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Nigeria’s Oil Subsidy Debacle: An Interview with Former US Ambassador to Nigeria John Campbell

January 24, 2012

With his announcement on New Year’s Day that Nigeria would no longer subsidize oil for the population—subsidies on which the majority of Nigeria’s poor depend—President Goodluck Jonathan guaranteed a descent into chaos for his country. Nigerians immediately took to the streets and went on strike, effectively bringing business as usual to a grinding halt. In response, the government dispatched security services to quell the unrest, repressive measures that left some twenty people dead and hundreds more injured. Jonathan, facing mounting pressures from within Nigeria and outside, reversed himself this past week by reinstating a partial subsidy in return for an end to the strikes. Nevertheless, questions remain about how well the government in Abuja will manage public dissatisfaction, ethnic and religious divisions, and violent resistance from the Islamist Boko Haram movement in the north moving forward.

I discussed these issues and more with John Campbell, former US ambassador to Nigeria (2004-07) and currently the Ralph Bunche Senior Fellow for Africa Policy Studies at the Council on Foreign Relations. Campbell’s recent book, Nigeria: Dancing on the Brink, offers a captivating account of the politics and society driving contemporary Nigeria, and his commentary on the subsidy debacle has distinguished itself with subtlety and fearlessness. Campbell warns that, while the protests offer some hope for Nigerian solidarity across traditional dividing lines, the government’s coercive response could spell more turbulence ahead.

It’s been a tumultuous couple of weeks in Nigeria as a result of the government’s announcement that fuel subsidies were coming to an end. I’d like to begin by asking that you give a sense of why these subsidies are such an important issue for ordinary Nigerians, and what the effects of ending the subsidies had on the population?

There are several different layers here. The first is that the profits from oil—about 95 percent—go overwhelmingly to the state which, for long, has been captured by a very small oligarchy. They are the primary beneficiaries from the oil revenue. The mass of the population benefits from oil mostly through the fuel subsidy. As the Roman Catholic Archbishop of Abuja put it, what the fuel subsidy amounted to was a very, very small resource transfer to the poorest part of the population.

There is also another dimension to it, one that may be hard to get our arms around. And that is the popular view that the oil was put in Nigeria by God for the benefit of the Nigerian people. Then, there is the more practical dimension to it, which is that when the fuel subsidy was ended not only did the price of oil and gas go up two or three times, the price of almost everything else did, too, because that’s how goods are moved in Nigeria—by road. The rail network has long since collapsed, though its restoration is now a government priority.

Now, why does all this matter? Essentially, what you had was an extraordinarily clumsy ending of the subsidy on New Year’s Day. Ordinary Nigerians all over the country tend to go back to their villages for the Christmas holidays, and a significant number of them apparently got stuck there because they literally didn’t have enough money for the increased bus fare to get back to where they worked. So they had to walk. It is very hard to quantify a factor such as this, and yet it is certainly in the equation.

What the removal of the fuel subsidy tended to do was to crystalize the widespread view that the government is essentially exploitative and corrupt. That’s why there were popular demonstrations as well as trade union demonstrations associated with the strike. Those popular demonstrations appear to be still going on, at least in Lagos and in Kano, though there is very little press coverage of it. The most recent I saw was on Wednesday when the police used tear gas against a demonstration in Lagos being led by Tunji Braithwaite. Braithwaite is celebrated human rights lawyer and activist.

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