On January 11, 2012, Bola Ahmed Tinubu published a sober, thoughtful, deeply insightful, and penetratingly foresightful article titled “Removal of Oil Subsidy: President Jonathan Breaks Social Contract With the People” that uncannily prefigured the untoward consequences of petrol subsidy removal that Nigerians are currently grappling with.
The article has trended on social media in the last couple of weeks, but I had never taken the trouble to read it until multiple people who I regard highly sent it to me in what seemed like a coordinated torrent of forwards.
But after reading the 4,000-plus-word article and finding out that it predicted the current petrol-subsidy-removal mass excruciation Nigeria is suffering with almost mathematical exactitude, I became suspicious of its authenticity. It was too good to be true.
My incredulity compelled me to make inquiries, which led me to realize that the Nigerian Tribune had actually fact-checked the genuineness of the article on May 31, 2023. It not only found that it wasn’t fake but also scanned and uploaded a printed copy of the article published in The Nation, Tinubu’s paper.
I encourage everyone to read it. In the article, Tinubu derided the 2012 removal of petrol subsidies as the “Jonathan tax,” and the following paragraphs are particularly noteworthy for the mysterious precision of their prescience:
“Government claims the subsidy removal will create jobs…. The stronger truth is that it will destroy more jobs than it creates. For every job it creates in the capital intensive petroleum sector, it will terminate several jobs in the rest of the labor intensive economy.
“Subsidy removal will increase costs across the board. However, salaries will not increase. This means demand for goods will lessen as will sales volumes and overall economic activity. The removal will have a recessionary impact on the economy as a whole. While some will benefit from the removal, most will experience setback.
“What is doubtless is that the Jonathan tax will increase the price of petrol, transportation and most consumer items. With fuel prices increasing twofold or more, transportation costs will roughly double. Prices of food staples will increase between 25-50 percent….
“Most people’s incomes are low and stagnant. They have no way to augment revenue and little room to lower expenses for they know no luxuries; they are already tapped out. The only alternative they have is to fend as best they can, knowing they must somehow again subtract something from their already bare existence.
“There will be less food, less medicine, and less school across the land. More children will cry in hunger and more parents will cry at their children’s despair…. Poor and middle class consumers will spend the same amount to buy much less. The volume of economic activity will drop like a stone tossed from a high building. This means real levels of demand will sink.
“The middle class to which our small businessmen belong will find their profit margins squeezed because they will face higher costs and reduced sales volumes. These small firms employ vast numbers of Nigerians. They will be hard pressed to maintain current employment levels given the higher costs and lower revenues they will face.
“Because the middle class businessman will be pinched, those who depend on the businessmen for employment will be heavily pressed. States that earn significant revenue from internally generated funds will find their positions damaged. Internally generated revenue will decline because of the pressure on general economic activity. The Jonathan tax will push Nigeria toward an inflation-recession combination punch worse than the one that has Europe reeling.
“This tax has doomed Nigeria to extra hardship for years to come while the promised benefits of deregulation will never be substantially realized. People will starve and families crumble while federal officials praise themselves for ‘saving money.’ The purported savings amount to nothing more than an accounting entry on the government ledger board. They bear no indication of the real state of the economy or of the great harm done the people by this miserly step.”
Like I have done for years, Tinubu also fulminated against “European conservatives” whose economic prescriptions are at variance “with the needs of the Nigerian populace.” He even said something that is eerily close to what I wrote in a previous column. “There has been no nation on the face of the planet that has developed or achieved long-term prosperity by devotion to conservative, ultra-free market economic ideas that dominate this government,” he wrote.
“If no nation has grown using these conservative ideas,” he asked, why are we stuck with them? I have an answer, and it’s three-fold: sadly familiar Nigerian elite self-love, xenophilic obeisance to meanspirited racist wretches at the IMF/World Bank, and a visceral disdain and blithe unconcern for ordinary Nigerians.
Like Tinubu pointed out in 2012, the removal of petrol subsidies in 2023 merely took money from the so-called oil subsidy cabal and put it directly into the pockets of politicians without hurting the bottom line of the subsidy cabal. The cabal simply pushed the extra cost of importing petrol to consumers.
In the aftermath of the removal of subsidies, allocations to the three tiers of government rose by 29.05% in just six months. By the end of 2023, governments shared N15.1 trillion, which represented an increase of N3.4 trillion from 2022.
Note that, according to the Punch of September 22, 2023, N3 trillion was budgeted for petrol subsidies from June 2022 to June 2023 (although it was N1.57 trillion in 2021 and N1.27 trillion from January to May 2022, indicating obvious fraud). In other words, the money that would have been used to keep the pump price of petrol at less than N200 per liter was simply shared between the presidency, governors, ministers, and the rest.
State governors now receive several folds more money than their normal monthly allocations without a corresponding increase in their expenditures. Because they have way more naira than they have use for (of course, they don’t care about the masses), they convert the extra naira into dollars, which contributes to the relentless depreciation of the naira, according to the BusinessDay of February 13.
In other words, to put it even more crudely, the masses and the economy benefited more from the corruption of the subsidy cabal than from what has replaced it since May 2023. But, as I pointed out earlier, the subsidy cabal isn’t hurt in the least by this change. Apart from pushing the cost of importation to consumers, they are now receiving subsidies through the backdoor to keep the price of petrol from climbing to over N1,000 a liter, which the IMF is now instructing Tinubu to stop.
The only losers are ordinary Nigerians, small businesses, the informal economy, and the manufacturing sector. After Tinubu said subsidies were gone in May 2023, the GDP of the transportation sector contracted by 50.64% in the second quarter of 2023 and by 35% in the third quarter, according to the National Bureau of Statistics (NBS).
The road transport sector is the most reliable barometer to measure the health of commerce and of the informal economy in Nigeria. Petrol subsidy removal is killing it. A November 28, 2023, BusinessDay headline succinctly captures this: “Subsidy removal pushes transport industry into recession.”
My job as an inveterate opponent of subsidy withdrawal is made easier by the knowledge that Tinubu knows the truth. He knows for a fact that petrol subsidies are not a waste, especially if the corruption in the administration of subsidies is addressed. He knows that it’s an investment in the people and in the economy.
Petrol doesn’t just power the transportation sector, it’s also the main source of electricity generation for industries, small businesses, and the vast majority of our people. Given that Nigeria has the worst electricity generation record in West Africa (and possibly in Africa), it’s easy to see why a drastic rise in the cost of petrol activates an across-the-board cost-push inflation and deepens the misery index in the country.
Tinubu knows this but has chosen to care more for the validation of the sadistic bastards at the IMF and the World Bank than the comfort and wellbeing of his people.
There’s no doubt that it’s the IMF and its evil twin, the World Bank, that are ruling Nigeria. Tinubu’s government is just a proxy. For example, just two days after the IMF told Tinubu he must remove electricity subsidies (I had no clue such a thing existed given the unreliable electricity in Nigeria) Minister of Power Adebayo Adelabu announced that the government would withdraw electricity subsidies.
The same IMF has also instructed that the surreptitious subsidies the Tinubu administration is paying to stop petrol prices from getting to—or even rising above— N1,000 a liter must be stopped.
Get ready for another bumpy ride, Nigerians. Until half the country drops dead from starvation, the IMF, which is the real government in Nigeria, won’t rest. I can guarantee you that.