Subsidy removal further impoverishes Nigeria’s poor, writes Ike Okonta
I am happy that Dr Kalu Idika Kalu, General Ibrahim Babangida’s finance minister in the 1980s, is alive and well. Dr Kalu, working closely with the national representative of the World Bank at the time, eagerly promoted the structural adjustment program and ensured that General Babangida forced it on the Nigerian people. Kalu argued that the government had no role in the economy, that the Naira should be drastically devalued, and subsidies in the education and health sectors should be removed or drastically reduced. He also called for the privatization of all state-owned enterprises and the removal of tariffs on imports that the federal government had put in place to protect the local manufacturing sector.

Following the introduction of SAP in 1986, the value of the Naira collapsed in the forex market. Local factories that produced products such as automobiles, textiles and vehicle batteries have closed. Privatized companies did not fare any better. They were dismembered and then abandoned while the employees were left to fend for themselves. By the time General Babangida was forced by pro-democracy forces to step down in August 1993, it was clear to ailing Nigerians that Dr Kalu, the World Bank and the International Monetary Fund had sold them a dummy. Nigeria had been pushed into the orbit of the international capitalist system as a fringe satellite importing everything from toothpicks to automobiles from Western countries, as the nascent steps it had taken on the road to industrialization in the 1960s and 1970s were discontinued.

Three decades later, the government of President Muhammadu Buhari still makes common cause with the discredited World Bank. The government has notified that it will remove subsidies on gasoline and electricity in 2022. It has claimed that the burden of subsidizing these two sectors is now too heavy for the government to bear and that, anyway, gasoline subsidies only benefited the better-off. . Then the government made a mistake. He assured Nigerians that the sum of N5000 would be paid to 40 million poor Nigerians for a year to cushion the effects of the removal of oil subsidies. Public Interest Economic Alert did a quick math and found that the amount of money that would apparently be spent on paying poor Nigerians would far exceed the annual grant! Who is trying to fool whom?

The central argument of President Buhari and the representative of the World Bank in Nigeria is that the government does not have to subsidize public services and that sectors such as electricity and petroleum should be left to the whims of market forces. . This is indeed the central position of neoliberalism, the far-right regime that the late President Ronald Reagan and Prime Minister Margaret Thatcher began to defend shortly after their election in the early 1980s. Neoliberalism, it should be noted , is not a question of economy. Not at all. Exposed, it is a political strategy whose aim is to strengthen the grip of hard capitalism on the world system and to suppress socialism as a competing political alternative. This is why Prime Minister Thatcher attacked unions in Britain in the 1980s and also sought to cripple the Labor Party. For his part, President Reagan drew up a strategic document that was later dubbed “the Washington Consensus” and pushed it to the International Monetary Fund and the World Bank for implementation around the world. . The collapse of the Soviet Union a few years later only strengthened the grip of this harmful far-right political regime on a global scale.

Interestingly, the arrival of President Joe Biden in January 2021 signaled neoliberalism that its end has come. In eleven months, President Biden introduced two key bills to the United States Congress – one to revamp public infrastructure and the other to provide grants to vital sectors such as health, child care and the environment. In short, President Biden and the Democrats argue that the great government is back; that the old practice of pampering the rich at the expense of the poor and public welfare has ended. President Biden made it clear that he meant every word when, in the face of rising inflation, especially the price of oil, he released strategic oil reserves in the United States in an attempt to lower the price. of the product. He paid no attention to right-wing economists who wanted so-called market forces to continue to determine the cost of gasoline in the United States – to the detriment of the ordinary consumer.

I have always maintained that President Buhari does not have a clear and definable economic strategy. Its policies are made on the hoof; not properly thought out and with the worries of the ordinary Nigerian as the main focus. Unemployment is currently around 40 percent. Food inflation has forced those lucky enough to have jobs to cut corners as they struggle each month with meager wages. Removing subsidies on gasoline and electricity will only increase inflation and worsen the plight of poor Nigerians who, even now, are barely able to eat three meals a day. The key to prosperity in Nigeria is the diversification of the economy through rapid industrialization and the expansion and modernization of the agricultural sector. This will require building a strong steel industry and increasing electricity production beyond the current 4,000 megawatts.

The Buhari presidency was unable to take these steps. Instead, he wants to further impoverish poor Nigerians by removing the few subsidies they still enjoy. I urge the government to rethink this policy. In any case, it is now a lame government because new elections are already around the corner. The decision whether or not to remove the subsidies should be left to the new government in 2023. President Buhari has done his best and it is simply not enough.

• Dr Okonta was until recently a Leverhulme Early Career Fellow in the Department of Politics at the University of Oxford. He lives in Abuja.