Saturday, January 28, 2012

ADDING FUEL TO THE FIRE IN NIGERIA

ADDING FUEL TO THE FIRE IN NIGERIA


Nigeria’s fuel subsidy reduction protests were called off last week (16 January) as union bosses and the public were presented with a carrot - a return to a compromise level of N97 per litre (as compared to N65 before Jan 1 and up to N200 during last week’s rushed changes) and a stick - military deployments against protesters in major cities (against the objections of Lagos State’s Governor Fashola and others).

With a casualty list of ten dead in five cities across the country, criminal elements starting to take advantage of the disruption, and the nation already reeling under escalating Boko Haram violence, it seems that it was in no-one’s interest to allow for a longer period of instability. In any case, opponents of the new policy, and of Nigeria’s non-transparent political status quo, will rightfully feel that they have achieved a certain shift in the balance of power: While many analysts felt that strikes could not be continued beyond three days, more than a week of sustained action resulted in the government blinking first – despite state efforts to force employees to go back to work through the threat of no-work-no-pay.

In 2004, showdowns between government and union-led civil society over the same issue led – via strikes – to a negotiated settlement that was more elegantly choreographed. So why did the administration of President Goodluck Jonathan act in a manner considerably more intransigent than that of the bullish and often autocratic President Olusegun Obasanjo, who presided over earlier fuel price controversies?

To understand this requires a deeper examination of the structural politics underpinning the current administration in Nigeria. Let’s start by dismissing a myth. Whatever well-meaning technocrats (including Nigeria’s respected ex-World Bank Finance Minister Ngozi Okonjo-Iweala) may think, the ending of fuel subsidies has less to do with correcting a structural imbalance in the national economy, and more to do with the maths of patronage politics.

Anyone who doubts that should just follow the numbers. Note first, that deregulated prices were introduced even though funds for a further three months had been budgeted for. Next, attempt to follow the fate of the N28.875 billion (US$174.9 million) already saved during the 1st – 15th January deregulation (if the calculation based on government’s own figures is correct). If you are unconvinced, then simply follow the national accounts over the next 12 months. The new agreed price will reduce government spending by an estimated N61.2 billion for the last quarter of the current financial year (the new subsidy will save N23 per litre - at a projected consumption of 35m litres per day for 76 days that makes N61.2bn). Come December, try to find where this saving is reflected in the year-end national accounts; if it is not accounted there, it means that another US$380m of public money has vanished into the system with no paper trail.

The agenda here is not an economic one but a political one that is informed by the logic of rent and patronage. The Goodluck Jonathan administration suffers from an unfortunate conjunction of deficiencies of two strategic commodities; legitimacy and cash. Having become President ‘against the grain’ of the unwritten pact of regional power-rotation among the political elite, Jonathan must manufacture that consensus post-facto, which is expensive, as it requires the stuffing of dissenting mouths with Naira bills, issued via lucrative government contracts.

At the outset, when he faced the challenge of how to take over power from the dying late President Yar’Adua, Jonathan commissioned a group of elder states-people, headed by veteran coup-brokering general, turned oil baron and philanthropist, T.Y Danjuma, to do what amounted to a strategic review of the state of the nation. In essence, he got the ‘management consultants’ in. The Danjuma-led Presidential Advisory Council (PAC) reported that the most significant cost to the government was recurrent salary expenditure, which have accounted for nearly 60% of budgets in the last decade. It further reported that the country is already committed to funding N20.84 trillion (US$126.2 billion) of capital projects that have been included in budgets since 1999. As a result, there is basically no money for any major new projects for the medium-term.

This is a political problem, not just a developmental one, because the patronage system of government – on which elite cohesion depends – is based on the issuance of contracts (and thus, kickbacks and leakages) for big infrastructure projects. When kickbacks are demanded in Nigeria, they frequently exceed 10% of a contracts value (this writer has heard reliable accounts of kickback-driven inflation of 40%-300% of the actual cost of the goods and services supplied); and the contracts are often sizeable – a recent Chinese agreement to supply security communications equipment for the capital city was reportedly worth US$470 million.

Kickbacks are what the political elite ‘eats’, and without them the machine grinds to a halt. So, the problem facing Jonathan was where to look for funds to keep the consensus going. The PAC advocated lots of savings, including cutting government waste and reducing salaries. Bureaucratic sinecures, however, are another patronage goods, so the government opted to pass the buck onto the public by availing itself of the huge sums that were tied up in the fuel subsidy. Given the choice of alienating the elite or the public, the Jonathan administration chose the former.

With its back to the wall, and instability in the country mounting, it is perhaps unsurprising that government was so keen to maximize the resources at its disposal. The Jonathan administration may appear to be more vulnerable than ever, but it is worth noting that the President now has funds that may enable him to co-opt support and re-establish his position.

The decision to remove the subsidy brought protesters out onto the streets and the unions out on strike, forcing the government to think again. So now, both sides have stepped back from the barricades, what can we discern from the current state of the political field?

Some commentators have noted the army’s move on to the streets and mooted a return to the military interventions of the 1960s-1990s. Such speculations seem wide of the mark. For one thing, there is no real public appetite for a return to juntas. For another, former President Obasanjo did a thorough job of structurally depoliticizing the army, and the ‘political’ officers of yesteryear are now out of uniform. Just to be sure, it is instructive that Jonathan, like Yar’Adua before him, has ethnicized the top leadership of the military. Ignore for now the post of Chief of Defence Staff (the Yoruba Air Chief Marshal Oluseyi Petinrin) – it is a cosmetic post which enables senior officers to be ‘kicked upstairs’ out of the line of command. Note instead that the strategic posts of Chief of Army Staff (CoAS) and National Security Adviser (NSA) are occupied by faces from areas which strongly support Jonathan. The appointment of Azubuike Ihejirika represents a major boost for the Igbo south-east and represents the region’s first top command appointment since the Biafra war. Similarly, NSA General Andrew Azazi is from Jonathan’s home state of Bayelsa.

A more pertinent fear might be the apparent division of the country along ethno-religious lines. Christian leaders, exasperated with the lack of condemnation of Boko Haram from prominent Islamic voices in the country (who are probably silent due in large part to their own fear of becoming targets of assassination), have begun to advise that Christians in northern states take steps to defend themselves; such statements are provocative but reflect real fears, and increasing numbers of southerners resident in the north are coming home. Meanwhile, a small number of northerners based in the south have moved in the opposite direction. But such trends are yet small, and civil society protests against the fuel subsidies have actually reinforced a message of unity, with Kano protesters striking an interfaith mutual defence pact.

In truth, popular anger in most places is against the government, not other Nigerians, and where it is likely to spill over, security forces are generally positioned for timely reaction. Fifteen Local Governments (including Jos) where ethnic or religious violence has been most pronounced are already under Emergency Rule, volatile Kaduna has been under curfew, and Kano is being carefully managed through savvy community relations. Violence against Hausa money-changers in Benin City under the cover of protests was an unfortunate exception – criminal networks have been a big problem in the city through the last decade – but army units acted fast to round up Hausa residents and place them under protection.

With the controversy over the fuel subsidy seemingly calmed for the time being, what is not yet clear is how the administration plans to react to the wider crisis of stability in Nigeria. President Jonathan seemed to strike a panicky note last week, announcing at a national church service that his government and military had been ‘infiltrated’ by Boko Haram militants. Even if grounded in any evidence, this was an inadvisable thing to say, as it only served to spread uncertainty and fear. But it may be the real state of the President’s thinking. Diplomatic sources reported in 2010 that Jonathan, while VP, had taken to wearing a bulletproof vest. Those who think the President may lose his appetite for office and step down are however wide of the mark: the matter is not up to him. Niger Delta militants, whose campaign of insurgency propelled Jonathan to the VP slot to begin with, now feel that ‘their’ man is in power, so that they are in power; it’s ‘their turn to eat’ and they will be extremely displeased to see it ended prematurely. Jonathan may not be as adept at working with these factors as Nigeria’s First Lady is reported to be; but in any case his freedom of action is likely to be constrained by this powerful constituency.

So, some analysts conclude that the President is not in control of the situation – the real question is does this matter. Nigeria did not have a President at all in any meaningful sense of the term during President Yar’Adua illness in 2009-2010 and nothing fell apart in the realm of the everyday, because the state doesn’t do much for ordinary Nigerians at the best of times. Despite the public demonization of the President in recent days, the issue is not that Jonathan is an especially mean person or bad President – he is certainly an improvement on some figures in Nigeria’s past – but that the system is remarkably impervious to reform. Last week, the administration made a cosmetic change in response to public demands for more transparency with regard to oil revenue by appointing two little-known domestic law firms to investigate and audit the sector; at the same time, the opposition ACN party accused the government of attempting to broker a deal to hand over the country’s entire maritime security to a company run by a former Niger Delta militant.

So, Jonathan alone is not going to make or break Nigeria. The problem is more structural – Nigeria’s government-centred political economy, built on top of a fundamentally unwieldy constitution, has grown too expensive for its own resources and incapable of playing the role that it has carved out for itself. Spatially, central government has been retreating towards Abuja for some time now, ceding more leeway to powerful state governors while it walls itself in to the capital – a glitzy, CCTV-monitored national-scale version of the Government Reserve Area (gated estates) that exist in most Nigerian towns – where it can feed off oil revenues without having to be bothered with actual governance. The more interesting question is not whether or not Jonathan is in control, but which devolved, democratized or fissiparous forces are coming in to fill the vacuum that has been created by the retreat of the centre. Given this trend, and the mediated success of fuel subsidy protests, will we finally see a change in the balance of power towards the public?


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5 comments:

Anon said...

Many thanks for this very useful analysis.

- Aangirfan

Deji Mabaogunje said...

My fervent wish was for the strikes to have gone on and have funds dry up. Nigerians have little or no input from government and I doubt that their going broke would have had any impact whatsoever on our daily lives. We generate our own electricity, sink our own boreholes, and send our kids to private schools or home grow them educationally.

There are no functional government hospitals and so no prenatal or useful maternity care. The functions of government are completely lacking in Nigeria. It would cripple our elites in power if Nigeria were to go broke and truthfully, that would be the easiest way to get rid of them in office-let the country shut down and watch these greedy elites go at each others throats.

Ajasin Oluwa said...

For the ruling elites and their 'cousins', the government contractors, patronage is the essence of 'good governance'. It is this system of patronage that has left the doors to our state coffers open to corruption. It is why our economy is not growing and why foreign crooks tread our shores as 'investors'.

Simply, it is why nothing works in my country and why merit and pride in it evaporated.

Blackstar said...

So, why do Nigerians rest so easy? Why are they not on the streets fighting this injustice? Why do they take it? Most Nigerians I've met brim with intelligence & are very aware of global trends, they are nothing like their leaders. I think Nigerians should take to the streets often & not just when petrol prices hit the roof. They should learn to put pressure on their government.

Julio said...

This is great stuff, fantastic expose.