The end of the subsidy to the fuels and the erratic measures of the government of Nigeria strangle the economy of the country
By Alfonso Masoliver From Lagos (Nigeria)
The fuel is crucial to develop the energy sector of a country. Energy is a key aspect of the development of a territory. Without fuel there is no energy; Without energy there is no development. It is a simple norm that applies to all nations in the 21st century. Although in Nigeria, apparently, they are lucky in this aspect: the country has oil reserves that make it the largest producer of the African continent. But, surprise: it happens that there are Nigerian companies that currently ask their workers to go to the office only three times a week, no more, to save them the cost of fuel, because Nigerians must dr gasoline with which to feed their vehicles. A Spaniard pays for a liter of gasoline the equivalent of 0.005 % of the per capita income of our country, while a Nigerian, for the same volume of fuel, must pay 0.05 % of the Nigerian per capita income. Ten times more.
Drastic measures
Arinze Nwoko, Finance professor at Lagos Business School, explains what happened in a simple way: «Nigeria is an oil producing country, but the lack of refineries forces to buy crude oil refined to third countries. This makes Nigeria sell its cheapest oil than the price for which it buys it, once processed. The Government implemented a subsidy years ago that sought to cut that difference ». Nwoko continues to say that the subsidy was a source of galloping corruption and object of strong criticism; Therefore, the current president of the country, Bola Tinubu, announced in May 2023, during his investiture speech, that this public aid would be eradicated IPSO FACTO. Nwoko affirms that the end of the subsidy “was seen coming”, but it is difficult for him to understand why he was eliminated in such a sharp way.
Nwoko thinks, but also Ozobo Austin, environmental activist and human rights of the Niger Delta, where Nigerian oil is extracted: «It would have made sense if they had removed the subsidy little by little, giving time to the population to adapt To changes. Instead, they removed it from one ». Nwoko then says that “it is very important that there is political will to do the right thing. But there is not.
A liter of gasoline with the subsidy was worth the Nigerians around 250 Naira –50 cents according to the change of May 2023–. In October of that year, five months after the end of the aid, the liter of gasoline cost around 800 Nairras – a euro according to the change of those dates. In December 2024, the price shot until 1,300 Naira (80 cents according to the change of that time). It is easy to check in this battery two realities that have hit Nigeria since Bola Tinubu decided Euro was equivalent to 500 Nairras in April 2023, while in January this year 1,600 were necessary to acquire a euro.
The Nigerian economy, fragile for decades, has ended up broken in a few months without an adjustment in the salaries of the population, according to Professor Nwoko. Together with the drastic eradication of the subsidy there is an increase in basic products in the most populous country in Africa. They are related crises, says Nwoko, because “if it is necessary to reduce food prices to solve inflation, the measure becomes very difficult if the transport costs are very high as a consequence of the price of fuel.”
Again, the teacher and the activist agree, despite being interviewed at different times. Both point out that the subsidy no longer reaches merchants, but remains included in the state budgets, so it would be valid to ask “who is taking that money.” Moreover, the game destined to subsidize the fuels in Nigeria increased in 2024 in relation to 2023, although it had been eliminated the previous year. But nobody knows where that money went.
What solutions are there?
It is evident that there are ways to solve the debacle. If Nigeria’s problem is that he sells his cheapest oil than he pays for his purchase, once refined in third nations, it would make sense that one of the main economic powers of the continent refined its own oil. The personality that has worked the most in this direction has been Aliko Dangote, the richest man in Africa, who opened a refinery capable of producing 650,000 barrels per day in 2023, but whose disagreements with the Nigerian government have pushed him to buy the oil out of the country, in what has become another lost opportunity. Professor Nwoko explains that the disagreements with the Executive are born from the fear of the rulers to which Dangote is done with the monopoly of refinery operations in the country, but it does not seem sufficient excuse: «The government had known the intention for years of Dangote to open a refinery and have not wanted to devote that time to fix those already the state and that have been stopped years.
This attitude, which harms the population in order not to benefit the entrepreneur, summarizes the positioning of the Abuya government, which has not launched any plan to reactivate state refineries. What could have relieved the crisis of Nigerian fuel has been, thanks to a bad government management, another negative factor in this story that grips the lives of millions of people. The Government eliminated the subsidy without applying its removal of the General State Budgets. Investors applauded the measure because it is not they suffer. The Naira collapsed. Dangote brought a solution. They denied it. And the national currency is still in free fall without the ruling class immute, because, as the professor of the Lagos Business School says: «Those who suffer are the masses. The others do not care ».
In the image, businessman Aliko Dangote talks with former Nigerian president Olusegun Obasanjo at the Annual Aphreximbank meeting held on June 18, 2023 in ACCRA (Ghana). Photography: Ernest Ankomah/Getty
