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HomeViews and ReviewsRoll Back The Tinubu Fuel Tax, a.k.a. Subsidy Removal

Roll Back The Tinubu Fuel Tax, a.k.a. Subsidy Removal

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Chido Nwakanma

Courage. President Bola Ahmed Tinubu is courageous, as shown by his public records. He courageously took on internal and external opposition to his quest to be the president. It led to the courageous Abeokuta Declaration of Emilokan.

Tinubu confessed that a courageous spirit entered him to declare the end of subsidy in Nigeria at his inauguration. It was unscripted. In other words, neither the president nor his team had worked out the dynamics and modalities.

Tinubu merely worked up the courage to follow the received Western wisdom against subsidies in the developing world, even as almost everything in Western economies is subsidised.

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It was unlike Bola Ahmed Tinubu, the strategist and marathoner. Even to appoint the second tier of his team, the heads of agencies, Tinubu subjected the key appointees to thorough scrutiny, including asking them to submit position papers.
He did not do so on 29 May 2023. Nigeria has paid an outsize prize for that courage. It is not working. Nay, it is causing enormous hardship. Citizens are groaning from Kutuwenji to Kaura Namoda. From Mushin to Maiduguri and from every corner of Nigeria.

Citizens have moved beyond the muted complaints in their sitting rooms and clubs and taken to the streets. Protests are mounting.

More disturbingly significant are the complaints of the elite and governing class.

The Nigerian governing class and elite have returned to their favourite habit of speaking in forked tongues about significant issues. They are doing so now on the consequences of the alleged removal of fuel subsidies and the dollarisation of our economy through floating the Naira. Once again, they see the elephant in the room but speak only of the mice running around.

My key witnesses are two Bola Ahmed Tinubu cabinet ministers and a former presidential special adviser under President Muhammadu Buhari. Enter into the witness box: Atiku Abubakar Bagudu, Minister of Budget and Planning; Senator Abubakar Kyari, Minister of Agriculture; and Prof Itse Sagay, a former adviser to Buhari.

Before the National Assembly on Friday, 9 February 2024, the two ministers critiqued the administration’s key policy thrusts. They stopped short of calling on the government to withdraw the policies.

Bagudu told the Senate Committee that the removal of fuel subsidies instigated a high cost of petroleum with its ripple effect on the transportation of goods and the high price of farm produce.

He said: “What we are faced with today is the undocumented food export to our neighbouring countries. Today, one CFA is N2.50; 100 CFA is N2, 200. That used to be N400 a few years ago. When you look at our neighbouring countries, all four neighbouring countries around us, the CFA is their currency, and because of the devaluation of the naira, our food is the cheapest around the neighbourhood. So, you find a lot of undocumented exports, smuggling across our porous borders to these neighbouring countries.”

Bagudu contemplates border closure to curb unrestrained export of our goods to neighbouring countries. He names nationals of India, China, and Turkey among the culprits who export Nigerian produce without repatriating the proceeds.
“Export is a good thing for us, but when you don’t earn the foreign exchange, and it is not repatriated back to us, and the government doesn’t have any income from it, I am sorry, that is not a good sign.

Food production is endangered, Bagudu submitted. “The benefits of fuel subsidy reforms must be supported by measures that guarantee food production and stability.

A former adviser to President Muhammadu Buhari, Prof. Itse Sagay, said that the sudden removal of subsidy by President Bola Tinubu caused the hardship being experienced in Nigeria.

Appearing on a Channels Television program on Friday, February 9, Sagay said Tinubu should have waited six months after his inauguration before removing the fuel subsidy.
Emir of Kano Alhaji Aminu Ado Bayero was more direct when he told First Lady Senator Oluremi Tinubu to message President Bola Tinubu about the hunger in the land.

The Chairman of the Presidential Advisory Committee Against Corruption (PACAC) said: “Petrol is critical to our lives. The cost of living is increasing, and basic living is now expensive. We might have gone on for another six months, and the subsidy could have been removed as internal production was coming up. The immediacy and the sudden manner of the decision to remove petrol subsidy has created an immediate level of hardship which is almost becoming unbearable.”

President Tinubu and all the other persons missed the mark. Subsidy was not our problem. The subsidy camouflage was brought on to cover for the failure of the elite to govern.

Governments failed to secure oil production and prevent or stop the theft of Nigerian crude. They declined to take necessary steps to resolve all the issues around this vital economic resource.
President Tinubu now needs courage and wisdom to reverse. I have held since Goodluck Jonathan that subsidy removal in Nigeria is merely a fuel tax. Sani Abacha was the only one who admitted that the government made additional income off the sweat of citizens from the alleged removal of subsidies and established the Petroleum Trust Fund to intervene from the proceeds of the exercise in government coffers. Jonathan established the SURE-P to reinvest the proceeds from the alleged subsidy removal. The situation has stayed the same.

Several countries reversed themselves on experiencing the backlash from subsidy removal. Here is an accounting by
• Egypt (2011): Following the Arab Spring in 2011, the Egyptian government partially reinstated fuel subsidies due to public protests and concerns about affordability.
• Indonesia (2013): After initially reducing fuel subsidies in 2013, the Indonesian government partially reinstated them due to public backlash and concerns about inflation.

• Ghana (2015): After initial subsidy removals in 2015, Ghana saw public demonstrations and economic hardship, prompting the government to implement targeted subsidies for specific groups.
• Malawi (2012): Large-scale protests erupted in Malawi following fuel subsidy removal in 2012, forcing the government to reinstate them partially.

• Tanzania (2011): Public protests and concerns about affordability partially led Tanzania to reverse fuel subsidy removal in 2011.

• Sierra Leone (2018): Sierra Leone initially removed fuel subsidies in 2018 but later reintroduced them in a targeted manner for specific sectors due to economic challenges.

• Liberia (2019): Liberia implemented fuel subsidy removal in 2019 but faced public protests and economic difficulties, leading to a partial reinstatement in 2020.

• Iran (2019): After initially raising fuel prices in 2019, Iran faced widespread protests and unrest, prompting the government to provide targeted subsidies for low-income citizens.

• Ecuador (2019): Ecuador attempted to remove fuel subsidies in 2019 but encountered mass protests, forcing the government to reinstate them with modifications.

The sad truth is that neither the IMF nor the World Bank has a template for managing the fallouts from their ugly prescription. Not one of them. It is not based on empiricism but on ideology.

Have you noticed how all the Nigerian eggheads who studiously canvassed subsidy removal echoing the West have gone quiet since Tinubu implemented their prescription? They have neither a response nor solutions. Indeed, the big companies only cried about the effect of the dollarisation on their accounts.

Please find your usual courage, President Bola Ahmed Tinubu and roll back the alleged subsidy removal and floating of the naira. These policies are a threat to citizens and your administration.



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