Occupy Nigeria victory: president to cut fuel prices

The initial removal of an estimated $7 billion annual fuel subsidy impacted an entire population and crippled the Nigerian economy.

Nigerian president Goodluck Jonathan announced today that his government would reduce gasoline prices in the country after weeks of protests and strikes.

Gas prices spiked after Mr. Jonathan's government removed fuel subsidies earlier this month. High gas prices were not the only effect: the costs of food and transportation nearly doubled as well, crippling the economy and impairing a population that largely lives on less than $2 a day.

Folenke's food shop, in the heart of Lagos, was nearly empty last week because she couldn’t afford to go to the wholesale market to restock the bare shelves. Tarek Shams, station manager for Egyptian Air at the Murtala Mohammed International Airport, looked shell-shocked as he tried to explain to angry passengers why he had already decided to cancel the flight out of Lagos the following Tuesday.

"I cannot face tomorrow what I faced today," he says, explaining that his workers had to have an armed police escort to deliver fuel to the one Egyptian Air flight that landed and departed Lagos last Monday. As the airline workers were transferring fuel, Mr. Shams says, they were greeted by union protesters burning debris in the road.

Welcome to the brave new world of Nigerian shock-therapy economics.

On Jan. 1, the Nigerian government decided to remove fuel subsidies, with President Jonathan saying they prevent government from spending in other areas, such as building roads, maintaining schools, and keeping the electric power grid running.

Economists such as the International Monetary Fund's Christine Lagarde and Columbia University economist Jeffrey Sachs have praised the move, but citizens reacted with a mixture of anger and bewilderment. A series of rolling strikes started Jan. 9, shutting whole cities around the country.

Big oil exporter must import gasoline

The fuel-subsidy protests, organized mostly by Nigeria's socialist and labor movements and taking on the name Occupy Nigeria, were just the latest hurdle for President Jonathan's administration. In early January, the militant Islamist group Boko Haram warned Christians, whose population is concentrated in the north, to leave northern Nigeria or face attack. Since then, more than 50 people have been killed, most of them Christians. While Jonathan has publicly condemned the attacks, many northern Nigerians, and particularly local Christian leaders, feel he is not doing enough.

Though Nigeria is Africa's largest oil exporter, it imports nearly all its fuel because its refineries are in bad repair. To keep fuel prices within the reach of ordinary Nigerians, the government has paid importers the market rate and allowed fuel to be sold to customers at nearly half the true cost.

But officials say the fuel subsidies, estimated to be about $7 billion each year, were crippling the national budget and siphoning funds needed for roads, schools, and other infrastructure.

Less than two weeks after the subsidy was removed, its effects started to trickle down to the larger economy. Fuel prices doubled, turning poor people into protesters as millions of Nigerians took to the streets around the country to demonstrate against the government's decision.

The protests emptied many of the roads in Africa's most populous country, as no one showed up for work on Jan. 9. Shops were shuttered, schools were closed, businesses were locked up tight.

Meanwhile, near the center of Lagos, thousands joined in morning protests during which three people were killed. The protests dissipated after police showed up in riot gear and cautioned people not to destroy property.

Not all Nigerians supported the fuel-subsidy strike, especially small-business men.

Chukwu Ebka owns a small auto body parts shop in Lagos. He says the government should have removed the subsidy gradually instead of all at once.

"Protesting ... I would like them to stop it," Mr. Ebka says. "It's not helping matters. It's not helping. It affects us. I can't open my shop, I can't sell anything. No one has been by, and it affects my business."

It's not the subsidy; it's about trust

Samuel, who gives only his first name, stands at a deserted bus stop. He says the removal of the fuel subsidy was a good decision. But he questions if it could have benefited all Nigerians.

"What Nigerians are calling for is good government," he says. "We are actually not against the idea of removing the fuel subsidy for the proper reallocation of such funds.

"But we have heard this story before," he continues. "They deregulated diesel, and I paid more. We've had promises from past governments, yet we still have a poor educational system, no roads, and no electricity … these are the issues that should be addressed. But they haven't [been]."