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Candidates are known for making rosy campaign promises to win elections, but which they do not intend to fulfill or cannot even fulfull. That’s why expectations were very high when, as a presidential candidate, President Bola Ahmed Tinubu made several high-stake campaign promises, involving tough policy decisions. Two such policies stood out in his manifesto. One was the removal of fuel subsidy. The other was the harmonisation of the exchange rates.
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He did not disappoint as he steamrolled both policies as soon as he assumed office nine months ago. He was praised by local and international observers for the boldness and promptness with which he acted. True, he made it clear on several occasions that the gestation period of the policy would be painful, but neither the government nor the citizens were prepared for how painful it would turn out to be. For the government, praise quickly turned to blame, while attempts to ameliorate the pain were complicated by sabotage. Besides, chronic critics and election losers capitalised on the masses’ knowledge gap to blame the President at every turn. Unfortunately, the government has not done enough to fill the knowledge gap (see, for example, my piece, How we got here, The Nation, February 14, 2024).
For the citizens, both policies have led to widespread economic destabilasation and deepened the existing poverty level. For example, attempts to harmonise the official and parallel exchange rates have led to the devaluation of the Naira and corresponding increases in commodity prices, while the removal of fuel subsidy instantly led to a hike in petrol prices. In no time, transport costs increased across the country. The resultant inflation has made matters worse in the face of stagnant wages.
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It cannot be denied, however, that the government has continued to work round the clock to improve the economic situation. Palliatives, wage increases, infrastructure development, agricultural expansion, and release of grains from the reserve have all been rolled out or put on the table. Unfortunately, instead of engaging their state officials, who are largely responsible for implementation, some continue to protest the Federal Government. Of course, some economic problems remain unresolved, leading the Federal Government recently to set up a tripartite Economic Advisory Committee, involving the Federal Government, states, and the private sector.
Lest we continue to misconstrue the Nigerian situation, it is important to put it in a wider perspective, by taking a look at the price of one litre of petrol across Africa. The goal is to show that, even at N650 per litre, petrol price in Nigeria remains one of the lowest on the continent, and even across the globe.
Let me repeat: even with the price hike following the removal of petrol subsidy, the cost of one litre of petrol in Nigeria is still below the average cost across Africa and the world at large. The truth is that, apart from a few countries in Africa, mostly oil producing, such as Libya, Egypt, Algeria, and Angola, the average price of petrol in Africa is over one dollar, that is, over N1,650. For ease of comparison, I use the dollar price for the rest of this essay.
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Let’s begin with West Africa, where Nigeria, Cameroon, Ghana, and Chad produce oil in varying degrees, with Nigeria being the highest producer. While the dollar price of one litre of petrol in Nigeria is about $0.69 (that is, 69 cents), the price in Cameroon is 1.37 (that is, over N2,000). The price is less in Ghana at 1.05 (that is still over N1,650.00). However, the price in Chad is 0.84. This is closer to, but still higher than, Nigeria’s price. Other West African countries in which the litre price is less than one dollar, but still higher than Nigeria’s, are Liberia (0.80); Niger (0.97); and Gabon (0.98).
In all other West African countries, the litre price of petrol is higher than one dollar. Here is a sample: Benin (1.12); Togo (1.15); Guinea (1.39); Burkina Faso (1.42); Sierra Leone (1.50); and Senegal (1.65). Take a look at Senegal again: In that country, the price of one litre of petrol is approaching N3,000! And that is a country where the President was attempting to sit tight the other day.
The situation in East Africa is worse than in West Africa as there is no single country in which the litre price of petrol is less than one dollar, partly because there is no oil producing country in the region. Here’s a sample: Tanzania (1.20); Uganda (1.36); Ethiopia (1.37); Rwanda (1.4); and Kenya (1.43).
It is a different story, however, in North Africa, where the only country that pays over one dollar for a litre of petrol is Morocco (1.53). It is close to a dollar in Tunisia (0.81), but much less in the oil producing countries of Libya (0.03) Algeria (0.3) and Egypt (0.4). Incidentally, these are oil producing countries in which crude oil is also locally refined.
However, local refinery did not save the day in oil producing South Africa, where the litre price of petrol is over one dollar at 1.21. This may well be due to corruption, which once reached a level described as “state capture”. But the story is different in Angola, another oil producing country in Southern Africa, where the litre price of petrol is only 0.36. In all other countries in the region, it is well over a dollar. For example, it is so in Malawi (1.50); Zambia (1.50); Zimbabwe (1.64); and Swaziland, which pays the highest price in Africa, at two dollars (that is, over N3,000) per litre.
On a global perspective, fuel price is high around the world, the average price being about $1.30 per litre. Variations in fuel prices are generally due to variations in taxation; amount of subsidy paid, if any; level of corruption; whether or not crude oil is indigenous; and whether or not oil is locally refined or imported.
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Going by the above data, it is good news for Nigeria that she is still among the countries with the lowest litre price of petrol in the world, despite the removal of fuel subsidy. True, it has taken a toll on the citizens, but it was good riddance, because it only benefitted a few, while it lasted.
Those who have been asking to see the savings from the subsidy should go ask their state Governors, who have been receiving more money as federal allocations since the removal of fuel subsidy. Now, with Naira gaining strength by the day, the cloud in the economic horizon is gradually clearing. Hope surely will be renewed.
Credit (The Nation)