Economic Hardship: Revisiting Buhari’s Reason For Jettisoning Petrol Subsidy Removal
WITH the harsh economic conditions in Nigeria today, following the removal of petrol subsidy and other policies of the President Bola Ahmed Tinubu administration, Nigerians have come to terms with the revelation by former president Muhammadu Buhari that his administration didn’t withdraw fuel subsidy to enable his party to secure electoral victory in the 2023 presidential election.
Buhari had in June last year, barely a month after he left office, admitted that his administration postponed the removal of fuel subsidy to safeguard the electoral prospects of the All Progressives Congress ( APC) in the 2023 elections. To many observers, the outcry by the citizenry against the negative effects of subsidy removal policy, which was announced by President Tinubu on the day he was sworn into office, have cast a spotlight on the intricate interplay between governance, economic policy and political expediency in Nigeria. Recall that President Tinubu had on May 29, 2023, during his inaugural address, announced the withdrawal of subsidy on petroleum products, which had been implemented for decades. The president said the rationale behind his decision stemmed from deficit budgetary concerns, expressing his intention to reallocate the funds accruing from the policy to enhancing public infrastructure and the well- being of Nigerians.
But the twin policies of withdrawal of fuel subsidy and the unification of the foreign exchange market by the Tinubu administration have continued to impact the economy negatively, as they have aggravated the challenges of poverty, inflation and food insecurity confronting the country. This situation had provoked protests across the country with youths and women taking to the streets to express their frustrations over the high cost of living in the country.
As of last Thursday, the naira reached its lowest point against major global currencies including the US dollar and the British pound. While the naira exchanged above N2,000 per pound at the parallel market, it is predicted that the dollar would trade above N2,000 against the dollar in the coming days. Last Wednesday, the International Monetary Fund ( IMF) warned that the naira may depreciate further by about 35 per cent this year and contribute to a sharp rise in inflation, peaking at 44 per cent before the monetary policy by the Central Bank of Nigeria ( CBN) could eventually arrest the situation through tightening. The IMF, in its February 2024 Post– Financing Assessment and Staff Report, maintained that with the absence of local production and the recent liberalisation of commodity imports, the exchange rate would likely depreciate further.
The success of any economic policy depends not only on its soundness but also on the political and institutional context in which it is implemented. In Nigeria’s case, economic experts believe that stopping the payment of subsidies might be economically rational but due to the absence of the right political will and institutional framework, more Nigerians would continue to fall below the poverty line as available data indicate.
So, was Buhari justified to have jettisoned petrol subsidy removal during his tenure?
The former president, who disclosed why he sustained the subsidy policy until he left office in response to critics who had questioned why it took Tinubu only days to end the policy whereas his ( Buhari) administration couldn’t do it in eight years, explained that if he had implemented the policy, the APC and Tinubu would have lost the last general elections.
Buhari, who spoke through his erstwhile spokesman, Garba Shehu, via a statement titled, ‘ Buhari Didn’t Fail to Remove Subsidy’, said: “We must be politically honest with ourselves. The Buhari administration in its last days could not have gone the whole way because the APC had an election to win. And that would have been the case with any political party that was seeking election for another term with a new principal at its head.” According to Shehu, successive polls indicated that the ruling party would have lost the 2023 election if the Petroleum Industry Act ( PIA), containing the petrol subsidy removal, was implemented before then.
“Poll after polls showed that the party would have been thrown out of office if the decision as envisaged by the new Petroleum Industry Act was made,” he said.
The statement had generated controversy as critics argued that the revelation raised broader questions about how the Buhari administration prioritised national interest above parochial gains.
In fact, some analysts argued that Buhari’s decision to ensure that his administration does not bear the brunt of removing subsidies was a trap set for the Tinubu presidency. Those in this line of thought alleged that the former president wanted his administration to look better than his successor’s.
A former governor of Bauchi State, Isa Yuguda, had described the delayed removal of the fuel subsidy as a clear indictment of Buhari’s lack of political will, suggesting that national interests were indeed compromised during his tenure.
“The issue of subsidy removal had been talked about so much under the previous government that it is comparable to motion without movement. It had been just a talk shop while the government lacked political will. Implementing policies, especially when vested interests and a cabal exist, can be very frustrating.
“It is similar to the issue of illegal oil bunkering and theft. It can be stopped, but the political will to do so is not there. There are so many interests involved, and that is what is leading Nigeria to where we are today. The subsidy regime should have been abolished back in 2012. Anyone who makes excuses against subsidy removal is a selfish person connected to the scammers that are harming this country,” Yuguda stated.
Socio- political organisations such as the Coalition of Northern Groups led by AbdulAzeez Suleiman also lambasted the former president over the disclosure.
The group had said the failure of the Buhari administration to announce the removal of the fuel subsidy was merely one out of the several indecisions of his administration to tackle national issues around security, the economy and reintegration.
However, with warnings that the current economic situation occasioned by the policy might only get worse, keen political observers said there is the likelihood that it would count against the efforts of the APC to win the forthcoming Edo and Ondo state governorship elections slated for September and November, and even subsequent polls.
Policy experts told The Guardian that what
Buhari feared is what is playing out in the country currently.
In an interview, a policy analyst, Mallam Baba Yusuf, asserted that political decisions that are taken based on political expediency are not new, saying that such happens even in advanced countries.
Noting that political and economic decisions should not be made just to win elections, and at the detriment of the progress of the country, Yusuf explained that how Tinubu manages the decisions made by his predecessor would determine how his ( Tinubu) administration fares.
Yusuf, who is the Group Chief Executive Officer of Global Investment and Trade Company ( GITC), said: “Basically, political decisions or economic policies that are made based on political expediency is not new with regards to this particular instance where former President Muhammadu Buhari stated that he didn’t remove petrol subsidy just to ensure that the APC wins the 2023 elections. It’s a traditional thing done by political parties everywhere in the world.
“However, what I am saying is if Buhari delayed the removal of fuel subsidy, it is just a political talk, because the process had been initiated already by him.”
The analyst faulted the Tinubu administration for pronouncing the fuel subsidy removal without proper planning and information. He argued that sometimes, taking decisions that will be injurious to the progress of a country simply to secure electoral victory backfires.
He added: “For example, in the case of APC, even though former President Buhari delayed the removal of subsidy on fuel, which I don’t believe is in favour or to support Tinubu, I think he just needed to save his own neck by simply leaving the problems for whoever takes over from him.
“As much as that is the case, my feedback from a strategic and policy point of view is that decisions should not be made based on political sentiments, but rather should be taken in the overall interest of the country. “This is because there are implications of delaying such decisions like what Buhari said he did. For instance, we saw how the former administration and former minister of aviation, Hadi Sirika, were appointing new people into offices one week or 10 days before they left office. What are the consequences of such decisions? What are the implications? You are leaving office and one week before that time, you appoint a new executive to run the MDAS. It is totally wrong. So, these things are done. But the implication is if you do this, it will have short to long term negative impacts on the overall economic well- being of your country. And whether that person likes it or not, it will still rub off on him that he did this not for Nigeria but for his political party.” To an Abuja based legal practitioner, Olaitan David, the idea of political leaders making economic decisions solely to secure electoral victory is detrimental to the wellbeing of the nation.
He said: “I sincerely believe that what the former president said was for him to be seen as someone who helped Asiwaju to power. In Africa, we should learn to understand the distinct roles and dynamics between politics and economics as that will ensure that our leaders learn to provide good governance for us by making political sacrifices.”
“I sincerely believe that what the former president said was for him to be seen as someone who helped Asiwaju to power. In Africa, we should learn to understand the distinct roles and dynamics between politics and economics as that will ensure that our leaders learn to provide good governance for us by making political sacrifices. ”