MyWeku

In Ghana, the Chief Executive Officer of its National Petroleum Authority, Alex Mould  has stated that the effect of the rise in crude oil prices this year and the 5.7 per cent depreciation of the cedi meant a 25 per cent increase in cedi terms in the cost of procuring crude oil and petroleum products since January. Alex Mould has stated that Ghana had spent about 450 million cedis ($276 million) on fuel subsidies in 2011. The Ghana government believes that the removal of subsidies would have a positive impact on Ghana’s economy.

Nigeria’s government also gave similar reasons to its fuel subsidy removal. The Nigeria government believes that the savings from the removal of the subsidy would be spent on more productive areas of the economy, like schools, health care, transport sector and power supply.

The reasons for the contrasting reactions, I suspect revolves around the extent to which citizens of both countries trust their respective governments to make good use of the savings from subsidy removal and perhaps the management of the process itself. Whilst in Nigeria a litre of petrol jumped by 116% on the 2nd day of January 2012, a couple of days after the removal, in Ghana and elsewhere the pain and shock has been somewhat minimised.

Ghana is on course to be the fastest growing economy in the world in 2012 according to the IMF. Lack of infrastructure and public service provision of some basic necessities such as electricty even though not perfect is not as bad as they are in Nigeria. In addition, even though Ghana is not corruption free the level of corruption in Nigeria seems to be a rather big issue for Nigerians. The Nigerian government’s assertion that the savings from fuel subsidies will be used more effectively elsewhere in the economy is simply not being swallowed by Nigerians without question.

Compared to Ghana, Nigeria has depended on its oil exports for over 50 years whereas Ghana has only just started exporting oil in the last couple of years. Nigerians see oil production as an integral part of their economy and as a birth right and perhaps rightly so. Afterall petroleum products are cheap in countries such as Saudi Arabia precisely becouse their government see it as a God given gift that should first and foremost benefit the citizen of that country. Protests continue to break out over the subsidy removal as politicians take a strong stance. As stated by Nigeria’s Deputy Minority Leader Rep Suleiman Abdurahman Sumaila (ANPP, Kano) “We will use the law to stop this inhuman act. It’s another form of terrorism against Nigerians that are already impoverished. We will not fail to salvage them from this bondage and enslavement,”

 On the other hand the Nigerian government is of the view that the massive 1.2 trillion naira subsidy regime is so riddled with corruption that it no longer benefited the sections of society it was meant for.

That begs the question. Is the removal of fuel subsidy an effective or the only method the Nigerian government has at its disposal to tackle corruption? More importantly, why should Nigerians give away their birth right in the form of hundreds of million dollars in subsidy savings to a government that clearly cannot tackle corruption effectively? Will these savings simply not end up in corrupt pockets?

The reaction to subsidy removal may be mute in Ghana but that does not neccessarily mean that Nigerians are wrong to protest against what seems like another misguided effort by the International Monetary Fund (IMF) and others to shove yet another bitter pill under the throats of people who should be benefiting massively from their natural resources. If the IMF had all the answers, then surely they would have been smart enough and capable enough to stop economies in their own back yard from sliding into recession. Instead of playing games with our birth right, the Nigerian government and other African government so quick to remove subsidies should be concentrating their efforts on increasing the refinement of crude oil within their own borders and not exporting crude oil at ridiculously cheap prices only to import the same crude in petrol form at equally ridiculously high prices from the very people now putting pressure on our governments to remove fuel subsidies.

News report expressing fears of a huge hike in petrol prices prior to the removal of the fuel subsidy in Nigeria - below

Related. Humorous Photos on how Nigerians are coping with the Fuel subsidy removal.

Theo Alade (Accra, Ghana)