Nigeria facing historical crisis: The fuel price hike and the Buhari regime

Ships are presently sitting outside Nigerian ports with two and half million tonnes of refined fuel but are not unloading their cargo because local buyers cannot access enough dollars to pay for the importation. Planes are not taking off from airports in Nigeria due to lack of aviation fuel. Police have been stationed at petrol stations. The country is facing the most serious crisis in its history.

A turning point in the course of the class struggle in Nigeria was the January 2012 uprising triggered by the fuel price hike by the then Jonathan-led PDP administration. That movement fundamentally changed the balance of interclass and intra-class forces in the country. That movement accelerated the process of discrediting the then dominant bourgeois party, the PDP, and sowed the seeds of the latter's implosion and split, and its eventual massive defeat in the 2015 polls.

Part of this process was the rise of the APC built around the personality of the current president Muhammadu Buhari. As we explained then, the APC/Buhari deceit was a project of the more far-sighted sections of the Nigerian bourgeoisie advised by their imperialist masters aimed at derailing the impending revolutionary upheaval. We correctly referred to the embracing of the APC/Buhari deceit by some (even advanced) layers of youth and workers as an illusion. We correctly maintained that the APC represented the same class interest as the PDP and that only a fundamental restructuring of the country on a socialist basis could get the country out of the crisis.

One year after Buhari won the elections the economic crisis has gotten worse, as evidenced by the deepening foreign exchange crisis, the downward spiral of the value of the Naira, fuel scarcity, electricity blackouts, rising unemployment, spiralling inflation and non-payment of workers’ salaries. Despite Buhari's repeated promises to serve the masses, we maintained that capitalism has its own laws and logic and that even Buhari would have to surrender to the market forces which dictate austerity and privatizations, as the logical way out of the crisis on a capitalist basis.

So just when life had already become tough enough for the impoverished majority, the Buhari regime decided to increase the fuel price by almost 67%, that is, increasing the pump price from N86.50 to N145. He further urged any Nigerian entity that wishes to import fuel to feel free to import the product on the basis of FOREX (foreign exchange) procurement from secondary sources (i.e. the black market). This comes after a period of fuel shortages throughout the country.

As Bloomberg in their April article explained, “The most severe fuel scarcity in a year in Africa’s most populous nation has left motorists paying more than double the government’s official price for gasoline and put increasing pressure on a stagnating economy that’s been hit by tumbling oil prices. The national statistics office blames the shortages, which have been on and off since May and have peaked in the last month, for contributing to an 8 percent drop in labor productivity in the fourth quarter.”

After the government announcement to allow the huge hike in the price of fuel, there was a massive rush by marketers to procure the required FOREX. This has led to the value of the Naira crashing to N370 to a dollar. This comes on top of the previous steep fall back in January when it hit to a 43-year low at N305 per dollar, from its previous N287, which means that in just four months the currency has lost almost 25% of its previous value. At one moment in February it had even reached N400 per dollar in February in the parallel markets, an indication of how much worse it can get in the coming period.

Collapse of the Naira and spiralling inflation

This explains the constantly rising rate of inflation, with each successive month of this year seeing a higher rate, now having gone over the 13% mark, and it continues to rise. With further falls in the exchange rate, more and more Naira are needed to buy the same quantity of imported goods. This is making life intolerable for the already suffering Nigerian masses.

Rising inflation has also forced the Central Bank of Nigeria to raise the interest rate to 12%, and the pressure will increase to raise it further, as they try to defend the value of the Naira. This worsens an already bad economic situation. The Nigerian economy grew at its slowest rate for 15 years in 2015, at less than 3%, and is expected to slow even further this year.

The sharply decelerating economy has also had an impact on the prices of shares. This year opened with a significant fall in the stock market which saw, in just eight days back in January, N1.22 trillion [around 4 billion dollars] wiped off the value of stocks, with an overall annual loss of 12.36 per cent in market capitalisation. This indicates the real mood of investors in relation to the Nigerian economy!

With the collapse in the prices of oil, Nigeria’s foreign reserves have been falling, and the government, in order to hold on to its declining FOREX reserves, decided to remove what little was left of the “oil subsidy”. Contrary to what the apologists of the regime have been saying – that the increment in the pump price of fuel was as a result of the removal of the subsidy on fuel – the truth is that in order for the government to be able to save enough money to cushion the effect of the subsidy removal, they argued that the government could no longer continue to subsidise fuel because there are a lot of fictitious companies on the list purportedly importing fuel and collecting the subsidy money for fuel that is actually never imported. Hence, the real reason for the so called subsidy removal. In fact by raising the price cap for petrol by 67%, the Federal Government has officially allowed the oil marketers to seek dollars on the black market to pay for the oil so it can be unloaded from the ships and it has also decreed that any Nigerian company can now import fuel.

The Vice-president, however, in a press statement has maintained that the new pump price of fuel is not due to the subsidy removal as there is not much subsidy to remove, but it is due to foreign exchange shortages in the face of dwindling earnings. In other words, the marketers are enjoined to get the FOREX from alternative sources while the government also helps them to increase the pump price to the detriment of the mass majority of already impoverished Nigerians.

No dollars to pay for fuel importation

Today’s Punch article, Dollar shortage stalls fuel imports, highlights the dramatic situation,

“Another fuel crisis looks set to rock the country as some vessels are stuck off Nigeria, unable to unload their cargoes of petrol and diesel.
“At least 75 ships with two and a half million tonnes of fuel are waiting for importers in the country to find the dollars they need to pay for the cargoes, according to ship tracking data and fuel traders.
“Some of the vessels arrived a month ago and their frustrated owners have almost given up hope and started to offer their fuel to buyers outside Nigeria, several traders told Reuters.
“Our correspondents on Sunday gathered that a number of marketers who were given petrol import allocations for the second quarter of the year had not been able to source foreign exchange for importation.”

As we write, the situation is becoming dramatic. Planes are stuck at the Murtala Mohammed International airport in Lagos due to lack of aviation fuel, leaving many passengers stranded. This is affecting mainly domestic flights, but is also beginning to impact on some international flights.

We have consistently maintained that there is no real subsidy on fuel, and that the government has over the years been simply subsidising fraud, i.e. simply handing over money to Nigerian businessmen who were claiming the subsidy, but not actually importing anything. This was strikingly confirmed by the report of the Farouk Lawan Committee of inquiry, which was set up by the then Jonathan regime to investigate the fraud involved in the subsidy. The inquiry found that the fraud had cost Nigeria the staggering amount of $6.8 billion. Ironically, Farouk Lawan, the MP who headed that committee was himself later charged with corruption, for having accepted a bribe of $500,000 from one oil marketer to have himself removed from the Committee’s investigations! Here we have a case of the corrupt investigating the corrupt! Not much can come of such investigations.

In fact, many companies owned by notable Nigerian bourgeois were indicted in the report, people like Femi Otedola (Forte Oil), Wale Tinubu (Oando), Mike Adenuga (Conoil) among others, but these people were never prosecuted by the regime. In fact, they are still on the list of major marketers that import fuel today. They could not be prosecuted up till now simply because they belong to the class of the rich and both the previous and the present governments were and are there to protect the interests of the rich.

Despite the fact that Nigeria is the 6th largest producer of crude oil in the world, none of the four refineries is working. Nigeria continues to import 100 percent of the refined product for local consumption. Before now, the government used to import 50 percent of the refined fuel, while private individuals (major marketers) imported the remaining 50 percent with the FOREX provided by the government.

In total agreement with the slogan that “Government has no business in doing business”, these private individuals will now import 100 percent of the refined fuel needs of the country with the Forex sourced from alternative sources. This is a striking confirmation that under capitalism, whether the APC or PDP is in government, the fundamental policy of attacking the living conditions of the masses remains the same.

This is the same regime that is finding it extremely difficult to pay workers’ salaries. Twenty-seven states out of thirty-six of the federation owe salaries. Some states owe as much as six months’ salary and yet we are told that the increment of 45percent in the electricity bill is a bitter pill Nigerians must swallow, despite the fact that electricity generation has not improved.

Anger of the people

Nigerians are very angry and frustrated and they are desperately looking for a way out. The vast majority of the working and poor masses are unwilling to pay for a crisis that is not of their making in 2016, in the same way as in 2012, if not even more because inflation and unemployment are much worse now than then.

Marxists express this anger of the oppressed. But then there is now a layer of youth activists and intellectuals who were against the non-existent fuel subsidy removal in 2012 but are now support the same policy because of the reason espoused above. This has been wrongly tagged hypocrisy, but that is an explanation that explains nothing. This vacillation is in fact a manifestation of the triumph of bourgeois ideology on the consciousness of such youth activists, i.e. it reflects the illusions among this layer that somehow the Buhari regime is different. More importantly, it further underlines the fact that a consistent opposition to bourgeois oppression and pursuing the interests of the vast majority of the oppressed can only be waged from a Marxist perspective.

And it is no accident that if one has limited oneself to the confines of capitalism, the only logical option under the current circumstances is a fuel price hike and similar attacks on the living conditions of the poor masses. The Buhari regime mentions the massive corruption in the subsidy regime and the dwindling foreign reserves needed for imports of the refined products.

We absolutely agree that tough choices have to be made and a price has to be paid. The question is: what tough choices and what price? Under capitalism, a system that functions on the basis of making a profit for the few, the logical option is to make the impoverished majority to pay for a crisis they are not responsible for. The other option is to get the fat cats responsible for the crisis in the first place to pay for it, but this would require the socialist transformation of the country. The struggle against the fuel price hike is now concretely a struggle for socialism. This, not hypocrisy or any other accidental personal weakness, explains why we lost some youth activists to the enemy class.

For many commentators, this decision by Buhari appears as political suicide. They wonder: why would Buhari hike the fuel price just when inflation and unemployment are at their peak? The reason is that under capitalism the way out of the current crisis is to ask the workers and poor to pay, i.e. to squeeze more out of the workers in order to increase profits for the capitalists. We have repeatedly asserted that the clash between Labour and Capital is inevitable even under Buhari. It is the reality of a class society.

As we write, the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have vowed to shut down the country if the pump price is not returned to N86.50 before Wednesday 18th of May. It is not impossible that the regime, being demagogic in its approach, may do everything to prevent the strike, coupled with lack of enthusiasm from the leadership of Labour to conclusively fight this to finish.

A turning point in the class struggle

However, this is a remarkable turning point in the class struggle in Nigeria. The regime cannot come out of this battle strengthened, but will come out much weaker and bruised, because it is up against the working class and youth that had already tested their power in January 2012 and are not yet defeated. In 2012 the workers and youth of Nigeria got a taste of their own power. They became aware of the fact that when the millions of workers and poor move, they have a power which has the potential to change society.

The problem back in 2012 was that the workers did not have their own party. That explains why when Jonathan lost popular support the political vacuum was filled by Buhari. He presented himself as “Mr Clean”, presenting himself as a crusader against corruption. The bourgeois media also hyped him as a man with a frugal lifestyle, a man who understood the people. After years of PDP regime, and with no other alternative in sight, Buhari was able to ride the tide of popular discontent and come into government.

However, the point about corruption is that it is endemic to a system based on class differences, of the vast majority of poor and a handful of rich. In these conditions, the few who make it to the top use their positions to enrich themselves at the expense of the vast majority that remains at the bottom. Capitalism is about making a profit on the backs of the workers. It is the labour of the working people that makes the capitalists rich, that produces their profits. It is inconceivable to have capitalism without corruption. Corruption exists to one degree or another in all capitalist countries.

The need for an independent party of the workers

As there was no mass party explaining this to the masses, then the solution seemed to be to replace the old corrupt regime of Jonathan with a corruption-fighting Buhari. But that was a mere illusion. That illusion is now dissipating among the wider layers of working people in Nigeria, but an independent party of the workers and poor is still missing in the equation.

The leaders of the major trade unions, both the NLC and TUC, also have not offered an answer to the crisis of the system. They try to work within the system, which means after they are forced to organise major mobilisations, they leave politics to the “politicians”. In this they abdicate their responsibility as mass leaders to organise the political alternative that is required.

The fact remains that the need for a mass-based working class party resting on the trade unions, with a Socialist programme, has never been as urgent and necessary as it is today. Just as the PDP eventually imploded, the APC is also inevitably going down the same road. The question is what will replace it when it finally collapses? Under capitalism, the ruling elites will do anything to remain in power, including raising the ethnic card, pitting Nigerian poor against Nigerian poor.

We must not allow this to happen! It is not an unavoidable disaster for us. But we must be ready with our alternative political platform. Nigeria is potentially a very rich country with huge resources, both human and material, but the lifeblood of the country is sucked out of it by the local rich and their imperialist masters. To put an end to this, what is required is the expropriation of the oil industry, of the banks, of the local industries and for these to be placed under the control and management of those who actually produce the wealth, the workers.

Unless we adopt such a programme, then power will remain in the hands of the present owners of the means of production who will continue to use this to their own benefit. The option standing before us is either socialism or barbarism, either the working people takes its destiny into its own hands, or the present elite drag the country down into the pit of hell.

Join us

If you want more information about joining the RCI, fill in this form. We will get back to you as soon as possible.