Within one week, Mayowa Adesina watched the fuel expenses for the generator in his barbershop soar, the highest-ever jump since he entered the haircut business over 15 years ago.
“I’ve never bought fuel and paid N10,000 [$13] before. Now I buy it and it lasts for three days,” says Adeshina, a barber in Festac Town, Lagos.
On the day he assumed office as Nigeria’s 16th president on 29 May, Tinubu announced the removal of fuel subsidy, a decision that saw the price of petrol jump three-folds across the country. In Lagos, the price of one litre rose from N180 to about N500. Outside Lagos, it costs even higher.
Tinubu, who sacked the Central Bank of Nigeria governor Godwin Emefiele, also called for the unification of the country’s multiple exchange rates. While the move was widely lauded by economists, it has caused prices to skyrocket.
Several universities and other higher institutions across the country had increased their tuition by as much as 100%.
In Lagos, the state government in conjunction with the Federal Road Safety Commission said vehicle owners will now pay a new few of N1,000 for a certificate of ownership.
Last week, electricity companies informed their customers of a planned hike in their tariffs by nearly 50% in July. The plan was, however, suspended after the Nigerian government said it had not approved it.
‘Huge pressure’
Adeshina’s barbershop is a partnership with the shop owner, whom he pays N20,000 weekly, after deducting his overhead costs. To adjust to the new fuel price regime, he doubled his barbing fees, a move that angered some of his customers.
“Some of them have stopped coming,” he says. “There are others who said that instead of wasting their fuel driving to my shop, I should come render the service in their homes. Of course, they’ll pay [marginally] more.”
Unlike Adeshina, the customers of Auwal Muhammad, an egg distributor in Bauchi, Northwest Nigeria, resisted his attempt to increase the price of his goods.
Muhammad says he had to stick to his old price, which saw his profit margin per crate of egg shrink from N200 to N50. “Before the subsidy removal, I used to hire one [commercial tricycle] for N500 from my farm to the various locations in Bauchi,” says the 27-year-old. “Now it is N1,500. Sincerely speaking, this subsidy removal has affected me tremendously.”
Adeshina’s weekly intake also shrunk from N15,000 before the subsidy removal to N5,000.
The fuel price increase and exchange rates’ unification had an instant ripple effect on other sectors of the economy. Public transport fares shot up, cost of goods doubled, and prices of services also rocketed.
“It is [a] huge pressure on the people,” says Chukwuka Onyekwena, executive director of the Abuja-based Centre for the Study of the Economies of Africa.
With the Reforms so far on the ground, the working class people and the common masses are going to see that the APC govt is not for the people, but for the rich class. No govt can talk about the removing of the Subsidy, and goes on to increase the Traifs on electricity & fuel,etc
— Vincent Aja (@basicp62) June 30, 2023
“In terms of how the policy was implemented, it seems abrupt in the sense that there were no safety nets in place to cushion the effect on the low income earners who will bear the brunt,” Onyekwena adds.
Labour’s action
Days after President Tinubu announced the fuel subsidy removal, the Nigeria Labour Congress (NLC) said it will embark on a nationwide protest if the government refuses to reverse the new pump price. Joe Ajaero, the NLC leader, also called for an investigation into the “fraudulent practices in the subsidy regime”.
The labour leaders and the Nigerian government eventually reached an agreement, which will see the two groups review a proposal for wage increase, among other steps.
The Lagos residence of the Nigeria Labour Congress President, Joe Ajaero has been gutted by fire.A statement by NLC spokesman said the entire building was razed to the ground without a pin salvaged.
— Kunle Stressacchi (@KStressacchi) June 27, 2023
Last weekend, Ajaero’s home in Lagos was razed to the ground in an inferno. The Socialist Labour said it was an arson attack targeting Ajaero and “the whole labour movement over our fight to stop the anti-people attacks of this government”.
No timeframe for ‘mitigants’
Nigerian government officials did not respond to requests for comment on potential palliatives.
Phone calls and messages to Dele Alake, special adviser to the president on special duties, communications and strategy, and Wale Edun, Tinubu’s special adviser on monetary policies, were unanswered.
Calls and messages to Hadiza Bala-Usman, the president’s special adviser on policy coordination, also yielded no response.
Speaking to Nigeria’s Arise TV, Bala-Usman said the government-provided “mitigants” would come when the economic council convenes.
“Mr President has directed the national economic council, chaired by the vice president, to formulate the policies that are needed to mitigate the impact of the fuel subsidy,” Bala-Usman said.
“The council is going to brainstorm to determine what would be done, what sort of mitigants will be provided for Nigerians,” she said, without providing a timeframe.
Its exactly a month since Tinubu announced the removal of Fuel Subsidy without a gradual phased approach.
— William (@_SirWilliam_) June 29, 2023
Still no Palliatives for poor Nigerians...
If those palliatives don't come, expect major social unrest by Q1 2024, its inevitable..
Onyekwena from the Centre for the Study of the Economies of Africa says the government has not shown any clear strategy towards providing palliatives for the citizens. “When you bring out policies you need to have cushioning effects,” he says.
“Nigeria is not good at bringing out cushioning effects and if they are doing it they don’t target it well. You have to actually bring out the cushioning effects before implementing the policy. We have a poverty problem in Nigeria and this will worsen it.”
Businesses closing down
Last week, the World Bank said more four million Nigerians slid into poverty between January and May, raising the number of the poor to 93.8 million, due the high inflation rates.
An additional 7.1 million people will become poor in Africa’s most populous country if the government fails to provide palliatives to cushion the effect of the fuel subsidy removal, the Bank says.
In Bauchi, Muhammad says if the hike persists, he will be forced to stop the business he started last year after graduating from the university.
“Maybe I will search for another thing. I’d already tried [to get] a job, even attended some interviews. Unfortunately, I couldn’t get anyone,” says the sociology graduate.
In Lagos, Adeshina also says he is also considering closing his barbershop and spending more time with his family. His wife works as a teacher in a private school.
“The N5,000 I make, by the time I remove my transport fares, I’m left with nothing. If the fuel price doesn’t come down, I’ll have to stop the work.”
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