Report: Rising Oil Prices Will Have Significant Political Cost for Nigeria
As Nigeria anxiously expects oil prices to rise to a comfortable position and boost the country’s confidence to recover from the current shock, analysts have warned that such anticipated rise would instead present grave political risks to the country.
Bloomberg quoted a senior analyst at the Lagos-based SBM Intelligence, Cheta Nwanze, as saying, “Given the relationship Nigerians have with cheap fuel, rising oil prices will have a significant political cost. Buhari could use security services to put down protests that are likely to erupt.” In six decades of pumping crude, Nigeria has produced some of the continent’s best-known billionaires, while at the same time creating a deeply unequal society in which almost half its population lives in extreme poverty. For a vast majority of its 200 million people, cheaper fuel is the only benefit they see from a state that built no social-safety net for its citizens during the oil boom.
Whether the government reverses the scrapping of the subsidy will largely be determined by the severity of the fiscal crisis it is facing. The International Monetary Fund last week approved $3.4 billion in emergency funding to Nigeria, the single biggest tranche disbursed for any country so far to fight COVID-19.
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