Royal Dutch Shell Plc  .com Rotating Header Image

The Wall Street Journal: Nigeria on Strike

June 22, 2007

Nigeria’s President Umar Yar’Adua came into office on May 29 after a sham ballot a month earlier. Africa’s most populous and oil-rich country isn’t easy to govern in the best of times, but the new President is fast learning that it’s near impossible without political legitimacy.

The immediate crisis is a nationwide strike, which is paralyzing Nigeria and raising further questions about its reliability as a petroleum supplier. The outcome will help determine if Mr. Yar’Adua can govern the country.

Two weeks ago the Nigeria Labour Congress promised to strike unless fuel-price increases, a new VAT and the sale of two refineries to a political ally of former President Olusegun Obasanjo were not reversed. The federation of labor unions was also hankering for a 15% increase in civil service salaries, approved in January but never put into practice. On Wednesday, the NLC’s five million members went on strike. Now into its third day, the strike has emptied the streets and businesses of Nigeria’s cities and towns.

Politicians have given Nigerians little to cheer about. Since independence in 1960, they have robbed the country of billions of petrodollars, leaving the average Nigerian worse off than before the oil boom began in the 1970s. Mr. Obasanjo made progress in improving governance and eventually abided by a Senate decision that he should step down after two terms.

But the Obasanjo government had only limited success in reducing corruption and strengthening democracy. Thirty-one of the 36 state governors are being investigated for corruption. At least someone’s investigating, say optimists. But the spring presidential elections were the bigger disappointment. Meant to seal Nigeria’s first peaceful transfer of civilian power, the poll was so rife with irregularities and outright fraud that many observers called for a redo. None came.

The strike reflects the frustration of many Nigerians with their rulers and in particular former President Obasanjo, who handpicked Mr. Yar’Adua, a former state governor. The unions say the oil-price hikes were hastily pushed through in the last few days of Mr. Obasanjo’s term without being approved by the appropriate state agency. Since many Nigerians consider cheap fuel to be the only benefit they reap from their country’s oil wealth, losing it and the two refineries to Obasanjo cronies didn’t go down well.

To survive, Mr. Yar’Adua will have to break with the recent past. He tried to convince the unions that he is a new man by distancing himself from his predecessor’s policy. He offered to reduce Mr. Obasanjo’s fuel-price hikes by half, eliminate the VAT altogether, and come through with a 15% salary increase for civil service workers. The unions said it wasn’t enough.

The bigger test for the new President will be to make real progress on corruption. Mr. Obasanjo got the ball rolling, setting up the Economic and Financial Crimes Commission in 2004. Mr. Yar’Adua can keep up the pressure by allocating more resources to investigations and trials and not shying away from politically sensitive cases. He could also let the judiciary, which remains miraculously independent, go forward with challenges to the outcome of several gubernatorial races, even though his party will probably lose in some cases.

If this week’s strike goes on for more than a few days, oil supplies could be affected. Oil majors are already on alert in the volatile oil-producing Niger River Delta, and this week Shell, the oldest and largest stakeholder in Nigeria, said it would cut back operations and rethink its strategy.

The root of the Nigerian disease is weak institutions and shoddy governance. After dealing with the immediate crisis, Mr. Yar’Adua’s job will only get harder.

royaldutchshellplc.com and its also non-profit sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “The Wall Street Journal: Nigeria on Strike”

Leave a Comment

%d bloggers like this: