More thoughts on Occupy Nigeria

A few days back, I wrote a post about the Occupy Nigeria movement. As with many of my posts, my main goal was to research the issue and get a better understanding of what was going on and what I thought about it. The post has generated a good deal of feedback, some of it quite confrontational, some skeptical, some helpful in helping me understand the situation better. I’m particularly grateful for the last two types of feedback, as I feel like I understand the situation better than when I wrote the first post.

In my first post, I argued that removing the fuel subsidy is ultimately the right thing for Nigeria to do, as it is riddled with corruption, offers massive benefits to a few companies fortunate enough to have been awarded import contracts, and dominates the government budget at the expense of critical infrastructure projects. What I hadn’t understood fully is that the protests aren’t against removal of the subsidy per se, but about a lack of trust in government. As Nicholas Ibekwe, one of the organizers of the Occupy Nigeria protests in London explains, “Most organizers of the protest believe that removal of subsidy is not a bad thing. And I share that sentiment as well. However, the removal of subsidy in Nigeria is not about economics, it is mostly about trust, corruption and timing. The Nigerian government has not given the ordinary Nigerian reason to trust it.”

Put more simply by Chude Jideonwo on YNaija, “This is good policy badly executed, not because of timing necessarily as because of trust.” In the long run, Nigeria needs to eliminate a fuel subsidy that buys imported fuel – it makes very little economic sense for a nation to produce raw petroleum, export it to countries that refine it and subsidize its reimportation. It would make much more sense for the Nigerian government to help rebuild the nation’s refineries so the oil could be processed locally.

The problem is that, as Ibekwe and Jideonwo both explain, people don’t trust the Jonathan government to repurpose the subsidy to build infrastructure. Many of the arguments against subsidy removal focus on overspending in the Nigerian government, particularly on salaries and benefits to elected officials. The assumption – not without some justification – is that any savings from the subsidy will line the pockets of politicians at the expense of ordinary Nigerians.

Based on the feedback I’ve gotten from Nigerian friends, there’s no doubt that the subsidy removal was implemented poorly. Removing the subsidy in one fell swoop may have been designed to minimize opportunities for dissent (as each step of a gradual increase might invite protest), but it maximizes harm to the ordinary Nigerians who are struggling to cope with cost increases. The removal of the subsidy during the Christmas season had the additional complication of stranding some Nigerians in their home villages without sufficient funds to pay for transport home. And, as the commentators I quote above have pointed out, the Jonathan government simply doesn’t enjoy enough popular support and trust to have implemented these changes so unilaterally.

Alex Thurston at Sahel Blog argues against two arguments he sees me making in the piece. The first argument he sees me making is that removal of the subsidy is a good thing. I don’t think that’s what my argument was, precisely – I think removing the subsidy, ultimately, is something Nigeria needs to do. But as I’ve conceded here, I agree the move was made badly, without sufficient consideration of the harms to ordinary Nigerians, and I hope it will be rolled back and implemented in a more careful, considered way.

The second argument Thurston disagrees with is my contention that a protest against the subsidy is reactionary. Here I think he and I genuinely disagree. Thurston suggests that removal of the subsidy favors the 1% over the 99%, and suggests that because the World Bank and IMF would like to see the subsidy removed, the interests of the powerful favor subsidy removal. I don’t think it’s especially fair to equate the oft-maligned IMF and World Bank with the globally rich and powerful. There are lots of smart economists – including Nigerian Finance Minister Ngozi Okonjo-Iweala, former Managing Director of the World Bank – who are looking for solutions to Nigeria’s long-term economic woes, and who see removing the subsidy as a step towards economic reform.

There’s no doubt that removal of the subsidy is hurting the 99% in the short term. But poor and middle-class Nigerians were experiencing a great deal of economic misery before removal of the subsidy. In the long term, one way or another, Nigeria needs a functioning infrastructure, a working power grid, better roads and rail, better health care and education. In the long term, some of these services need to come from the government… and the government will gain legitimacy by providing services that people want and need, beyond cheap fuel.

Thurston and the Occupy protesters seem to be arguing that the government can’t and won’t provide those services, and therefore we should focus on the short term: maintaining a large subsidy on the import of foreign petroleum products. That mistrust of government’s ability to provide any services sounds more like the Tea Party than the Occupy movement to me. I’m not saying that the protesters are wrong in their mistrust of Jonathan’s government. I am saying that a government taking steps towards modifying a budget to provide essential goods and services appears more progressive than supporting a massive subsidy.

In US terms, this argument sounds like a very typical right-wing argument: we can’t trust the bloated, lazy government to produce public goods, so we should have very low taxes and rely on the private sector for any goods and services. In practical terms, removal of a fuel subsidy is a tax increase. It’s a badly implemented tax increase and it affects people who are ill able to afford it. But the goal is a progressive one, so long as you accept the notion that Ngozi Okonjo-Iweala and Jonathan are genuinely trying to build infrastructure and help the economy recover. If you don’t trust their motives, obviously, you won’t see this move as anything other than an opportunity for more corruption.

Do I think the subsidy removal was a good idea? I think it’s an admirable goal in the long run, but was badly implemented and should be rolled back and implemented gradually in closer consultation with a variety of non-government groups. Do I support the Occupy Nigeria movement? Yes, inasmuch as I think it’s great to see organized, peaceful, popular opposition to corruption in Nigeria. But I am deeply worried that the movement is focused on rolling back a change that, in the long run, is intended to correct some of the major problems of the Nigerian economy. Do I still think the movement is reactionary? Yes, in the literal sense that protesters are trying to roll back a change made by government, and more figuratively, because the movement questions the ability of the government to create positive change for the people. I hope the movement will become a broader anti-corruption movement, which I would see as less reactionary, more progressive and more in line with global Occupy movements.

Do I expect that this post will reduce the amount of angry email I’ve recently received? Probably not. :-) As several correspondents have pointed out, passions are understandably running very high around these issues. It’s hard to both critique and support a movement, but I think the issues here are complicated enough that it’s worth trying to do both simultaneously.

Occupy Nigeria – a reactionary occupy movement?

On January 1st, Nigerian President Goodluck Jonthan put into place a reform that he and key ministers have been discussing for years: he ended a 20-year old subsidy that kept Nigeria’s petrol prices the lowest on the continent. When Nigerians went back to work on Monday, the 2nd, they discovered that not only had petrol increased from $0.40 to $0.91 a litre, but the cost of private taxis, minibuses and other forms of transit had increased in price as well.

By Tuesday, the 3rd, protesters in Lagos were blocking access to petrol stations and shutting down stretches of motorways by building and burning barricades. On the 4th, protesters in Kano shut down petrol stations and threatened to burn down a newspaper they believed was supporting the removal of the subsidy. They occupied Silver Jubilee Square in the center of the city and attempted to maintain an encampment overnight, though police responded by firing tear gas and, allegedly, working with armed gangs to clear the square through violence and intimidation. The protests are led, in part, by two powerful trade unions, National Labour Congress and Trades Union Congress, who have promised to “occupy” Nigeria until the subsidies are restored. They plan a nationwide strike, beginning January 9th.

Michael Bociurkiw, writing in the Huffington Post, notes that it wasn’t obvious that petrol price increases would trigger such widespread protests. After all, there’s lots to protest in the country. Despite being sub-Saharan Africa’s largest producer of oil, most Nigerians are quite poor, the nation’s infrastructure is shambolic, and political corruption is widespread and well-documented. A rigged election in 2007 (and controversy over a mostly-clean election in 2011) led to some heated rhetoric, but little visible protest.

But petrol prices affect every aspect of life in Nigeria. The country has no (functioning) mass transit systems, which means urban dwellers are reliant on a complex system of minibuses, taxis and motorbikes, operated as private businesses. Those businesses will be sharply affected by the petrol price increase and pass the costs on to their customers. And because Nigeria’s electrical grid and power producing stations are notoriously unreliable, most businesses use generators to power their operations. Those generators have just become at least twice as expensive to operate, which is likely to increase prices at a wide variety of businesses. Complicating matters, Nigeria is least stable in the north, where tensions between Muslim and Christian groups have erupted into violence, and where the terrorist acts of Boko Haram, an extremist organization which wants all non-Islamic education and culture banned from Nigeria, have pushed President Goodluck Jonathan to declare a state of emergency in the North. Because the north is distant from the ports where Nigeria lands imports, goods are likely to increase sharply in price in the already troubled region.

Jonathan is not the first Nigerian leader to try to remove the fuel subsidy. Two of Nigeria’s military leaders – General Ibrahim Babangida and General Sani Abacha both tried to end the expensive program, and both were forced to back down due to popular opposition.

On the one hand, it’s exciting to see a Nigerian population that’s often overwhelmed into inaction taking to the streets. Stories about Muslim and Christian protesters finding agreement over shared prayer space – and images of Nigerian Christians encircling and protecting Muslim protesters at prayer in Kano – are genuinely encouraging. And there’s no doubt that making a living was a tough prospect for ordinary Nigerians with the subsidy in place and that a tough situation will get worse without it.

That said, ultimately, I think Nigeria needs to get rid of the subsidy. It’s incredibly expensive – depending on how you account for it, it cost between $8 billion and $16 billion in 2011. Nigeria’s tax authority collected just under $18 billion in 2010, and budgets for key sectors of the Nigerian economy are substantially smaller than the cost of the subsidy: defense spending is proposed at $6 billion, education at $2.5 billion, health at $1.8 billion. And while the subsidies make life easier for ordinary Nigerians, they’re a massive boon to the few companies the government allows to import refined petroleum… and contracts to import those petroleum products are a likely source of patronage revenues for corrupt government figures.

The IMF has pressured Nigeria to remove fuel subsidies for years, and Nigerian Finance Minister Ngozi Okonjo–Iweala, an internationally celebrated economist and anti-corruption reformer has been a powerful champion of reforms, offering long briefings to the President and other leaders on the importance of the reform effort. (Rumors have circulated that she threatened to resign if the subsidy wasn’t eliminated. She refuted those rumors in classic Nigerian fashion… on Twitter.)

Ideally, the Nigerian government would use the monies freed by eliminating the subsidy to address some of the country’s chronic problems: weak road and rail infrastructure, unreliable power, run-down refining facilities. It’s possible to imagine a Nigeria where imported petroleum products were less necessary, if the country had functioning rail systems, a reliable power grid minimizing the need for generators, and refineries that could produce diesel and gasoline locally. Given the history of corruption in the Nigerian government, it’s not hard to understand why many Nigerians are skeptical that the monies released from the subsidy will go anywhere other than in politicians’ pockets. As the BBC observes, many Nigerians feel like the fuel subsidy is the only government service they actually see.

If you want to understand opposition to removal of the subsidy, an oddly partisan view can be found on the Occupy Nigeria wikipedia page, which is quite far from NPOV, but a very interesting read nevertheless. Statements from Central Bank of Nigeria Governor Lamido Sanusi make the case for subsidy removal in a piece on Bloomberg News. His basic argument: Nigeria needs to borrow a lot of money to build infrastructure, and responsible lenders won’t give the country money as long as it keeps doing boneheaded stuff like subsidizing oil consumption instead of building infrastructure.

Even though I think Nigeria needs to end the subsidy, I would be surprised if Jonathan can sustain these changes in the face of a sustained strike. There’s tension already over the idea that this isn’t Jonathan’s “turn” at the presidency – there’s a popular notion that Nigeria’s presidency should rotate between northern Muslims and southern Christians. The previous president, the Muslim northerner Yar’Adua died in office, and Jonathan finished his term. Some believe that, by this rule of thumb, the 2011 president should have been a northerner… Some northern activists and some labor activists have made threats that they will make Nigeria “ungovernable” during a Jonathan administration. It’s not hard to see how protests over fuel could make Nigeria vastly harder to govern.

I’m interested to see Nigerian take on some of the rhetoric and tactics of the Occupy movement, including the occupation of a public square in Kano. I’ll be intrigued to see whether any of the global energy over Occupy goes to support the Nigerian protesters. The irony, I fear, is that while the global occupy movement seeks to equalize income disparities and fight government corruption, the Nigerian movement is currently pursuing radical and important reforms, and the Occupy Nigeria protesters are fighting against that change. Read one way, Occupy Nigeria is a conservative movement fighting to keep a dysfunctional status quo in place, which seems at odds with other branches of the movement.

Nollywood: Is Better Distribution the Remedy for Piracy?

While my colleagues at Berkman are very good about scheduling many of the Center’s most exciting events on Tuesdays – the day I leave western MA for the wonders of Cambridge – there are lots of events too good to miss the other six days of the week that I attend virtually. In Berkman parlance, we refer to people who call into meeting as being “in the ceiling”, which reflects both where the speakers are for our conference call setup in our conference room, and makes vague allusions to the Ceiling Cat phenomenon, as an overamplified remote participant can sound like the voice of God.

I was “in the ceiling” for a lunch conversation at Berkman this past Friday about the future of the Nigerian film industry. This means that, while I know the conversation included luminaries like Ronaldo Lemos of the Center for Technology and Society at FGV Law School in Rio, business strategist Dayo Ogunyemi, filmmaker Robb Moss, film critic Shaibu Husseini, World Bank economic expert Chioma Nwagboso and Berkman’s own Yochai Benkler, I basically have no idea who said what. So rather than giving my usual blow by blow, I’ll offer my takeaways from the conversation.

Colin Maclay (who hosted this conversation), Mike Best and I met with a number of Nollywood luminaries in Lagos a few months back and got an introduction to the concerns and anxieties of the world’s second largest film industry (in terms of films produced annually, not in revenue terms.) On that trip, we learned that Nollywood’s financial structure is utterly different from that of India’s film industry. Nigerian films make virtually all their money from single-copy sales, rather than from licensing, foreign rights or theatrical screening. As a result, piracy can have a much sharper impact than in other markets. In India, some scholars refer to piracy as “a marketing expense”, as the sale of pirated films may encourage other viewers to go see the films in theatres. It’s harder to make this case in Nigeria, where over 90% of revenue comes from the actual sale of DVDs and VCDs and there’s virtually no revenue from screenings.

In our discussions at Berkman, a core idea emerged – piracy is a response to poor distribution networks. One of our participants explained that capital is so scarce within the Nigerian film industry that distributors usually produce 50,000 copies of a film in a first run – all they can afford – and hope to issue a second run using revenues from the first run. But the audience for Nollywood films is massive: one participant tells us that the least successful films sell 30,000 copies. So when a film is a hit, it’s quickly pirated. The pirate copies aren’t necessarily cheaper than the legitimate copies – often, they sell at a similar price and they’re chosen simply because they are the only copies available.

Filmmakers know they’re going to need to recover costs by selling the first 50,000 copies. As a result, some are releasing their films in two, three or four parts, hoping to sell an initial 50,000 copies of each. A few days after the film has been released, the film is likely to start appearing either as a pirated copy, or as part of a compilation. Compilations, one of our participants told us, are generally produced in China and can include up to 100 low-quality films on a DVD.

For whatever underlying reasons, the Yoruba-language film world – where the average film sells 50-100,000 copies – seems to have better distribution systems. Original films are produced in larger runs and often meet market demand before unauthorized copies enter the market. This may be a function of the fact that the Yoruba-language film industry preceded the English/pidgin market and has had more time to work through financing and distribution issues.

Filmmakers continue to look for a technical fix to their problems – there’s some enthusiasm for a copy protection solution from an Indian company (possibly Aft-India), though skepticism that any scheme can remain unbroken for long. (“The Figurine“, an extremely high-quality and much discussed film, hasn’t yet been released on DVD – one of our participants tells us the film will be copy protected before release.)

The real answer may be improving film financing, so that filmmakers are able to raise money by selling equity in their films, enabling them to invest in larger distribution runs. Financing might also help filmmakers pay the fees to the censorship board, which reviews all films before release. (Ghana, by contrast, has had very little film censorship. Perhaps in response to this, Ghanaian films have been pushing the boundaries, showing nudity, sexual situations and producing some films that are probably best characterized as soft porn. Ghana’s ministry of information has announced a new censorship board – it will be interesting to see whether this board quashes this new trend in Gollywood cinema.)

While people in our group expressed concern about distribution, no one seems especially worried about Nigeria’s ability to churn out appealing and crowd-pleasing films, and for those films to compete with Hollywood. One of our discussants noted that the James Bond film Quantum of Solace grossed $280,000 in theatrical release in Nigeria, and that many top Nigerian films gross above $200,000. Those numbers sound small, but they reflect the fact that there are five official cinemas in a country of over 130 million people. If Nigeria had the cinema infrastructure of a country like India, some speculate, we’d see a shift in the economics of Nollywood. We might see the emergence of a model like that used for music in Jamaica, where musicians are shifting from trying to sell records to trying to sell concert tickets. Films like The Figurine launch with “yellow carpet” premieres and expensive ticket prices – those who attend on opening night are paying a premium for the experience and the exclusivity.

Not all these big-budget films are artistic successes. “Kajola” was billed as Nollywood’s first great sci-fi flick. It had a production budget nearing a million dollars – huge by Nollywood standards, where “big films” are usually made for less than $100,000. Set in a totalitarian future Nigeria of 2059, the film uses a combination of live action and computer graphics… and turns out something that looks a lot like a bad video game. (The reviews I’ve read inevitably conclude with the reviewer walking out of the film.)

On the other hand, films that are predictable and fairly low-tech are sometimes going viral. Yoruba comedy Jenifa tells the story of a country girl come to Lagos to go to college… and laughed at for her backwards ways. So she recreates herself as a new woman, “Jenifa”, and shows up her mates up. One of our panelists suggested that this film was the first in Nigeria to be promoted successfully online, where stills, quotes and reviews circulated widely amongst the ~ 2 million Nigerian Facebook users. (You can watch Jenifa on YouTube, though it’s an unauthorized copy. It’s subtitled, which is good for us non-Yoruba speakers out there. This points to a long-term challenge for the industry – filmmakers would like to make money from audiences in the diaspora, which is hard to do, as many movies get chopped into ten minute chunks and posted on YouTube. This tends not to affect the domestic market, because connectivity in Nigeria is so expensive, it would be insane to try to watch this film online in West Africa rather than buying a legit or pirated copy.)

The best market for Nigerian culture may be outside Nigeria, the problems of YouTube distribution aside. One discussant tells us about Nigerian hiphop group P-Square recently sold several million copies of their latest album. A distributor purchased and sent six million copies to the East African market. Not only has the record succeeded, it has allowed the group to demand $100,000 – $150,000 for live performances. Perhaps, some of our group speculated, this is the future for Nigerian cinema – live screenings of new films across the continent and film stars demanding appearance fees similar to those of hiphop stars.

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