Good luck Jonathan (You'll need it)

His election ignited hopes that Africa's most populous country might be changing direction. Yet nearly a year on, Nigeria appears closer to civil war than a new economic dawn, says Daniel Howden

There were some unlikely guest speakers at Nigerian President Goodluck Jonathan's Independence Day ceremony last year. Among the assorted ministers, governors, generals and praise singers for the recently elected leader were Michela Wrong and Richard Dowden, two writers both renowned as stern critics of dysfunctional government in Africa's giant.

They were as surprised as the rest of the hall that Westerners had been invited to lecture Nigeria's elite on their assorted failures. And neither of them was short of material.

Mr Dowden, the director of the Royal Africa Society, reminded the audience that oil had been a curse to Nigeria since its discovery in the 1950s, comparing the country's relationship with crude to that of King Midas' with gold. Ms Wrong, in her own words, "castigated" the hall over endemic corruption.

When they had finished a government official predictably dismissed the pair for their "distorted view" of Nigeria and turned to her boss expecting him to concur. But he didn't. "She was then mildly ticked off by Jonathan," says Ms Wrong, before the academic-turned-politician delivered a "rambling, unscripted speech, also chided the rest of the dignitaries for not putting more testing questions or staging a real debate on national issues, confining themselves, instead, to singing his praises."

This was the Goodluck Jonathan who ignited hopes that Africa's most populous country might be changing direction after he won a flawed but improved election. Those, who like author Ms Wrong, met the president for the first time at the "Nigeria in Transformation" celebration last September found someone "extremely approachable, who clearly finds ceremony and protocol wearisome and comes across as a learned and amiable university professor rather than a head of state".

The appointment of an economics team that included World Bank luminary Ngozi Okonjo-Iweala and respected banking reformer Sanusi Lamido Aminu Sanusi spurred hopes that sub-Saharan Africa's largest oil producer and the continent's second biggest economy might be about to make good on its vast potential.

And yet four months on Nigeria appears closer to civil war than an economic breakthrough. Boko Haram – the northern Islamist insurgency bent on imposing Sharia law across the country – has taken its death toll to 935 in the past two years, according to Human Rights Watch.Its most recent attacks in the northern city of Kano last Friday were the group's largest yet, claiming at least 186 lives.

As Nigeria's regional and religious faultlines are ripped open, the government seems impotent and respected voices such as Nobel laureate and political activist Wole Soyinka have publicly stated that "Nigeria is at war" and that the Somalia scenario of complete statal collapse is possible.

Mr Soyinka looks beyond the important economic factors that have nurtured extremism in the country's majority Muslim north such as unemployment, misgovernment, wasted resources, marginalisation and cor- ruption, to attack the politicians who have long appeased fanatics to stay in power. Powerful northern governors, he argues, have curried favour with a murderous sect for their own political gain and turned a local rebellion into a threat to the nation. The presidency has in turn appeased the governors in order to retain their support. "How many of the hundreds of cases of impunity need one cite, with their corresponding gestures of appeasement? Where does one begin?" he asks.

Adding to the impression of a nation under siege has been a wave of mass strikes since the new year in response to the removal of fuel subsidies, which might seem innocuous to outsiders but for many Nigerians represented the withdrawal of the only government benefit they received.

Nigeria's near total reliance on oil has meant governments don't need to manage the broader economy to bring in revenue and power has been held by a rent-seeking elite for whom gaining office and staying there is the objective.

Nigeria, like many of its dysfunctional counterparts such as Gadaffi's Libya, Mubarak's Egypt and Bashir's Sudan, used price controls on fuel or food to dampen public unrest at the absence of economic progress. The irony of Africa's leading oil producer having to import nearly all of its fuel is lost on nobody in the country itself.

While Nigerians got cheap fuel, a cabal of politically-connected fuel importers looted the subsidy system of billions of dollars of public money, the Nigerian Senate concluded recently.

The argument for the withdrawal of the subsidy, which cost the government of $7.67bn last year was clear and has been backed by development economists such as Paul Collier at Oxford's Centre for the Study of African Economies. He argues that the subsidies represent a cash transfer from Nigeria's overwhelming poor majority to its wealthier consumers and fuel profiteers, and that the money would be better spent on social programmes.

Professor Collier compared the mass of fuel protesters to the US Tea Party movement, saying they had been duped by the profiteers into rallying against their own economic interests.

Whatever the motives, there's little doubt that the removal of the subsidy was mishandled. The announcement caught people by surprise and petrol doubled in price on New Year's Day with a devastating effect on inflation and the poor. The Senate report on the cabal of fuel importers which named names – several of them very close to President Jonathan – led to no action. Those who demanded an account of how much had been stolen and asked where the savings from previous decisions to remove subsidies from diesel and kerosene had gone were ignored.

With oil workers set to join the strike the government crumpled and reinstated half the subsidy at a cost of $4bn.

In both crises, the President has been accused of dithering. After Boko Haram blew people up in their churches on Christmas Day he took a week to visit the scene. On the fuel issue, he appeared to hide from public view before performing a U-turn and buying off opposition to the reform. Those in the West who hailed Mr Jonathan as a reformer now deride him as "indecisive", saying he takes weeks over minor matters.

The Christian whose rise to power from the restive oil-producing Niger Delta was credited with soothing tensions there now finds himself under attack from all sides. The concessions this month to the fuel protesters echoed the flawed amnesty for Niger Delta rebels that saw militant leaders bought off with state contracts.

Soni Daniel, a Nigerian political commentator, is among those who believe that Mr Jonathan is losing the groundswell of good will that he had: "The removal of the subsidies was a calculated deceit. What is the assurance that they will use the money for the benefit of the common man?"

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