In my last note, I wrote that Nigeria’s rural economies have been disconnected massively from the urban economies. Yes, during the holidays, the traffic reduction in the rural areas was noticeable and drastic. Simply, the fuel re-pricing and the broad removal of fuel subsidies have distorted and disconnected rural Nigeria from the urban one, as many could not afford to travel during the Christmas and New Year holidays.

Understand that without logistics and supply chain, economies struggle. Our fuel subsidy removal has caused severe pains in our rural economy, and I want the leaders to pay attention.

Here are two things to consider:

1. Every country subsidizes something. Nigeria can subsidize fuel without the corruption part.  This table shows the leaders on energy subsidies; Nigeria is not even recorded because our subsidy is insignificant. Notice that China’s manufacturing policy is tethered to its smart energy subsidy playbook.

2. We must make sure the postal system is working so that the rural areas can link back to the urban areas of Nigeria: “The US postal service has not made a single profit in the last 20 years. That is a massive subsidy to improve the supply chain, across America, by making sure commerce works. But they’re smart: the money used to subsidize post office is recovered when profits of companies which depend on the postal system are taxed. Provided there is no corruption, the government has no need to turn the post office into a direct profit-making machine. Recently, the government tried to clean the books, and even after, the postal service still recorded red! That subsidy is a platform strategy as we do in startups.” Simply, a working postal service will deepen the economic ties between rural and urban Nigeria.

US Postal Service Net Income/Loss By Year

• 2021 – $9.7 billion loss (projected)
• 2020 – $9.2 billion loss
• 2019 – $8.8 billion loss
• 2018 – $3.9 billion loss
• 2017 – $2.7 billion loss
• 2016 – $5.6 billion loss
• 2015 – $5.1 billion loss
• 2014 – $5.5 billion loss
• 2013 – $5 billion loss
• 2012 – $15.9 billion loss
• 2011 – $5.1 billion loss
• 2010 – $8.5 billion loss
• 2009 – $3.8 billion loss
• 2008 – $2.8 billion loss
• 2007 – $5.1 billion loss
• 2006 – $900 million surplus
• 2005 – $1.4 billion surplus
• 2004 – $3.1 billion surplus
• 2003 – $3.9 billion surplus
• 2002 – $676 million loss
• 2001 – $1.7 billion loss

Good People, Nigeria needs strategic subsidies on energy and logistics; what should be eliminated and phased out is corruption. Imagine instead of saying “The fuel subsidy is gone”, we say “The fuel subsidy corruption is gone”. The latter would have improved every Nigerian by now.

As I have written here many times, I use many unconventional ways to pick indicators on where things are in Nigeria. To model the strength of the export of our physical goods, I ask friends to send me images of ships as they arrive and depart the harbours, from Marina Street’s highrise buildings in Lagos. Right now, most ships arrive fully loaded but depart partly loaded or empty.

Also, I do ask contacts in aviation to send me how many planes are parked at night in our major airports. Those give me indications on supply chain and the strength of economic activities. Again, the total number of operating planes in Nigeria has dropped from this time last year.

Last year, I added a new element: ask people to examine traffic in their village’s popular junctions on Christmas and New Year days. Yes, compared with last year’s traffic, were those junctions busier, etc. The consensus I am getting from most I have sampled is clear: in most parts of southern Nigeria, people did not visit home and many popular rural junctions did not experience as much traffic as last year’s. In other words, most people did not travel to rural areas during this Christmas break.  Whenever that happens, it means there is economic stress. Yes, no money to travel! (The high cost of transportation due to the removal of the fuel subsidy could also be a huge factor.)

Let me ask you: if you visited home during the holidays,  is this consistent with your observation? Did you see more people and vehicular traffic in the village? 

Good People, from Oriendu Market Junction to Ababa Imenyi Junction, in Abia State, to other junctions, traffics dropped significantly.

Nigeria cannot afford to disconnect rural Nigeria from urban Nigeria. We must make sure that the connection remains. But as it stands, it does seem like Nigeria recorded a massive economic degradation within the  last 12 months due to changes in forex policy and fuel prices.

This is not suprising: supply chain is commerce and when that is broken, everything fades. With the cost of transportation high due to fuel re-pricing, Nigeria dislocated the equlibrium.  I do not support the removal of fuel subsidy because every country on earth subsidies something; Nigeria has the capacity to fuel production with common-sense subsidy of energy. My only solution has been simple: remove the corruption in Nigeria’s fuel subsidy which makes it look bad. 

Yes, it was similar to my position on border closure where I noted that  you do not close your land borders because your Customs officers are ineffective; a better solution would have been to fire those men and women, and get new people to do their jobs.

I do hope we do not forget rural Nigeria as transportation cost can widen the “distance”, considering that the collapse of the postal service has already taken most of those rural areas out of our national economic maps.

I use many unconventional ways to pick indicators on where things are in Nigeria. To model the strength of the export of our physical goods, I ask friends to send me images of ships as they arrive and depart the harbours, from Marina Street’s highrise buildings in Lagos. Right… pic.twitter.com/V5Dfqz3Iqt

— Ndubuisi Ekekwe (@ndekekwe) January 4, 2024