Nigeria subsidies removal collapses West Africa’s fuel market

Nigeria’s recent decision to remove fuel subsidies has had far-reaching consequences, resulting in the collapse of a thriving black market in West African countries.

This informal sector, which played a significant role in the region’s economy, has been disrupted as the price of smuggled petrol from Nigeria suddenly doubled.

A report by Reuters highlighted the impact of subsidy removal on black market fuel vendors and commercial drivers in Cameroon, Benin, and Togo, who heavily relied on smuggled petrol from Nigeria. As fuel supplies dwindled, long queues formed at official petrol stations where prices became competitive.

In Garoua, a town near the Nigerian border in Cameroon, the cost of a liter of petrol on the black market used to be around 300 CFA francs ($0.48), but it has now skyrocketed to a minimum of 600 CFA francs, causing dissatisfaction among customers who perceive the high prices as unjustified.

The consequences extend to commercial motorcycles, locally known as “okada,” leading to conflicts between riders barely making ends meet and customers demanding low fares regardless of the circumstances. Ousmanou Mal Djoulde, a rider in Garoua, has been forced to more than double his fares, resulting in many customers refusing to pay and his business suffering.

The black market fuel trade is so significant in the local economy that authorities often turn a blind eye or even participate in it. In Garoua, a Reuters reporter witnessed a Cameroonian customs officer refueling his motorcycle with smuggled Nigerian petrol.

Unfortunately, there is no reliable data on the volume of fuel smuggled from Nigeria. Mele Kyari, the head of the Nigerian National Petroleum Corporation, admitted that 66 million liters of petrol leave their depots daily, but he could not provide an accurate estimate of local consumption. Smuggling is known to be rampant.

Benin and Togo, neighboring countries to the west of Nigeria, have also experienced a decline in supplies and customers for contraband fuel vendors, while official petrol stations have seen a sudden surge in activity. At the Hilacondji border crossing between Togo and Benin, some black market fuel stalls have closed, leaving vendors waiting with empty containers for potential deliveries.

In the absence of improvements, some individuals have sought alternative livelihoods, such as fishing or engaging in other small businesses. The closure of informal fuel depots has left previously employed individuals without work, exacerbating the unemployment rate.

The informal sector is a crucial driver of economic activity in Africa, accounting for over 80% of employment, according to the United Nations. In Cotonou, the commercial capital of Benin, long queues have formed at official petrol stations, and some have struggled to meet the sudden surge in demand, particularly from commercial motorcyclists known as “zemidjan.”

Janvier, a worker at the JNP fuel station in Cotonou, reported that their daily sales have increased from around 2,000 liters to up to 7,000 liters. However, the heightened demand has caused supply shortages, forcing them to turn away customers.