The week ahead – Investors will question Nigeria’s intent

5th August 2016

Yesterday, the Central Bank of Nigeria instructed banks that pilgrims travelling to Mecca are entitled to a maximum of US$1,000 as PTA at an discounted exchange rate of ₦197 to a dollar as opposed to the interbank rate of ₦318, and the parallel market rate of ₦402 per dollar. The practice of subsidising pilgrimages for both Muslims and Christians is long standing. In October last year, when the exchange rate was yet to be floated and the official CBN rate was ₦199 to a dollar, Christian pilgrims got discounted dollars for ₦160 to a dollar.

The Transnational Corporation of Nigeria has suspended plans to build one of Nigeria’s biggest power plants as gas shortages make it difficult to obtain fuel and a recession hinders efforts at raising funds for the flagship project. The company had announced in 2014 that it would raise $1 billion to build a 1,000-megawatt gas-fired facility. This followed a 2012 purchase of the Ughelli plant in Delta State from the government whose capacity it more than doubled its output to 700 megawatts. Since then, militant attacks on pipelines by have cut natural gas supplies. Also, a shortage of US dollars, blamed on the 15-month currency peg which was only lifted on June 20 has raised import prices and inflation, with the economy contracting for the first time since the 1990s.

The Federal Government has resumed cash payments to militants in the Niger Delta. Media consultant to the Presidential Amnesty Office, Owei Lakemfa, said the Central Bank of Nigeria would directly pay into the bank accounts of beneficiaries. The Amnesty Programme’s media office, initially said the payments, which include tuition for those studying abroad, had been made on Monday, but militants through protests have said that they had yet to receive the money. Under the amnesty deal, each militant is entitled to ₦65,000 a month and job training. The government stopped the payments in February, resulting in the militants accusing it of breaching a deal negotiated in 2009. But the government had said it was looking into aspects of the programme to see where it could be revisited. Local militants in the Niger Delta including the Niger Delta Avengers have claimed several attacks on critical oil and gas facilities in the area, especially since the beginning of this year, with the federal government accusing them of sabotaging the national economy. The latest move is therefore seen as an attempt to curb the attacks which have severely affected oil production.

The Islamic State has installed a new leadership for Boko Haram, its West African branch., In his first interview with Al-Naba magazine since his appointment as governor of West Africa, Sheikh Abu Musab al-Barnawi talks about the history of jihad in the region and crucially, did not acknowledge the movement’s leader Abubakar Shekau, except for a mention of Boko Haram’s pledge of allegiance to IS in March 2015. Speculation over the fate of Shekau and his alleged disappearance has been rife in recent months. He last appeared in a video posted on YouTube in March, and has not been seen since then, suggesting, according to reports that he have been dead, though in that particular video, he was devoid of his usual confidence talk and defiant bluster, and rejected the rumours of his death but indicated that his time as chief of the jihadist group may be coming to an end. An audio is in circulation of Shekau denouncing the new leadership and it appears there is a visible rift in the top echelon of Boko Haram.

The Judicial Commission of Inquiry set up by the Kaduna state government to investigate the December 12-14 incident between Nigerian Army and the leader of the Islamic Movement in Nigeria (IMN), has declared that the leader of the Islamic group, Sheikh Ibraheem El-Zakzaky, is responsible for the acts of lawlessness by his members and should be investigated and prosecuted. The 13 member panel headed by Justice Mohammed Garba Lawal in its report said Zakzaky and his members are to be held responsible for the bloody incident which led to the death of 347 people. According to the report, Members of the IMN owe absolute loyalty to Sheikh Ibraheem El-Zakzaky. He therefore bears responsibility for all the acts of lawlessness committed by the organisation and should therefore be held responsible, fully investigated and prosecuted. The report also accused the Nigerian Army of the disproportionate use of force contrary to its Rules of Engagement. The panel recommended that soldiers who were involved in the killings should be prosecuted.

The detained leader of the Indigenous People of Biafra, Nnamdi Kanu has said that the IPOB is not in the “business of betrayal,” and he would die than to renounce Biafra and abandon the struggle for its restoration. The comments were made in a press statement signed by its spokespersons, Emma Nmezu and Dr. Clifford Iroanya, who were reacting to reports credited to the Movement for the Emancipation of the Niger Delta that negotiations with the federal government to secure Kanu’s release were contingent on his renunciation of Biafra, the IPOB saying that Biafra’s restoration is not subject to negotiation.


  • The CBN’s circular, represents a huge discount of well over 100% to the intending pilgrim. Last week, a Federal Government statement granted a 65% tax waiver to Christians going on pilgrimage. These in a period when citizens, businesses and even the government struggle to find dollars to meet legitimate personal and business needs. The signal is clear – patronage of religion is more important to the Nigerian government than business and even the government itself functioning. It is counter-productive that we say we have floated the naira and yet religious sections of society get subsidised dollars which will cost the Nigerian state ₦7.6 billion in tax payers’ money. This is particularly so when we are struggling with a recession and desperately need to turn the economy around. This comes in spite of repeated promises by the government to end sponsorship of religious pilgrimages. Those whose FDI and FPI we desperately need to flow in will take note and make adjustments accordingly. The government needs to show more seriousness about steadying the ship of state and in allocating resources that are scarce almost to a point of desperation.
  • Regarding Transcorp’s troubles, this government has shown a unique under-appreciation of the concept of market forces. For all of its pretensions about being committed to addressing the seemingly unsolvable problem of providing power to millions of Nigerians, its actions seem to suggest the opposite. We call on government to discard the concept of economic nationalism. The power sector must be fully deregulated so that the forces of demand and supply will sort the winners from the losers. The long term benefits for power generation, transmission and consumption far outweigh the short term squeeze deregulation will undoubtedly wreck on the pockets of Nigerian consumers.
  • The Niger Delta crisis will not be resolved by the mere payment of stipends. The Presidential Amnesty Programme was a project to buy time, and postpone the doomsday. We continue to reiterate that the region needs a practical solution through a Constitutional amendment to give resources back to the control of the immediate communities where the crude oil is being tapped from. The militant rampage in the region will continue until the federal government takes the high moral ground to bring an end to the intractable problem.
  • The current leadership change signals a new approach and strategy may have to be sought for the war in the North East. The potential for infighting in Boko Haram is evident from the audios of Shekau and the new leadership. The violence this will generate, and the potential gains and losses for Nigeria if Boko Haram turns on itself must be factored into the government’s strategy for ending the insurgency in the North East finally.
  • While we commend the Kaduna committee for admitting the casualty numbers and also that the Nigerian Army used disproportionate force, we disagree with the submission that the members of the IMN led by Zakzaky are to be held responsible for the deaths of 347 people. These people did not kill themselves, neither did the IMN kill them; the report clearly states that Nigerian Army troops that did. Therefore it is illogical to hold Zakzaky responsible. Also, the continuing injustice of holding Zakzaky and his followers without charging them to court and giving access to family and lawyers to see them for 8 months casts a shadow on the credibility of whatever inquiry the government has done. We urge the government to release Zakzaky or charge him to court. The government must also decisively deal with the elements in the army responsible for this needless massacre.
  • Again, we ask the government to display transparency, maturity and sensitivity over the Biafra issue. First, it is irresponsible for a government which has committed itself to the rule of law, whose head proudly told the nation, and the world that he was a “born again democrat” to continue to detain a man whom the courts have ordered to be freed on bail with fairly stringent conditions since December 2015 and has committed to attend his trial. Nigeria is a constitutional democracy, it bears reiterating and the seeming heavy-handed attitude of the government and its security agencies only plays into the hands of Biafra sympathisers who say this administration (and it must be said, every other administration before it) has vitiated their moral right to superintend and lead them by their actions. Second and even more importantly, the Buhari administration can only effectively deal with the Biafra question through a display of deft political tact and cleverness that it has so far not been capable of mustering – it must sit down and talk. A far reaching national conversation about Biafra and the persistent, and sometimes legitimate agitations of secessionists and its sympathisers must occur. The luxury which successive generations of Nigerian governments exercised in sweeping those agitations under the national rug is one that Buhari does not have – not with rampaging northern herdsmen, pipeline happy militants, a wonky, constipated political patronage class, the Boko Haram insurgency ,and let’s not forget, an economic mess. He must be the man and rise up to this occasion; if so, history may remember him as the man who saved Nigeria as we know it.