The Senate has approved the ₦30,000 new national minimum wage with an appeal to the federal government to begin the implementation immediately, to avoid any industrial action from the unions. The Senate ad-hoc committee on Minimum Wage Bill approved all the recommendations contained in the report, including a fine of ₦75,000 imposed on firms that refuse to comply with the wage payment. The Senate also recommended that there should be an urgent review of the revenue-sharing formula, so the states will be able to pay the new minimum wage. Under the current sharing arrangement, the FG takes 56 percent, states receive 24 percent while the local governments attract the remaining 20 percent.

The Lagos Chamber of Commerce and Industry has warned that the CBN’s recent decision to deny the textile sector access to the forex market, would put about ₦5 trillion worth of investments in jeopardy while an estimated 500,000 jobs may be wiped out. Muda Yusuf, DG of the LCCI, noted that the exclusion of all forms of textile materials from the forex in both official and unofficial windows would have grave implications for businesses in the fashion, tailoring, fashion accessories and garment industry in the country. The fashion industry, one of the fastest growing sectors of the economy, provides significant value addition to imported or locally produced fabrics. The CBN’s order, if implemented, will put all the aspects of the sector at risk, the chamber warned. Early this month, the CBN ordered commercial banks and Bureau de Change operators to immediately stop the sale of forex to the importers of textiles and clothing materials in the country, in an effort to save the over $40 billion the country spends annually on imported textiles and ready-made clothing.

The Independent National Electoral Commission (INEC) has criticised the Nigerian Army over the actions of some of its soldiers in disrupting the gubernatorial and state assembly elections in Rivers. Festus Okoye, INEC’s commissioner for Information and Voter Education, acknowledged that violence was the major reason for the suspension of the polls. In its reaction, the Nigerian Army expressed its disappointment at what it termed as a “betrayal” from the electoral body. The spokesperson for the 6 Division in Port Harcourt, Col. Aminu Iliyasu said INEC deliberately left out its (army’s) submission to INEC’s fact-finding committee, and noted that INEC failed to make public a report which acknowledged that two soldiers were victims of attacks carried out by police aides and thugs loyal to Rivers Governor Nyesom Wike. The Army was also criticised by the UK government, and in its response, essentially asked them to mind their business.

Armed insurgents attacked and briefly seized control of an army base in the central Malian town of Mopti, killing at least 23 soldiers, the Mali Defense ministry has confirmed. It is believed that the latest attack was carried out by Jihadist groups with ties to al-Qaeda despite the presence of French troops in the region. No particular group has claimed responsibility for the attack so far.

Commentary

  • Increasing the minimum wage does not solve all workers’ problems but it is a little step in the right direction. For a country with huge unemployment numbers, very few people are able to get multiple jobs meaning that most workers rely on just a single income source, and are themselves the breadwinners for their families. This implies little disposable income in the hands of most Nigerians and this further impacts the productivity of suppliers of goods and services. On the government side, the juggling to move revenue sharing around, and the mooted potential increase in the VAT rate to fund the salary payments, points to a simple issue – the Nigerian government refuses to recognise its dire revenue position and continues to increase costs for both federal and subnational governments. Accounting for the fines, the recourse to this model of funding increased public sector wages will almost certainly exact more from an already squeezed private sector. This reinforces our main thrust this week – unless fundamental problems are faced squarely and fixed, measures taken will deliver huge negative externalities.
  • Usually, trade groups are proponents of forex restrictions due to the assumption is that this fosters development of the local industry. Push back from the LCCI basically implies that the local textile does not have the capacity to meet current demand not will it be ready to do so any time soon. We then wonder about the CBN’s decision making mechanism regarding forex and import restrictions and this calls to question its one size fits all approach to fostering industrial development. This move repeats a pattern that has not yielded any substantive development results for Nigeria over the last few decades – institute a ban without fixing structural issues, ban immediately and leave Nigerian entrepreneurs to figure out how to satisfy latent market demand. As is always the case, these bans open up the black market and the increased costs are borne by Nigerians in increased prices with little new wealth created in the affected industry. We do not expect this iteration to be different and can categorically state yet again that this is a move in the wrong direction.
  • The politicisation of the Nigerian Army, evidently by highly-placed government officials, is worrisome and should be condemned by everyone as it robs the Army of its professionalism. For one, the general involvement of the military in the elections contradicts the Constitution which does not allow for the deployment of the military for purposes other than protecting Nigeria’s territorial integrity. For another, the Electoral Act offers no blessing to the deployment of soldiers around polling units – a state of affairs that has been affirmed by at least six court injunctions but has been observed more in the breach. In the 2019 election cycle, this has had important consequences. INEC has said that no rerun will be conducted in Bauchi (save for certain units in Tafawa Balewa LGA) and Rivers, saying that the disruption of voting by armed soldiers was ‘irreversible’. The case of Rivers needs to be investigated by the military’s legislative oversight committees, with all culpable parties sanctioned in order to prevent such reoccurrence. A failure to do this will be to legitimise military involvement in future elections, which bodes ill for the country’s democratic vitality.
  • Mali continues to remain a security flashpoint with as many as four insurgent groups: the Al-Mourabitan, Al-Qaeda in the Maghreb, Ansar-al-Dine and Macina Liberation Front operating in or around its territory and even coming together to form an alliance. As part of the larger Sahel, a vast and mostly unpoliced region, it makes it easy for these terrorist groups to carry attacks from Mauritania on the far west coast of Africa all the way to the Niger Republic. This has implications for Nigeria especially on its North-West borderlands, which has seen rising criminal activities – including kidnappings and ransom killings by armed groups and bandits. There are already indications of terrorist groups such as Ansaru pursuing cross-border synergies – it is possible that all the Sahelian groupings will use criminal activities as a financial conduit to fund their grander jihadist agendas. It is critical that Nigerian security agencies move to arrest the deteriorated security situation in Zamfara and other parts of the country’s NW in order to prevent a further escalation.