The national leader of the All Progressives Congress, Bola Tinubu, has told Senator Ali Ndume and other APC lawmakers to either support Ahmed Lawan and Femi Gbajabiamila for the Senate President and Speaker of the House of Representatives positions respectively or leave the party. Speaking at a reception held in honour of his 67th birthday in Lagos, Tinubu said that the “careless mistake” which the party made in 2015 which led to Bukola Saraki and Yakubu Dogara occupying both positions would not be repeated in 2019, adding that aggrieved lawmakers were free to leave the fold but not sabotage the party’s leadership choices. The APC enjoys a clear majority in the incoming Senate, winning 61 of the 109 Senate seats.

Numerous media reports say that Nigeria’s government has increased the proposed 2019 budget to ₦10.3 trillion from ₦8 trillion, with projected revenue of ₦6.97 trillion for the period. The FG says it expects nominal GDP to reach ₦139.65 trillion, with GDP growth of 3.01 percent for the year. Capital expenditure will constitute 23 per cent of the total expenditure while projected recurrent expenditure is ser at ₦6.18 trillion. According to a BudgIT review of the numbers, the government’s budget for debt servicing closely mirrors the steep debt trajectory. The government will spend ₦2.14 trillion on debt service in 2019, up from ₦1.6 trillion in 2017 and ₦1.7 trillion in 2018. Projected VAT revenue collection for FY 2019 is set at ₦229.3 billion with ₦799 billion expected as Company Income Tax and ₦302.5 billion from Customs and Excise duties. The Senate has said that its Appropriation Committee has a week to get the budget ready for consideration by lawmakers, with passage set for 16 April.

The President of the Nigeria Cashew Exporters Association (NCEA), Tola Fasheru says the gridlock and inefficiency at the Lagos ports have delayed the shipment of 50,000 tons of cashew nuts valued at $300 million. The congestion has meant that some foreign investors have walked out from contracts with members and threatens this year’s output as traders are cash-strapped. The fruit from the 2018’s harvest was expected to have been exported by January but they are still in containers on trucks waiting to enter the ports or on wharves, Fasheru said. He added that foreign investors are no longer willing to give fresh contracts. The delay is likely to affect the output target of 260,000 tons for the current season, which started in February and will end in July. Nigeria, as Africa’s sixth largest cashew producer, plans to raise its annual production to 500,000 tons by 2023, according to a five-year strategic plan released in 2018 by the National Cashew Association of Nigeria as the country seeks to reduce dependency on crude and diversify the economy through agriculture and other key sectors.

The Gambia’s parliament ratified the African Continental Free Trade Agreement on Tuesday, becoming the 22nd country to do so since the agreement was enacted in 2018. With Gambia’s ratification, the agreement has met the minimum threshold required to come into force. This agreement seeks to create the largest trade zone in the world, increase intra-African trade by 52 per cent by 2022 and remove tariffs on 90 per cent of goods. The AfCFTA will become effective 30 days after the required number of ratifications have been deposited with the African Union. Nigeria has yet to sign the agreement.

Commentary

  • While the APC’s leadership appears bent on preventing a repeat of the 2015 fiasco in the legislature where the opposition PDP won the seat of the Deputy Senate President, with the positions of Senate President and House of Representatives Speaker going to unanointed APC acolytes who eventually defected to the PDP, their current approach of endorsing Senator Lawan and Hon. Gbajabiamila is still likely to cause a rift within the party as ambitious senators and representatives remain unwilling to cast their ambitions aside. This could once again be seized upon by the PDP to back candidates other than the APC’s preferred candidates, either in exchange for plum committee chair seats or even for the positions of the Deputy Senate President and Deputy House Speaker. The latter is likely as another challenge within the APC is how to balance leadership positions within the country’s six geopolitical zones: if Lawan and Gbajabiamila become Senate President and speaker respectively, it will mean that the top four political offices in the country are shared between the North-West (President), the North-East (Senate President), and the South-West (VP & Speaker). While South-East & South-South APC members have become more vocal about representation at the highest level; these zones contain states which sent the least number of elected APC senators & reps to the National Assembly, making it possible for the PDP to capitalise on that discontent to once again make a run legislative leadership. It is a situation that will need to be watched closely as it evolves between now and the first week of June when the new Assembly will be inaugurated.
  • Nigeria’s government had touted that the 2019 budget was reduced to ₦8.8 trillion from 2018’s ₦9.1 trillion in order to manage the country’s debt. Only recently, the Vice President said that Nigeria had one of the largest public debt to GDP ratios in the world, perhaps signifying that the official stance on debt is changing. However, he failed to mention that the debt service expense to government revenues was at a record 68 per cent. It is clear that with a new minimum wage and higher pension considerations, the proposed budget had become obsolete and needed a revision. Unfortunately, revenue in 2018 was less than ₦3 trillion and the new add-ons to the government’s financial responsibilities alone are almost ₦2 trillion. Nigeria’s budgeting continues to be divorced from the country’s reality and reinforces the thinking that the document is a mere suggestion, not a law that the government must abide by when it comes into force. The reality is that the only portion of the country’s budget that is ever fully achieved is recurrent expenditure, meaning that the meagre resources allocated for capital expenditure are never fully realised as revenue targets go unmet. The fiscal deficit is already at record highs and with the amount of borrowing that will be required to fund this budget, it has only one way to go – up. There is clearly a need for a structural change in the budgeting and revenue realisation process, but the Buhari Administration, like others before it, appears to lack the political will to take the most important decisions. Nigeria is in the early stages of a fiscal crisis, and even record oil prices will not be able to save it this time.
  • When the incentives for the port operators are not aligned with the goal of moving imports and exports through the ports efficiently, this type of outcome is inevitable. The government cannot continue to pay lip service to trade and creating a more business-friendly environment while the conditions for the same are not firmly aligned. A thorough investigation into this fiasco is necessary at this point, with sanctions meted out where errant officers are identified and changes made to processes that may the current situation possible. More than any government pronouncement, the efficiency of our ports will firmly announce our readiness to trade with the world.
  • The attainment of the minimum ratification threshold for the AfCFTA is expected to herald a new beginning in intra-African trade which currently accounts for 10-12 percent of total African trade. This also means that hitherto unattractive small markets (e.g. Rwanda) can now attract more investment with the right enabling environment as well as exports across the continent. However, to meet the goals of the agreement, there needs to be massive investment in infrastructure links between countries so that trade can move seamlessly. The refusal of Nigeria to sign the agreement has been conspicuous as the country alone accounts for 17 percent of the continent’s GDP. Interest groups within the country’s private sector have been able to successfully lobby the government against joining the agreement, effectively closing it off to competition from the rest of the continent. Although the official government position is that they need to consult more before coming to an agreement, the body language does not show any inclination towards joining. This, in our opinion, is a major error.