The European Union Observer Mission has said that Nigeria’s 2019 general elections won by President Muhammadu Buhari and the All Progressives Congress were not transparent. The observer mission added that the elections, of which the presidential vote is currently the subject of a legal challenge by the main opposition candidate, were marred by violence, harassment and voter intimidation. The EU observers said in their final report on the 23 February and 2 March votes, that the irregularities during the process were fostered by the contentious role played by the security agencies. These election malpractices, the EU said, damaged the integrity of the electoral process and such may deter future participation. At least 58 people, including election officials, were killed in voting-related violence, according to the Nigerian Civil Society Situation Room, a coalition of civic groups that monitored the vote, the report said.

A United Nations’ report shows that Foreign Direct Investment in Nigeria has dropped by 43% to $2 billion. This, according to a Reuters report, is as a result of investors’ withdrawal from the country after being put off by a dispute between the government and telecom giant MTN over repatriated profits. The country’s FDI inflow closed at $2 billion in 2018, down from $3.5 billion in 2017, according to the United Nations Conference on Trade and Development (UNCTAD), a development which the report said, came as two global financial giants, HSBC and UBS, closed their representative offices in Nigeria. In its World Investment Report, the UNCTAD said FDI in sub-Saharan Africa rose 13% to $32 billion, and the rise in the FDI inflow to the region bucked a global downward trend, reversing two years of decline. The report said Africa stands in sharp contrast to developed economies, which saw FDI inflows plunge by 27% to their lowest level since 2004. Some African countries fared better than others, however. Southern Africa performed the best, taking in FDI of nearly $4.2 billion, up from $925 million in 2017. Foreign investment in South Africa more than doubled to $5.3 billion. The situation in Nigeria left Ghana, which is in the midst of an oil and gas boom and saw inflows of $3 billion, as West Africa’s leading destination for foreign investment. According to the report, the ratification of the African Continental Free Trade Area Agreement could also have a positive effect on FDI, especially in the manufacturing and services sectors.

Britain’s Foreign and Commonwealth Office has issued a travel warning to British citizens warning about travel to certain Nigerian states. According to the advisory, all travel to Adamawa, Akwa Ibom, Borno, Cross River, Gombe, Yobe; riverine areas of Bayelsa, Delta and Rivers; and travel within 20 km of the border with Niger in Zamfara should be cancelled. The FCO warned against all but essential travel to Bauchi, Jigawa, Kaduna, Kano, Katsina, Kogi; the rest of Bayelsa, Delta, Rivers and Zamfara; and riverine parts of Abia. The North East was added to the list on account of the Boko Haram insurgency, while Abia, Akwa Ibom, Bayelsa, Cross River, Delta, and Rivers were added due to kidnappings and gang-related violence. The warning was issued on the same day that Dayo Adewole, a son of the former health minister, Isaac Adewole, was abducted at gunpoint in Oyo. Eyewitnesses said he was ambushed at gunpoint on his farm in Iroko, near Fiditi in Afijio LGA at about 6 pm. He was later released.

NASCON Allied Industries, a Dangote Group subsidiary, says it has moved some of its operations away from Apapa to Oregun, a Lagos district and Port Harcourt, due to the gridlock in Apapa. Addressing shareholders at the firm’s Annual General Meeting in Lagos on 20 June, NASCON’s Managing Director, Paul Farrer said the Apapa gridlock was a major risk to the company’s business last year. The gridlock, described as unending, affected the movement of raw materials to Oregun, timely delivery of finished goods to customers and increased the turnaround time of the company’s trucks. With the announcement, the refiner and distributor of household, food processing and industrial salt, with an installed production capacity of 567,000 metric tonnes per annum, has effectively relocated 60% of its Apapa production capacity to its other facilities. The firm said it also engaged third-party transporters to ensure the timely delivery of its finished goods. According to its 2018 report, the Apapa plant opened in 2001 with an annual installed capacity of 275,000MT while the Port Harcourt facility, opened in 2003, had an annual installed capacity of 210,000MT. The Oregun plant, inaugurated in 2004, has an installed capacity to refine 82,000MT of salt every year.

Commentary

  • The conduct of the 2019 general elections leaves us with many questions, chief of which is if it was an improvement on 2015. We think that the answer to this is an emphatic no. The EU Observer Mission raises very important points on the conduct and the process as well as the avoidable and sad loss of life. Expectedly, the report has generated differing reactions from stakeholders in the elections with the main opposition Peoples Democratic Party seeing it as a vindication of their rejection of the results, and the APC insisting that the results of the election were fair. The most important factor to watch, however, is if the 30 recommendations of the observer mission will be implemented before the 2023 polls, such as making it mandatory for full results data to be accessible to the public and for election tribunals to cover pre-election cases. Everyone, from the government to the security agencies and the electoral umpire, the Independent National Electoral Commission, must reflect on these issues. Elections can be free and fair in Nigeria. Elections do not also have to automatically translate to the loss of life. Some of the structural issues that enable these were addressed in the Electoral Act Amendment Bill and the 9th Assembly is advised to consider that bill’s passage a top priority.
  • It was rather curious that the official reaction by Nigerian regulators was to insist that FDI inflows into the country increased during the same period. According to the CBN, total capital inflows to the country was $19.07 billion in 2018, of which $7.78 billion was marked as FDI. The regulator went to query UNCTAD’s methodology, stating that it was not familiar with it. It is hard to take the CBN seriously in this regard, for the twin facts that UNCTAD uses globally recognised models for making its assessments and the bank regulator’s ethos of transparency has all but disappeared in recent times. The simple fact is that FDI is not charity – it follows risk and returns. For many, the level of returns to be found in Nigeria no longer matches the risk, and there are clear signs to back this assessment. A major one is the government’s persistent inability to raise the revenue it needs to fund infrastructure projects, thus resorting to an aggressive short-term borrowing strategy that has ballooned (and is now being increasingly hindered) by a high debt to revenues ratio – currently above 60%. In what appears to be a strategic change, the government says it wants to access concessionary long-term loans to finance its 2019 budget of ₦8.9 trillion and supplementing it with increased domestic borrowing, rather than returning to the Eurobond debt market as a primary option. Typically, concessionary loans are granted on more generous terms than market loans, but they are not as easy to procure. Coupled with how some of the biggest FDI successes like MTN have been treated over the last four years, it is indisputable that FDI is declining. There are consequences to hounding your success stories. This is one of them.
  • The travel advisory covers almost 2/3 of Nigeria’s territory and includes both the crisis-ridden North-East and parts of the North-West but also parts of Nigeria that have been relatively safe. Earlier this year, a British citizen was killed in Kajuru, Kaduna. While the Nigerian Police rushed out a press statement reassuring the international community that Nigeria is safe to travel to, it is bravado at best. The internal security situation has precipitously declined and it has become a perilous task to travel between cities in most parts of the country. Large swathes of the North West and North Central remain unsafe and kidnapping can be safely be described as an industrial enterprise everywhere in-between. In the North East, various factions of Boko Haram continue to operate with relative ease, and gunmen caused major harm in a state capital, Jalingo just this week. The government cannot continue to bury its head in the sand – Nigeria’s security architecture is creaking and needs to be addressed, fast.
  • The challenges faced by Nigerian manufacturers such as higher input cost pressure, the influx of cheap smuggled products and perennial Apapa gridlock have continued to weigh on companies’ performances, especially their turnover. Unfortunately, the ability to increase prices as a way to transfer cost is often limited hence the need for businesses to become more nimble and creative. By moving some of its manufacturing away from Apapa, NASCON is likely to see improvement in its operations which should positively affect its bottom line. Regrettably, not all manufacturers possess the ability to relocate production to other facilities quickly or without incurring huge costs. In the past, many manufacturers simply shut down plants and resorted to importation at the detriment of the Nigerian economy. For the larger economy, it is vital that the government resolves the Apapa congestion issue beyond issuing paper orders and organising high profile photo opportunities. Apapa is the main gateway into the Nigerian economy and the current state of the road and rail infrastructure that supports the port is abysmal. The endless trail of tankers and other articulated vehicles parked on the roads leading to the main port has made life torturous for residents and businesses. Businesses, in a bid to thrive, will continue to vote with their feet, irrespective of their token commitment to the Buhari administration’s economic patriotism agenda. In the best of times, Apapa simply could not solely support the commerce of an economy of Nigeria’s size. Nigeria needs to sort out Apapa, while simultaneously solving the wider problem of its near-singularity.