President Muhammadu Buhari has ordered the Central Bank of Nigeria to stop providing foreign exchange for food importation to ensure the steady improvement in agricultural production and attainment of full food security. According to Buhari, the foreign reserve is to be conserved and used to drive the diversification of the economy, not to grow national dependence on foreign food imports. Some states like Kebbi, Ogun, Lagos, Jigawa, Ebonyi and Kano had already taken advantage of the FG’s policy on agriculture with huge returns in rice farming, Buhari said, urging more states to plug into the ongoing revolution in the sector. The CBN, in August, announced plans to add milk and other dairy products on the forex restriction list with the aim to boost investments in local ranches.

The demand for Nigerian crude oil has dropped as it recorded the slowest sales of the year in August. This is not unconnected to U.S. exports competing for light, sweet grades that flood traditional markets in Europe and Asia, traders told Reuters. Crude from Nigeria has largely been pushed out of the U.S. market in the last decade due to booming domestic output as exports to the United States plunged to zero for three weeks in July, the U.S. Energy Information Administration said. This news came days before Saudi Aramco announced that it has agreed to purchase a 20 per cent stake in the oil and chemicals business of Indian conglomerate Reliance Industries and petrochemicals business, valued at $75 billion. The deal between the world’s largest oil producer and Mukesh Ambani, Asia’s richest man worth $45.6 billion as well as Reliance’s chairman and largest shareholder, gives it a stake in the Jamnagar Refinery in India, which can process an unmatched 1.2 million barrels of crude oil per day.

The spokesperson of the All Progressives Congress in Lagos, and commissioner designate, Joe Igbokwe, says that motorcycle-hailing services are not sustainable in a densely populated state like Lagos. Igbokwe made this comment on Facebook on Wednesday. Noting that Lagos, Nigeria’s second most populated state and its commercial capital, has about 12 million residents living in 3,577 square kilometres, Igbokwe advised that funds for the bike-hailing services should have been invested in the Bus Rapid Transit operated by the Lagos State government. Saying that the $5.3 million invested in ‘okada’ business is a waste of resources, Igbokwe added that and no one expected the Lagos state government to allow anyone to jeopardise its multi-billion (sic) naira mass transit investments. Igbokwe’s comment came on the same day that Gokada CEO and Co-founder, Fahim Saleh, announced a partial shut down of operations to restrategise after ‘operational’ hurdles during a ride, and a month after the state government proposed new regulation, including licensing fees, required for bike-hailing services to operate as part of local transportation infrastructure.

Armed robbers have taken advantage of a broken-down electricity transformer to attack a “B Police Barracks” along the Benin-Onitsha Road in Asaba, Delta state, and rob the residents of their belongings. The transformer serving the barracks was vandalised about two months ago. Each resident allegedly contributed ₦3,000 to fix the transformer a month ago, but nothing has been done since then. The residents appealed to the state police command to investigate the matter, but Adeyinka Adeleke, the commissioner of police in Delta state, while admitting that the barracks has been in darkness for a while due to the vandalised transformer, denied that there was a robbery incident in the barracks.

Commentary

  • President Buhari’s latest order to the CBN has been widely condemned, and is alarming, to say the least. Perhaps the strongest response came from a former CBN Deputy Governor at the regulator, Kingsley Moghalu, who pointed out that Nigeria’s entire economy appears to have been sub-contracted to the Central Bank, including industrial and trade policy, and in the process, the economy has fared poorly and the CBN has lost its independence. We concur with this position. First, the President’s announcement is an unequivocal statement by the federal government that the CBN is not independent and investors will have taken note. Second, it signals that there is pressure on the naira’s exchange rate, a position which the government is determined to defend irrespective of other structural considerations. Third, Nigeria is already the world’s poverty capital and a key reason for this is that Nigerians spend the highest proportion of their income on food globally – at more than 58%. This revelation underscores the fact that there is no empirical evidence to support the President’s claim that the country is now self-sufficient in food production. Large portions of Nigeria’s farmlands remain fallow due to the pastoral conflicts which the same government has failed to address. This move is bound to raise food prices and create the perfect environment for smuggling, ultimately making a few people richer and leaving even more Nigerians poorer. While we urge the government to reconsider, we are not hopeful it will.
  • The rest of the world is ramping up not just crude production but as we see in this deal, refining capacity. Aramco hopes this deal will help it reach 10 million barrels per day. Nigeria’s refining hopes are hinged on the mammoth Dangote project which is already ridden with delays, with a new launch of 2020 – a very optimistic view according to many analysts. Even worse, Nigeria’s oil sales are plunging. While Nigeria’s daily oil production hit 2.3 million barrels in June despite OPEC restrictions, by the end of this month, 40 Nigerian cargoes will still be looking for buyers as opposed to the monthly average of 25, the largest oversupply gap so far in 2019. U.S. shale producers have priced Nigeria out of their home market while competing with the country internationally in the light sweet grades space. Nigeria sends about 46% of its crude to Europe, nearly 18% to India and the rest of Asia gobbles another 10%, according to IHS Markit. While some people consider this mix temporary, we believe it is indicative of a slow but clear trend – the world is awash with oil and the refiners hold the aces.
  • Mr Igbokwe’s comments are symptomatic of the propensity of Nigerian politicians to conflate public goals with private enterprise. In many cases, this confusion can lead to real harm for Nigerian businesses and consumers and this case might prove to be one of them. With its pothole-infested, traffic-jammed, crime-conducive roadways, Lagos is an urban navigation nightmare. Egged on by a large market and decades of dilapidation and neglect, the city’s ride-hailing services have thrived over the last five years and now stand at the forefront of mobility innovation in a country starved of decent transportation options by policy stasis. Mr Igbokwe’s statement seems to have an issue with how much the startups are able to raise in USD, and we wonder why someone who is about to be commissioner in a state that says it is open for business will espouse such views. Mr Igbokwe should deploy his bully pulpit away from misguided socialist remarks to a state government that can do one big thing to unclog Lagos’ transit channels – enact sensible regulation to incentivise investment in the state’s abundant waterways. Uber says it is in talks with the state government to develop boat taxi services, a service it offers in Cairo and Mumbai and Lagos’ weary residents would surely welcome. Mr Igbokwe has his advocacy work cut out.
  • There is a nexus between the conditions of service of policemen and the quality of policing in Nigeria where everything, ranging from poor salaries, no life insurance, squalid living conditions, and utterly poor training. It is no surprise then, that a huge majority of policemen are routinely involved in the extortion of citizens and demands of payment before any basic police service is rendered are common – last year, a poll of citizens rated the Nigerian Police Force as Nigeria’s most corrupt institution. These, and the ease with which policemen turn their guns on the very people they are meant to protect and serve, contribute to the force’s lack of popular support. As an example, the killing of three policemen by soldiers in Taraba last week did not elicit much sympathy among Nigerians with many on social media comparing the incident to similar incidents in which policemen, particularly members of the feared Special Anti-Robbery Squad, killed innocent young people. The loss of a fear factor where police installations are now subject to attacks will only make a bad situation worse, but, the change in attitude will have to start with the police. The irony is that until the conditions of service of policemen are improved, it is unlikely there will be an improvement in the quality of policing.