The week ahead – Spot the mismatch

The Supreme Court has dismissed the appeal filed by the Peoples Democratic Party and its candidate, Atiku Abubakar, challenging the victory of President Muhammadu Buhari at the 2019 general elections. The Supreme Court panel, which included Chief Justice Muhammad Tanko and other six members, said it will provide its reasons for dismissing the petition at a later date. Abubakar and the PDP filed an appeal at the Supreme Court after the presidential election tribunal last month dismissed their original petition. The tribunal ruled against the PDP on the core issues it raised about the February vote. Abubakar and the PDP had argued that Buhari lied on oath about his educational qualifications and that the secondary school the president said he attended did not exist at the dates stated by the president. They also argued that the electoral commission, the Independent National Electoral Commission, manipulated the result of the election and that the result on an INEC server showed that Abubakar won the election ahead of Mr Buhari.

Data from the NNPC shows that the amount spent on the petrol subsidy by the corporation increased by ₦58.6 billion within a month. According to its financial report for July 2019, the corporation spent the additional sum in April 2019. Going by the breakdown, the state oil firm spent ₦89.2 billion on petrol subsidy in April, up from the ₦30.64 billion incurred as subsidy in March. From the July 2019 financial report, the ₦89.2 billion expenditure on subsidy in April was the third-highest amount spent by the oil firm in a single month since January 2019. The NNPC spent ₦104.35 billion, ₦102.24 billion and N30.64 billion on petrol subsidy in January, February and March this year, respectively. Petrol is imported solely by the state owned NNPC, which subsidises the commodity to ensure that it is not sold above the approved ₦145 per litre price at filling stations across the country. The firm, however, classifies its subsidy spending as under-recovery as it has repeatedly argued that only the National Assembly can approve an actual subsidy. According to the NNPC’s definition, under-recovery is the additional cost that it incurs in subsidising the price of petrol in order to ensure that it is sold at the regulated price of ₦145 per litre, even when the real market price is above this rate. The International Monetary Fund has advised Nigeria to reduce its fuel subsidy, in order to account for the current low oil price environment and bring about more productive government spending.

The CBN Governor, Godwin Emefiele, has said Nigeria’s land borders would remain closed until neighbouring countries sign up to mutual anti-smuggling policies. Speaking after meeting with President Buhari at the Presidential Villa, Emefiele said the border closure has reduced smuggling and improved rice production in the country. According to him, apart from the reduction in rice smuggling, poultry farmers have particularly benefited from the border closure as they have been able to sell off accumulated produce, which had hitherto been hindered by illegal importation. He said the pre-closure situation had been undermining Nigeria’s economy and the FG remained resolute in keeping the borders closed until engagements are concluded with Nigeria’s neighbours to have them stop using their ports as launch pads for smuggling into West Africa’s biggest economy.

Thousands of passengers have opted for rail transport as a more secure means of travel due to the unbearable insecurity on the Abuja-Kaduna road, according to The Punch. This development has raised the passenger volume on the rail service by 270 percent. The FG had said that passenger traffic on the Abuja-Kaduna rail service has risen to 3,700 daily from its carrying capacity of 1,000 people as it announced plans to commence a trial run of trains on the Lagos-Ibadan railway service in December. The Transportation minister, Rotimi Amaechi confirmed press reports that the increase in traffic on the Abuja-Kaduna railway service was due to rising insecurity.

Commentary

• While the reasons for dismissing Atiku’s petition are not yet known, the Supreme Court’s decision is unsurprising as doing otherwise would have been without precedent. It does appear that the PDP candidate did not sufficiently prove his case before the tribunal, and early indications appear to show that the judges’ decision was unanimous. Having said that, the manner of the removal of the former Chief Justice, Walter Onnoghen, and the controversy that ensued will cast a long shadow on this verdict, considering that his successor, Tanko Mohammed is largely perceived as being pro-Buhari, and he handpicked the judges that sat on the panel. Not surprisingly, the PDP has already protested the verdict, something they should not do as the verdict of the Supreme Court is final. For President Buhari the verdict means that the last electoral distraction standing in his way has been eliminated and he is in a theoretically secure position; with his party in solid control of both houses of the National Assembly. By virtue of this, he now possesses the political capital to spend at will in this, his second and final term. The jury is out on whether he will deploy it to good use.

• According to a recent report by BudgIT, Nigeria spent over ₦10 trillion subsidising petroleum products in the twelve-year period between 2006 and 2018; with the amount spent in 2018 alone estimated at ₦1 trillion. Compare this with the ₦5.3 trillion, which, according to the Federal Inland Revenue Service (FIRS) was realised in tax revenue in 2018. Two crucial variables drive the subsidy numbers – the landing price of petrol and daily petrol consumption volumes. Considering that the landing price remained stable in this period, the key variable to watch is the consumption volume. It will foster the understanding of the Nigerian public and other stakeholders if the NNPC confirms actual consumption numbers. Two things are pertinent. The subsidy regime has become even more opaque than it was under the previous administration and opacity is often the main prerequisite for corruption and manipulation. Second is that the subsidy continues to be an untenable expense for Nigeria’s public finances and sooner rather than later, it will have to be removed.

• The first and, perhaps, the biggest takeaway from this week is how the CBN governor has moved so far away from his core role in shaping monetary policy and now spends time making fiscal and quasi-fiscal pronouncements that he should not be seen making. Such actions send the worst signals to domestic and international stakeholders on the bank’s independence as well as its focus on its core mandate. Unlike in most countries where the bank regulator occupies itself with maintaining price stability, the CBN has increasingly promoted a developmental agenda, with direct and indirect interventions in agriculture and other sectors of the economy. Away from the wrong policy signalling, there is another dangerous aspect to this behaviour. Historically, in economies where policymakers were invested in proving that economic productivity was rising despite contrary evidence, examples include Stalinist USSR and Maoist China, people falsified the figures irrespective of on-the-ground realities. These, in part, lead to monumental disasters such as the Great Leap Forward in China and successive famines and mass starvation in the Soviet Union. In today’s Nigeria, there is simply no empirical confirmation of rising rice or chicken production, let alone it being as a result of the closure, but the CBN governor has jumped the gun and is reporting this. He also failed to mention that the accumulated poultry stock was sold almost 60% higher than their August prices. The brilliance of this policy shift means that for a majority of Nigerians, a CBN which should be exercised about any price shock to the wider population is now the chief architect of volatility in the economy.

• It appears the government has for all intents and purposes given up on securing the Abuja-Kaduna Expressway, a major road out of the country’s capital. While there has been a small decline in the rate of kidnappings on this important travel artery, passengers (including top ranking military officers) are definitely not taking chances. Despite the deployment of the police’s elite Intelligence Response Team, the authorities have not succeeded in completely eliminating the problem, and this is having an effect. The rail capacity is now overburdened and officials have, responding to that incentive, created rackets around ticketing due to the huge demand and the lack of transparency in the ticket purchase process. The rail track itself has been attacked at least twice and as more people choose rail over road, it will become an even more attractive target. Rather than take to the skies as the government of Kaduna is attempting to do with a recently signed MOU, a more sustainable solution will involve looking at the remote and immediate causes of the kidnapping menace that has spread across the country: from increasing policing in numbers and quality, stemming the flow of illegal arms and weapons into the country, implementing policies that create jobs in order to bring down the scarily high rate of unemployment and proper tracking and investigation of kidnapping syndicates. A failure to do this will only cause the problem to fester and become worse.