The World Bank has said that Nigeria may become home to a quarter of the world’s destitute people in a decade unless policymakers act to revive economic growth and lift employment. By 2030, the number of Nigerians living in extreme poverty could increase by more than 30 million, the bank said in its Nigeria Economic Update report published Monday. The World Bank projected economic expansion of 2.1 percent in 2020 and 2021, below the country’s 2.6 percent population growth rate. The World Bank exhorted President Buhari to increase domestic revenue, remove trade restrictions and improve the predictability of economic policy and also called on the government to remove expensive petrol subsidies and reduce CBN lending to targeted sectors that crowds out banks. This warning came as figures from the NBS showed that Nigeria earned a total of ₦275.12 billion from Value Added Tax in the third quarter of 2019, a decline of ₦36.82 billion from the ₦311.94 billion generated in the second quarter.

The Nigerian Government currently owes its retirees over ₦400 billion in accrued pension rights. The chairman of the Senate Committee on Establishment and Public Service, Ibrahim Shekarau, made this known during the second annual National Assembly retreat with the Pension Funds Operators Association of Nigeria in Uyo, Akwa Ibom State. Shekarau promised to take up the issue with the government to ensure that all the arrears were cleared, even if it would be the only achievement that the 9th National Assembly would be remembered for. The committee has written the Senate President on the matter, insisting that it should be addressed, he said. Shekarau blamed the indebtedness of state governments and local governments to their retirees on a lack of political will. He said the committee will initiate appropriate amendments to deter state governments from further owing their retirees.

A federal judge in Lagos has ordered the FG to recover pensions collected by former governors now serving as ministers and members of the National Assembly following a lawsuit brought by the Socio-Economic Rights and Accountability Project. Justice Oluremi Oguntoyinbo also ordered the Attorney General of the Federation and Minister of Justice, Abubakar Malami, to challenge the legality of states’ pension laws permitting former governors and other ex-public officials to collect such pensions. The judgement is coming on the heels of the invalidated pension law for former governors and other ex-public officers in Zamfara State, which provided for the upkeep of ex-governors to the tune of ₦700 million each year, noting that the state has produced three former governors since 1999. The court will sit on 3 February 2020 for hearing on the compliance with the court orders by the FG.

Rising theft of crude oil theft and the activities of vandals in Nigeria are posing serious security risks to oil assets across the country. Speaking at the 9th Practical Nigerian Content holding in Bayelsa State, the MD of Aiteo Exploration and Production, Victor Okoronkwo, said that unscrupulous elements constantly vandalised oil pipelines and flow lines, especially its 600,000 barrels per day Nembe Creek Trunkline. Okoronkwo said that despite efforts to increase crude oil production, oil companies had continuously suffered more shutdown in their operations, leading to a significant loss of revenue for the companies and the government. Aiteo has seen more shutdown days in operations due to third party infractions for two more months this year than previous years. This, he said, has resulted in a loss of revenue and deferments estimated at about four million barrels so far this year. Also worrying is the amount of crude loss recorded even when the pipeline is operational, usually in the range of 25 to 35 percent.

Commentary

  • The World Bank’s warning is unsurprising. Much of the World Bank’s exhortations echo what many stakeholders, including SBM Intelligence, have repeatedly said. Despite Nigeria overtaking India as the country with the largest number of people in extreme poverty last year, it appears that there isn’t any form of urgency to address the issue, and per capita income is still dropping. More Nigerians will fall into poverty because of the current set of policies that the government and its agents are espousing and carrying out. We are almost at the point of resigning to that inevitability, but we must speak about the dangers of increasing poverty – worsening security, emigration and a rise in pervasive corruption born of desperation to get by. While other countries are working hard to lift their people out of poverty, Nigeria appears stuck in a maze of bad policy ideas, repeating the same mistakes over and over again.

  • In 2004, the Obasanjo government pushed through the Pension Reform Act (PRA) which changed the country’s pension system from defined benefit to contributory schemes which ensure that a part of workers’ salaries is set aside monthly, matched by employers both private and government. Although some states and local government authorities are yet to sign up to the scheme, it has been a success, and now has more than ₦9.5trillion ($26.3 billion) in pension contributions currently being managed by various pension fund administrators. One issue which has lingered however is the arrears of retirees’ pre-2004. Successive governments have failed to cough up the funds due and this has seen pensioners suffer undue hardship. Another cause for concern is the focus which is now being placed on the trillions in pension contributions by a government which is now looking for ways some of the funds can be used for “infrastructure investment”. Theoretically, it sounds like a good idea, but we fear that the reality would be that such funds would be used for unviable projects which would end up being a conduit for transferring the money to private pockets. Unless proper structures are put in place to ensure the funds don’t get frittered away, we advise that the status quo is maintained. Despite the odds, such as some employers including federal and state governments not paying their share of contributions, the Contributory Pension Scheme is perhaps the greatest success story in Nigeria’s economy. One bad move and the trust that sustains it despite the odds will be lost for a generation.

  • This week has been a hard one for former governors. Just yesterday, after a court process that lasted more than a decade, a former governor of Abia State, Orji Uzo Kalu, who had also made his way to the Senate, was sent to prison for his part in robbing his state of ₦7.65 billion ($61.55 million on 29 May 2007 when he left office). Kalu’s imprisonment and Justice Oguntoyinbo’s ruling are welcome developments. It is a travesty that governors who go on to hold public office and therefore earn an income from the public coffers while simultaneously drawing a pension from the public coffers. This is at a time when many of these states struggle to pay salaries, provide basic services or build needed infrastructure. While Justice Oguntoyinbo’s judgement only applies to former governors still in public service or who were in public service after their terms as governors, it nonetheless represents a huge win. The governorship pensions case is one to keenly watch, as it will have far-reaching ramifications on what has essentially become legalised banditry from governors on the eve of their departure from office.

  • Although crude oil theft in Nigeria is down significantly from the levels it was at in 2008 during the heights of the militancy where up to a quarter of production was lost to militants, it still remains a prevalent problem. In June, a Bloomberg feature, done in part using SBM’s datasets, estimated crude oil theft in Nigeria to be around 100,000 BPD. In late August, the National Economic Council put the daily theft at 122,000 BPD, or close to 8% of average official daily production numbers – a huge gap in a country that desperately needs to increase its revenue profile. It is impossible for theft of this scale to go on without significant levels of organisation and the collusion of key elements among state actors. Nigeria seems to have settled into a faux peace fueled by looking the other way while various elements who have the capability to disrupt oil flow get away with theft of such magnitude. We do not believe that this is not a sustainable peace. What has been defacto done by this can and should be done officially by structuring proper resource control for the people of the Niger delta. Nigeria cannot run away from this forever.