The Federal Government has sued about 70,000 Kebbi state farmers to court for failure to repay ₦17 billion loans they had collected under the Anchor Borrower Programme. In November 2015, President Muhammed Buhari launched the Central Bank of Nigeria (CBN) Anchor Borrower Programme in Kebbi state, in which ₦17 billion was approved by the federal government to support the farmers in the state. The chairman of Kebbi State chapter of the Rice Farmer Association of Nigeria Muhammed Sahabi Augie said that of the 70,000 farmers that benefited from the loans in 2015, only about 200 farmers were able to settle their loan commitments. According to him, most of the farmers had gotten the wrong impression that the loan is free money.
The spate of insecurity in the country which had been taking its toll on the economy caused the foreign direct investment to fall by $408.28 million between June and September 2019. The Deputy Governor (Economic Policy), Central Bank of Nigeria, Okwu Nnanna said this in Lagos on Tuesday during a presentation at the sixth National Economic Outlook session. In his words, “insecurity and the tepid recovery following the fall in oil prices – a trigger to the 2016 recession – have slowed investor appetite. Thus, foreign direct investments, which have been on the slide since 2011, fell to $498.62 million in Q3 2019 from $906.9 million in Q2.” Business confidence in Nigeria’s economy dropped to 28.3 index points in January 2020, a decline of 2.0 index points compared to 30.3 index points in December 2019. The Central Bank of Nigeria, in its Business Expectation Survey Report, said the business outlook for February 2020 showed greater confidence in the economy, with a projected 61.4 index points. The optimism on the macro-economy in the current month, according to the CBN, was driven by the opinion of respondents from services.
A Nigerian airline has launched daily flights between the capital, Abuja, and neighbouring Kaduna after insecurity forced commuters to abandon a major road linking the two cities. Misha Travels started operations on Monday in the fairly short distance for the daily air service, with the slogan: ‘No fatigue, no fear’. The firm appeared to be the first airline with a dedicated service to the route, which is less than three hours by road. A management official at Misha Travels, Tope Popoola, said the route was admittedly too short to be taken seriously, but worsening road travel insecurity was the dominant basis for going into the business. The company said it sees a huge market from the country’s insecurity challenge. Popoola said that most people would ordinarily be inclined to drive the two hours, but they are more concerned about their safety. The airline operates a Bombardier CRJ plane that could carry up to 50 passengers.
Nigeria is among six countries the Trump Administration is adding to its travel restrictions list. The new ban will see the United States cease issuing immigrant visas that offer a path to permanent residency, and possibly citizenship, to nationals of Nigeria, Sudan, Tanzania, Eritrea, Kyrgyzstan and Myanmar, senior officials at the Department of Homeland Security confirmed Friday. The updated policy would not completely ban all citizens of the countries from entering the U.S., but instead would limit access to certain kinds of visas. Access to the diversity lottery program will be limited for Sudan and Tanzania, and the new restrictions will go into place in 21 days. The restrictions were implemented for a variety of reasons, including insufficient passport security and information sharing about terrorists and criminals, the officials said. In another development, the federal government has introduced a multiple-entry, multi-year visa for Nigerians by birth who had to renounce their citizenship. According to a tweet by Tolu Ogunlesi, the special assistant on digital/new media to President Muhammadu Buhari, the visa is available to people who renounced their Nigerian status to become citizens of other countries. Journalists, entertainers and sportsmen wishing to visit Nigeria will now also get single-entry, short-visit visas.
- On the surface, the Anchor Borrower Programme appears to be a good initiative but a closer look shows there are some underlying issues. This lawsuit is proof of that, and an indication of yet another wrong policy approach by the Federal Government. A loan scheme touted as a success by government propaganda in actuality has a 99.8% default rate. In the Anchor Borrowers setup, the Central Bank of Nigeria has acted more like a development bank rather than as a central bank. The regulator’s primary focus has been split from ensuring price stability to direct intervention in such sectors as agriculture. Ideally, this should have been done indirectly through the Bank of Agriculture or commercial banks, with the latter putting in place proper credit structures before lending to end-users. Rather than doing this hard work to ensure that the target farmers could meet such requirements, the CBN took on the credit risk directly. Poor coordination and a lack of due process have prevailed such that the steps for becoming a beneficiary was, and still is, opaque. Then there were the reports of farmers having the wrong impression of repayment terms which hint at inadequate communication. A better approach would have been to have the loans disbursed through microfinance banks in the states, which would have also provided them with the opportunity to strengthen their capacity, increase financial inclusion and reduce loan defaults. This was indeed the original concept of the programme when it was first conceived by the former agriculture minister, Akinwunmi Adesina. Unfortunately, such sensible thinking was sacrificed on the altar of politics. If Kebbi, which has been hailed as a success story of the programme is encountering such problems, we fear to see how other states have fared in guaranteeing loan repayments. Without collateral, it will be tough for the CBN to enforce any judgement even if such is received.
- A key omission by the CBN deputy governor is that beyond insecurity and the tepid oil recovery, the choice of policy responses from Nigeria’s government have done a lot to ensure this outcome. From a rash of fines that seemed vindictive, to monetary policy that prioritised hot money just to keep exchange rates stable while holding on to a wasteful petrol subsidy, and a senseless border closure, investors have a host of reasons to be wary. Insecurity has grown as well, reaching the country’s capital as a recent SBM report shows. Many of the roads leading out of the FCT are now some of the most dangerous to travel in the country. Recently, Information Minister Lai Mohammed, stated that Nigeria is one of the safest places on earth. This kind of divergence from reality is worrisome to both domestic and foreign investors as it is indicative of a government that is more keen on trumping propaganda than actually fixing the issues such as its revenue problem. Since Nigeria exited a recession in Q2, 2017, the country has been in a low growth state due mainly to its inability to attract significant investment to the oil sector. Whilst the sector contributes just under 10% of the country’s GDP, its effect on the rest of the economy cannot be downplayed as the country depends on the sector for more than 90% of its export earnings and about 70% of government revenue. Asides oil prices which have failed to ascend to pre-recession levels, the country’s failure to pass the Petroleum Industry Bill into law after more than a decade of trying has forced international oil companies to suspend any major investment decisions. We expect that total capital inflows to the country will remain weak throughout 2020.
- The launch of the route by Misha Travels comes a few months after the Kaduna State Government signed a Memorandum of Understating with a company called Quorum Air Travel to provide air shuttle services on the same route with two 50-seater planes. As Mr Popoola rightly pointed out, the distance between Abuja and Kaduna, 188km, is too short to be taken seriously as an air route. A flight between Lagos and Abuja, four times the distance, takes an hour, so the economics of a 15-minute flight cannot possibly add up, yet Misha Travels has gone ahead because they appear to understand the mindset of Nigeria’s political class. Rather than solve the problem that has caused many people to abandon the road for the trains, the Kaduna government, by signing the MOU with Quorum, indicated that even its trumped up rail service which had become threatened by bandits, was for people who are expendable. Coming in a week where a police helicopter in the state came under fire from a general purpose machine gun at Kuduru village in Birnin Gwari, this begs the question – should the bandits make camp outside the airport, which is a considerable distance from the city centre, what would the government’s reaction be? Go to space? It is way past the time that governments in Nigeria begin to take their roles in providing security for their people seriously. The government exists to serve an entire population, not just a tiny elite that can afford to be pampered.
- It is worth situating the American announcement in the wider context of the Nigeria-U.S. bilateral relationship. The United States is the largest foreign investor in Nigeria, with U.S. foreign direct investment concentrated largely in the petroleum/mining and wholesale trade sectors. At $2.2 billion in 2017, Nigeria is the second-largest U.S. export destination in Sub-Saharan Africa. In 2017, the two-way trade in goods between the United States and Nigeria totaled over $9 billion, according to the State Department. To put it nicely, the United States is Nigeria’s main trading partner and its most important diplomatic partner. Nigeria is consistently a pro-America nation. According to the 2012 U.S. Global Leadership Report, 77% of Nigerians approve of U.S. leadership. The cultural exchanges go even deeper. An estimated one million Nigerians and Nigerian Americans – the country’s largest diaspora – live, study, and work in the United States, while over 25,000 Americans live and work in Nigeria. In light of the above, this decision must be seen for what it actually is, an effort by an ally to compel one of its critical national security partners to take its commitment to an existential crisis – to both countries – more seriously. While a lot of the reaction to this action from the American side has toed the line of America’s fractured politics, it has emerged that Washington told Abuja six months ago that this ban was coming. As has become unfortunately regular, nothing was done. Washington has had discussions with Abuja for two years over improved passport control protocols and greater immigration security, and yet nothing has been done. There has been chatter that suspicious characters from other countries enter Nigeria through its many porous borders, especially in the north, obtain Nigerian passports with which they use to fly to places of concern such as Yemen for terrorism training. These loopholes, real or imagined, have yet to be fixed. It is thus the prerogative of the Americans to protect their country as they see fit. If it means bruising the side of perhaps its most important African ally to get it done, so be it.