President Buhari has backed Victor Giadom as acting National Chairman of the ruling All Progressives Congress (APC) amid the crisis rocking the party. Buhari’s spokesman, Garba Shehu, said on Twitter that Buhari had received convincing advice on the position of the law as far as the situation in the party was concerned, and had determined that the law was on the side of Giadom. He added that the President was expected to attend the virtual meeting Giadom scheduled for Thursday afternoon. The Giadom meeting was attended by APC governors and the leaders of the National Assembly. However, the APC’s National Vice Chairman, South-South, Hilliard Etta, who was appointed to act on behalf of Deputy National Chairman, South, Abiola Ajimobi, while reacting to the issue, described Giadom’s NEC meeting as unconstitutional. Scheming for the control of the APC by various camps has worsened the crisis rocking the ruling party. Two members of the party claimed to be acting chairman following the Appeal Court’s suspension of Adams Oshiomhole. The NWC had named Ajimobi, who is in hospital, as the acting national chairman of the party, but Giadom declared himself as the acting chairman of the party, puncturing the announcement by the NWC of the party.
Nigeria’s pension fund managers have seen a sharp decline in the number of new retirement savings accounts as employers cut back on recruitment. Businesses, especially manufacturing firms, have largely been shut down since April after the country imposed movement restrictions to curb the spread of the coronavirus infections. New retirement savings accounts grew 85% less in April compared to the same period a year earlier, according to data from the West African nation’s pension body, an indication of a slowdown in the number of new jobs. The economy of Africa’s largest oil producer has also been battered by a drop in crude prices this year. This has hit hiring and the creation of new pension accounts, which is mandatory for all employers in Africa’s most populous nation. Still, total pension fund assets under management in Nigeria was steady at ₦10.6 trillion in April, almost the same level as in February. Over 40,600 new pension accounts were created in February but that number dropped to around 30,000 in March and virtually disappeared in April. No data is as yet available for May. The number represents those taking up jobs for the first time or opening pension accounts for the first time.
President Buhari has expressed concern over the decision of some West African nations to replace their currencies with the Eco ahead of other ECOWAS states including Nigeria. Buhari made the comments at an extraordinary virtual summit of the Authority of Heads of State and Government of the Union Economique et Monétaire Ouest Africaine (UEMOA) also known as the West African Economic and Monetary Union, which was hosted by the West African Monetary Institute, Accra, Ghana. Speaking in a series of tweets, Buhari expressed unease about the UEMOA Zone’s wish to take up the Eco in replacement for its CFA Franc and complained about the lack of trust. Buhari said Nigeria fully supports and is committed to the monetary union, “but we must do things properly and ensure absolute compliance with the set standards.” The members of the UEMOA are Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo. They have a single currency, the CFA Franc, and the Eco will remain pegged to the euro and will be backed by the French Treasury. The euro will guarantee the Eco’s convertibility and stability, with the French Treasury remaining as guarantor for all eight UEMOA states. The desire to jump the gun by UEMOA states is in response to the desire of its members to wriggle out of the influence of Paris. A switch from CFA Franc would mean that links with France would be severely cut and Paris will no longer help to manage the currency of UEMOA members. It should be noted that foreign reserves of these countries were centralised in Paris as UEMOA members had an obligation to ensure that they paid 50% of these reserves to the French Treasury. According to Reuters, up until now, Paris has maintained representatives at the Banque Centrale des États de l’Afrique de l’Ouest (BCEAO) also known as the Central Bank of West African States, the monetary policy Council, and the banking commission.
South Africa’s unemployment rate hit a record high in the first quarter of this year as key sectors including agriculture shed jobs, data showed on Tuesday, highlighting weakness in the economy even before it was battered by the COVID-19 pandemic. Africa’s most advanced economy was already in recession before the pandemic hit. Authorities imposed a strict lockdown at the end of March, further squeezing businesses and consumers. The unemployment rate of 30.1% was up from 29.1% in the final quarter of last year, Statistics South Africa said in its quarterly labour force survey. “This is the first (time) ever that we have hit the 30% mark,” Statistician-General Risenga Maluleke said. There were 7.1 million people without jobs in the first quarter, up from 6.7 million in the previous quarter, Statistics South Africa said. Under the expanded definition of unemployment, which includes people who have stopped looking for work, the rate was 39.7% compared with 38.7% in the previous quarter. With a large immunocompromised population, owing to the prevalence of HIV in South Africa (20.4% of the general population), the country was forced to go into a strict lockdown to curtail the spread of the coronavirus. President Cyril Ramaphosa in the wake of the lockdown announced a 500 billion rand ‘economic rescue package’, which is equivalent to 10% of the country’s GDP, to support small and medium scale businesses as well as a section of the population such as the homeless, child support and social relief grant beneficiaries. Even with an elaborate stimulus plan in addition to tax holidays given to major industry players, South Africa’s economy is still projected to contract by at least 7% at the end of 2020.
- The crisis in Nigeria’s ruling party is aimed at seizing control of the party with the race for the presidency in 2023 in mind. This ruckus is basically between two camps: the party’s National Leader, Bola Tinubu, and those opposed to his ambitions (which include the Minister of Transportation, Rotimi Amaechi, and the Kaduna and Ekiti governors, Nasir El Rufai, and Kayode Fayemi respectively, who are all rumoured to be interested in running for the office). The support of President Buhari for Victor Giadom who is close to Mr Amaechi and Mr Fayemi represents a victory for that camp against Mr Tinubu who is backing Adams Oshiomole. However, this in no way means the war is won for the Amaechi/Fayemi/El Rufai camp or that the leadership struggles are over. We expect that there will be more court battles and leadership changes, especially as Mr Oshiomole is likely to appeal his suspension all the way to the Supreme Court. The battle line, already marked by the dissolution of the party’s entire National Working Committee by its National Executive Committee, will become even starker with Abiola Ajimobi’s death yesterday. We should also bear in mind that even an outcome in Mr Giadom’s favour does not finalise the direction that the 2023 APC presidential ticket will swing as the group behind him are very likely to fall out with each other in the months to come. What is clear to us though, is that the reasons that brought a coalition of actors with widely varying interests under a single tent in 2013, no longer exist, and the APC is likely to break into shadows of its original constituent parts. We note with interest that President Buhari’s action is in stark contrast from his usual aloof disposition to party intrigues and squabbles. Whether he will get more involved in the party’s internal politics, especially with respect to supporting a successor in 2023, makes for an interesting prospect of political theatre.
Rainy day is here
- Since the Pension Reform Act was enacted in 2004, the Nigerian pension industry has grown in leaps and bounds, with total pension fund assets under management crossing the ₦10 trillion mark in 2019, after just 15 years. In recent years, however, the industry has faced challenges, from legislators sounding the rhetoric for the funds to be channelled to bridge the infrastructure funding gap, to state and local governments refusing to sign up to the scheme, and the rising casualisation of labour across the entire economy. Now it faces multiple trouble points of funding as employers both private and public, are facing revenue problems which quickly cut remittances to pension funds in times of financial difficulty, and also, rising unemployment. Nigeria’s official unemployment rate was 23% at the end of 2018 and is expected to rise to 34% by the year’s end if urgent steps are not taken, according to a report published this month by a government pandemic committee led by Vice President Yemi Osibanjo. That we have to rely on proxy deductions of this nature to arrive at the possible employment numbers is an indictment on the Buhari administration. These numbers were previously routinely released and funding has been identified as the reason why they have not been released for almost two years now. The reality is this – while the data can be hidden, the actual situation with regards to the country’s job market is plain for all observers to see. This can be corroborated with the rising number of people living in extreme poverty, which at the time of writing this report the World Data Lab pegs at 102,125,917 or about 50% of Nigeria’s population. Employment was one of the cardinal promises of the APC when it campaigned for office and is clearly one of the key areas its policies have failed to deliver on the promise.
- Mr Buhari’s complaint regarding the Eco is justifiable, however, Nigeria cannot simply express unease in these circumstances. It must offer an alternative, canvass support for that alternative and push it through. The idea of the Eco has been mooted for years; and having used the Euro’s teething issues as a case study, guidelines were enacted for the possible adoption of the currency. However, due to recent outcry over the colonial construct around the CFA, the UEMOA states have decided to use the Eco name as a facemask without dealing with the real issues and members have not met the 10 criteria required for its implementation by all West African states. These criteria are split into primary and secondary components with the primary criteria demanding a fiscal deficit of no more than 4% of GDP of each member state, a central bank deficit-financing of no more than 10% of previous year’s tax revenues, gross external reserves that can offer import cover for a minimum of three months, and a single-digit inflation rate of 5%. So far, Ghana appears to be the only country close to meeting the four primary criteria. These issues, if not properly addressed, would have a long-term effect on the viability of the currency. If Nigeria’s protestation against the UEMOA’s decision to proceed with the Eco is to be taken seriously, it would have to take more proactive steps by leading by example and meeting the primary criteria for the adoption of the currency and ensuring that the regional union, ECOWAS, stays true to its goals.
- The outlook for South Africa’s labour market remains gloomy, with some of the country’s big firms such as steel producer ArcelorMittal South Africa, food producer Tiger Brands and the third-biggest telecom operator Cell C already announcing plans to cut jobs. With no significant government support offered during the lockdown to the informal, or unregulated, sector — which according to the World Bank provides employment to 25-30% of South African workers — the impact has been severe for many. These figures are likely to be worsened by the COVID-19 induced lockdown; they also touch on a much larger economic challenge faced by South Africa, which is experiencing its second recession under President Cyril Ramaohosa since he took office in 2018. A part of this has been exacerbated by the battles with Eskom, the country’s electricity public utility, which regularly employs a power rationing programme, colloquially known as load-shedding, to account for the lack of maintenance of its facilities over the last decade. Another factor is the growing skill mismatch between what is taught at universities and what is needed in the labour market, a problem that seems to plague many developing countries. This has led to record-high unemployment rates of about 55.2% among youths aged 15 – 24 and 31% among graduates in this age group. The country is now confronted with unprecedented economic challenges as its debt to GDP grew to about 62.20% at the end of 2019, an all-time high. None of these figures makes for a rosy future for Africa’s most advanced economy, which is hobbled by the institutional deficiency of the African National Congress. Bold action is required to pull South Africa out of this deep economic mire and Ramaphosa needs to rise up to the occasion and prove that he is not setting his country up for another lost decade.