Nigeria expects to spend a record ₦12.65 trillion ($33.20 billion) in 2021 despite severe revenue constraints, according to an outlook released by the Finance Ministry on Monday. The spending by Africa’s largest economy, still reeling from low oil prices and the new coronavirus pandemic, is a 17.2% jump from the record ₦10.8 trillion budgeted for this year. Spending, according to the document, would focus on completing as many ongoing projects as possible, and that no new works would be allowed unless there were adequate resources to complete ongoing projects. This comes as the World Bank may not approve Nigeria’s request for a $1.5 billion loan in August due to concerns over desired reforms, unidentified sources told Reuters. The sources said the main concern being expressed by the World Bank is naira reform. Both the World Bank and International Monetary Fund had advised Nigeria to float its currency and allow market forces to determine the value of the naira. The World Bank which had aimed to bring the loan request to its board for approval this August could now delay it till October. The delay could leave Nigeria battered by low crude prices, unable to fully finance a record ₦10.8 trillion or $28.35 billion budget. The CBN has said that the country’s balance of payments gap this year will be $14 billion. Although the World Bank has not outlined any demands, fuel subsidies and electricity tariffs were also said to be a part of the discussions.

Ride-hailing companies operating in Lagos will face a new set of regulatory road bumps as the state government has said operators will pay a levy of ₦20 known as “road improvement fund” on each trip their drivers make in a day starting from 27 August 2020. According to a release signed by Chief Press Secretary to the governor, Gboyega Akosile, the Commissioner for Transportation, Frederic Oladehinde, said the state government and the operators had unanimously adopted the new regulations, after all, parties jointly reviewed and fine-tuned some of the contentious items in the framework. This was made known at a meeting between the state government and representatives of the ride-hailing operators held Friday, with Governor Babajide Sanwo-Olu in attendance. Both parties were said to have reached an agreement on the controversial service tax. The government said the enforcement of the new regulations were not intended to extort operators and drivers but to regularise ride-hailing operations in line with security measures. The commissioner said the governor offered a duty incentive to the operators, reducing statutory operational licencing and renewal fees by 20%, which implies that each e-hailing firm will now pay ₦8 million per 1,000 cars for a fresh licencing and renewal, instead of the earlier ₦10 million. Back in 2016, the state government first attempted to regulate ride-hailing startups by requiring taxi companies to register each operator with the state at the cost of $320 per car.

The two wives and a child of the lawmaker representing Dass Constituency in the Bauchi State House of Assembly, Musa Mante Barassa, have regained their freedom. News reports say the victims regained their freedom after spending four days in captivity. The Chief of Staff, Bauchi Government House, Dr Ladan Salihu, announced their release on his Twitter handle. Gunmen had attacked and killed Barassa at his residence in Dass, abducted his wives and one-year-old daughter last week Thursday. Police authorities said four empty shells of live ammunition were recovered at the scene of the murder, adding that the incident is being investigated. Meanwhile, on Tuesday, Jihadist group, Islamic State West Africa Province, took hundreds of hostages in a town in Kukawa in the Lake Chad region and seized people who had just returned to their homes after spending nearly two years in displacement camps. The group attacked the town in 22 trucks around 1600 hours and engaged soldiers guarding the town in a fierce battle. Residents of Kukawa, escorted by the military, had returned to the town just on 2 August, on the orders of the Borno state authorities. They had been living in camps in the regional capital Maiduguri, 180 kilometres (120 miles) away, where they fled following a bloody attack in November 2018.

Mali’s President, Ibrahim Boubacar Keïta, was arrested on Tuesday by mutinying soldiers in the capital, Bamako. The arrest came after soldiers took up arms near Mali’s capital and staged an apparent mutiny amid an ongoing political crisis in the country. The soldiers on Tuesday fired their guns into the air in the base in Kati, a garrison town some 15km (nine miles) from Bamako, while witnesses said armoured tanks and military vehicles could be seen on its streets. Some senior government ministers and army officers were also reportedly under arrest but it was not clear by whom. It was also not immediately clear who was behind the unrest or where embattled President Ibrahim Boubacar Keita – who has faced weeks of opposition protests calling for his departure – was when it erupted. Reports said he had been taken to a safe location. In a statement, the West African bloc, ECOWAS, urged the soldiers “to return to their barracks without delay”. This mutiny comes at a time when, for several months now, “ECOWAS has been taking initiatives and conducting mediation efforts with all the Malian parties,” the bloc said in a statement. Government ministry buildings, offices of state television, ORTM, were evacuated, a government official said, and gunfire was heard near the prime minister’s office, according to a security source. The mutiny comes amid Mali’s worst political crisis since the 2012 coup that toppled then-President Amadou Toumani Toure and contributed to the fall of northern Mali to jihadist militants. At least 14 people have been killed in the mass protests led by Keita’s opponents since June, according to the United Nations and human rights activists. The protesters were calling on Keita to resign over what they say are his failures to restore security and address corruption.

Commentary

  • Nigeria’s finances require desperate measures but the government appears stuck in dreamland. The country’s governments since 1973 have continued to act like “money is not our problem, but how to spend it,” a statement so eloquently made by the military dictator at the time. The reality in 2020 is different. Projected debt servicing payments would take up ₦3.1 trillion of the spending, or just under 25% of revenue of the 2021 budget, which is expected to reach ₦7.5 trillion, implying a higher deficit. The CBN has devalued the naira twice in 2020 to increase Naira allocation to the various tiers of government, and the Federal Executive Council, in July, approved the removal of the petrol subsidy. These steps are positive, but despite them, debt service to actual revenue ratio was 86.2%. Recently, the World Bank delayed the disbursement of a $1.5 billion loan to Nigeria for reasons centred around currency reforms. Bond investors have had to wait to get their coupons paid this year from Nigerian government securities, the second such time in five years, raising concerns. More needs to be done, and almost all of it should come from the government. Nigeria’s government still projects large revenues and expenses in its budgets, divorced from anything which the past five years has shown. It refuses to employ creative solutions to manage its growing debts, especially by cutting its own costs. Rather, it has chosen to raise revenue through the introduction of all types of new taxes. Without structural reforms, none of these will course-correct the country’s finances in the long run. Things are coming to a head.
  • It is important to point out that moves to regulate ride-hailing operations are not limited to Nigeria. What is different here are the multiple layers of regulation, fees and taxes being thrown at the sector. The Lagos State Government can rename the tax all it wants, and provide facetious justifications such as regularising “ride-hailing operations in line with security measures”. But it is what it is, a tax. Only last year, the motorcycle hailing operators were forced to reach an agreement with the National Union of Road Transport Workers (NURTW) and Road Transport Employers’ Association of Nigeria (RTEAN) to buy ₦500 daily tickets to allow each motorcycle to operate anywhere in the state without the fear of harassment. A few months later in January 2020, the Lagos State government banned all motorcycle hailing operators from operating in the state as part of its wider clampdown on motorcycles and tricycles by citing security concerns. Any neutral observer can discern what is going on. The government has moved against an easy target to skim off money, specifically, because they are formally constituted companies, yet it has not added any value to the process. Their argument, of course, falls apart when one considers that such taxes are not collected from regular transporters precisely because they are unenforceable against them. Lagos likes to say it is open for business but measures like this effectively amount to preying on businesses. In a state with a combined unemployment and underemployment rate of over 43% according to the NBS, we wonder why the government is keen on making things more difficult for some of the largest private employers in the state. This fixation on continually ‘raising’ internally generated revenue (IGR) in what amounts to a predatory manner, with little transparency and accountability to show for it, will only have one result – firms will begin to wonder if Lagos is really worth it.
  • The attacks in Bauchi and Borno are the latest in the long running episodes of insecurity in northern Nigeria, particularly kidnapping for ransom. Even more, these kidnappings are gradually moving from rural areas and highways and into towns and cities: Dass, which is the third biggest town in Bauchi, has a population of almost a hundred thousand people. In Zamfara in the North-West, unidentified gunmen kidnapped the children of a former commissioner on Tuesday and killed a security officer and a neighbour. Although Zamfara is a hotbed of attacks and kidnappings by bandits, this attack, unlike many of the previous ones, happened in an urban area, like the one that led to the death of Mr Barassa. These three incidents within days of each other represent a significant escalation in kidnappings and adds another layer of insecurity on top of urban gangs and sectarian violence. Continued attacks by Boko Haram/ISWAP, such as the Kukawa incident, show that insurgent presence in and around the lakeshore area surrounding Kukawa is still significant. The recent claims by Governor Zulum that there were no Boko Haram operatives in the area rings hollow. These attacks will continue to mount pressure on the government and security agencies for proactive measures to improve security directly through revamping the security architecture of Nigeria. They also mean that unless there is an expansion in the economy to create jobs and wealth, crime will continue to be a draw.
  • The arrest and resignation of President Keita, which brings months of protests and political turmoil in the country to a head, does not come as a surprise as not only had Keita lost the support of the public but also of the military. Although ECOWAS, which appointed and sent the former Nigerian President, Goodluck Jonathan, on a mediation mission, and other countries such as erstwhile colonial master, France, have condemned the coup, it is hardly going to make the mutinous soldiers stand down and reinstate Mr Keita. The likely outcome is to put pressure on the new junta to conduct an election very soon as it has promised. It is important to make a distinction between this coup and that of 2012 which removed then-President Toure; the former was instigated by the rapid fall of northern Mali to jihadist militant groups, while this one takes place amid an escalating security crisis, particularly in its north and east and contentions following highly disputed parliamentary elections. As such, it is hard to say if this change in leadership will change the security picture by much despite rising insecurity being one of the major reasons for Mr Keita’s ouster. Mali will continue to host peace-keeping operations from the UNASIM, the UN Peacekeeping Force; the G5 Sahel Force and France’s Operation Barkhane. The real challenge will lie in being able to deploy a large enough force to cover the entire country – 1.2 million sq km, exert territorial control over areas that have been practically taken over by these terrorists and cut off insurgent networks. Already, we have witnessed the use of Mali as a staging ground for attacks in Grand-Bassam (2016) & Kafolo (2020) in Côte D’Ivoire, and the gradual expansion of the sphere of operations of these groups into Burkina Faso & Niger Republic. Recent trends also point to the increasing participation of these groups in violent attacks in North-West Nigeria, incidents typically described as bandit attacks. As such, there is an urgent need for continued regional & international collaboration in restoring order and security to Mali. If the new junta makes this its singular focus, it could buy itself local and international support to stabilise the country before elections are held.