The Central Bank of Nigeria has introduced a rebate of ₦5 for every $1 of funds remitted to Nigeria, through International Money Transfer Operators (IMTOs) in its new forex policy. The Central Bank Governor, Godwin Emefiele, disclosed on Saturday during a virtual event organised by Fidelity Bank at its inaugural webinar on the impact of the new forex policy on diaspora investments. The new policy took effect from Monday. According to Mr Emefiele, efforts at driving remittance inflows into Nigeria would yield positive results as it continued to ensure formal banking channels offer cheaper, faster, and more convenient ways for remitters to send funds to beneficiaries. The CBN governor said reducing the cost of sending remittances was a significant way to boost remittance inflows to Nigeria. In general, he said, the new policy was expected to enlarge the scope and scale of foreign exchange inflows into the country with a view to stabilising the exchange rate and supporting accretion to external reserves. This development came as oil surged above $71 a barrel in Asian trading on Monday after Saudi Arabia said the world’s largest crude terminal was attacked, although output appeared to be unaffected after the missiles and drones were intercepted. Bloomberg reported that futures in London jumped as much as 2.6% at the open after rising 4.9% last week. The Saudis said that a storage tank at Ras Tanura on the country’s Gulf coast was attacked on Sunday by a drone from the sea. The terminal is capable of exporting roughly 6.5 million barrels a day — nearly 7% of oil demand — and as such one of the world’s most protected installations. The attacks follow a recent escalation of hostilities in the Middle East region after Yemen’s Houthi rebels launched a series of attacks on Saudi Arabia.

Petrol tank drivers and other articulated vehicles on Wednesday blocked the Benin-Ore highway, at Ofosu over the killing of two drivers by suspected Fulani herdsmen on Tuesday night. Ofosu is the boundary community between Edo and Ondo States. The hoodlums were said to have also made away with an undisclosed amount of money stolen from their victims. The angry drivers, who blocked the ever-busy highway at the military checkpoint, refused all pleas made to them by other motorists, to vacate the road. A driver, who delivers newspapers to Edo State, lamented that he was stuck in the traffic since early Wednesday morning, saying business has been disrupted by the blockade. “It is a terrible experience getting stuck on the road. The protesting drivers said two of their colleagues were robbed and killed by suspected herdsmen. We are all stuck here and our businesses have been disrupted,” he said. It was also gathered that the security operatives at the checkpoint have abandoned their posts due to the chaotic atmosphere, while the angry drivers are insisting that Governor Godwin Obaseki of Edo State must come to address them before they will open up the road for use. When contacted, PPRO of the Edo Police Command, Kontongs Bello, confirmed the incident but said the location is under the Ondo Police Command.

The managing director of the Federal Airports Authority of Nigeria (FAAN), Hamisu Yadudu, says Kaduna’s airport will not be shut over an attack on its staff quarters. Gunmen had attacked two houses in the staff quarters and abducted 11 persons on Saturday. While receiving the Senate Committee on Aviation in Lagos over the weekend, Mr Yadudu said only a few staff members of FAAN reside in the quarters, adding that the current attack will not discourage the agency from clamping down on criminals. “This incident is entirely different from closing down the airport. It is a security concern that we have at our staff quarters,” he said. “A lot of our staff do not even live in these quarters. If there is a need for us to close it, we will close it, but this is even far away from it. “There is no need for that drastic action. Just a small percentage of our members of staff stay in the staff quarters; the rest are all living in the town. “You can see that the staff quarters are fenced. We are taking appropriate measures, but like I said, we just have to improve to counter these challenges. “Though the fence was broken, somehow, somewhere, things happened, and now it is time for us to counter as we have been doing always.” He said FAAN had, since 2020, beefed up security at the various airports across the country. On his part, Smart Adeyemi, chairman of the Senate committee, called for the restructuring of the entire country in a bid to address the various security challenges. He said the agitation for restructuring would not lead to the secession of the country, as being claimed in some quarters.

A prominent Senegalese opposition figure has been released on bail pending a rape trial in a case that has ignited mass outrage at President Macky Sall’s government and led to the worst unrest in a decade. Ousmane Sonko, a charismatic 46-year-old opposition leader and MP who finished third in the 2019 presidential election, was arrested last Wednesday after an employee of a beauty salon accused him of raping her. He denies the allegation and his supporters believe it is the latest in a line of moves orchestrated to prevent popular figures such as Sonko from challenging Sall’s government in elections. Thousands of largely young people have taken to the streets in the past week, leaving at least eight dead in clashes between protesters and police and bringing parts of the capital, Dakar, to a halt. Many observers say protesters are venting wider frustrations about unemployment, inequality and corruption in one of west Africa’s most stable democracies. Sonko, a former presidential candidate and government tax inspector, has galvanised many Senegalese people, particularly the young. He rose to prominence in 2015 after releasing documents he said exposed political corruption in Sall’s ruling Alliance for the Republic Party and criticising Senegal’s economic reliance and relationship with former colonial power France. Military tanks patrolled Dakar’s streets on Monday morning in a show of force. Outside court groups of Sonko supporters cheered the judgment as a “partial victory”. Despite his release, protests called by his Movement to Defend Democracy party (M2D) are expected to continue. On Friday, at least four people died, according to police, including a 20-year-old student, amid an aggressive response by security forces who have shot live rounds and teargas.

Commentary

  • The CBN’s new policy holds a number of implications for Nigeria. First, both the rise in oil prices and the CBN’s remittance policy will bring about, in the short to medium term, a much needed if temporary rise in government revenues. Nigeria’s debt service to revenue ratio is already unhealthy, and any increase in the FG’s fiscal position is a welcome development. A second implication, however, is that domestic petrol prices will also rise, as landing fuel costs follow oil price trends. The FG has removed subsidies for petrol, and this period will be the real test of its commitment to this policy. A rise in petrol prices will also have a knock-on effect on transport costs and food prices at a time where food inflation, at 20%, is already unbearable for most Nigerians. Whilst the country seems to have only just limped out of its second recession in three years, insecurity and economic issues threaten wider national stability. In recent years, the government seems to have abdicated its fiscal policy role to the CBN, which has equally seen its monetary policy role expand to a development finance one as well as currency printing for the government. These activities have left a gaping hole in the CBN’s balance sheet and the regulator is contemplating issuing long term promissory notes to the public to help take the exposure “off-balance sheet”. Another cause of concern is that falling oil revenues have pressured the external reserves, which threatens the country’s ability to fund imports. In fact, Nigeria’s external reserves fell this week to $37.74 billion, its lowest level since the height of the COVID-19 induced lockdown in May 2020. The CBN is desperately trying various initiatives to stem this reserve erosion. Data indicates that remittances are down 61% y-o-y, which could be a result of myriad factors from the use of decentralised channels like cryptocurrencies, peer-to-peer exchanges and unfavourable CBN remittance policies to the economic difficulty caused by the ongoing pandemic. This “Naira 4 Dollar” scheme appears to be designed to meet at least two goals. Firstly, to help attract US dollars from unofficial exchanges to be routed through official channels. This means it could discourage peer-to-peer exchanges and other forms of remittance like cryptocurrencies. However, incentivising the use of more formal channels through licenced IMTOs may not be sufficient motivation for many diasporans when the main prohibitive factor – expensive transfer charges persist. Secondly, it appears to be a subtle devaluation of the Naira since more of the local currency will be exchanged for a limited amount of US dollars. Only time will tell if this initiative will succeed. We are not holding our breath.
  • The strategy of using economic sabotage to air grievances started with Niger Delta militants blowing up pipelines, leading to an amnesty. However, the immediate inspiration for the action of the tanker drivers appears to have come from last week’s short-lived blockade of food trucks coming south. It is pertinent to note that up till this year, there was only one instance of this kind of tactic, now we have had two in as many weeks. It indicates that the forces plaguing Nigeria – from insecurity, pervasive sense of grievance in every corner and economic malaise that deprives many of a chance at a better life – are accelerating. To be clear, this latest incident is not the first blockage on that road, but it is certainly the most significant, and it reflects the deteriorating security situation on Nigeria’s roads, a situation which make trips that used to be hassle-free become extremely fraught with security risks due to the actions of criminal gangs across the country. Just as worrying is that the crime being ascribed to Fulani herdsmen increases resentment towards Fulani communities across the country. Such resentment creates a fertile ground for the emergence of ethnic champions such as Sunday Igboho in the South-West accelerating an already clear descent into sectarian violence between indigenous communities and the Fulani who have settled amongst them. One thing that is clear is the need for the government to take its duty to bring criminals who have been attacking indigenous communities to book seriously. In a scenario where people do not feel they can obtain justice through official channels, they will use whatever leverage they have in protest, or to get what they perceive to be justice. The government’s repeated failures to at least appear impartial have fuelled increasing animosity towards the Fulani ethnic group in various parts of Nigeria. Just like the food blockade, this one will come to an end, but the message is now clear: it is every group for itself.
  • This attack on staff of the Kaduna Airport shows the growing ambition and capabilities of some of these armed groups. They appear no longer content to just kidnap children or individuals, but any group of people residing in improperly secure places. It means that state and federal employees across the country are now on notice, because they could also be abducted en masse at any time. In our view, Mr Yadudu’s comments are a clear attempt to downplay the security risks at the Kaduna Airport, which is a significant distance from the city centre and surrounded by vast and unguarded expanses of land. While it may be true that only a few staff members reside at the airport, it does not diminish the fact that armed gangs have proved that they can launch attacks on the facility. It also highlights how despite the presence of the military at the airport and with the Nigerian Defence Academy – perhaps the most important military installation in the country – only 15km away, armed groups can still carry out attacks nimbly and effectively before any response can be sought. The challenges with Kaduna Airport are peculiar to it as an airport but also in tandem with the security challenges in the wider region: where vast, ungoverned spaces are a boon for armed gangs to roam about, attacking communities and kidnapping or murdering them. This is not a problem that can be solved by simply increasing the number of security personnel on patrol (of which Nigeria does not have enough); this will need increased border security and intelligence gathering to track down criminal and arms-trafficking networks in order to prevent attacks. It will also require solving the wider governance challenges that give rise to these crimes, such as increasing economic opportunities for young people and tackling low-level conflicts before they metastasise into violent ones. As we have already seen, the cost of ransom payments goes far beyond just money changing hands. Financial compensation continues to grease the wheels of this terrible industry by attracting violent characters in ever greater numbers, who then with the money made, build the resources to arm themselves for even more attacks. An ounce of prevention is worth a pound of cure.
  • The behaviour of the Sall administration shows how weak democratic institutions in numerous countries are making it easy for new leaders that promise reforms to perpetuate the dictatorial tendencies of their predecessors. As we have continued to insist, countries in West Africa need stronger institutions, not strong men. Mr Sall is gradually slipping into the habit of Abdoulaye Wade and Abdou Diouf before him in using state institutions such as the police and courts to render potential challengers to his rule ineligible to stand for election. This approach is exemplified in how the Sall administration succeeded in getting the parliament to strip Mr Sonko of his immunity as an MP, creating a precedent that is sure to be used against other opposition MPs. It is ironic that Mr Sall, himself a victim of politically motivated accusations by his predecessor Abdoulaye Wade, is using the same methods against opponents. It also highlights the similarity of governance challenges on the continent – a youth bulge mixed with unemployment challenges repressive government institutions that are comfortable with deploying brutality as an instrument of state control. This produces anti-establishment figures, who emerge in political opposition to these institutions, but when they get into power (which is not a given), they often make little effort to reform the system and institutions they so keenly criticised. Although Mr Sall had promised to restore five-year presidential tenures after Mr Wade increased them to seven years and serve only two terms, he was not successful in getting the Constitutional Council to allow him to shorten his stay in office after he won the 2012 election. If the current show of support and ongoing unrest, which has led to destruction of lives, properties and shutting down of schools and economic activities in Dakar, is anything to go by, it indicates Mr Sonko’s growing influence. With only two years spent in his second term, Mr Sall still has five years to go – a very long time for Mr Sonko to build his political base with a view towards the 2026 elections, or to continue whittling at the credibility of the central government through carefully orchestrated legal battles.