The week ahead – The game is the game

Nigeria’s economy grew 3.11 percent in the first quarter of 2022, the National Bureau of Statistics (NBS), said on Monday. The Gross Domestic Product, which measures the size of the economy, expanded at a slower rate than the previous quarter — the fourth quarter of 2021 the NBS said Monday. It grew by 3.98 percent in the fourth quarter of 2021. The performance was, however, better than a year ago when the economy grew 0.51 percent in the first quarter of 2021. The growth recorded in the first three months of 2022 was the sixth consecutive quarter of economic expansion. The full-year GDP figure for 2021 was the fastest growth in seven years. In the NBS report, non-oil sectors such as financials, communication, trade and healthcare were among those that recorded the fastest growth. “The observed trend since Q4 of 2020 is an indication of a gradual economic stability,” the statistics office said crude petroleum and natural gas, road transport, quarrying and other minerals lagged. The oil sector declined by 26.04 percent in the first quarter, compared with an 8.06 percent contraction the previous quarter.

The NNPC has deducted another ₦271.13 billion as a shortfall for the importation of petrol (subsidy) in April 2022 meaning that so far this year, the NNPC has spent ₦947.53 billion on the petrol subsidy — more than half of 2021’s subsidy spending. The NNPC said this in its monthly presentation to the Federation Account Allocation Committee (FAAC) meeting yesterday. The FAAC document showed that this is the fourth time the oil company will not remit any fund to the federation account in 2022 — as subsidy payments continue to deplete revenue. NNPC also said it would deduct ₦371 billion for the shortfall in May 2022 during next month’s FAAC meeting. “The Value Shortfall on the importation of PMS recovered from April 2022 proceeds is ₦271,125,127, 487,58 while the outstanding balance carried forward is ₦371 billion,” the document reads. “The estimated Value Shortfall of ₦874,503,649,663.98 (consisting of arrears of ₦371 billion, plus estimated April 2022 Value Short Fall of ₦503,313,767,828.14 is to be recovered from May 2022 proceed due for sharing at June 2022 FAAC Meeting.” In January, February and March 2022, petrol subsidies gulped ₦210.38 billion, ₦219.78 billion, and ₦245.77 billion, respectively. This year alone, the federal government has budgeted to spend ₦4 trillion on costly petrol subsidies — as a result of high global oil prices due to the Russia-Ukraine war. In the month under review, the report said NNPC lifted overall crude oil of 8.80 million barrels (export domestic crude) in March 2022, representing a 10 percent decrease relative to the 9.77 million barrels lifted in February 2022. This comes as the 36 Nigerian states on Monday lost in their opposition to efforts by Abuja to monitor their handling of local governments’ funds. Justice Inyang Ekwo of the Federal High Court in Abuja dismissed a suit filed by the state Attorneys-General and the Nigeria Governors’ Forum. The suit had challenged the legality of the Nigerian Financial Intelligence Unit Guidelines which came into effect on 1 June 2019. The NFIU 2019 guidelines required among others, that the states/local government joint accounts should be used only for receiving funds and subsequently transferring them to local government accounts only. They argued among others that the NFIU guidelines known as “the NFIU Enforcement and Guidelines to Reduce Crime Vulnerabilities crafted by cash withdrawal from local government funds throughout Nigeria,” particularly provisions 1 to 6 and the penalties prescribed, were ultra vires the power of the NFIU under Sections 3 (1) and 23(2) (a) of the Nigerian Financial Intelligence Unit Act, 2018 and therefore, unconstitutional. Justice Ekwo, in the judgment, held that he did not see where the guidelines contradict the provisions of sections 7(1), (6) (a) and (b) of the 1999 Constitution. The judge added that the guidelines also did not conflict with the provision of Section 162(6) of the 1999 Constitution which creates the State Joint Local Government Account, into which allocations to the local government councils of the state from the federation account and the state government are paid.

The National Association of Nigerian Students (NANS) has promised to continue the ongoing nationwide protest against the prolonged strike by the Academic Staff Union of Universities (ASUU). The students noted that the next phase of the protest would target the shutdown of airports and other sources of the Federal Government’s revenue until the strike was called off. The NANS Southwest Zone D made this known yesterday in Abuja during a protest at the national secretariat of the All Progressives Congress (APC). Speaking about the strike embarked on by ASUU, the students, who were led by the NANS Southwest Coordinator, Adegboye Olatunji, and Chairman of NANS Ogun Joint Campus Committee (JCC), Kehinde Simeon, called on the Federal Government to look into the plight of the lecturers and by extension the students, who bore the brunt of the strike with a view to acceding to the demands of the union.

Seven political parties have joined forces ahead of the upcoming 2023 general elections. According to a communique on Monday, the coalition said it took 15 months of deliberations and agreements, for the Allied Political Parties and the National Consultative Front, comprising six parties, to decide to join forces with the Labour Party to present a joint Presidential Candidate for the 2023 polls in a bid to put up a stronger fight against the ruling All Progressives Congress (APC) and front-line opposition Peoples Democratic Party (PDP). The parties in the coalition are New Nigeria Peoples Party (NNPP), African Democratic Congress (ADC), Social Democratic Party (SDP), Allied Peoples Movement (APM), People’s Redemption Party (PRP), Labour Party (LP) and National Rescue Movement (NRM). A spokesperson for the National Consultative Front (NCFront), Bello Bilikis, said that the formal endorsement of the Labour Party by the ‘3rd Force’ Movement arose from recent meetings and activities of separate political commissions of the NLC and the TUC with their allies like the Femi Falana-led The Political Alternative Movement (TPAM) and the Civil Society, towards repositioning the Labour Party as an “alternative platform for rescuing Nigeria ahead of the 2023 general elections.” Ms Bilikis added that Prof Attahiru Jega of the People’s Redemption Party (PRP), Professor Pat Utomi of the Labour Party and Senator Saidu Dansadau of the National Rescue Movement, are also on board with the arrangement and have been instructed to build a Mega Electoral Alliance and also adopt of a single line of candidates among the seven allied parties involved in the ‘3rd Force’ alliance talks for the 2023 elections. Furthermore, Ms Bilikis noted that the ‘3rd Force’ Mega Electoral Pact for the 2023 elections is proposed around an agreement on the Labour Charter of Demand, EndSARS Youths’ Demands and Constitutional Referendum for Nigeria, among others to be agreed upon as terms of the Alliance for the 2023 elections. The ‘3rd Force’ Coalition Leaders and Parties are expected to jointly address the country sometime this week in a bid to announce the new agenda.

Commentary

• The Nigerian economy continues to rebound from the pandemic induced recession that the country suffered in 2020. This is expected as pent-up demand is now being fulfilled. However, there are already signs that the economy has started slowing down. The CBN’s MPC report showed that in February, the Manufacturing Purchasing Managers’ Index and Non-Manufacturing PMI both contracted month-on-month (the former registered at 50.1 and the latter at 49.0). Perhaps the most important indicators of Nigeria’s financial health are oil price and oil production, as can be directly linked to the country’s entry into and exit from the 2016 and 2020 recessions. The Nigerian oil and gas sector requires significant intervention. Currently benchmark brent crude is moving at above $110 per barrel, which is well above Nigeria’s 2022 budget benchmark of $62 per barrel. The problem is that the country’s oil production is ridiculously low at around 1.3 million barrels per day, far short of its OPEC quota of 1.7 million barrels per day. If this is not addressed, then not only will the country fail to meet its budgeted revenues for 2022, but it may just start flirting with another economic recession. In a period where supply is depressed due to the Russia-Ukraine war and prices are up, the sector contracted by 26.4%. Had the sector remained flat, overall GDP growth would have been about 6%. On the other hand, Nigeria’s current GDP growth rate is positive, as it outstrips population growth marginally, which also means that overall on a macro level, per capita GDP has improved slightly. This happening at a time when unemployment numbers are at a record high indicates that this growth does not represent the full potential of the country’s productivity. A government that reverses the unemployment trend and gets the country fully working and producing will produce remarkable growth and by extension, development. This has to be the most fundamental priority as Nigerians gear up to elect a new leader who may likely lead the country for another eight years after Buhari.
• Much has been made about the financial viability of Nigeria’s federating units, the practice of getting handouts from Abuja on a monthly basis, and how this disincentivises the states to put in place strategies for growing their internal economies and generating revenues within. Nigeria now spends close to ₦1 trillion ($166 million, parallel market, 26/5/22) on petrol subsidies per quarter, which sums up to about ₦4 trillion per annum. This is about 37% of the ₦10.7 trillion revenue budgeted for 2022, a figure that the government is unlikely to realise. Essentially, government spending will be negatively affected. Added to this are strikes by labour unions and the distraction of the 2023 general election season which is already in full swing. A jolt was sorely needed and this can lay claim to being a contender. The judgement loss by the states represents a significant step in institutionalising local government autonomy in Nigeria. We expect that the states will pursue this all the way to the Supreme Court but this pronouncement is definitely one in the right direction. All observers of Nigeria agree that a key reason why the legitimacy of the Nigerian state is in tatters is a failure of grassroots governance and autonomy is a solid starting point to set it on the path of accountability. Having said this, the states are curiously not up for a fight where their financial viability is really threatened. The NNPC continues to deduct earnings which should accrue to the FAAC with administrative impunity and the states – which have sued Abuja over such things as Value Added Tax and stamp duties management – have not brought this up in the courts. We have consistently maintained that the country’s subsidy regime is unsustainable. With the current revenue shortfall and rising debt at all levels, this should be “the beginning of the end” of the subsidy regime; specifically, because of its impact on state governments’ revenue. This could likely be the long-awaited wake-up call to state governments to look inward and grow their various economies while loudly challenging the status quo that many have meekly acquiesced to. In order for them to fully occupy the moral (and legal) high ground and pursue greater fiscal accountability, they must sort their own houses. State governments should allow local governments to handle their allocated resources; a practice which handled right, could curb voter apathy for local council elections, usher in greater accountability for councillors and local council chairmen and have a net positive impact on subnational revenue generation.
• After perhaps decades of simply being a platform for aspiring young politicians or being in the pockets of politicians, NANS seems to have rediscovered its revolutionary streak with the way it is organising and protesting against yet another ASUU strike. Unfortunately, the strike and the protest have come at a time when politicians, including those in government, are caught up in the throes of politicking as the primaries approach. The earliest indication that the government does not give a flying flamingo about the anti-strike protests embarked upon by students in yet another long strike by university lecturers came last week when soldiers shot at protesting students in Akure, Ondo State, leaving many students with injuries and in shock. The Akure protest was part of the nationwide protests embarked upon by the national student body. The military’s actions are instructive, although not without precedent. The anti-police brutality protests of October 2020 ended prematurely when the military opened fire on the protesters in Lagos, in what is now known as the Lekki Massacre. Furthermore, no top government official has responded to NANS’s threat. NANS’s attempt to shut down infrastructure may likely receive the same heavy-handed response that the government has shown a clear appetite for. For a government whose major preoccupation is regime security, oil infrastructure is the lifeblood of its sustenance. The Odi Massacre in 1999 demonstrated how much it is willing to use force to ensure that the taps keep flowing. NANS itself has a credibility problem to overcome. The composition of its executive committee is questionable and some in the secretariat are not even students. Thus, their skin in the game is thin and tilts heavily towards the political and performative. It stopped representing the real and legitimate concerns of students a long time ago and has been hollowed out by political patronage and the dismemberment of student activism by overbearing university administrators, who are themselves in the employ of the government. The group simply is too weak to either influence policy actors or carry out its threat. The handwriting on the wall is clear: education ranks low on the government’s priorities and public higher education is fast becoming like public primary schools, an unwanted, unloved and barely tolerated option for the average Nigerian. Both the government and striking stakeholders in education have refused to truly engage, instead, reverting to tired and outmoded models of engagement. For Abuja, it has been obfuscation and empty platitudes to fund and revamp the sector; for education unions, strikes and half-hearted attempts at civic disobedience. NANS’s strategy of attacking the government’s revenue sources that are largely oil-dependent is important because it could theoretically starve the ruling elites of much-needed funds going into the election season. That approach could go both ways: if the sabotage campaign is strong enough to gain government attention, it will either lead to a hastened resolution of the striking lecturers’ demands or the more likely option, a fresh outpouring of violence.
• Nigeria’s political space is no stranger to a single party, two-party, three-party and multiple party politics, especially during election season. At independence, the country had three major parties in parliament–the NPC, NCNC and the AG. In 1983, three major parties contested the presidential polls–the NPN, UPN and NPP. The two-party system was introduced by the military for the 1993 elections–the SDP and NRC. The PDP’s dominance at the federal level between 1999 and 2013 presented Nigeria as a one-party state, but the creation of the APC – a merger of regional parties and disaffected members of the then ruling PDP in 2013 returned the country to a two-party system. What the Labour Party is proposing as an alternative is also not new. Some smaller parties came together in 2018 to form a third force as an alternative to the APC and PDP but infighting among the group about the choice of presidential candidate for the following year’s general election ensured the idea was dead water. The difference between 2019 and 2023 as regards the third alternative is that unlike the 2019 edition of proposed mergers, the 2023 edition goes beyond being a marriage of convenience (which was what the APC was and still is), as it has key burning issues such as police and constitutional reforms in its manifesto. This is not to say that the new political party is sure to blaze a trail through Nigerian politics. In 2019, the conversation around a ‘Third Force’ to checkmate the ruling APC and the PDP peaked about a year and a half from the polls. Despite the fanfare and reams of commentary, this ‘Force’ failed to garner more than 100,000 votes in the election. This current alliance holds important promises as well as potential pitfalls. If well constructed, the new party could represent a formidable force in the coming elections. While it is unlikely that they will take the presidency, this new coalition might do two things. First, they could take some key states, Kano being the main prize on the cards, off the established parties in gubernatorial and legislative elections. They could also take some key votes away from the big two parties in the presidential elections and become positioned as a potential deciding factor in the event that they do enough for the elections to go to a run-off – the first in Nigerian history. The alliance, however, has a lot of hurdles to cross: first is if it is able to manage the various ambitions of its key members, particularly when it comes to selecting a presidential candidate. This has been the bane of the existence of similar arrangements in the past. There is also the lack of name recognition, structure and financial muscle to go toe-to-toe against the dominant two parties. It is also unclear if this alliance would hold for offices down the ballot. A disproportionate focus on capturing power at the centre risks diverting focus from creating a durable and sustainable base for future electoral contests. The absence of a bottom-to-top approach to fighting the 2019 elections killed the Third Force then and it appears to be recurring this time again. It must also prioritise National Assembly, gubernatorial and state House of Assembly contests for it to be reckoned with in the tempestuous waters of Africa’s largest democracy.