Emirates says it will reduce the number of flights to Nigeria from 15 August due to its failure to repatriate revenue from the country. The airline disclosed this in a letter dated 22 July addressed to Nigeria’s Minister of Aviation, Hadi Sirika, and signed by its DSVP International Affairs, Majid Al Mualla. “With effect from 15 August 2022, Emirates will be forced to reduce flights from Dubai to Lagos from 11 per week to 7 per week. We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” the letter partly read. The letter noted that as of July, The Dubai-based airline had $85 million of funds awaiting repatriation from Nigeria. It said the figure has been rising by more than $10 million every month, while operational costs of 11 weekly flights to Lagos and five to Abuja continue to accumulate. The airline said these funds are urgently needed for them to meet their operational costs and maintain the commercial viability of our services to Nigeria. “We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate,” the airline noted. According to the Bilateral Air Service Agreements (BASAs) with countries, airline tickets are mostly sold in naira while the airlines would repatriate the funds in dollars through the Central Bank of Nigeria.
Emirates is one of the many stories highlighting the casualties of Nigeria’s (still) befuddling foreign exchange management regime. The airlines are required by the BASA agreement to source the forex equivalent of ticket sales made in naira from the central bank at the official rate, a prospect which has led to undesirable currency risk exposure for the carriers – their realised returns in foreign currency will be less than the parallel rates – and they join the queue of market operators held hostage to the regulatory benevolence of the banking regulator. While one of the CBN’s primary objectives is to ensure price stability, this is quite different as its fixation on the control of the Naira has caused Nigeria more harm than good. For years, the CBN has insisted that it would defend the value of the Naira at any cost, only to retreat periodically when the pressure builds to an unsustainable point. However, the pressure has never been this high, whereas foreign airlines are unable to access foreign currency through the official window to repatriate funds. The damage that this will do to Nigeria’s reputation as an investment destination will be far-reaching and outlive the current regulatory life cycle. The most important facilitator of modern trade is the sacrosanctity of agreements. Nigeria, through the CBN, has consistently reneged on fulfilling its part of the BASA agreement, fuelling a ballooning pile of industry funds awaiting repatriation that reached $600 million as of June 2022. As these airlines depend on these cash flows to service their operations, including payment on leases and fuel contracts, it is no surprise that airlines, as exemplified by Emirates, are beginning to scale back until a more predictable forex regime enables them to make sensible business decisions. The solution is not very complicated – either allow the airlines to sell tickets at the more realistic forex rate of the parallel market or honour the agreements by maintaining enough forex supply to honour their repatriation requests. We cannot eat our cake, especially at 37,000 feet, and have it.
The 36 state governors through the Nigeria Governors’ Forum (NGF) have again resisted fresh moves to commence the deduction of the $418 million Paris Club refund allegedly owed four contractors from the federation account. In a letter to the federal government through the Secretary to the Government of the Federation (SGF), Mr Boss Mustapha, dated 1 August, the governors maintained that any renewed plan to begin the process which is being challenged in the courts and for which the Supreme Court has made pronouncement would be unconstitutional. In a letter signed by NGF Chairman and outgoing Ekiti Governor Dr Kayode Fayemi, the governors noted that it would appear that the allegiance of the Attorney General of the Federation and Minister of Justice, Mr Abubakar Malami, SAN and the Minister of Finance, Mrs Zainab Ahmed, lies with the contractors rather than the Nigerian people. The governors described as suspicious the “uncommon zeal and speed” with which the two ministers were pursuing the cause of the four contractors, explaining that the latest attempt to stampede the Federal Executive Council (FEC) to approve the payment was a surreptitious way of breaching the law. In addition, they said the monies can only be spent on the basis of an appropriation law or as prescribed by the House of Assembly of the state and in the manner and for purposes prescribed in the constitution, local government law or as prescribed by the council of the local government. The NGF argued that the essence of the Supreme Court’s pronouncement is that none of the contractors recommended by the Attorney General and the finance ministry can be paid because the contracts and payments relied upon were not processed as prescribed by the Constitution and the law. The governors said it was immaterial that part of the contract sums had been paid, as the payments did not validate the unlawful nature of the contracts.
Cases of Nigerian government officials pushing proposals that undermine the rule of law and economic wellbeing of Nigeria for personal benefit are not rare. The key difference is that, in this case, the NGF is an equally powerful body that can oppose them. A major feature of the Nigerian state is the tendency toward centralisation as politicians and policymakers seek to arrogate ever-expanding powers to themselves. Key examples of over-centralisation are resource management and taxation. The states are finding their feet and voice in curbing those unhelpful tendencies. A few years ago, Aso Rock tried to implement a settlement scheme aimed at establishing cattle grazing settlements across the country, but this was met by widespread condemnation from state governors, mostly in the south, and that forced the government to back down. The states are currently in court seeking to review the Value Added Tax collecting arrangement, in opposition to the central collection mechanism presently spearheaded by the federal government. Furthermore, a controversial Water Resources Bill is making its way through the National Assembly that seeks to grant the FG much control over the country’s waterways, which critics say is another federal resource grab along the lines of the discredited Ruga cattle grazing scheme. As we have repeatedly pointed out, where the interests of the state governors are clear, they know how to use the instruments of law and due process to tackle overzealous and suspected attempts to use the federation funds by the federal government and/or its agents. It, therefore, means that where they fail to do so, we can surmise that this is not for a lack of knowledge but either they do not see it as their interest or they deliberately choose to not act. Having said this, the governors are spot on. The AGF has repeatedly attempted to get these monies out for these four contractors in spite of pronouncements by competent courts of law and ongoing litigation on the matter – it is therefore another manifestation of the disdain for the rule of law that the chief law officer of the country under the Buhari administration has displayed on multiple occasions. Is there a cogent reason to rush through this matter before the Buhari administration leaves office in a few months? Otherwise, what is the hurry? Cabinet members are legally mandated to abide by the rule of law. Mr Malami and Ms Ahmed are no exception.
The National Broadcasting Commission (NBC) has imposed a fine of ₦5 million on Trust Television Network (Trust TV), a subsidiary of Media Trust Limited, over the broadcast of the documentary titled “Nigeria’s Banditry: The Inside Story”, which it aired on the 5th of March, 2022. This is coming days after the Minister of Information and Culture, Alhaji Lai Mohammed, assured that both the BBC and the Daily Trust will be sanctioned for their “unprofessional” documentaries which glorify terrorism. In July, BBC Africa Eye published a documentary where it interviewed Abu Sanni, a self-confessed bandit kingpin, who said that insecurity has become a lucrative business. The 50-minute documentary titled ‘The Bandit warlords of Zamfara’ was undertaken by Yusuf Anka, a journalist who crisscrossed remote bandit enclaves in the state, one of the hardest hit by banditry. Citing the documentary, Kaduna-based Islamic cleric, Sheikh Ahmad Gumi faulted the Buhari-led government’s approach towards fighting the Boko Haram and Islamic State’s West Africa Province (ISWAP) insurgency. The cleric said the documentaries exposed the ethnic and tribal undertones as the real genesis of the decade mayhem the North Western region is experiencing. He stated that both sides of the divide committed the crimes, adding that if the next president of the country follows President Buhari’s footprint, Nigeria would result in a greater insurgency. Reacting to the fine slammed on it, Trust TV said it believes it acted in the public interest by shedding light on the thorny issue of banditry and how it is affecting millions of Nigerians.
The government’s response is not an altruistic regulatory issue, but an attempt to prevent a spotlight from being shown on one of its many failures. Lai Mohammed’s argument that the platform given to leaders of armed groups glamorises terrorism falls flat in the face of evidence as the platforming of terrorists did not start with the BBC or Trust Tv. Analysing the work Sheikh Ahmad Gumi has done in bringing the plight of the terrorists to the limelight can be classified as “glamorising terrorists”, but that came with significantly less antagonism from the government. For what it is worth, the government’s reaction is most likely an attempt to deflect from its inability (some would say refusal) to contain the fallout of its poor management of ethnic conflicts in the region. It is clearly more concerned with image management and control, especially in the international community, rather than tackling the structural drivers of the country’s security challenges. The sanctions raise questions regarding freedom of the press, freedom of expression and media censorship. One of the key ingredients of a democratic state is freedom of the press. Recently, the Information and Culture Ministry has adopted a more hands-on approach in relation to its reporting on terrorism and banditry, to the detriment of aiding the public’s understanding of perhaps the single most important challenge the country faces. The regulations certainly do not help; the code states that “broadcasting shall influence society positively, setting the agenda for the social, cultural, economic, political and technological development of a nation, for the public good” without clarifying what any of that means. This coyness does not do the federal government any good in the court of public opinion as it has whipped up theories that the government is deliberately allowing the insecurity to fester for its own benefit, and is upset about the exposè. On the other hand, the documentary has helped to dispel single-story, simplistic narratives about the banditry, and highlights the failure of government at all levels to take preemptive action to resolve communal conflicts at small levels, instead allowing it to escalate to this point. Much of the narrative about the violence in the North West before this documentary has mostly been seen from a single prism which paints a damning picture of an entire ethnicity, the Fulani. This documentary has shown that there are Fulani victims of the violence as well, and that can only be seen as a service. The fault lines are now out in the open, so there is a chance of working to patch them up.
Shell’s Nigerian unit has blamed Nigeria’s economic woes, including the free fall of the Naira value and rising living costs on unabated oil theft and asset vandalism. The Country Head for Corporate Relations at the Shell Petroleum Development Company, Igo Weli disclosed this to journalists in Port Harcourt on 2 August. Igo debunked the idea that those involved in bunkering are poor, noting that equipment required to carry out oil theft is so expensive and cannot be afforded by poor people. In a related development, Vanguard reported that the Nigerian Navy has charged 13 officers and ratings before a General Court Martial at the Western Naval Command headquarters in Lagos for offences ranging from conniving with crude oil thieves to pipeline vandalism and other maritime infractions. The navy says it has successfully foiled pipeline vandalism and the theft of crude oil and its products worth over ₦25 billion since April 2022. This includes shutting down 278 illegal refinery sites, 85 arrests, 72 boat impounds, 23 seized vehicles and tankers coupled with the destruction of 127 illegal refinery ovens, 102 illegal refinery large pits, 148 illegal refinery storage tanks and the recovery of 41 outboard engines and 35 pumping machines. Naval spokesman Commodore AO Ayo-Vaughan told journalists on 1 August that naval forces recovered 230,882 barrels of crude oil, 110,102.59 litres of diesel, 649,775.38 litres of kerosene, 345,000.49 litres of petrol, 380,000 litres of sludge and 66,000 litres of Low pour fuel oil (LPFO).
Mr Weli is right. For the scale of oil theft that has been surmised to be ongoing in Nigeria, it is clear that a full-scale organised crime operation is responsible for this. This is the reality that whoever wants to analyse the issues of oil theft in Nigeria needs to deal with. And the impact is staggering. For the first time in its history, Nigeria is not benefiting from an oil boom. There is no oil windfall. The currency continues to slide. In addition, the oil thieves, even more than the oil companies operating in the Niger Delta continue to destroy the environment. And as with other places where organised crime thrives, it is impossible for them to operate on such a large scale without the active or tacit support of people within the state and security apparatus. Arrests and convictions obtained by the Economic and Financial Crimes Commission (EFCC) over the past few years have implicated mid to senior-ranked naval officers, evidence that the government’s war against oil theft is essentially a war against itself, which it is losing. Even worse, the environmental damage that has been the result of the oil theft crisis has been improperly handled by the government. Three months ago, dissatisfied with the activities of the Hydrocarbon Pollution Remediation Project (HYPREP) in dispensing funds for the cleaning of Ogoniland, host communities under the aegis of Ogoni Liberation Initiative (OLI), threatened to drag the agency before the EFCC. President of OLI, Dr Douglas Fabeke who read the eight-page document at the meeting noted with dismay that there was nothing tangible to justify the $366 million claimed so far which has been expended on the clean-up exercise. The Nigerian state, as presently constituted, is too weak to enforce its will even in the one area where it derives the bulk of its revenue from. When one pans out and looks at the bigger picture, it is no wonder that non-state actors are able to de-facto control key roads and rural areas in many parts of the country. In effect, state collapse is happening in real-time and this generation will be its primary witnesses.