The week ahead – Exhausted

On Tuesday, the Nigerian National Petroleum Corporation (NNPC) increased its fuel pump price from ₦617 to ₦897 per litre, two days after it admitted to owing suppliers more than $6 billion. In response, the Nigeria Labour Congress (NLC) has said it feels betrayed because it accepted the ₦70,000 minimum wage, expecting that petrol prices would remain stable. Meanwhile, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has announced that starting in September, the Dangote Refinery will supply 25 million litres of petrol daily, increasing to 30 million litres daily in October. This follows Dangote’s announcement of the first petrol rollout from the refinery.

Nigerians understand that once petrol pump prices go up in our country, they do not come down. Also, it is a fact that demand and supply are two of the most significant forces in economics. A study conducted by SBM in 2022 revealed that at the time, Nigeria’s petrol pump price, equivalent to $0.40, was an anomaly in West Africa, with our neighbouring countries selling the product for the equivalent of $0.89 – $1.09. Consequently, arbitrage opportunities opened up, leading to the prevalence of smuggling the product out of Nigeria to sell for almost twice the price in Benin, Cameroon, Chad, Niger and Togo. Following the devaluation of the Naira (currently at $1/₦1,660), Nigeria’s pump price is still 1.78 times the price in neighbouring countries, implying that there is still a subsidy on the product and opportunities for arbitrage. Nigeria’s insistence on maintaining a pseudo-market-driven regime without fully committing to market-determined prices for petrol and foreign exchange is leading to another opaque setup for petrol supply. This approach fails to address the subsidy issue and risks concentrating its rising costs into even fewer hands. The much-maligned crude swap arrangements with foreigners will now be substituted with a crude-for-Naira arrangement with Dangote. At the same time, the government continues to decide the retail price, effectively paying the subsidy difference to its chosen suppliers—formerly licensed fuel importers, then solely NNPC, and now largely Dangote, with NNPC inserting itself in the middle as the sole off-taker. All these result from the faulty and flawed implementation of the needed policies of petrol and FX subsidy removal. In essence, the country has gone in a circle to end up back at square one. Perhaps a more reasonable, although painful, course of action would be full deregulation of the product price and, simultaneously, doubling the proposed minimum wage.

PZ Cussons posted its first annual loss since 2020, despite a 34% revenue growth to ₦152.24 billion ($92.3 million) due to a significant tax burden of ₦76.02 billion and a 3,000% surge in foreign exchange losses, rising to ₦157.9 billion. Meanwhile, the Manufacturers Association of Nigeria (MAN) called for reducing the alleged 200% electricity tariff hike to 40%, citing declining production and GDP as inflationary pressures. Additionally, the Federal Competition and Consumer Protection Commission (FCCPC) criticised exploitative pricing in Nigeria, giving traders a one-month moratorium to adjust prices.

The devaluation of the Naira from $460 to $907 between May and December 2023 had significant but varying implications for banks and manufacturing companies. The banks, which had substantial FX as assets on their balance sheets, enjoyed appreciation (which the government wants to subject to windfall tax). However, manufacturers who had borrowed FX to trade or had trade payables suffered losses as those obligations sat on their balance sheets as liabilities. In addition, many of these companies were unable to pass the full cost of price increases to consumers who simply could not afford to pay due to the rising cost of living. Essentially, the Nigerian economic landscape has changed drastically in the past year, and many investors are reconsidering their business strategies. While the FCPC has since walked back its directive due to public reactions, the inclination of the government and its agents to attempt price controls on outputs instead of dealing with the inputs that drive the final price is clear. As energy costs soar and foreign exchange rates hike up, it was inevitable that those in the real sector who could not hedge and needed to continue paying for raw materials and machinery in FX while being limited in how high they can increase prices due to already high inflation would inevitably bear losses. The government has yet to offer any support for these firms. Instead, it has fixated on applying a retroactive tax to those who made gains despite admitting that this was due to government policy failures. What is likely next is a combination of further price increases driving inflation up and changes in input and quality of products to cut costs.

At least 37 people were killed in Yobe State’s Mafa village after suspected Boko Haram fighters attacked, setting fire to homes and shops. The attack was reportedly in retaliation for local vigilantes killing two suspected Boko Haram members. Villagers fear the death toll may be higher, as some residents are still missing after being chased into the bush. Meanwhile, the Nigerian Army confirmed that its personnel had not received their August salaries and allowances, urging soldiers to remain patient as efforts to resolve the payment delay are underway under the Bola Tinubu administration.

Yobe is a state located in Northeastern Nigeria, carved out of Borno State. Borno borders it to its east for about 421 km and Gombe to its southwest for 93 km. Yobe’s Northern border forms part of the national border with Niger for about 223 km, mostly across the Komadougou—Yobe River. These linked borders make it a hotbed for terrorism and banditry operations. The security situation in Yobe remains unpredictable and volatile, with a history of Boko Haram attacks and clashes with government forces. Inter-communal clashes have also led to displacement and casualties, alongside instances of flooding that have devastated homes and facilities. Boko Haram has carried out numerous attacks in Yobe over the years, often employing similar tactics. Some notable past attacks include the 2018 Dapchi schoolgirls kidnapping, where 110 girls were abducted; the 2014 Buni Yadi attack, which claimed the lives of 59 students; and the 2013 Gujba college massacre, in which 40 students were killed. Other incidents include attacks on Damaturu, Geidam, Kanamma, and Babangida, reflecting the persistent threat of Boko Haram in the region. The persistence of such attacks in 2024 shows the enduring nature of the security challenges facing Nigeria. Conservative estimates suggest that over 35,000 people have been killed directly by insurgent violence since 2011. More comprehensive assessments, factoring in deaths from conflict-induced famine and lack of medical care, put the toll at a staggering 350,000 lives lost since 2009. Aside from these frequent attacks, late or poor remuneration in Nigeria’s security services is another pressing issue. It affects primarily the Nigeria Police Force. For the military, however, delayed wages would not have raised eyebrows if not for the fact that it is involved in multiple counterterrorism operations across the country, by which it has also suffered significant losses in personnel, manpower and resources. This has led to the imperative to complement these shortfalls using citizen militias such as vigilantes who were responsible for the attack on ISWAP, thus bringing about last weekend’s massacre in Mafa, Yobe. The frequency by which these kinds of vengeful mass killings happen shows, among other things, a pattern of collective punishment that is a feature of both the military and insurgents’ response mechanisms to setbacks. Both Boko Haram factions and bandits in the North often target civilians, accusing them of collaborating with the government or military. This tactic, aimed at instilling fear and deterring cooperation, has increased displacement. The aftermath of such attacks raises several issues. Firstly, the government tends to downplay casualty figures, with official reports of a recent massacre capping the toll at 37, while on-the-ground estimates suggest over 150 deaths. This minimisation erodes trust in the government. Additionally, while the government has invested in alternative intelligence technology, its deployment has not significantly improved security. This underscores the need for community-driven intelligence operations, which are hindered when communities aligning with the government face violent retribution.

Ghana’s National Democratic Congress (NDC) elections director, Edward Omane Boamah, expressed concerns over the Electoral Commission’s presentation of voter names who transferred across districts. He said the EC had asked all district offices to verify these names against their Form 1C or transfer request forms, as names found not originating from their offices could account for the discrepancies noted in the voter transfer process. For accuracy and transparency, the NDC has urged the EC to re-exhibit its “corrected” Provisional Voter Register at all polling stations. He emphasised the need for vigilance in monitoring the EC and New Patriotic Party (NPP).

Voter registration errors have been a persistent issue in Ghana’s Fourth Republic since its inception in 1992. Despite over three decades of electoral reforms, minor errors continue to challenge the authenticity of the voter register, fueling scepticism, particularly from opposition parties. This ongoing issue remains a point of contention, with each election cycle marred by disputes over the accuracy of the electoral roll. Ahead of the 2020 elections, a completely new voter register was compiled, with additional layers introduced into the registration process to minimise these errors. However, despite significant investments in improving the system, opposition parties still point to errors in the current register, undermining confidence in the system’s integrity. Ghana’s upcoming presidential and parliamentary elections on 7 December are seen as a critical test for the Fourth Republic. The race between the ruling New Patriotic Party (NPP), represented by Vice President Dr Mahamudu Bawumia, and the opposition National Democratic Congress (NDC) candidate, former President John Dramani Mahama, is intensifying. For the first time in Ghana’s history, both main political parties are fielding presidential candidates from the northern part of the country, making this contest a “Battle of the Northern Giants.” Beyond the historic nature of the presidential race, the possibility of a third-party coalition adds an extra layer of unpredictability to the elections. A strong showing by a third force could push the presidential contest to a run-off, a scenario that would further test Ghana’s near two-party system. The composition of Ghana’s next Parliament will also be critical, as the last election yielded a hung parliament, with neither party securing a clear majority. The outcome of the parliamentary elections will have significant implications for governance, as the party that controls the most seats will wield considerable influence over the next administration. In the face of these challenges, the Electoral Commission (EC) must ensure that the electoral process is transparent, fair, and error-free. As the sole referee in this high-stakes contest, the EC’s role is vital in safeguarding the integrity of the election and maintaining Ghana’s reputation as a stable democracy in the West African region.