The week ahead – K-legs
13th December 2024

At least 12 people were killed Wednesday morning as an explosive planted by bandits blew off the Gadar Mailamba (Mailamba Bridge) in Tashar Sahabi in Maru LGA, Zamfara State. Premium Times reported that an explosive planted by bandits had also blown up another bridge in the same local government area on Sunday. The Zamfara State Police Command said the newly identified terror group, Lakurawa, is responsible for the recent explosions. Earlier, gunmen attacked a mining village in the state, abducting at least 50 people, including women and children. Three others were killed, and seven were injured in the attack.
In some ways, the use of explosives in conflicts in the Northwest closely resembles the dark days of the Boko Haram insurgency’s peak between 2012 and 2014. Although the group may have been pushed to Lake Chad’s fringes, not only have its networks across the North remained, the bomb-making expertise which the bandits–otherwise known as economic terrorists–require is in high demand. The veteran jihadists’ services to the bandit warlords range from bomb-making advisory to routes to more transnational collaboration. The latter is important as foreign armed groups increasingly seek a foothold in Nigeria’s wild Northwest. Speculations surround the explosive planted in Maru. The Zamfara State Police identified the Lakurawa group as responsible for the recent explosions, marking the second such incident along the Dansadau road within a week, but some other sources attributed the bombings to bandits seeking to avenge the death of their leader, Sani Black. Black, an important figure in the region’s terrorism landscape, was a protégé of Tsoho Buhari and an ally of Halilu Sububu, both prominent criminal leaders, both now dead. Simultaneously, a power struggle is fracturing another bandit and Sububu’s putative successor, Najaja’s, criminal network after the killing of his brother and top commander, Dan’auta, during a confrontation with rival commander Dullu. Leading a faction of approximately 400 armed men, Dullu has long harboured resentment toward Najaja’s leadership, which he views as illegitimate following Sububu’s death. Throughout much of the past year, aside from civilian casualties, insecurity across the North has been primarily defined by a civil war among bandit kingpins spurred by intensified pressure from Nigeria’s security forces. While other factors, such as territorial ambitions, may have fueled this conflict, the alleged dislodgement of the Lakurawa group in Kebbi has added a new layer of complexity. Now resurfacing in volatile areas like Kaduna and Zamfara, the group may seek to exploit the ongoing armed struggles between bandit kingpins to bolster its ranks, potentially driving out the bandits and expanding its caliphate further south along the boundary with Niger State. The immediate danger is the obvious appropriation of a significant chunk of Nigerian territory, almost the size of Italy. Another big consequence would be in the form of the loss of mining opportunities, especially in places like Baggega, a town in the gold mining local government area of Anka, Zamfara, where bandits are trying to augment the stark competition in mining by abducting residents to make up for the shortfall in revenue. In all these, the Nigerian security services have their work cut out for them. Beyond their sluggish response to the Lakurawa, they must exploit these divisions and, very importantly, stop the proliferation of explosives which have bled out the military in Kaduna and crippled power infrastructure across the North.
Nigeria’s 2025 budget, pegged on an optimistic oil price and production of over two million barrels per day, may suffer a major threat given OPEC’s decision to maintain production cut into 2026. The Federal Government expects ₦34.82 trillion ($20.13 billion) in revenue, assuming an oil price of $75 per barrel. However, Nigeria currently produces less than 1.5 million barrels daily, aligning with its 2025 OPEC quota. With Brent crude trading below $75 per barrel, these optimistic assumptions risk undermining the budget’s feasibility and exposing fiscal vulnerabilities.
It was inevitable for OPEC to attempt to moderate oil prices in a year that will be marked by the inauguration of Donald Trump as President of the United States, a development expected to catalyse an increase in US oil production. This shift will introduce a critical variable into an already turbulent global energy landscape. The slowdown in demand from major oil-importing nations like China will add another layer of complexity, signalling a potential recalibration of global energy markets. For Nigeria, which remains heavily dependent on oil revenue, navigating this intricate geopolitical and economic environment without adopting more realistic production and pricing projections is ill-advised. Domestically, the risks are further exacerbated by persistent challenges in the Niger Delta, the epicentre of Nigeria’s oil production. Escalating tensions, including recent unrest in Akwa Ibom State and ongoing financial allocation disputes in Rivers State, undermine the stability required for consistent oil output. These internal disruptions threaten Nigeria’s production targets and erode investor confidence in the country’s oil sector. The compounding effect of these issues heightens the likelihood that Nigeria’s oil production and revenue will fall short of supporting its ambitious budgetary assumptions, necessitating increased borrowing to bridge the fiscal gap. This reliance on debt to sustain expenditure further underscores the urgent need for a pragmatic and grounded fiscal strategy. On the international front, Trump’s energy policies—geared toward maximising US oil production and reducing regulatory barriers—will pose a direct threat to oil-exporting countries like Nigeria. A surge in US oil production is expected to drive down global oil prices and intensify competition in markets traditionally dominated by Nigerian crude. With the US leveraging competitive pricing and higher exports, Nigeria risks losing key markets, further straining its oil-dependent economy. Such dynamics could jeopardise the country’s ability to meet its 2025 oil price benchmark, compounding the anticipated revenue shortfalls. Nigeria must adopt a more conservative approach to its oil price and production benchmarks to mitigate these risks. By aligning budgetary projections with the realities of a volatile global oil market, the country can position itself to absorb potential shocks better. This recalibration should be accompanied by a diversified economic strategy that reduces dependence on oil revenue, enhances domestic energy efficiency, and strengthens non-oil sectors. Additionally, addressing the underlying causes of unrest in the Niger Delta and fostering equitable resource distribution will be critical to ensuring stable production levels. Nigeria’s ability to navigate these domestic and international challenges ultimately hinges on its capacity to balance pragmatism with resilience. Proactive reforms and strategic fiscal planning will shield the economy from the vagaries of the oil market and lay the groundwork for sustainable growth in an increasingly competitive global landscape.
Nigeria recorded a trade surplus of ₦5.81 trillion ($3.36 billion) in Q3 2024, marking its eighth consecutive quarter of positive trade balance, though lower than the ₦6.9 trillion in Q2 and ₦6.52 trillion in Q1. Total merchandise trade reached ₦35.1 trillion, a 13.26% increase from Q2 and 81.35% higher than Q3 2023. Total exports in Q3 2024 were valued at ₦20.4 trillion, a 98% rise compared to ₦10.3 trillion in the corresponding quarter of 2023. Total imports in Q3 amounted to ₦14.6 trillion, an increase of 62.3 % from Q3 2023’s ₦9 trillion.
It is often argued that currency devaluation provides opportunities for exporters, making goods cheaper for international buyers and boosting trade. In Nigeria, the naira devaluation over the past 18 months has indeed made Nigerian products more affordable to neighbouring countries. For instance, eggs and grains from northern Nigeria frequently cross the borders into neighbouring markets, while the southern region’s plastic products, carbonated drinks and snacks hold potential for wider export. However, despite this theoretical advantage, manufacturers in Nigeria have struggled to capitalise on the situation due to poor infrastructure and prohibitively high interest rates, which make credit access expensive. These challenges have turned what could have been an economic opportunity into a missed one. The country’s trade policy, which focused more on import substitution than export promotion, compounds this issue. The Export Expansion Grant (EEG), Nigeria’s primary exporter incentive scheme, has faced allegations of corruption and poor management by the Nigerian Export Promotion Council, leaving many exporters disillusioned and unsupported. Despite these setbacks, Nigeria has maintained a positive trade balance since the fourth quarter of 2022, primarily driven by crude oil exports. In the third quarter of 2024, crude oil accounted for ₦13.4 trillion of the ₦20.4 trillion in total exports, representing 65% of Nigeria’s export profile. Non-oil exports, by comparison, contributed only 12.21%. While crude oil exports have been on a downward trend since late 2023, the recent increase in the trade surplus is attributed mainly to the naira’s devaluation. This has resulted in higher naira earnings per dollar for export proceeds, providing some relief to Nigeria’s current account and reducing external financial pressure. Agricultural exports have also recorded remarkable growth, surging by 301.87% to reach ₦884.07 billion. This marks a potential revival for a country that once relied on agriculture as the backbone of its economy before the 1970s oil boom. Legacy regions that once competed in producing world-class commodities such as cocoa, groundnuts and palm oil now have an opportunity to reclaim their prominence. The Tinubu administration has set an ambitious goal of achieving crude oil production of two million barrels per day by 2025. Encouragingly, the relative peace in the Niger Delta region has already led to slightly higher crude production. To achieve this target, the government must address longstanding issues such as infrastructure deficits, vandalism, theft, corruption and militancy, all of which have contributed to production levels falling below one million barrels per day in recent years. Additionally, Nigeria will need to negotiate a higher production quota with OPEC. While there are glimmers of hope in increased activity from the oil and gas sector and the resurgence of agricultural exports, significant work remains to transform Nigeria into a resilient, export-driven economy. Building robust infrastructure, fostering an enabling business environment, and reforming trade policies will be critical steps in ensuring Nigeria fully capitalises on its economic potential.
Ghana’s former president, John Dramani Mahama, has staged a political comeback, winning the 2024 presidential election after Vice President Mahamudu Bawumia conceded defeat. Bawumia confirmed Mahama’s decisive victory and the National Democratic Congress (NDC) win in the parliamentary election. Early results showed Mahama leading with over 53% of the vote. Mahama revealed that outgoing President Akufo-Addo had called to congratulate him, and both leaders agreed to form a joint transition team, with an early inauguration set for 11 December. Mahama expressed his readiness to collaborate in the people’s interest.
On 7 December 2024, Ghana turned a new page in its political history. With 56.55% of valid votes cast, former President John Mahama staged a historic and remarkable comeback. His victory mirrors the U.S. political landscape, where Donald Trump staged a return to the presidency by defeating Vice President Kamala Harris. This election brought numerous historic firsts, notably the election of Ghana’s first female Vice President, Professor Jane Naana Opoku-Agyemang. Mahama’s victory was particularly symbolic as he became the first Ghanaian president to lose re-election in 2016, only to return triumphantly eight years later. His victory followed Ghana’s “third-time lucky” trend, as he defeated Vice President Dr Mahamudu Bawumia whose administration had been heavily criticised for economic mismanagement. In a move that surprised many, Dr Bawumia conceded defeat less than 24 hours after polls closed, setting a record for one of Africa’s swiftest concession speeches. Mahama’s campaign focused on revitalising Ghana’s struggling economy and creating jobs for the country’s large youth population. His promises include transforming Ghana into a 24-hour economy and providing substantial tax reliefs, such as abolishing the 1% COVID-19 levy, the controversial electronic transaction levy (E-Levy), the emission levy and the 10% withholding tax on betting earnings. These measures are aimed at alleviating the citizens’ financial burden. Despite inheriting a nation grappling with severe economic challenges, Mahama has pledged to renegotiate the International Monetary Fund (IMF) agreement to better align with Ghana’s developmental priorities. His administration has set ambitious targets. Within his first 120 days, Mahama intends to launch an anti-corruption campaign and implement free first-year tuition for all public university students, underscoring his commitment to education and youth empowerment. Drawing on lessons from his previous tenure, he has promised bold and decisive action to address Ghana’s pressing issues. Mahama’s second coming is more of a commentary on how poorly Ghana has fared during the Akufo Addo tenure. As many will recall, Akufo-Addo’s rise to power in 2016 was fueled by dissatisfaction with how Mahama handled the economy. In a twist of fate, Mahama’s return was driven by similar frustrations with the performance of Akufo-Addo’s government. The new president inherits a nation grappling with a fiscal crisis, slow economic growth, high inflation and unemployment. Challenges around mineral rights and Ghana’s role in the global cocoa value chain complicate the landscape. Mahama’s work is cut out for him. To succeed, he must buckle down and deliver clear, actionable solutions to Ghana’s economic challenges. His promises offer hope, but Ghanaians will watch closely to see if his administration can turn bold rhetoric into tangible results.