THE IMPLICATION OF COVID-19 ON SELF-RESETTLED IDPs IN NIGERIAN CITIES

The coronavirus which first broke out in Wuhan, China was officially announced as a global pandemic by the World Health Organization (WHO) in March 2020. The impact of this outbreak globally as of 1 of July 2020, suggests that there are 10.5 million infected with 5.3 million recovery and 511,000 deaths (Wikipedia, 2020). To mitigate and contain the virus, most countries enforced strict lockdowns measures with the exception of countries like Sweden and Belarus which adopted less restrictive measures. While countries like South Korea, Taiwan, Indonesia, and some states in the United State did not have any total shutdown enforced. 

Presently, the Worldometer (2020) data suggests that there 25,694 cases, 590 deaths, and 9746 recovery cases of COVID-19 in Nigeria. Nigeria was once one of the countries that enforced total lockdown measures. Such measures exposed various vulnerable groups such as the homeless and urban IDPs to extreme vulnerabilities and danger. This demography often invisible dwellers of the city and as such have little to no access to basic goods and services. During the COVID-19 lockdown, this key population was excluded from any forms of aid and assistance by both the government and international aid agencies. 

Below are five key points on how the COVID-19 pandemic and such exclusion impacted IDPs:

1. The population assumption is that all IDPs are usually able to find shelter in slum communities, however, Roberts and Okanya (2020) find that this group of migrants often face various barriers in penetrating slums and informal settlements. Therefore, they end up living in unfinished, abandoned, and unsafe properties, sometimes, under the bridges and in other public areas. The enforced lockdown made this group who are otherwise invisible to become visible and susceptible to harassment and torture by law enforcement agencies. Human rights activist Femi Falana condemned such practices as it is in gross violation of human rights. The COVID-19 pandemic shows that even within the various vulnerable groups that exist in cities, such as the urban poor, the vulnerabilities of  IDPs are much worse as they often face challenges such as the structural urban inequalities as well as ethnic, social and cultural barriers; making it harder for this group to cope in emergencies such as the COVID19 global pandemic and city lockdown.
2. The majority of IDPs who migrate from north-eastern Nigeria to other cities are susceptible to such barriers mentioned above. My work with this key population in four Nigerian cities finds these barriers to be prominently existing. For example, IDP with limited understanding of English or the local dialect of their new habitation have limited understanding and that could inhibit access to social and healthcare in these times. What this means is that where there is an outbreak of the virus, IDPs may not be very aware or have access to accurate information if the local agencies responsible for disseminating such information are not aware of their presence or lack the capacity to be inclusive. In the case of the virus infection or any other medical needs, this population lacks the financial capacity to assess healthcare nor are there free health services readily available for them.  
3. Directly related to the above point, IDPs living as internal refugees in Nigerian cities were largely excluded from the relief palliative distributed by the Federal and state government due to their invisibility in the cities. Because this group often ends up living as homeless people or as squatters in unsafe shelters under bridges and abandoned properties, they are often afraid of an eviction and must remain invincible. Without a systemic structural support IDPs will continue to live in the shadows, thus, continue to be excluded from any financial and social support available during this pandemic for vulnerable groups. 
4. Roberts and Okanya (2020) suggest that while earning an income is possible, urban IDP refugees are daily income earners in informal economies such as small-scale entrepreneurs, street trading, or informal transportation. The lockdown put a huge strain on this group financially and saw many of them exhausting their business working capital and are now unable to recover from the loss of income during the lockdown. The financial vulnerabilities alongside exclusion from social support and lack of access to basic service may lead the majority of this population to become food insecurity and starvation, ultimately, leading to life-threatening conditions. 
5. Compounded, all these challenges lead to a significant decline in the quality of life of IDP migrants in cities. Conversely, the COVID-19 pandemic is leading to secondary displacement for internally displaced persons in Nigeria who are currently living as refugees in cities. The resulting effects are new forms of vulnerabilities for this already fragile community and such fragility could force many of this group to move again or return to IDP camps. It is critical to note that the return of self-resettled IDPs as a result of COVID-19 vulnerabilities back to humanitarian camps is a regression of progress for internal displacement duration and sustainable solutions.  

One of the core lessons the COVID-19 pandemic seeks to teach us in Nigeria is the importance of reevaluating our understanding of IDPs beyond IDP camps and expanding to accommodate self-resettled IDPs who seek safety and opportunities to restart their lives in urban centers. It is also forcing us to look at new ways that the pandemic could become a major driver of displacement for already vulnerable groups. Beyond the gradual lifting of the lockdowns, how do we move forward in ensuring that the needs of IDPs are incorporated into the Federal, state, and local governance risk and vulnerabilities mitigation plans? 

Globally, the pandemic has various economic, social, political, and physical issues that are trickling down from global borders to the smallest of communities. This has highlighted collective successes and painful failures of the government to respond to various groups across the world. Yet, the impact on IDPs remains largely silent and not yet prioritized in the grand scheme. The failure to do so will lead to the abrasion of resilience, subverts sustainable development, and inclusivity of persons, communities, and cities. It is critical to note that whatever mitigation strategies are adopted for COVID-19 and for future crises, it should always seek to extensively examine who could be left behind. 

 

Nigeria-Decides-2019: Why Nigerians will Vote Against President Buhari and for Atiku Abubakar

“For Africa to succeed, Nigeria must succeed and more importantly, if Nigeria fails the world is in trouble”. ~ Tony Blair, 2003

One of the key areas which Nigeria must do well as a key example to rest of Africa is in leading a peaceful election and transitional government as it has been since 1999. Observations of the economic crisis, thriving inequality, growing arrest and oppression of civilians and the media, the Nigerians dying in the mediterranean sea in bid to illegally immigrate to Europe makes this statement even more meaningful 16 years later.

In less than 4 days Nigeria goes to the polls to decide if incumbent Muhammadu Buhari deserves a second term or if the leading opposition candidate, People’s Democratic Party flag bearer and former Vice President, Atiku Abubakar is a better option. For the first time in a democratic Nigeria, the leading opposition and current President are both Hausa-Fulani Muslims and it does not matter. Many say that this is a sign that Nigeria is progressing, but I beg to differ: I think it is simply that Nigerians are even more desperate now than they were in 2015 and are willing to overlook ethnic concerns in order to move the country forward. Here is why I believe Nigerians should vote against Buhari and for Atiku in the coming election.

In recent times past state and by-elections have induced with tension, violence and electoral malpractices, analysis by political analyst, Remi Adekoya on Twitter suggests that since the inception of the second republic of Nigeria in 1999, 2015 election was the freest and fairest. A free and fair 2019 election for Nigeria is crucial because is important to the region of Africa, where democracy has been problematic of recent. The outcome of this election will have a greater impact on foreign investors confidence and on a larger scale the financial markets.

It is common for the incoming government to meet a highly depleted treasury and this should not be an excuse why a nation’s economy nose-dives into multiple recession like Nigeria has under this administration. In President Buhari’s case, his government had no economic plans and this was the beginning of trouble for the economy; as saw things spiraling out of control. Five months into his government, President Buhari had no Finance Minister, leaving the nation’s most important ministry vulnerable. What ended up happening was the Central Bank of Nigeria (CBN) assumed the sole position of policymaking and this saw a clueless Central Bank Governor, Godwin Emefiele shred an already fragile economy in a position it has not been able to recover from since 2016. These self-destructive policies include but not limited to the Foreign Exchange (FX) manipulation and exclusive trade policy that saw the CBN closing Naira cards out of global economies. This singular action took the power of a people-driven economy and placed it back under the command of the President via the CBN.

President Buhari’s good intention behind this bad policy follows a similar pattern attempted and failed as the Head of State during his military rulership in the 1980s was attempting to promote industrialization by forcing it through stringent economic policies. But even first-year economic undergraduates know that any force applied to the economy often induces an uncontrollable disaster. First, in 2016, President Buhari resolution to prevent the devaluation of the Naira caused foreign investors to panic and this sent the market into monetary panic and uncertainty. Also, when the CBN Governor, Godwin Emefile removed the Naira cards from the global economy and the politics of FX control which saw the Presidency and the CBN rationing and controlling Foreign Currency sent the market in a panic and drove the economy into recession.

The reason why stringent economic policies make no sense for Nigeria is simple: Nigeria imports many goods because it produces very little of what it needs and, more critically, production is impaired by multifaceted challenges. Naturally, the high cost of production for the producer forces them to sell at a more costlier price to break the profit margin. To the producer, the option of purchasing raw materials from China becomes a more viable option and to the consumer, paying more when the option of paying less makes no economic sense. The implication of these stringent policies impacted all businesses directly or indirectly because as an export-dependence economy, businesses across all scales and sizes requires access to FX directly or indirectly to stay afloat. The manipulation of the FX by the Presidency through the CBN forced all businesses to downsize, and in some cases to foreclosure were inevitable. In 2018, analysis of the Nigerian Stock Exchange showed the multinational investment portfolio dropped significantly. In 2018 alone, over 10 multinational firms have exited in Nigeria. These departures and the closure of multinational and domestic enterprises are stoking unemployment in the country.

An illustration of this is a personal friend of mine who left formal employment in 2014 to focus on his ice block and pure (sachet) water business. Between 2014 and 2015, he had purchased land for a factory in Lagos, Nigeria’s second city and commercial capital. This business, which started with 10 employees and had grown to employ a total of 58 within 10 months would be left vulnerable by the nation’s harmful policies. This business that mostly purchased its raw materials online from China as it was far cheaper to do so and this increased its profit margin. When the Buhari administration took these decisions it meant that this thriving business had no access to FX nor could it purchase goods on the black market. It struggled for months to stay afloat, after which it shut down. For example, according to the Nigerian Bureau of Statistics (NBS), unemployment rose from 6.4% in the final quarter of 2014 to 23. 10% in the third quarter of 2018.

President Buhari’s administration was 24 months into power before it kicked off the national economic agenda on economic recovery and growth, showing Buhari did not expect Nigerians to take him and his campaign seriously and vote for him, and that he did not have an economic plan in place.
This administration has consistently taken action that suggests it is undemocratic and a threat to democracy. For example, in 2017, Senate President Bukola Saraki publicly declared that the President had withdrawn $1B from the Excess Crude Account (ECA) without following due process as required by the constitution. In April 2018, President Buhari again withdrew $462 million from the ECA for the purchase of 12 Super Tucano aircraft also without notice and without the approval of the National Assembly and the Senate. The ECA is a national account that requires the approval of the three tiers of government, therefore, the President has no veto power over it. It is critical to note that at the beginning of the Buhari’s administration, the ECA account had $2.07 billion and presently the account is at $631 million, with $1.46B withdrawn illegally.
President Buhari, who is both the President and Minister for Petroleum, is administering the most untransparent, authoritarian and corrupt government in Nigeria’s democratic history. In 2017, online platform Sahara Reporters reported that the Nigerian National Petroleum Corporation (NNPC) had failed to remit over $35.7 billion into the Federation’s account. Another report by the Premium Times newspaper proposed that as at March 2018, the NNPC had not remitted $16.8B into the Federation’s account.
The recent illegal suspension of the Chief Justice of Nigeria (CJN), Justice Walter Onnoghen and the illegal appointment of an illegal acting CJN, Justice Mohammed Tanko is of great concerns. This is important because the President thought it appropriate to disregard the rule of law and illegally replace the CJN. The timing of this illegal suspension is worrisome because of the upcoming elections and the controversy surrounding the appointment of the new Independent National Electoral Commission Chief who is alleged to be the daughter of the President’s elder sister’s husband, hence, a relative of President Buhari. This action suggests a plot to rig the upcoming elections.
For the first time in Nigeria, the Federal cabinet is 95% Hausa-Fulani Muslims. The Nigerian Federal Character Commission which was set up to promote, monitor and enforce compliance of political appointments at the Federal level of government to reflect the nation’s ethnic and religious diversity has been undermined by this administration. Although this commission is not subject to any supervision or regulation, the nation’s susceptibility to internal multifaceted conflicts makes it a crucial body.
Is Buhari fighting corruption or is Buhari corruption? President Buhari came into power on the podium of fighting corruption, yet accusations of sharp practice against his administration are flying, both at home and abroad. The administration hides behind anti-corruption in order to use the Economic and Financial Crime Commission (EFCC) as a vindictive tool against key opposition members. It has become common for accused opposition members to switch to the ruling party in other to escape the vindictive methods adopted by President Buhari in targeting opposition leaders. This has seen thousands of targeted opposition members switching from the PDP to the ruling party APC, afterwhich the cases against them are withdrawn and silenced. From Babachir Lawal, Rotimi Amaechi, George Akume, Tony Nwoye, Goodwill Akpabio to Abdullahi Adamu whose corruption cases with the EFCC have been silenced, President Buhari has shown that he is unserious about fighting corruption and switching from opposition to the ruling party, the APC, washes away the sins of corruption.
On the 16th of January 2019, the President when asked about his opinion on Governor Abdullahi Umar Ganduje of Kano who was caught on camera receiving a bribe, the President Buhari in his response expressed doubt by asking “what kind of technology did they use to do this?”. On the same issues, the President has since said that the governor is enjoying the immunity that comes with his position. Interestingly, the Nigerian Chief Justice was not allowed this same immunity pending the due process of trial in the allegations against him.
Furthermore, President Buhari’s approach to tackling an insurgency in Nigeria’s northeast seems unserious and irresponsible. The President is reportedly paying members of the Boko Haram terrorist sect large sums of undisclosed sums as amnesty; connoting since that the Niger Delta militants were appeased, therefore, the same rule should apply for religious fundamentalists. This response to the growing crisis is empowering terrorism in Nigeria. In June 2018, after a major attack by the Fulani herdsmen in Benue state, the head of Miyetti Allah, (cattle herders association) was on Channels TV live rationalizing the killings and proposing the solution of individual state land allocation for grazing in order to further senseless murders. Not only does such rationalization equate human life with animal life but empowers terrorista by rewarding criminals with the land. The following week, President Buhari suggested the same proposal as a solution to the herdsmen crisis in Nigeria.
The frequent arrest of civilians and peaceful protesters such as political activist Deji Adeyanju, the killings of Shitties Muslims, the continuous illegal detention of Shiite leader Ibrahim Zakzaky, and the growing harassment, arrest and intimidation of journalists all points to the danger that this government is becoming to Nigeria’s greater good.
Looking back at 2015, former Vice President Atiku Abubakar would never be a choice I would consider as an option, but the failures of the sitting President have forced many of us to embrace Atiku Abubakar even though we do not totally trust him.
I particularly have no concrete reasons to be hopeful with Atiku, but the only thing I remember well of him as the VP to President Olusegun Obasanjo was his resolute stance against his boss’s third term and this makes me feel safer with him.
The PDP presidential candidate, Atiku Abubakar in his manifestos and very interviews and dialogue with the electorates has proposed various solutions to tidy up the mess created by this administration should he be voted as President. Of all the promises in his manifesto, the most exciting for me is the privatization of the NNPC. Particularly interesting is the promise of ensuring timely and public remittance of oil revenue income as well as the digitize the internal processes of the NNPC.Secondly, Atiku Abubakar has promised to expand manufacturing sector from 9% to 30% of the nation’s overall Gross Domestic Product (GDP). His job creation agenda and the framework of uniting the nation from the internal fractions created by the Buhari administration, the promise to protect democratic processes among other things is a reason to be hopeful and feel safe with Atiku.
The question of whether or not Atiku is better than Buhari is the wrong question: the appropriate question is does President Buhari deserve a second term? And the answer for me is not only a no, but that the survival of our democracy, the path to economic progress and unity as a nation depends on his replacement and Atiku happens to be the only candidate with a chance.
By 2023, replacing Atiku will be a non-negotiable because whether or not he performs, at 74 years old, he will be too old to be the President that Nigeria needs. But until then, it is more important that our nation is protected from falling into anarchy.

Reducing Inequalities in Nigeria by 2030: SDG Challenges and Way Forward

“Nigeria cannot afford to fail. One in every five African is Nigerian, Nigeria needs to succeed if Africa is to succeed and if Nigeria fails, the world is in trouble” – Tony Blair 2002

Nigeria has a shared broad role in shaping out Agenda 2030, its explosive population makes it even more imperative that Nigeria meets a certain milestone by 2030. But presently, is the country’s national and regional development plans aligned with meeting Agenda 2030? Will Nigeria achieve a fair amount of progress by 2030?

In theory, Nigeria’s commitment to the SDGs is sensible, however, in practice, there is little or no evidence to support the notion that the government is serious about achieving these goals. By all indications, there is no reason to believe that Nigeria will make any progress on the SDG. The Oxfam International Commitment to Reducing Inequality (CRI, 2018) ranks Nigeria 157 of 188 countries in the world. In accessing the commitment to reduce vulnerabilities, this report found no indicators of positive efforts by the government to mitigate the growing risk.

All of these point to a regression in progress. For example, the National Bureau of Statistics (NBS) 2017 data shows that unemployment rose from 14.2% to 18.8% in 2017, the number of out-of-school children increased from 10.5 million to 13.2 million between 2015 to 2017. In February 2018, the World Poverty Clock pronounced Nigeria the new global headquarter of absolute poverty, overtaking India. This report proposes that Nigeria whose total population is 180 million has 86.9 million persons living in abject poverty. Clearly in Nigeria poverty is rising and rising poverty is often an indication of increasing inequalities.

Inequalities in income, opportunities, and redistribution of national wealth are in problematic condition and are on the increase globally and in Nigeria, it is getting worse. Despite the impressive economic growth of the last decade, Nigeria has been unable to structure policies and governance to lift more people and keep them out of poverty. Rather, the reverse is the case as new poverty is emerging; more middle-class population are slipping into relative poverty, more relatively poor people are dropping in the abject poverty margin.

The socio-economic inequality is fundamental as a result of unequal distribution of socio-economic resources or capital. Howbeit, thorough observations of specific laws and policies what becomes apparent is that ‘anti-poor’ policies such as rapid rates forced and illegal evictions and the attacks on informal livelihood could have possible links to indicators of SDG 1,2,3,4,6, 8,10,11 and 16. For example, on declining rate of school enrollment and attendance, homelessness induced by forced displacement would have a direct impact on education indicator.

Besides socioeconomic inequality, political, socio-class and gender-specific inequality are determinant factors in Nigeria’s chances at making progress in the SDG. For instance, the most excluded and economically disadvantaged section of the society generally marginalized in the political system and this leads to such group being chronically under-represented. In this class are the poor, women, minority ethnic groups and children. Baring these challenges in mind, Nigeria’s ratification of Agenda 2030 requires a holistic approach as all of the SDG goals are interconnected and feed off each other. For instance, homelessness and bans on informal livelihood negatively impact school attendance.

In conclusion, due to the fragile nature of the conditions in Nigeria, my recommendation is for the government to hands off sanctions, bans, avoidable displacement and create a system to regulate informality of all types and support the processes to get more people to generate their own income. Why? Because, when things are really bad, as bad as things are in Nigeria, the worse thing the government can do is witch-hunt it’s people. And the best thing it can do is free-markets and open cities to allow as many people as possible create their own income.

The idea that the government must interfere to make the country or cities attractive to Foreign Investors is exactly the reason why things got out of hand. What the government must understand is that no investment comes into Nigeria because of beautification or the ease to do business, investment comes because of its population, hence, policies cannot afford to kill the people as development is fundamentally about the people.

More critical, is the need for the government to view all of the SDG goals as a human right. This perspective is crucial because seeing housing as a human right will force the government and vested interest to hands off forced displacement of vulnerable people until structural ways to resolving the housing deficit are achieved.

I am lending support to end forced evictions in Nigeria by supporting the #AntiForcedEviction bill, please take a minute of your time to sign this petition in support of the bill here 

Thank you in advance!

The Nigerian Middle-class Everyone Should Worry About

Recently, a Ph.D. candidate friend came to Lagos on field assignment for research work; studying the trends of migration in Nigeria with the specific focus on migration rate, the location of choice and the class and profession of migrants. I was opportune to proofread some of her findings report and I was alarmed by the rate and class of migrants leaving Nigeria.

The preferred location of choice was Canada through the Canadian express entry for highly skilled immigrants, but what was distressing about her report was that the class of people leaving were not necessarily having a hard life in Nigeria. Secondly, the occupation of those leaving Nigeria meant that in less than ten years, Nigeria will have a huge deficit in its medical, education and finance field. Further, this report also found that the approval rate for Nigerians was declining and not only that, it was beginning to negatively impact US visa approval rate as well.
Following this, without giving it much thought, on Canada day, July 1st, I tweeted that the Canada government should reduce the approval rate of migrant visas for Nigerians by 60% and that also, the program should give preference to applicants below a certain income gap and the social media sphere went crazy on me. Up until this time, I was slightly ignorant of the fact that the average Nigerian, I mean the majority are seeking a way out of the country in pursuit of the Canadian dream. What I cannot seem to understand is the assumption that life is necessarily better abroad. And the entitlement connoted by the backlash I got is fueled by the idea that the West owes poor countries something and must pay for the failures of our bad government.  We seldom forget that these countries have their own issues too and were not always this functional and good governance was enforced by their citizens who were angry and frustrated enough to force a revolution. As such, Nigerians who do not have to leave are the ones leaving in droves and therefore should be restricted because the change Nigeria needs will require more of the standard income earning set of middle class because the lower income earning middle-class demography are slowly slipping into poverty and are the class every economist and development expert should pay attention to.
For long, the Nigerian middle class has been a class of people economically living a lie; living paycheck to paycheck and spending everything they earn. More recently, the poor economic management and the self-inflicted challenging times of the Buhari government divided the Nigerian middle-class into two groups;

1.  The economically delusional: This class of medium income earner who spends everything they earn, sometimes they have more days than money later to survive and end up borrowing to cover a deficit. Most of this class of median income earners whose economic reality cannot accommodate all their basic needs and wants are doomed to be trapped in this survival circle.
2. The vulnerable middle-class; these are the working-class income earners who have not been paid a salary for months, some for as much as seven months. It is important to note that this set of staff are the ones the companies could not afford to let go after the Buhari ill-economic policy-induced hardships which saw many multinational companies close and exit Nigeria while others were forced to do a drastic downsizing. Howbeit, besides bad economic climate, companies such as payporte, Wakanow, Etisalat are highly irresponsible and abusive to staff because they know that Nigeria is a lawless nation, they could easily get away with this. For example, Payporte prioritizes sponsoring the TV show Big Brother Nigeria over offsetting salary arrears or even a part payment.

In February 2018, the Poverty World Clock hypothesized that Nigeria had overtaken India to become the new global headquarter of the nation with the highest number of absolutely poor people. While this hypothesis is not back up with field research, it is relevant to note that, taking into attention the downward spiral the Nigerian economy has taken since early 2017; the job cuts, job loss, factory close down, the harsh policies such as arrest of street traders inhibiting the poor from generating their own income and forced evictions across Nigeria which is rendering hundreds of thousands homeless and without stability to continue their livelihood practices. Any business that depends on importing raw materials has been struggling since early 2017; laying off staff and at extreme cases closing up. For example one year after setting up a $300 million factory in Agbara, Ogun State, Procter and Gamble has shutdown due to the government policies making sources and getting raw materials into Nigeria challenging and economically unreasonable. Over 300 employees are being gradually laid off in preparation for a final shutdown. Evidently, more Nigerians are shift demographies from the weaker middle to relative poverty. The impact of this will affect ability to access healthcare and greatly impact school enrollment and attendance. Whether or not the Poverty World Clock is a clever hypothesis, it is clear to see how Nigeria rapidly became the home to the highest number of the most vulnerable poor people globally.

In analyzing the current welfare climate in Nigeria, what quickly becomes apparent is that the lower middle earner who has now been forced into vulnerability are slipping into relative poverty, while the former relatively poor demography is shifting into absolute poverty.
It is this set of middle-class that economist and development expert must begin to pay attention to, as ignoring this class is detrimental to Nigeria’s growth and development.
In a country that citizens buy and pay for everything they still pay the government for, it is imperative that as many people as possible are harnessed to generate their own income.

If Nigeria is remotely serious about achieving the SDG goal, 1, 2, 8,10 and 11, the government must begin to stop and pay attention to how the policies are creating more inequality and poverty, and device interventions to support and not inhibit income generation as well as slum upgrades and not forced evictions. Because any policy that bans and imposes sanctions on informal activities as opposed to creating management structures to support is unwise.

The Intricacies of Buhari’s False Economy

In 2016 when the Buhari led administration embarked on the currency swap deal with China it was obvious that China, had the upper hand and this was doomed to failure at inception. The currency swap was never a deal for Nigeria because Nigeria realistically, Nigeria will not be better for it. If anything, this deal showed that the Nigerian economy under President Buhari has no directive and is driven by a “copy and paste” preconceived notions of the direction Nigeria should be taking. For a vulnerable economy such as ours, the bilateral trade works best with the cash and not swap because the Naira is not a convertible currency in the global scale of things and our oil earning is in US dollars. Unless Nigeria trades with China and collects their yuan anything else is unintelligent in its situation.

There are broad lessons that we can draw from Buhari’s failing economic model. Cutting a deficit economy off from the rest of the world by strict and corrupt FX policy is generally a bad idea. All nations urbanize but some plan ahead and don’t impose a path upon itself. It’s generally best to let your economy do what it turns out to be best at rather than forcing down a narrow path, however, when the need arises, the government can step in to support and not inhibit it back to recover. The idea of micromanaging economies are generally a disaster, particularly for emerging nations such as Nigeria.

One of the biggest mistake made by this administration’s economic team is the monocausal justification for everything. For example, asides oil prices dip, Nigeria’s economy is struggling because past administration was corrupt, yet the past administration met a deficit economy almost ruined by an ill President Musa Yar’Dua whose illness left the office susceptible to intense looting, yet managed to navigate an economic leap.  My point is, reducing everything to simplistic explanations don’t work, and however, staying out of the way of economic activities, reducing heavy regulations and the singular exchange rate will do the economy better right now.

This has prompted so much uncertainty now much more than existed three years ago when oil prices were high,  now the reduction in oil price affects government’s spending and not necessarily the economy in the real sense of it. I say so because government spending does not translate to the market wellbeing or economic growth nor can government spending induce a bottom-up growth, but sound policies that support the bottom, especially the bottom businesses and the informal sector will kick-start the economy.

That being said, one explanation to this assumption is that economist around the world have no straightforward formula for development, as such, the solution remains maximum free markets, maximum openness and support for all activities, particularly informal sector.  The logic is that this will increase the chances of discovery of new opportunities and as long as new opportunities are supported the market will do well, thus, the economy. Somehow, the finance minister and the CBN find this difficult to grasp. What is obvious is, as usual, the Nigerian economy is designed intentionally to favour those it favours; the elites; as it is continually reinforced by the CBN and “bureau the change” through the multiple exchanges.

My main stance is that the government step up to see a role for – a bigger role as an orchestrator of a discovery process. Such process involves a stronger amount of government agencies supporting but not picking winners particularly those at the lower end of the chain by coordinating a kind and less stringent insider system of key business leaders, trade unions, and others in a long-term process of interaction about a national development strategy using markets.

Lastly, Nigeria has a trade deficits relationship with almost all the countries in the world; we import everything and export nothing but unrefined oil. Shutting down an economy that relies on import through the stringent FX access and multiple exchange rates makes no sense even to a first-year economic undergraduate.  This single policy has created more poverty and unemployment than any other policy in Nigeria’s history in the last two decade.

By all indications, this administration’s economic plan is built on sheer delusional and ignorance of an economic illiterate team or purposely seeking to put Nigeria through economic hardship for reasons yet unknown!.

 

 

Slave Trade in Libya like the Deaths in Medditterian Sea is Caused by the African Governments

The horrifying reports brought to light by the CNN film crew who secretly filmed actions of humans being auctioned as a slave in Libya two weeks ago has created an uproar globally; causing shocks and condemnations. Majority of the slaves are Sub-Saharan Africans.

As much as this is a human rights crisis deserving of global attention, beneath the surface and most importantly, is the underlining migration problem plaguing most of Sub-Saharan Africa. Howbeit, popular opinion and politically correct perspectives of blaming the international community for evading international responsibilities and commitment to international laws drive this narrative.

For many Africans, the autopilot response is a sweeping generality that the West owes us something, has for years created this learned helplessness and a certain level of entitlement. For the most part,  this has made Africans fail to hold their government accountable.
It is for this same reason that Nigeria handled the death of young Nigerian girls who died at the Mediterranean Sea while trying to migrate to Europe in search of the better life with such nonchalance and indifference; like their lives meant nothing. For decades African leaders have been irresponsible and inciting their people to look to the West often for a solution to problems that they as a government should solve.

That is the reason why many African leaders are silent on addressing these steep issues that are deserving of worthy attention that should be pioneered by them, African leaders. But, the reserve is the case across all affected Sub-Saharan nations; these leaders are dead silent.

While we are at this, let’s not forget the unpopular stories of the Nigerian women slaves in Libya whose slave owners are fellow Nigerians who abuse the desperation of citizens who want to seek a better life in Europe, illegally,  the nearest and most convenient route in Libya. Let’s not forget the little African girl trafficked for prostitution in Libya under the disguises of a better life in Europe or getting a job elsewhere. Let us not also forget the many Africans who die of dehydration in the Moroccan desert while trying to cross over to Spain.

Think about this for a second, do you think a Congolese will willingly with the availability of alternative possibilities leave Congo on the journey to Europe through Libya? Will a Nigerian medical doctor who is paid a decent salary and regularly by the government migrate to the UAE or Saudi Arabia to practice? Why should IOM pay ransoms for the Africans to be freed in Libya to return to their countries?

The answers to these questions are the reason why Nigeria like many African leaders fails to address these issues. Yes, they know why Africans would risk their lives for the possibility of the unknown in a strange land. Many of these Africans are aware of the hardship fellow Africans face on the streets of Europe but still see it as a better alternative than the sense of helplessness that is their realities in their respective countries.

Silence and or indifference is the best response of African leaders to these issues because for them it easier than looking at it from a practical perspective. Are things that hard that citizens are taking these sorts of risk? Of course, yes, but our leaders ignore it because addressing these will force them to face the reality of the bloated cost of running the government in comparison to how much they budget and spend on education, healthcare, opening up the economy to accommodate small businesses which is the main driver of most African economies and human development.

For example, the Nigerian University Commission (NUC) 2018 budgeted eight million Naira out of its 2018 four billion Naira on research for the entire year, while eighty-five million Naira was budgeted for the purchase of cars for the commission’s secretariat in Abuja.  What is the rationale for this of budgeting? Why are we spending less on human development and expecting anything good to come out of this country?

The Washington post recently condemned the Italian government desperate attempt to keep the migrant’s numbers low by paying Libyan traffickers more money to keep them from allowing migrants crossover. Although this is wrong, the Italian government is just trying to protect itself; refugees and illegal migration cost these countries a fortune.

But this is often disregarded like it does not matter, yet African government blame everyone else but themselves.

President Alpha Conde of Guinea criticized the European policy that allows migrants to be sent back to Libya where they came from saying “Our European friends are wrong for asking Libya to keep immigrants in detention.

As Africans, we are failing our future by refusing to come to the realization that, these countries owe us nothing and that our governments are solely responsible for the ongoing slave trade in Libya and the death of many who die at the Mediterranean Sea.
Blaming the world, then Libya is a futile exercise that cannot solve the fundamental issues beneath the surface these horrible situations.

Libya is a weak and failed nation that cannot even protect and provide for Libyans, it is, therefore, unnecessary for the West and Africans to expect any better from them. And the West should consider alternative ways of returning Migrants to their countries, as using Libya as a dumping ground for these migrants is wrong on their part.

 

Nigeria’s Political Economy & the Implication for Sustainable Development

The 2006 British White paper on good governance opens with a bold assumption, stating that good governance is about good politics, period! That good governance is predetermined by the nature of politics (good or bad). Politics is central to reducing service delivery as it shapes and influences policy making. In other words, politics determines who gets what. Furthermore, underlying politics are elites who fund campaigns; making money the most essential tool in politics.

What this means is that economic and political elites are a recycled small group of people who determine who gets into what public office and for how long. As such, governance is driven by loyalty to the elite, paying back loans and ultimately mostly serves these elites, leaving many behind. Public office holders are neither elected nor appointed based on capacity but on the ability to buy votes. After which the elected officer ignores the needs of the poor to satisfy those who got them into office. This drives the huge disparities that exist between the elites, struggling middle class and Nigeria’s most vulnerable group; the poor.

As such, money itself has become a dominant factor in African politics. Money seems to have taken the centre stage in the political process in most countries and even more so in Nigerian politics. It is, sadly, now playing an increasingly critical role in determining who gets elected and who the beneficiaries of such governments are as political financing makes economic elites powerful and the main beneficiaries of government, in the case of a military government; political elites play this position. Presently in Nigeria, political parties’ formation and financing create room for economic elites to hijack government for their benefits.

The argument is be reducing the role money plays in politics, but making politics work for the electorate regardless of such role. Money is an essential part of political processes globally, and even more so in many developing nations. Howbeit,  money continues to take a back seat in the discourse on creating incentives to drive better governance; a governance that works for the benefit of the majority.The role that money plays in politics by all accounts creates an uneven playing field and an unequal access to the office.

The implication of this is that in the longer term; it bred a huge threat to Nigeria’s democracy. Upon closer inspection, Nigeria’s political structure disempowers the electorates and makes it impossible for the government to be held accountable to the citizens.

Expert explanations about bad governance, poverty and inequality in emerging nations such as Nigeria is often the disregard for key factors such as but not limited to the lack of long-term planning. In Nigeria, this is even more so the case.

Such reasoning often fall for the fallacy of a single cause; “Nigeria is poor because of oil curse and falling prices” or more popularly, “Nigeria is poor because of corruption”, yes these points are valid but are merely created by the vacuum left by poor governance and lack of tangible planning for development. For example, in 2016 forward-thinking China launched their 13th five-year education plan; The plan encourages the cultivation of students’ entrepreneurship and innovation capabilities and practical skills. It also emphasises the need to strengthen exam and recruitment reforms, promote higher education, develop internet plus education, and promote and regulate private education.

In terms of the economy, the self-induced recession via a scarcity of foreign exchange (FX) is a recipe for disaster in an import-dependent economy.  Also, the Nigerian Central Banks policy to restrict Nigeria debit and credit cards from trading outside of Nigeria in other to boost the “buy Nigeria” campaign makes no economic sense, because, in reality, the cost of manufacturing and producing “made-in-Nigeria” does not make the pricing competitive and affordable.

This single account has killed many Nigerian small businesses who depend on foreign goods or services to run their businesses. For example, two years ago, a Nigerian small business could purchase items online from China to run their businesses at a much cheaper rate, today, many other those businesses do not exist. The logic behind this policy is to control illicit funds, dismantle the black-market and combat corruption but the technicalities of what makes such policies efficient are lacking greatly, thus, causing more harm than the intended outcomes. If Nigerian banks have a scarcity of FX, it still leads Nigerians back to the black-market it was trying to dismantle; allowing the black-market so much power in setting the FX rates. While the blockage of Nigerian credit and debit cards isolates Nigeria from the global market from Nigeria and vice versa.

Recently, the acting president of Nigeria VP Yemi Osinbajo launched a 60 days national action plan to improve and create business friend environments in Nigeria. The main focus is on the entry and exit of goods and the entry and exit of the person into Nigeria to be improved,  as well as improving transparency and efficiency of the government parastatal. While this is a great idea, it is largely built on the assumptions that administrative challenges are the reasons why doing business in Nigeria are difficult. While this is true, technicalities such as lack of electricity, the reconciliation of state and federal taxation policies, custom high charges, bribery, bureaucratic processes and middlemen in the process of getting a license or business registration are much more urgent necessities.

The government needs to focus more on implementing the existing practical laws and policies that make doing businesses easier and cheaper. In Rwanda, a business registration can be done online without lawyers and other middlemen and gotten in less than a week. Making Nigeria work for the benefits of the poor majority requires the following;

Making Nigeria work for the benefits of the poor majority requires but not limited to the following;

1. Free Markets: There is much more uncertainty now than there was two years ago and I think one of the main downsides of this dreadful financial slump is that it has raised the level of uncertainty that cannot be intervened by international recommendations but practical-context specifics with will only be discovered after many trials and errors. It is important that policy makers understand the Nigerian context and the market fundamentals in allowing market forces to work out the optimal scenario. Some economist argues that there are justifiable reasons for Nigeria to abandon the free markets mantra, however, I believe that as bad as things are, free markets is a reasonable way to jump-start a way forward.  Efforts as little as, moving away from trying to control and direct the paths of growth and a standard formula for such growth will make a huge difference.
2. Good Politics/Good Governance; In 2015, Nigeria had a change in power when the fairly new All Progressive Congress (APC) unseated the People’s Democratic Party (PDP) that had previously governed the nation for 16 years. Two years later, the initial hope for change has vanished, leaving much disappointment and a certain level of hopelessness. There was a change in leadership but not a change in politics. The failures of government in Nigeria, as is in most emerging nations, is generally attributed to the primary assumption that the hindrances to better governance are predominantly economical, administrative and technical. Consequently, advancement can be made through improved or enhanced policies, capacity building, and civic participation and decentralised governance. The situation of the last two years in Nigeria challenges this assumption. What this narrative fails to address is that politics determines the capacity of the government to decentralize governance; politics determines the roles the electorate gets to play in the good governance process, but the electorate must take the bull by the horn and play their role in choosing better leaders and then holding those leaders accountable.

Nothing replaces planning for growth and development and following through; Nigeria’s population is estimated to be 200 million by 2019. What is the government’s ten-year plan for education, jobs, healthcare, food, water and housing? Nigeria’s population is often referred to as an advantage, but it is only an advantage for businesses as the population power drives demand, however, the government is not using such advantage to the nation’s interest, as there is no preparation to accommodate growth. In terms of inter-African trade and economic penetration, Africa has 31 francophone nations, how is Nigeria preparing to penetrate the francophone economies? Why is French not made a compulsory subject in Nigerian educational curriculum? What is the government’s plan to for trans-continent trade with other African nations? Nigeria needs a unified development plan that is tied to a ten-year plan across all the states in Nigeria, upon which policies can be developed and projects implemented in line with those plans and strategies.

In conclusion, the political economy of Nigeria requires a proper restructuring, one that enables active citizenship participation as the role that citizens play in good governance cannot be overstated. Further, citizens must move away from the passive role used only for campaigning and “winning” elections as assigned to them by political elites in governance processes and begin to see themselves as relevant participants in driving good governance in Nigeria. Secondly,  must be flexible with economic policies and be willing to try every and anything until something that works comes along. The free markets have its advantages and disadvantages but for this static economic stage Nigeria has found itself, it seems a viable trial option. Thirdly, making Nigeria business and tourism friendly should be viewed from a longer term perspective that goes beyond getting a visa in 48 hours but more in terms of making Nigeria as a country function, because getting a visa a business license quicker does not negate the challenges paying state and federal taxes and bribes in some cases to run a business, nor does affect the cost of running a generator. Nigeria’s rapidly growing population should be of utmost emergency to the government, the government cannot afford to carry on like this ticking time bomb will sort itself out and nothing will replace planning for this. Right now the unemployment rate is at a record high, schools are barely able to accommodate student due to lack of space and facility. And lastly,  as the giant of Africa, Nigeria needs to position itself to penetrate not just the English-speaking African nations but the francophone ones as well, and what better way to do so than making French a compulsory subject in the education curriculum.

Is Nigeria Still in A Recession? Versus Reality

The economy contracted 1.5% consistently quarterly in 2016, based on the latest economic revision, Nigeria is no longer recessing, and is actually on the way to recovery and growth. However, as we know, a number of temporary factors including the CBN’s manual intervention of the FX have seen the Naira gain againt the dollar, in the last five weeks. The question of whether or not such intervention is a good idea or sustainable is a completely different subject.

With FX unavailability concerns somewhat out of the way, many leading indicators are signalling that Nigeria is out of recession and on the way to progressive growth as it were just before the recession.

Anecdotal shreds of evidence support the assumptions that consumer spending is rising, projects previously put on hold are picking up and Foreign Direct Investment (FDI) slowly recovering from a decline of  $4.5bn in 2016.

First, these assumptions do not take inflation into account. They are also not adjusted for population growth, unemployment rate and the number of businesses downsizing daily. Finally, and perhaps most importantly, the wealth gap in Nigeria is also near record levels of high, perhaps this is the most important factor; as steep inequality often bears the appearances of never-ending recession.

The wealth gap presents a very real danger moving forward. It makes moving up the income ladder more difficult, and it reduces the operational flow of the economy since the wealthy shield most of their income from taxes, while, those at the lower end of the spectrum can barely afford ongoing living expenses.

In my experience, the severe wealth gap underpins a critical misinterpretation of the Nigerian economy. On the one hand, it can misconstrue the reality of growth and expansion, on the other hand, it negates the fact that such growth is failing to carry the majority along.

I hear many economic experts claim that Nigeria is still in a recession, while indicators reflect the opposition; a recovery and on the way to growth. An individual’s view of the economy is primarily driven by their own unique circumstances, wealth, and prosperity, and that of their family and close friends. We generally take the microcosm of our own lives and deduce this out to the condition of the broader economy. It’s completely natural for many who are earning low wages or still contemplating reentering the workforce to believe the economy is in recession. I understand this and have harboured similar feelings at times.

However, from an economic and economic activities perspective, it’s very difficult for me to substantiate this assumption. Howbeit, in the next couple of weeks when the new window trades a bit and stability, is observed for a while, more concrete evidence will emerge based on the type of liquidity and pricing observed.

I believe that if we look at the data, the cause of the plight of many Nigerians is not the result of an economy in recession, but of the tremendous wealth gap, inequality and the fact that all government projects and investments are not geared towards the poor and “vulnerable middle class“.

 It is basic economics that in an economic recession, the middle class and poor are the most vulnerable, hence, should be the major beneficiaries of government interventions in restructuring the economy. The reversed is the case in Nigeria’s current economic recovery plans and interventions.

There is tremendous wealth in Nigeria, it’s just held by a select few, and not productively distributed across the population and there is no evidence pointing to the government’s plans to reduce inequality and make growth more visible in the lives of the majority. This is a very different problem, with very different solutions than having an economy that’s in recession.

If an individual doesn’t personally benefit from economic growth, such an individual is likely to think that economic growth doesn’t exist, especially if they are not in-tune with ongoing economic performances and growth indicators.

Nigeria’s economy has problems, lots of them. But are we still in a recession? The answer is NO. The unfortunate reality is that for many, this period of mild economic expansion feels very much like a period of economic contraction because they are not participating in meaningful employment, still struggling to gain employment or participate in the wealth creation.

Rising income inequality can also be detrimental to overall economic growth. The OECD suggested that “High and often growing inequality raises major economic concerns, not just for the low earners themselves but for the wider health and sustainability of economies. In other words, “rising inequality is bad for long-term growth”

Nigerian economic team and experts must become better at distinguishing what plagues our economy and differentiating the impacts of these challenges on various groups. For example, it is important to understand how the economic contraction of 2015/16- first quarter in 2017 affected and continues to affect small business owners, working high/low income middle-class and the very poor.   These challenges should not be grouped together and treated as the same thing, as that is the reason why out-of-recession indicators are failing to reflect the realities of the majority in Nigeria. To mistake the symptoms of a serious wealth gap for economic recession is to misallocate our frustration, energy and solutions.

These challenges should not be grouped together and treated as the same thing, as that is the reason why out-of-recession indicators are failing to reflect the realities of the majority in Nigeria. To mistake the symptoms of a serious wealth gap for economic recession is to misallocate our frustration, energy and most likely leads to inappropriate solutions.

I don’t know what the answer to sustainable growth and redistribution for Nigeria is right now, but what I know for sure is that a better widespread understanding of the situation is the first step in the right direction.

Obession With Fighting Corruption Is Where Buhari is Getting It Wrong

The Buhari led-administration campaigned and won election purely on the basis of fighting and or setting the precedence on reducing corruption in Nigeria.

The challenges with Buhari’s understanding of tackling corruption is the assumption that corruption is a tangible that can be held and beaten down to a stand-still. Fighting Corruption is important but it is not as important as economic growth. Addressing the bogus-ness and wastage of resources by Nigerian public office officials, selective persecution of APC’s economic enemies and the lack of transparency and accountability of president Buhari’s administration; makes President Buhari’s quest a futile and vindictive exercise to uproot APC’s political and economic enemies and make Nigeria a one party state.

There’s absolutely no disputing the fact that if you compare advanced countries, which have achieved development and you look at their levels of corruption and you compare them with poorer countries like Nigeria who is neck-deep in the struggle with corruption and are poverty-stricken and so on, there is a huge difference in corruption between them. But there is a huge disparity in comparing how they made things better to how Buhari is doing it in Nigeria. If fighting corruption means killing the economy, increasing unemployment, reducing foreign investments, then Buhari is doing it wrong.

The challenge the economic team and the ministry of finance of an oil-dependent economy that produces nothing and depends heavily on FX  such as Nigeria, remains, pointing to specifics of what the preconditions for getting from poverty to prosperity as a result of focusing on corruption are.

Further, President Buhari upon resuming office should have done everything he did but leave the most powerful economy in Africa void of a finance minister and into the hands of a CBN governor whose only role should be regulating banks and supporting the finance ministry. At the time Buhari appointed a finance minister, the power-drunk-busy-body CBN governor had done such damages that that left the finance minister in a huge and complicated mess. This is really what the disconnect in Nigeria’s economic policy issue is really all about.

Recently, in the midst of the heated attention the Nigeria was getting as the president left the country on a sick leave indefinitely and is still yet to address the country, amidst hard times created by this government, the EFCC disclosed the recovery of $9.8M loot from former NNPC group Managing Director Andrew Yakubu and Nigerians are celebrating it.

A ploy which many see as a damage control to draw attention aware from the New Yorks Times’s article on the case of a missing president. But going by the way the current government is spending, such recovery does and means nothing to the benefit of the average Nigerian. But rather would be used to fund the padded budget and government’s excessive spending.

President Buhari is not necessarily doing anything to fight corruption but rather recycling the loots from one hand to new sets of hands. Former CBN governor Sanusi Lamido Sanusi referred to it as “creating a new system of corruption”.

There are vital differences in some aspects of corruption, there are other much more important political-economy differences which President Buhari has failed to consider, which can only identify things that are considered in perspectives of our historical process of transition and how simpler countries who have been being Nigeria’s reality now had to pass through. This process cannot be skipped and where there is convergence we need to find out why such convergence exists. Nigeria needs to understand these processes of tackling corruption in a broader context that goes beyond loot recovery.

The big historical picture is a reason why China is developing and parts of India are developing and Korea developed before that is not just that their leaders were slightly less kleptocratic. How you measure kleptocracy is itself is important to the conclusion you can draw.

The Chinese or South Korean government in absolute amounts made more money than any African leader can ever imagine. They understood what Buhari does not today; fighting corruption should not kill the economy. The thing is they generated these by actually developing their economies and not by focusing on fighting corruption. Corruption has no tangibility to it. It is not a thing you can hold and fight. If you want to fight corruption, fight the things that enable corruption from a top-down approach, but focus on developing the economy to benefit from a bottom-up approach.

Perhaps, President Buhari should broadly consider why elites in Nigeria make their money by destroying the economies and comparing it to the reversal cases of developing and functional developing economies such as Rwanda or as it is in Botswana.

The problem is that Buhari is not looking at successful transitional economies who reduced corruption. History is repeating itself and Buhari is doing exactly what he did in 1984 as the head of state that created the exact economic mess Nigeria is going through right now.

 

Nigeria’s Lack of Economic Recovery Plan

Nigeria’s bid to secure international bailout loans to fund the 2017 budget deficit has hit a deadlock because the economic team is yet to submit the economic recovery plan as requested by the World Bank and African Development Bank.

The government has been in loan bidding and negotiation with the World Bank for over a year. The government had promised potential lenders that it would present its proposed reforms to make the economy more resilient and attractive to investment by the end of December.

 

The reason for the plan submission delay by the government remains unclear. The finance minister Kemi Adeosun has reportedly refused to comment on this.

 

This has serious implications and the possibility to cast a huge doubt on the claim that the 2017 budget is predicated on “intent to revived the economy” and the  much-needed infrastructure projects planned for this year, including new roads and improvements to power infrastructure.  Failure to secure these loans, and to present a reform program, could also deter some investors from Nigeria’s planned $1 billion Eurobonds sale in March

This could also deter foreign investments from Nigeria’s planned $1 billion Eurobonds sale in March.

Presently, Nigeria requires assistant in funding a budget deficit of 2.2 trillion Naira ($7 billion) for 2016 and to help fund a record budget of 7.3 trillion Naira for 2017 which is aimed at stimulating the economy.

Nigeria has also been in talks with China and other international banks and funding agencies to borrow more funds but apart from a $1 billion loan from the African Development Bank, at a rate of 1.2 percent. The figure of the amount Nigeria is seeking to borrow from the World Bank is not yet known; as no figure has been made public so far.

The African development bank has indicated it will not release the second half of Nigeria’s $1billion approved loan until the economic recovery plan is ready and presented. $600 million of the $1billion was remitted to Nigeria in November 2016.

The Central Bank of Nigeria as supported by President Muhammadu Buhari is adamant about its flexibility to allow a free fall of the Naira and bent on keeping the Naira rate to the dollar at 40 percent above the unofficial – or parallel – market rate, which has boasted the scarcity of the dollar on official channels. This action has placed the power to navigate the situation into the hands of the black-market; making a few benefit from the sufferings of the majority while shutting down the whole economy.

This has also made investors reluctant to commit to new projects as they expect the central bank will have to devalue the Naira eventually as oil production has been hit by an insurgency in the Niger Delta oil hub.

The central bank has also imposed hard currency curbs making impossible the import of almost 700 goods, which has many plants and factories to close down. Just this week, the Dangote tomato factory was shut down due to a lack of FX availability.

There is no tangible evidence proving that the government is serious and making any effort to salvage the economy from plunging further downwards. Businesses continue to struggle to cope, organisations are continuing the massive worker layoff.  It is still unclear what the government hopes to achieve with it strict FX policies when things are already so bad.

A look at the 2017 budget shows that president Buhari and his economic team are creating a new set of corruption for Nigeria.

 

 

 

 

 

 

 

The budget is extremely bogus, lacks any reflections of the stated intent of restructuring the economy for recession recovery. The 2017 budget makes absolutely no sense.

A budget is a projection plan that is based on a strategic framework were the inputs has a direct correlation with the outputs to achieve an intended goal. This 2017 budget shows a clear mismatch between the inputs and outputs, thus, creating a lack of confidence that this government can achieve any positive outcome in the economy.  If the budget is ready and waiting for international loan approvals, yet the economic recovery plan which the budget was supposed to be predicated on is not ready, on what basis was this budget developed? 

 

 

 

 

 

The only thing apparent in this situation is that Nigeria is acquiring loans to fund a bogus running cost of government and to continue the culture of looting.

The North-East Crisis In Nigeria

As sanity and peace returns to the Boko-haram war-torn zones of north-eastern Nigeria, the struggles of war aftermath is getting out of hand while the government and Nigerians alike watch in indifference.

In the wake of recovery in these states is intense famine arising alongside all other components that accompany longer term displacements. The Boko haram crisis which started in 2009 has made millions of citizens in the north-east been displaced.

These states, as well as the federal government, seem helpless while people; Nigerian citizens are dying daily of preventable health challenges and hunger. According to Medicins Sans Frontieres, 6 children die daily in Bama, Borno state IDP camp. Nigeria is in the middle of a humanitarian crisis, yet chooses to carry on like nothing is happening.

These states which are still struggling to rebuild from years of terrorism does not seem to have any tangible strategy or means to tackle the aftermath of the boko haram crisis.

The federal government’s intervention strategies lack clear and intentional directions and are mostly raid with bureaucratic processes that breed corruption.  The president’s initiative on the north-east intervention team has recently not been able to account for “N2.5b, however, N253M was used to fight plant invasion, N203M was used to cut grass, N50m was given to local non-profits while N2m was used to feed the Internally Displaced Persons (IDP)” – Remi Sonaiya.

Food and relive items donated to the IDPs are intercepted by corrupt officials, thus, never gets to the intended beneficiaries. In some IDP camps, little girls are raped while women are having to exchange sex.

Apart from hunger, the IDPs are in urgent need of access to clean water, basic healthcare, family planning interventions, shelter and warm clothing for the northern harmattan. However, food remains the most urgent need of the IDPs. The internally displaced are extremely vulnerable, however, women and children are the most vulnerable in the IDP communities.

Further, besides, women and children, there is a set of displaced people within the IDP community that are termed “illegitimate” by the government and are therefore not eligible for any form of reliefs. The “illegitimate” internally displaced persons are supposedly not Nigerians and are therefore not recognised as qualified beneficiaries. So besides overall population, there is a set of unqualified displaced persons within the IDP community that overlooked by government interventions and have to depend on private and individuals who know about them and how to access them for survival.

 

Kay Lawal of Compassion Network with “illegitimate” IDP kids

 

In theory, combatting the aftermath of Boko-harm and resettlement of the displaced members of the north-eastern states requires a holistic plan that seems very complicated. In practice, overcoming these challenges requires multiple interventions that trade off of each other running concurrently in order to help these states rebuild and settle displaced people.

For example, interventions cannot just focus on feeding, it requires healthcare, education, livelihood and resettlement plans. The state government’s main role should be on rebuilding the states, while international communities, NGO, the private sector and individuals should focus on meeting the immediate needs to arrest the rising crisis; putting things under control.

It’s easy to feel helpless and overwhelmed and want to turn away from a story like this. The news is discouraging — and likely to get bleaker. But those of us with the good fortune to live in safety have a responsibility to do what we can to help.

And there are ways to help;

1. Support Local Non-Profits: most involve donating to local organisations that are on the ground in or around north-east. I know not everyone has money to spare, but if you can make it work; donate food, medical supplies, deworming medication for children, contraceptives- to control alarming birth rates in the IDPs and clothing items,  providing much-needed funds to local and community-based initiatives is the most efficient way to assist at a crucial moment like this.
2. Support Doctors Without Borders: the global, nonpartisan medical relief organisation is active providing local medical facilities but there are not enough of them and the demands for medical attention in the IDP camps far outweighs availability and accessibility. The majority of medical assistants in the NE are international while the local medical interventions lack equipment, supplies, administrative funds and volunteer personnel.
3. Start and Keep the Narratives Alive: The local media for some reason are not covering the crisis in the NE. Howbeit, it is imperatives that we all keep the narratives of the realities of the IDP alive as that is the only way to ensure that people are not dying in silence while the rest of Nigeria lives in delusion and denial.  If you a story teller or a journalist, use social media to keep the narrative alive, if live in cities areas the IDP camps, it is your responsibility to demand action and better treatment of the displaced from IDP local officials. Organise protest effort where you are to ensure awareness of the realities of the internally displaced persons in the north-east.

More importantly, call your senators and various ministries that should be in charge of managing this crisis to demand accountability and transparency of the monthly IDP fund allocations.

Borno state has a total of 5.5 million population out of which 3 million are displaced. The longer term effect of displacement in this northern state is that, if interventions are not holistic and timely, a state like Borno may never be able to recover.

The north-east crisis is beginning to look like what happened in Rwanda post-war. What is happening in the north-east isn’t just a humanitarian tragedy, it’s a moral crisis. It’s a time to put aside our denial of reality and indifference, to get real, and to act as best and as effectively as each of us can because the Internally Displaced Persons are human beings who are Nigerian citizen, whose government failed to protect- leaving them vulnerable to the menace of Boko-haram for over six years.

Boko haram and the Fulani herdsmen are already recruiting children from these camps, if things continue how they are, more terrorist groups will emerge from northern Nigeria. And soon the monster which our indifference created will hold Nigeria hostage in ways we never thought possible.

If we continue to do nothing now, five years from now we’ll never stop asking ourselves why we didn’t.

 

Is Nigeria Cursed or Just Incapable Of Better Policies?

“The worse decisions  a fragile economy like Nigeria with no concrete evidence of why it grows other than its population size can make is price fixing and market control” Rebecca Enobong Roberts, 2016 🙂

In September, African Development Bank (AfDB) president Akinwummi Adesina at a Nigerian businesses forum in Abuja said Nigeria was too big to fail. Noting that similar oil exporters such as Angola and Equatorial Guinea faced similar challenges.

The AfDB President said it was important for the private sector to take advantage of the incentives that should accompany the devaluation of the local currency, the naira, to boost production, especially in the agri-industrial sector.  In theory, the right direction for Nigeria will be what the AfDB president suggested, but in practice, taking these advantages require incentives only the government can create.

From FX stringent policies, data price increase, passport taxes to price fixing, everything the Buhari administration is doing is going in a direction opposite of where an economy in crisis should be. If the government had allowed the inevitable; the Naira free fall since last year September, the Naira would have been on its way to recovery by now.

 

Is Nigeria curse or Buhari incapable of sound policies?

 

It is no rocket science, FX of a consuming economy is solely dependent on demand and supply. If oil income is low, businesses are struggling to cope and foreign investment is the decrease, restricting the flow of FX of a country that produces nothing but reliant on imports is an unintelligent and dangerous decision.

The first rule of managing an economy in crisis is creating incentives for free markets. Presently, every step this government is  taking at this critical moment is self-destructive and rent seeking. Which leads me to ask; Is Nigeria curse or is the Buhari administration  just incapable of backtracking from the economic mess it is creating and making better choices?

Africa and the world cannot afford for Nigeria to fail. Howbeit, that is exactly the direction Nigeria is headed; failure and it is Nigeria’s fault. The economy is at a 1.7 % shrinkage, unemployment has more than doubled the rate of the last two years, inflation is the highest its been in the last 11 years.

Empirical Problems and Implications

It is obvious that although the Naira was eventually devalued in June 2016, the president is still obsessed with defending a factor (Naira) he has no control over and allowing factors (policies) he has control over to be shaped by the directions a chaotic economy. Further exposing Nigeria to extreme economic vulnerabilities.

The president through the CBN is manipulating the exchange rates, restricting banks access to free flow of FX. As a result, discouraging foreign investment, FX shortage, killing businesses that depend on importation and feeding the FX black market.

As things get out of hand, instead of creating an FX open market, the government through the Department of State Services (DSS) is forcefully clamping down on the same black market monsters it has created. More stringent control at play.

Relinquishing control of Nigeria’s foreign exchange will doubtless cause at least a short-term rise in inflation , yet from a holistic perspective, it is exactly what needs to happen urgently. Doing so will not only draw foreign investments back into the country but it will also make the economy more productive and competitive, but also cut off a conduit for corruption.

Further, the Nigerian Communications Commission’s (NCC) announcement that the cost of data will triple from December 1st makes no sense for a country that people are already struggling to survive with pay cuts and increasing unemployment rate; sending more middle-class back to the poor demographic. The danger of creating pro-poverty policies is that on the one hand,  it falls on a desperate need to reduce poverty now and on the other hand, making the challenge even harder to overcome.

What the government should do instead is shield the middle-class  and cushion the blows for the countries’s poorest and most vulnerable by seeking other means to raise funds internally; curtailing the cost of running the government, cut senator’s bogus allowances and making better usage of returned loots until the economy kicks off again.

In this hard times, it should be a priority to keep more businesses afloat and create shocks to hold things together from getting worse, as recovery becomes harder if the situation keeps deteriorating.

It is better for more businesses and individuals to pay taxes than for more businesses to shut down and for government out of desperation seek to increase taxes. This same framework could also shield the poor from the regressive impact of an increase in Nigeria’s value-added tax — which is relatively low and should remain low until governances and services delivery improves, but a potentially valuable source of additional government revenue.

The saddest part about NCC increase in data tariffs and taxation increase proposal is that such revenues will be used to pay the salaries and allowances of incompetent civil servants and their bogus and unnecessary special advisers. It is callous and abusive for the Nigerian government to seek to increase tax rates and data tariffs for a struggling population who benefit nothing from the government.

Evidently, former president Goodluck Jonathan’s style of managing the economy meant that things were inevitably bound to get worse.  Yes, Buhari inherited a Nigeria that although was prospering, oil price declines, looting and corruption meant that a recession was a matter of not “if”, but “when”. However, his controlling and rigid method of handling the economy has made the economic crisis harder to manage and solve.

In conclusion, things are already at a climaxing bad state, the only way 2017 will be a better year economically for Nigeria is if Buhari sees the need to relinquish control, create better policies that allow the market a free flow and back-tracks on trying to sacrifice the poor so that government can generate revenue.

 

 

Five Reasons Why Buhari’s Unemployment Benefit Won’t Work

In the usual Nigerian politics manner of making idealistic promises during election campaigns and going back on it after the win, president Buhari or the ruling party APC (depending on personal understanding of who said what and what it meant at the time), a promise was made that all unemployed youths will be paid N5000 monthly. In April, the President said in an interview, that the promise to pay unemployment benefits was his party APC’s idea and not necessarily an idea he agreed with.

 

The president said “the largesse N5,000 for the unemployed, I have got a slightly different priority. I would rather do the infrastructure, the schools and correct them and empower agriculture and mining so that every able bodied person can go and work instead of giving N5,000 monthly to those who don’t work”.  

Looking at Nigeria’s current economic state, the monetary policies are feeding more job loss, states are being bailed out by the federal government to enable civil servants salary payment. Clearly, the country has more pressing priorities. However,  not to throw away the baby with the bathwater, unemployment benefits can be a good has the capacity to improve livelihood. But the question is even if Nigeria had the financial capability, is it still a good idea? Does Nigeria have the capacity to target the right beneficiaries and a system that maximises benefit schemes to achieve intended goals (improving livelihood)?. What are impact indicators?

 

Nigeria’s unemployment rate has been on a steady increase since 2009. Then, the rate of unemployment was 19.9 percent, but it hiked to 21.1 percent in 2011, and 23.9 percent in 2012. However, from 2012 to 2014, there was a significant decline in these figures; unemployment rate plunged to 9.7 percent from 23.9 percent. Nigeria with the average age of 35 years, has a large youth population, this means that the youths are most affected by the issue of unemployment. It is therefore, no surprise that the current rate of unemployed youth stands at over 50 percent, a situation that is clearly detrimental to the country’s economic growth and overall development.

During a press conference late last year, President Buhari stated that the fulfilment of his campaign promise of a  N5, 000 monthly stipend to every unemployed Nigerian citizen was in the works and that the implementation of the unemployment benefits scheme would begin early this year. He also said that the country had in the past, wasted its resources, and it was time to focus on investing in the most important resource of any nation – human resources.

Currently, the number of unemployed people in Nigeria is stated to be 25 million. But with the recent increase in job loss, coupled with the government’s inability to create jobs, this statistic does not seem an accurate reflection of reality. The unemployment benefit scheme will cost the Nigerian government N125 billion monthly; that is N1.5.trillion annually. Considering the current economic uncertainties, and the static nature of the economic policies by the present administration, is Buhari’s N5, 000 monthly stipend feasible? How will it be funded? And is there an interim exit plan for when the project term expires?

The cost and other restraining factors of this project do not negate the positive impact it could have in enhancing the livelihood of the millions of Nigerians living in absolute poverty. But from all indications, it does seem like the Nigerian government is ill-equipped to handle this sort of project. Moreover, the complications surrounding the 2016 budget begs the question of priority and provision for this project right now. The nature and framework of such benefits are such that it is practicable and most efficient in functional societies, as it can only be successful if it is built around a long-term goal.

Countries such as Sweden, Denmark and Norway, pay unemployment benefit to people who have worked for over 52 weeks within the last three years. This payment is made for six months while the beneficiaries are actively seeking employment. In Switzerland, beneficiaries get paid full benefits for 8 months, as long as they can prove that they are registered with job centres and are actively seeking employment. In these countries, the framework for these schemes is market driven, as they involve voluntary enrolment and are funded by taxes and government subsidies.

The intricacies of unemployment benefits are such that their planning, implementation, and success are highly data driven and funded by labour, insurance taxation policies, or both. For example, in Denmark, all workers contribute $700 annually to cover social programs for which unemployment funds are part of, but not all workers are eligible to claim the benefit should they be out of employment.  

In South Africa, the unemployment benefit is paid through the Unemployment Insurance Funds to people who lose their jobs and are unable to get a replacement. These persons are allowed to apply within 6 months of becoming unemployed and are able to receive payment for up to 34 weeks. They must also undergo various stringent methods of self-identification. This process of identification still poses a challenge in advanced economies, how much more in a developing country like Nigeria.

In December 2015, the Nigerian senate voted against this scheme on grounds that it was open-ended, and that the government had no concrete means of screening and identifying potential beneficiaries of the scheme. The senate argued that such a scheme was susceptible to abuse due to the country’s constant struggle with data and biometrics. Also, this sort of project is grassroots-driven; the government’s inefficiency at this level could also pose a major challenge to its success.  

Here are five reasons Nigeria has no business embarking on such projects.

In addition to the country’s present state of economic uncertainties, here are reasons why the unemployment benefit scheme is not feasible for now.

1.    Sustainability:  It is common practice for the Nigerian government to copy foreign initiatives that are at work  in the US, the UK, or China, without proper thought and analysis based on the country’s realities. Because Nigeria has no tangible long-term goals; a sectionalized 20 years development plan, there is usually nothing to measure these irrational decisions against. While imitating these western countries, some of the basic questions the government should ask is; is this an investment or a liability? How will it be funded? If it’s an investment, what are the expected outcomes, and how will these outcomes be measured? There is also the question of the project duration and its interim exit strategy.
2.    Increased Debt: The controversies surrounding the bloated nature of the 2016 budget, and the lack of other alternatives, will see the government having to incur more foreign debt to finance the unemployment benefits scheme. For Nigeria’s continued growth, it needs to enhance its capacity to grow; this involves human capital contribution to economic activities. However, it appears that the implementation of this scheme would breed liabilities – dependency on handouts. The last thing the country needs is incurring debt to create liabilities.
3.    Lack of a National Database: Presently, Nigeria’s total population is uncertain; how many children are born daily? How many out-of-school children are there? How many people are actually unemployed, or underemployed? And what is the difference between underemployment and unemployment? Some statistics quote the unemployment rate at 25 million, while others place it at 30 or 40 million. How does the government plan to cope with this varying statistics? And how will unemployment and underemployment be differentiated?
4.    Population Politics: The unemployment beneficiary scheme will breed room for corrupt practices such as the creation of ghost citizens; there is a general assumption that many states in Nigeria have ‘ghost citizens’ used for political and budget manipulation. For example, there is an argument that Lagos state is the most populated in the country, while others say it is Kano state. Again, this reinforces the irregularity of the country’s data statistics, which appears to be based on speculation. If the government cannot ascertain the population of states in the country, then the unemployment scheme is doomed to fail.
5.    Lack of functional smaller governments: Another challenge to the success of this project is that it will leave many behind as the Nigerian system has major efficiency challenge at the local level. Initiatives of this nature often thrive when it is driven and implemented at the grassroots, and by the local government. However, the framework of the Nigerian government and politics is such that the authority of the local government is restrained and therefore has very little capacity to handle a capital-intensive project of this nature.

Analysis of the possible reasons that aided the reduction of unemployment rates between 2012 and 2014, what quickly becomes apparent is that during this period, the Nigerian economy witnessed the birth of new industries, with a quite a number of new and emerging entrepreneurs. This sheds light on the power of free market economies and its capacity to birth alternative or informal sectors in Nigeria. 

Howbeit, recently in Lagos state, governor Ambode endorsed the enforcement of criminalising street hawkers. Global experts have projected the informal sector to be the new driver of Africa’s growth. For Lagos state, what this means is; rather than ban street hawking, finding ways to regulate and license makes more sense.

That way, the government is not pushing uneducated and vulnerable Nigerians into the unemployment market when graduates are struggling to find jobs.  The logic is that street hawking is not an obstacle  to overcome in building a mega-city but  an intricate part of keeping poverty level low. Also, until a government can provide for itself people, the basic needs, it has no right to take away their source of livelihood. Doing so obstructs the balance of reducing  the absolute poverty rate in Nigeria. 

Further, in an economic crisis such as Nigeria without the availability of basic human needs, it makes no economic sense to kill any form of informal income earning activities.  A meaningful step for the government to take is to build structures around the alternative sector and render its maximum support through intentional policies. For obvious reasons, the current economic realities require prioritising investments as well as supporting and maintaining all forms of economic activities to boost the economy and not create more liabilities.

The Nigerian government must avoid the trap of breeding dependency and focus on harnessing human capital, which in turn will contribute to economic growth. The government should harness investment opportunities for better policies that support growth by removing all obstacles to all income generating activities and the free market. 

 

How Nigeria Can Navigate the Current Economic Uncertainities

When an economy is distressed, exchange rates become volatile and countries rush to stem potential risk. What risks should countries in this scenario mitigate —and how?

The reduction in oil price has brought exchange-rate risk back to the forefront in Nigeria; creating foreign exchange instability which has seen the nation, an import-dependent economy continually spending more while generating little foreign exchange income. This has left the economy in a vulnerable state.  More often than not, nominal exchange rates tend to draw the most  attention to the less volatile factors which when touched, has the potential to create major vulnerability in an economy.

In theory, when commodity prices are falling as local currency values were rising, purchasing power would stabilise due to cash inflows, and there would be no real foreign exchange risk. However, in Nigeria’s case, the crash in oil price and the little generation of earnings in foreign currency has created a huge imbalance. Nigeria spending more foreign currency on importations and earning less foreign currency; creating a deficit. Along with this deficits are obvious risk but tend to be misleading factors, demanding immediate interventions, which creates a chain reaction of more erratic risks.

Many developing nations, when faced with this challenges tend to rush to managing the visible risks immediately. For example, micro-managing FX transactions, pegging the Naira, currency swaps, trying to control currency futures and options. Such tactics often negate longer term views as they act as temporary solutions to underlining severe and more permanent issues . These kinds of risk mitigation would down the line see Nigeria face greater exposure to the less obvious risk that is more challenging to manage and these risk may in the nearest future become unmanageable.  For example, trying to manage a risk which stems from a mismatch between cost and investments in one currency and revenues in another will create risks which are initially difficult to forecast.

Understanding where and how foreign exchange fluctuations affect the nation’s cash flow is not a straightforward case and no amount of research can accurately prevent risk likely to arise. Various factors from macroeconomic trends to internal competition within market segments determines how foreign exchange rates affects the economy. While economist use mathematical risk-management tools in analyzing risk, development economists lean more towards understanding where and how exchange rates can drive or derail the economy. Each of these arising risks will influence cash flows and value in various ways, thus, requires context-specific approach in risk mitigation.

Presently, Nigeria has already made some economically unintelligent decisions by rushing to manage immediate risks that were apparent as soon as the shift in commodity pricing occurred. There are no easy ways to undo these decisions, so the only viable option is to ensure that things don’t get out of hand. Here is how;

Take a holistic perspective

Foreign exchange risk should not be managed in isolation of intense policy research, as doing so could trigger more hazardous risk. For example, if Nigeria is borrowing and signing a loan $6bn deal with the IMF today for 2017, it should consider buying the loan required today and enter a forward contract for a fixed rate whereby, changes in exchange rates does not affect repayment rate. Understanding where and how foreign exchange risk triggers one another in a vulnerable economy is crucial for effective mitigation of these risk.

Focus on cash flow, not earnings

Often times, the country’s accounting report fails to draw attention to the most important aspect of currency risk; cash flow. For example, the nation’s reserve contains information on FX gains and cumulative adjustments from translating foreign currency- designated assets and liabilities without separating assets from liability in the final analysis; when the focus is placed on earnings it negates cash flow activities, and cash flow is the truest reflection of reality.

Additionally, it is common for economist to look at just numbers in financial report,  the most vital effects of changes in currency rate comes from structural risk analysis. As a matter of fact, standard financial reports often lead analysis to misleading conclusions about a nation’s reserves by overstating the accounting impact on incomes earned as opposed to the real effect of cash flows.  The finance ministry should focus on the potential risk created by spending more than what is going into the reserves.

Secondly, it is common for commodity-dependent nations to struggle whenever there is a negative shift in commodity price, however, it is wise for a government in such scenarios to avoid the temptation of try mitigating all of the risks that are induced by shocks in commodity prices.

Furthermore, the main reason why mitigating obvious risk in this scenarios is a given is such risks are initially very obvious creating a panic that requires immediate actions. However, mitigating the risk more often than not create a chain reaction of more harmful risks that were initially less obvious. For instance, price fixing, currency pegging and control are ideal when oil price makes a free fall from $89 to $37 per barrel, what is not considered in such decisions making process is the chain reactions it is likely to create in the macro economy that will overflow negatively into the entire economy.

Fourthly, the current economic condition of price fixing and FX irregularities shows that the Central Bank of Nigeria(CBN) is the main driving force in economic policy making and this should not be so. Central banks are banks regulatory body and because they are market driven, being that a market-driven approach to managing an economy is more often that not shallow and is hardly based on real research on longer-term development goals, a Central Bank should under normal circumstances only act as a support to the finance ministry and not the other way round.

In conclusion, Nigeria should be able to stabilize and possibly grow the economy if the finance ministry with the appropriate support of the CBN takes a holistic approach that focuses on the effects of cash flows than on earnings and be fully adverse with the limitations of financial instruments and how to use them to the nation’s advantage. Both the finance ministry and the Central Bank of Nigeria should be transparent with each other about the risk they face and strategies developed to hedge these risk.