19 Feb

The week ahead – Security threats are linked to the economy

A pipeline rupture in Forcados, Delta state has led to the stoppage of crude oil export, affecting 400,000 barrels of oil per day. A previously unknown group, the Niger Delta Avengers has claimed responsibility. This is coming as the Inspector-General of Police, Solomon Arase announced that the Nigerian Police are in possession of a court order to arrest ex-Niger Delta militant Government Ekpemupolo (aka Tompolo), declared wanted by the Economic and Financial Crimes Commission (EFCC) after a court issued the warrant for his arrest. Tomopolo was declared wanted by the EFCC in connection with a N45.9b fraud in the Nigerian Maritime Administration and Safety Agency (NIMASA).

In a possibly related development, less than a month after the country experienced a petrol scarcity, long queues have resurfaced in petrol stations in some parts of Lagos. In virtually all the petrol stations along the Epe, Ajah and Lekki axis, there were long queues of vehicles and motor cyclists, struggling to get petrol. The scarcity was also noticed within the Mile 2–Apapa axis, where some petrol stations are closed. This is coming on the heels of a drop in the electricity supply.

President Buhari has approved the immediate disengagement of 26 chief executives of federal government agencies and commissions whom he inherited from his predecessor, Goodluck Jonathan. He also directed that the most senior officers in the affected organisations should oversee the organisations pending the appointment of substantive heads of the agencies. Some have argued that the appointments of these Heads of Agencies and Parastatals are statutory and backed by law.

This week, soldiers and policemen attacked an IPOB prayer meeting in Aba, Abia State, dousing the crowd with tear gas, and opening fire. They arrested and beat up men and women, and drove some away in a security van. No reason was given for this action but reports suggested the members were having one of their occasional prayer meetings for the release of Nnamdi Kanu, the leader of the movement, and in the hope that a Biafran nation will be realized again.

This week, kidnappers attacked Otuoke, Bayelsa state, the hometown of former President Goodluck Jonathan and abducted his first cousin and foster father, Inengite Nitaba. Nitaba was taken away from his residence at about 0330 hours by seven heavily armed men through the Otuoke creek. Although a detachment of men of the Nigerian Army is stationed in the former president’s home, reports suggest that the gunmen used the creek to gain access to the old man’s residence which is on the bank of the creek. Nitabai is described as the head of the compound from where the former President hails from. This is the second time the septuagenarian is being taken forcibly, obviously for ransom payment.

The Sultan of Sokoto, has called for a revamp of National Security Architecture, in order to boost national security. He also lamented that the Almajiri syndrome that is posing a threat to the country.

Still on threats to national security, the people of Ukwulu, a predominantly farming community in Dunukofia, Anambra state, have held a protest saying that for the better part of a decade, their farmlands have been invaded by Fulani herdsmen, dwindling their productivity. They claim that farmers who dared to challenge the herdsmen have been threatened.

The exchange rate between the naira and the American dollar has hit new lows, exchanging for as much as N410 in some places. The exchange rate has depreciated to a new low every day since last week as dollar scarcity continues to bite hard. The disparity between the naira and dollar has created huge arbitrage opportunities. Chatter suggests that buyers of personal or business travel allowances at the official rates have also ended up selling all or part of the forex at the black market cashing in on over 40% of their returns. Some analysts say that the free-falling exchange rate strengthens the CBN’s view that forex sold to BDC operators mostly found its way to the parallel market. Some analysts believe that the true value of the Naira could be in the region of N250-N280 suggesting that the current price could be artificial. Nigeria’s external reserves now stand at about $27.8 billion, down by about $1 billion since the beginning of the year.

Counsel

  • Despite the economic loss to the country occasioned by the loss of 25% of Nigeria’s crude output, we advice that the government focus more on the environmental impact of this disaster, and the clean-up efforts. This will go a long way towards bringing the affected communities closer into the Nigerian orbit, and reducing their antipathy, which, in our considered opinion is more beneficial in the long term.
  • We again call on Tompolo to surrender to the authorities. Failing that, the authorities must use every available legal means to bring him to book.
  • The return of petrol queues in some parts of Lagos, particularly at a time when the power situation has worsened badly, is alarming. The relevant agencies MUST get their acts together urgently to arrest this situation. Nigeria cannot afford a petrol and power crisis at the same time as the ailing economy.
  • The reshuffling by the President, like some of his more recent actions has opened him to attack by various interest groups. While we understand the President wanting to have people he can trust around him, we advice caution for fear of overheating the system.
  • We advice caution in the manner in which the security agencies go about handling Biafra sympathisers. There is no gain in risking alienating people with heavy handed tactics, and the authorities by now ought to have drawn the link between the worsening economic situation and the rise in IPOB’s popularity.
  • As predicted in our end of year report for 2015, there are more incidents of kidnapping. Again, it can be linked to limited economic opportunities. We call for the quick, and safe return of Mr. Inengite Nitaba.
  • We believe that the Almajiri system has done more harm than good. It has led to an increase in the number of out of school children in the Northern part of Nigeria, and it provides fertile ground for the recruitment of Islamists. The governments, at the state level, need to invest more in proper education for their growing populations.
  • We still hope for the federal government to take the threat of the herdsmen/farmer conflicts seriously. It is affecting agricultural activities in the Middle Belt, and frontline states in both the South-East and South-West. It is better taken care of while it is still manageable.
  • Finally, and again, we call for a free float of the Naira. While we accept that this will be a painful pill to swallow, we cannot see any other way of first knowing the true value of our currency, and then stimulating local productivity.