13 May

The week ahead – Trouble ahead over fuel price hike

On Wednesday, Nigeria’s government raised the price of petrol, saying that “it would now sell for not more than N145 a litre.” However, despite its best efforts to get the buy-in of the major labour unions, which for decades had thwarted the attempts by previous administrations to remove the subsidy on petrol, the Nigeria Labour Congress warned that it would resist the move. The government, nonetheless, got the support of the Manufacturers Association of Nigeria, Lagos Chamber of Commerce and Industry and Independent Petroleum Marketers Association of Nigeria, who all backed the decision, saying it was inevitable under the current economic climate.

The most recent attacks on oil infrastructure in the Niger Delta have pushed Nigeria’s output of crude close to a 22-year low, putting intense pressure on the country’s finances. Shell workers at Nigeria’s Bonga oilfield in the southern Niger Delta were evacuated following a militant threat. Attacks late last week forced Chevron to shut its Okan offshore facility, taking out 35,000 barrels per day (bpd). Shell said the unrest had not yet impacted production, but its Forcados field is still closed and under force majeure following a February sub-sea pipeline attack, taking out 250,000 bpd. The violence has depressed production in Africa’s largest producer to roughly 1.4 million bpd this month, according to the Minister of State for Petroleum Resources, Ibe Kachikwu.

Following the remarks by British Prime Minister, David Cameron, in which he described President Muhammadu Buhari as a leader of “fantastically corrupt” country, the president has corroborated the PM that the country is corrupt, and he will not be demanding an apology from the Prime Minister over the comment. British media, on Tuesday, published a video clip of the Prime Minister, in which he was caught on camera, describing Nigeria and Afghanistan as “fantastically corrupt countries.” Cameron was speaking with Queen Elizabeth II at an event to mark her 90th birthday. Buhari, who left for London on Tuesday, is one of the foreign leaders to be hosted by the Prime Minister on Thursday.

The Central Bank of Nigeria has said that it is carrying out special investigations into the roles played by banks in certain financial transactions, especially the N23 billion reportedly shared to officials of the Independent National Electoral Commission by officials of the former President Goodluck Jonathan administration to influence the outcome of the last general elections. The apex bank said in a statement by the Acting Director, Corporate Communications Department, Mr. Isaac Okoroafor, that the special investigations would enable the CBN to determine the level of involvement of the banks as well as persons involved in questionable financial transactions. The CBN stated that while it was aware of some of the investigations being carried out by law enforcement agencies, it would not allow the banking sector to be used as a conduit for illicit transactions. It assured all customers of Deposit Money Banks in the country that despite the probe, the safety and stability of the banking sector remained a priority of the CBN.

The renewed internally generated revenue drive by most state governments is now taking a toll on business operations, especially small and medium scale firms. Operatives of different agencies entrusted to collect IGR have pushed back operations of most of the businesses as many are either high-handed or have instituted fees that are largely not payable. This has resulted in some of the businesses, especially the small ones, operating covertly or simply closing down. Nigeria’s telecommunications operators have all complained of multiple taxes and fees at local, state and federal levels, with service disruptions related to tax claims costing the sector billions of dollars annually. The federal, state and local governments appear to all have tax-raising powers, leading to multiple taxation of companies.

The Federal Government has announced that the people responsible for incessant attacks on communities in recent times are not Fulani herdsmen, and added that some of the perpetrators were elements of Boko Haram. Speaking at a Senate hearing, Minister of State for Agriculture, Senator Heineken Lokpobiri, declared that creation of ranches was just the way to go, adding that keeping cattle in the ranches would restrict their movement and ensure they stayed in one place. The minister told the joint hearing of the Senate Committees on Agriculture, Rural Development and National Security and Intelligence that no fewer than nine states of the federation had given some 5,000 hectares of land each for establishment of ranches.

Three soldiers were killed during a surprise attack in the wee hours of Wednesday in the Foropa area of Bayelsa State, a day after five policemen were killed in Rivers State by gunmen. Foropa is in the Southern Ijaw Local Government Area of Bayelsa State. The three soldiers were attached to the Joint Force Operation Pulo Shield in Bayelsa State. The gunmen took away two Kalashnikov riffles, a General Purpose Machine Gun and other ammunition at the Foropa checkpoint.

Ibrahim, son of former CJN, Mohammed Uwais, was this week killed at Aleppo, Syria, during airstrikes. Ibrahim, who joined Islamic State of Iraq and Syria last year, was killed during airstrikes carried out by the United States. According to reports, Ibrahim, who secretly travelled to Syria in February 2015 to join ISIS, was one of numerous Islamist terrorists who died as US military aircraft bombarded ISIS camps near Aleppo. The deceased was said to have died on the battle field, leaving behind two wives. Ibrahim left Nigeria in 2015, telling close family members he was headed to Turkey to explore business opportunities. He took along his two wives and five kids. However, Ibrahim slipped from Turkey into Syria with his entire family and joined the army of ISIS. ISIS agenda, like Boko Haram in Nigeria, is to carve out an Islamist caliphate.

Suggestions

  • We believe that Nigeria needs a total and complete deregulation of the downstream petroleum industry. The recent price increase is a half measure that will only lead to more hardship in the short term, and a further, and unnecessary discussion, in the medium to long term. We expect this government to take the bit between its teeth and do the needful.
  • Nigeria’s approach to the anarchy in the Niger Delta has been largely ineffectual. We advise the President to quickly convene a summit to address the immediate challenges of the region and think through practical solutions, which will involve the locals.
  • That Nigeria is rife with corruption is without doubt. That corruption is harmful to Nigeria, is again, without doubt. However, Nigeria’s foremost PR person, the President, should not be seen amplifying derogatory statements by foreigners. A better response from Mr. President would have begun with, “Some Nigerians are corrupt…” A President’s words carry weight, and his statements could very easily have a negative impact on the foreign investment drive of his government.
  • We believe that the CBN is being dishonest in its statement pledging to investigate banks for questionable transactions. The CBN is aware of all these transactions that are being investigated by the EFCC. Banks’ internal controls make direct renditions of all funds above stipulated regulatory requirements to the regulator, and even an arm of the EFCC. That they are pledging to investigate after EFCC has weighed in is quite disingenuous of the apex bank.
  • The state governments must not suffocate small businesses with taxes, rather they should seek for investments that can add quality to the lives of citizens and in the long run generate revenues. The current drive for IGR must be done with a human face and not exacerbate the troubled SMEs.
  • It is embarrassing that the government of Nigeria does not have a firm grip on the murderers who are hacking people to death across the country. They say it is Boko Haram or foreigners without credible evidence to buttress their position. Up until now, not a single person involved in these mass murders has been arrested, a sorry development that emboldens the marauders on the one hand, and creates more problems on the other. This can be tied to the impunity with which various groups in the Niger Delta are now beginning to attack security personnel. They rightly or wrongly, believe that nothing will happen.
  • The death of Ibrahim Uwais in an airstrike in Syria should put our security services on notice. If we could have a Nigerian fighting actively in Syria, we should be very vigilant and proactive in monitoring people movements along the Dubai-Turkey-Syria route.