18 Nov

The week ahead – There are no signposts where we are now

The NBS on Monday released new data showing that the Consumer Price Index, a measure of inflation, rose to a 94-month high of 18.3 percent in October. The 18.3 percent inflation rate, which is about 0.48 percent higher than the 17.9 percent recorded in September, is the highest since January 2009 when the NBS started publishing the revised CPI. The bureau attributed the increase in inflation rate to pressures recorded in some sub-indexes such as housing, electricity, gas, water, lubricants for personal transport and education. It explained that while the prices of food items such as bread, cereals, fish and meat also recorded significant increases, fruit prices moderated during the period. The report added that the least growth pace recorded in October was experienced in communication (5.7 percent), restaurants and hotels (9.4 percent), and recreation and culture (10.3 percent). The NBS noted that the urban index rose by 19.9 percent (year-on-year) in October from 19.5 percent recorded in September, while the rural index increased by 16.95 percent in October from 16.4 percent in the previous month.

The CBN is proposing a string of new amendments to the Foreign Exchange, Monitoring and Miscellaneous Exchange Act (FEMM). The regulator made its position known in a “working paper” shared to members of the Chartered Institute of Bankers of Nigeria and can also be found in the website of the Nigerian Law Reform Commission. The act signed into law in 2014 liberalised the foreign exchange market in Nigeria allowing for foreign investors to import money into the country and repatriate same freely. The Minister of Finance has overall responsibility for the Nigerian foreign exchange market structure under the Act of 2004 and this could set the stage for a fierce rivalry with the Central Bank of Nigeria (CBN) according to dealers and lawyers. They also say the CBN has no legal powers to control or peg rates for transactions in the interbank foreign exchange market as the apex bank appears to be doing at the moment. Citing the Act, senior bankers as well some of the nation’s top lawyers note that the overall regulatory power for the foreign exchange market structure lies with the Minister of Finance and not the regulator.

The Police have confirmed the death of eight Shiites civilians and a police sergeant in a violent clash on Monday between the law enforcement agents and members of the Islamic Movement of Nigeria in Kano. The clash occurred during a procession of the Shiites in the city. The state Police Commissioner, Rabiu Yusuf, said the Shiites, who were allegedly in possession of dangerous weapons, snatched an Ak47 gun from an officer and used it to kill the sergeant. Yusuf said the incident started at about 8:00 a.m. when police officers were invited to a scene of mayhem at Kwanar Dawaki Zaria allegedly caused by the Shiites who, he said, blocked the road and were attacking motorists and vandalising properties. The commissioner said the law enforcement agents tried to stop the carnage with tear gas but were repelled by the Shiites with arrows and other dangerous weapons. While news outlets could not independently confirm the death toll, Premium Times quotes a witness as saying that he saw a pile of bodies of Shiite members being removed from the scene of the clash in a police van. Another witness had told the online paper that the crisis started when the police tried to forcefully stop the Shiite procession. Monday’s killings occur almost a year after over 300 Shiites were killed by soldiers who also accused them of blocking a major road in Kaduna State during a procession. The leader of the Shiites, Ibrahim El-Zakzaky has been in detention since the December attack, a move which has been condemned by local and international rights groups.

The House of Representatives on Tuesday passed through second reading, a bill seeking to stipulate penalties for all offences relating to terrorism, and criminalise financing terrorism, in addition to categorising kidnapping and pipeline vandalism as acts of terrorism. The bill seeks to commit to life imprisonment, convicted terrorists, instead of the current 20 to 25 years terms under existing anti terrorism laws. Sponsored by Hon. Mohammed Tahir Monguno (Borno APC) and Hon. Ahmed Kaita (Katsina APC), it seeks to repeal the Terrorism (Prevention) Act 2011 and the Terrorism (Prevention) (Amendment) 2013, and also classifies the use of biological or chemical weapons as well as the “interference with or disruption of the supply of water, power or any other fundamental natural resource, the effect of which is to endanger human life” as terrorist activity.

The Niger Delta Avengers on Tuesday blew up three truck lines at Nembe in Bayelsa State. The group said its “Elite Strike Team 03″ struck Nembe 1, 2 and 3 truck lines, being operated by Agip, Oando and Shell respectively at about 2345 hours. The trunk lines have the capacity to supply 300,000 barrels of crude per day to the Bonny export terminal. The Avengers spokesperson, Mudoch Agbinibo, said the group’s latest attack was to prove the futility of the Nigerian Navy’s “Operations Sharkbite.”“This is in response to the so-called “Operations Sharkbite,” an act of terrorism commissioned by the tyranny of the Nigerian Navy establishment and orchestrated by some elements of the ruling political class to continuously undermine any effort by the Nigerian state to address the legitimate demands of the people of the Niger Delta.” The group, which wants more energy wealth to go to the region which is the source of most of Nigeria’s oil, said it would continue attacking energy facilities until the “environment prevails for genuine dialogue and negotiations” to end a spate of attacks dating back to January.

Lagos State lawmakers have ordered investigation into the alleged killings and destruction of property in Otodo-Gbame in Ikate- Elegushi area of the state last weekend. The action followed a mass protest to the Lagos State House of Assembly by aggrieved residents of the area, who have alleged continuing harassment and intimidation of members of their community by the police. Mudashiru Obasa, speaker of the House of Assembly set up a five-man committee, headed by Sanai Agunbiade (majority leader), with a mandate to investigate the matter and establish the truth. Protesting residents of Ikate-Elegushi stormed the Assembly complex on Tuesday, and blocked entrances, preventing vehicles from moving in and out until they were dispersed by security men. The protesters alleged destruction of their property by those they called “agents of the state government”. The group, which included women and children, urged the lawmakers to save them from alleged harassment by officers from a police station near to their community. Bokoh Oluwole, spokesperson of the protesters and a leader in the community, alleged ill treatment of the residents. Oluwole further alleged that suspected hoodlums went to the community on November 8, and destroyed property worth millions of naira. He added that the hoodlums set property ablaze while victims who ran into the water for safety met their death, with some missing. “No fewer than 400 houses were burnt. We have since recovered three bodies from the water. We are still looking for five more people. “They did not give us a single notice, we just saw them claiming ownership of the land and there is no court judgement on the matter”, he said.

Suggestions:

  • All the drivers of the CPI point to the fact that we are yet to reach the peak of this inflationary trend. Perhaps the biggest point to note is that an increase in the pump price of petrol looms, as well as a scarcity of essential commodities. Taking these two factors into consideration, we predict that inflation will experience a pronounced spike in the December and January 2017 inflation numbers.
  • The move by the CBN is an alarming one which finally discredits the float announced by the CBN governor, to even the most casual of observers. These moves, if passed into law, will not only violate the rights of Nigerians, but will also see the government reneging on all the commitments it made to foreign investors which saw them bringing in their capital into the Nigerian economy over the years. The move smacks of desperation and can only result in negative investor perception and capital flight, affecting not just the CBN but the whole Nigerian government. Some unintended consequences of this move will be the hoarding of FX by Nigerians, and abuse of such a poorly crafted law by security agencies. We urge the National Assembly to do not just the patriotic thing, but the sensible thing in not only striking these proposals down, but to issue a strong statement cautioning the CBN governor, and reassuring investors of Nigeria’s commitment to free movement of capital and the proceeds of business.
  • This week’s incident represents yet another milestone in what appears to be a determination by the Nigerian state to solve “the Shiite problem”. This determination flies in the face of Chapter 4 of the 1999 Constitution which guarantees a right to freedom of religion and association. The Nigerian state’s other-rizing the Shiites will embolden more and more extremists in the North who already harbour a hatred of the Shia to manifest this hatred in violent attacks. This runs the risk of a backlash one day as the Shiites are pushed more and more underground. Given the as yet resolved Boko Haram insurgency, the issues in the Niger Delta, and the Middle Belt, causing this Shia issue to escalate is not the wisest course to take. We repeat our call for the government to act with justice and either release Zakzaky or charge him and other IMN members being held to court.
  • The proposed law, which will essentially be a consolidation of existing terrorism statutes coupled with key additions and stronger sentences, defines terrorism in broader terms to mean a deliberate act of malice, which may cause harm/damage to a country, its government, economy, international organisations or claim lives. The new bill criminalises international terrorism, funds supporting terrorism and seizure of terrorist cash and property involved. It also contemplates dealing with charities linked to terrorists, and requests from foreign states and to foreign states on extradition of persons involved in terrorism. Under the proposed law, facilitating escape for a terrorism suspect will attract a life prison sentence, while sponsors of terrorism would also bag life imprisonment. The new law also prescribes punishment for participating in planning terrorist acts, even if the act is not eventually committed. On paper, it is a welcome step in aiding the nation grapple with a spate of terrorist related activities which has dramatically spiked in the last half decade. What is unclear is how the more stringent aspects of the law will be applied considering the country’s patchy record on security and law enforcement.
  • The Nigerian government extended an olive branch that has now been shredded by the vengeful Niger Delta Avengers. We had previously advised the Nigerian government to come to the table. Despite this setback, the Nigerian government will need to continue to engage the leaders of the region and indeed the militants as it cannot afford further disruptions to critical oil production facilities. The roots of the Niger Delta problem lie in the heart of the fundamental structure of the Nigerian state. To illustrate, a $900 billion reserve of oil has been reported in the United States. All reports of this find say “Texas is $1 trillion richer.” This level of resource control is what must be on the table and the Niger Delta must see a real commitment from the government to move towards this for a long lasting solution to the crisis to become feasible.
  • The people of Otodo-Gbame have been living in the area for over a century. Dispersing them in such a manner, and without compensation bodes ill for Nigerians living in areas that are not their ancestral lands. Besides, Nigeria has relevant laws which are clear on the rights of long-term settlers. All of these laws have been breached. The only sensible course of action is for the people of Otodo-Gbame to be properly compensated, and for due processes to be followed by anyone who wants the land.