13 Jan

The week ahead – A new year needs new thinking

The FG will soon start an exhaustive review of the country’s trade policy in order to avoid dumping of substandard products in Nigeria by some foreign trade partners. The review, which will be done this year, is the first to be carried out since 2002 when the current policy was formulated. Trade Advisor to the Minister of Industry, Trade and Investment and Chief Trade Negotiator for Nigeria, Chiedu Osakwe, said the review of the trade policy would be done in such a way that it would discourage dumping and promote the diversification efforts of the government. He also said that the FG will not be forced into signing and ratifying the Economic Partnership Agreement between the EU and ECOWAS. Osakwe explained that while Cote d’Ivoire and Ghana had signed the agreement, Nigeria was not in a hurry to do same as the agreement in its current form would not support the diversification efforts of the FG. Osakwe insisted that the review of the trade policy would enable the government to expand market opportunities for Nigerian companies as well as look into the ECOWAS Common External Tariff and the EPA that had been seen to be controversial.

This week, the Guardian reported about the collapse of the PPPRA template used in determining the price of various fuels for sale to Nigerians. According to the paper, the disruption in the system is the result of a lack of mechanism for a quarterly price adjustment, absence of a board and failure by the FG to appoint a substantive executive secretary. These factors have contributed more to the collapse of the pricing template than the lack of forex for fuel imports. The rising cost of crude oil in the international market has renewed pressure on the FG to increase the price of petrol as the subsidy has made a comeback. The current open market price of petrol is above the ₦145 per litre maximum price of the product.

The FG suspended a corporate governance code issued by the country’s Financial Reporting Council of Nigeria. Industry, Trade and Investment minister, Okechuckwu Enelamah, announced this on Monday, shortly after reports of President Buhari’s sack of the FRC Executive Secretary, Jim Obazee. Obazee’s sack followed the exit of Enoch Adeboye as the Nigerian overseer of the Redeemed Christian Church of God in compliance with the suspended FRC governance code for not-for-profit organisations, including civil society and religious organisations. Adeboye, arguably Nigeria’s most influential Christian cleric, had on Saturday complained about the government’s interest in Church activities. The governance code sought to provide financial reporting, transparency and accountability standards for not-for-profit organisations. Among others, it provided that founders or leaders of not-for-profit organisations would not head governance of their organisations for more than 20 years, and could also not handover to their family members. While the code received positive reactions by people who consider it necessary to ensure accountability, it also suffered knocks by those expressing concerns it was targeting faith organisations, especially the Church.

The Nigerian Army has announced the recovery of bodies of an officer and fifteen other soldiers in River Yobe in Borno State. The sixteen soldiers were part of the 46 officially declared missing more than six weeks ago. Major-General Lucky Irabor, the Theatre Commander of Operation Lafiya Dole, said that the bodies were recovered along Kamadogou River line area in Maiduguri. ThePremium Times newspaper had broken the news that 83 soldiers in Gashigar, Borno State, had gone missing following a major Boko Haram attack on the evening of October 16, 2016, and had specifically mentioned Lt. Col. K. Yusuf, the commander of Nigerian Army 223 Tank Battalion, as one of the missing soldiers.

Taiwan has accused China of interference after Nigeria ordered the island to move its trade mission from Abuja to Lagos. Foreign Minister, Geoffrey Onyeama, announced the move after meeting with his Chinese counterpart, Wang Yi in Abuja. Onyeama said Taiwan would stop enjoying privileges because it wasn’t a country recognized under international law. Onyeama also reaffirmed Nigeria’s commitment to the “One-China” policy.

Suggestions

  • That the FG is talking of “preventing dumping” for its new trade policy, rather than looking for new markets for Nigerian products speaks to a lack of unified messaging, and direction, from the government on an economic front. The mantra over the last few years has been one of diversification, which cannot be achieved without finding new markets. We urge the FG to have a rethink, and to embark on a review only when it is ready to involve all concerned parties.
  • Regarding the report on the PPPRA’s template, Nigeria is still unwilling to accept the hard truth – controlling the price of petrol is not sustainable. Already, petrol importers enjoy huge subsidies and they get dollars at ₦285, below every other player in the market, and even below the internal rate. In spite of this, the landing cost of petrol today already outstrips the open market price. The only logical thing is for the price fixing that the template attempts to do needs to go. Nigeria is between a rock, and a hard place. On the one hand, reduced crude oil prices mean reduced dollar supply and reduced government revenues. On the other hand, an increase in crude prices immediately impacts petrol prices here because Nigeria imports most of its petrol. As we have always called, the PPPRA template needs to be done away with and what we have already done with diesel and kerosene should be done with petrol – let the market determine the prices.
  • Away from the arguments about the validity and utility of the corporate governance code which ensued following the sacking of Jim Obazee, President Buhari possesses a chequered record when it comes to appointments. Observers have noted two trends: how the President’s appointees heavily skew towards persons of northern extraction and the pace with which Aso Rock fills in important positions in the civil service. On this issue, a combination of the speed with which the President ordered the sack of the FRC boss coupled with his inability to fill in the other positions on the FRC Board is telling. That there has been no movement on another key appointment – that of the confirmation of Walter Onnoghen as the Chief Justice of the Supreme Court , who has less than 30 days to function in an acting capacity and the potential for starting a constitutional crisis indicates that the President is not incapable of being decisive as most observers would say, he simply picks those positions that seem politically expedient to act upon. This pattern augurs little for Nigeria’s evolving democracy.
  • While the army has recorded major successes against Boko Haram, the continued obsession with a victory on the field, while disregarding possible blind spots bodes no good. This obsession is directly responsible for the poor treatment of internally displaced persons, which can lead to more recruits for a resurgent Boko Haram. Another worrying trend is the military’s seeming determination to silence Premium Times, probably the only Nigerian media outfit that has continued reporting both military successes and reverses. Finally, the behaviour of government officials towards people who have been rescued from the terrorists, risks creating more recruits for Boko Haram, and this risk has been heightened by unfortunate statements by the governor of Borno state, which raises the prospects of a lukewarm attitude by aid agencies who are very crucial in helping solve the humanitarian crisis.
  • Finally, on the spat with Taiwan, there are no friends between countries, just interests. Nigeria has been seeking China’s help in the wake of funding gaps for the 2016 Budget, and a dwindling economy, and China, more than any other major country, has shown an interest in bridging that gap. We believe that if playing to the “One-China” principle will serve Nigeria’s interests, then so be it. What we worry about more, is what long-term strings come with China’s involvement in our country, and how it will affect our population in terms of job creation, given China’s record of insisting on using its nationals for external projects.