17 Mar

The week ahead – There will be more drama

Nigeria’s inflation rate bucked the trend in February to fall to 17.78 percent, its lowest level in 15 months. This was driven by a slower rise in general price levels, the National Bureau of Statistics said on Tuesday. Inflation had risen to 18.72 percent in January, its 12th monthly rise and its highest level in more than 11 years, as Africa’s biggest economy grapples with an economic recession, a currency crisis and dollar shortages, brought on by low oil prices, its mainstay. A separate food index showed inflation at 18.53 percent from 17.82 percent in January, the statistics office said in a report, pushed up by the rise in food staples such as bread, cereal and meat, while drink prices slowed. The government forecasts inflation to be at 15.74 percent at year-end and 12.42 percent in 2018.

A community in Abia state which was rocked by a deadly clash between farmers and Fulani herdsmen has been abandoned. Economic and social activities have ground to a halt in Umuobasiukwu Ozuitem community in Bende LGA as residents have abandoned their homes for fear of arrest by police who swooped on the community following a clash with Fulani herdsmen. Residents told the media that one-sided arrests by the Abia State Police Command in the past would embolden the herdsmen to launch another attack on the community.

The Comptroller-General of the Nigerian Customs Service, Hameed Ali, appeared before federal lawmakers to brief them on a proposed but controversial policy on vehicle duty payment. Following a failure to appear before the Senate on Wednesday, March 15, the Senate had invoked Section 89 of the Constitution to compel Mr. Ali to appear Thursday, March 16 or risk arrest. The Customs boss had said that he would not comply with a requirement by lawmakers to appear to give testimony in the agency’s uniform. Senate President Bukola Saraki had read Ali’s letter saying he was bereaved and could not show up before the Senate. Hours before Ali failed to show up on Wednesday, the Customs released a press statement saying it had cancelled the controversial policy that led to the unfolding drama between the agency and the National Assembly.

The Senate rejected the confirmation of the Acting Chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, for a second time. Mr Magu was rejected after the Senators voted against his confirmation. The Senator representing Kogi West, Dino Melaye, had cited a fresh security report from the Department of State Services (DSS) disqualifying him for failing to pass an integrity test. Mr Melaye said two reports from the DSS were released on Tuesday on Ibrahim Magu and they both indicted him.

Suggestions

  • The CBN’s monetary policy decisions in the past year have been focused on reversing Nigeria’s surging inflation. CBN’s decision to “manage float” the naira in June 2016 resulted in a depreciation of the value of the currency by over 85% and the impact was felt in the pricing of goods. If this downward inflationary trend continues, we expect the Federal Government to pile pressure on the CBN’s Monetary Policy Committee to cut interest rates by the second half of the year. This would be because the Federal Government sees the provision of low interest loans to businesses as a key stimulant for economic development. On the other hand the regulator may have reasons to delay cutting interest rates in order to encourage FPIs seeking higher yields to invest in the Nigerian debt market.
  • On the Pastoral Conflict, SBM had predicted in its outlook for 2017, and reiterated in multiple security reports since then, that local communities would begin to respond to the Fulani herdsmen threat this year. Rumours in geographically diverse states like Delta, Benue, and Taraba, of helicopters supplying ammunition to herdsmen, while so far unproven, have destroyed trust in the impartiality of the security forces. As a result, communities are beginning to embrace self help to protect themselves, and it is a very worrying trend, which may lead to further escalation of ethnic strife across the country. The Benue Governor’s statement represents a clear turn in this direction as this is the first time he has spoken so strongly against the herdsmen in spite of his state being the worst hit with herdsmen violence. We urge the security agencies to assuage the fears of communities as regards their fairness in dispensing justice where violence occurs as this is crucial to any peace efforts from the government.
  • We believe that the whole drama around Hameed Ali’s uniform is majoring on the minors by both parties. The Comptroller General has magnified the issue of wearing the Customs uniform precisely because he made it a big issue. We counsel that he complies with the Senate’s directive to appear before them as prescribed. We also counsel the Senate to extricate itself from making the appearance of the Customs boss before it about his uniform compliance and not lose sight of the bigger issues that should be on the table, for example the customs now suspended directive on vehicle customs papers and the numerous complaints by Nigerians of rife graft at the customs even during Ali’s tenure.
  • This is the second time in three months that Mr Magu is being rejected by the lawmakers. The first was in December 2016, after which he was re-nominated by President Muhammadu Buhari in January, 2017, after consulting with the leadership of the Senate. It would seem that the doctrine of separation of powers has prevailed in this regard. Going by sections 2(1) and 2(3) of the EFCC Act, Magu ceases to be the Executive Chairman. Having left his “acting” position during his nomination to the Senate, he also loses his “acting” capacity. A special mention but be made of President Muhammadu Buhari. How one of his big ticket nominees failed to pass security clearance from another of his favoured agencies – the DSS – twice and why Aso Rock still seemed hell bent on sticking with its man speaks volumes about the administration’s ability to coordinate between its various arms and raises important questions about Buhari’s grip on power.