05 May

The week ahead – Hide and seek is the name of the game

Bisi Akande, a former national chairman of the All Progressives Congress (APC), says some people in the corridor of power, are feasting on the health condition of President Muhammadu Buhari. In a Monday statement, Akande said he expressed fear that the country may be thrown into anarchy if Nigerians did not learn from history. “These are two great red flag dangers that have the potential of plunging the country into unprecedented chaos and of destabilising the gains of democracy since 1999. The greatest danger, however, is for political interests at the corridor of power attempting to feast on the health of Mr. President in a dangerous manner that may aggravate the problems between the executive and the national assembly without realising if, in the end, it could drag the entire country into avoidable doom,” Akande said.

Nigerian stocks hit a three-month high on Tuesday, lifted by company earnings results that outperformed market expectations and hopes that a new currency-trading window will help lure investors back to Africa’s biggest economy, analysts said. The market all share index rose 0.77 percent to 25,965 points, led higher by banking and oil stocks. In a client briefing note, Vetiva Capital noted corporate results were better than expected and said it anticipated increased demand for Nigerian stocks this week. Dangote Cement, which accounts for a third of the market capitalisation, reported a 34 percent rise in post-tax profit, beating the market consensus. In a boost for investors in Nigerian equities, the CBN last week allowed portfolio investors to trade the naira currency at a market-determined exchange rate and increased dollar sales on the interbank market. The latest PMI reading from FBNQuest, the fourth reading for this year, shows a PMI reading of 58.9, which is positive and indicates an increasing confidence level in the manufacturing sector. The current PMI is an improvement on the 52.8 reading recorded for March and is the measure’s highest level since December 2016.

Nigeria has appointed advisers to help it set up a national airline and develop its aviation infrastructure in order to create a hub for West Africa, Junior Aviation minister Hadi Sirika said on Wednesday. Sirika said a group of six firms including German carrier Lufthansa would advise the government on setting up an airline, an aviation leasing company, a maintenance hangar, and how to create concessions to run the country’s airports. A cabinet meeting on Wednesday chaired by Vice President Yemi Osinbajo had approved ₦1.52 billion ($4.99 million) of funding for the project, he added. An APC transition paper seen by Reuters in 2015 had proposed merging a dozen debt-laden airlines on the books of state-owned “bad bank” AMCON, into a single carrier that would partner with a global airline to serve the West and Central African region. The single carrier would include Nigeria’s biggest airline, Arik Air, which AMCON took over in February.

Multiple media reports say a factional Boko Haram leader, Abubakar Shekau, might have been injured in an air strike by the Nigerian Air Force on Balla village, near Damboa in Borno’s Sambisa forest. A source close to the insurgents told AFP on Wednesday that one of Shekau’s deputies, identified as Abba Mustapha, was among several Boko Haram leaders killed in the air strike. Two fighter jets were said to have bombed the insurgents’ positions, while they gathered for prayers in Balla village, which is about 40 kilometres from Damboa on the fringes of the heavily forested region.

Suggestions

  • The President’s continued withdrawal from the country’s decision making apparatus, his absence from the public eye, and manifestly unhelpful explanations by his media team, are understandably drawing the concern, and in some quarters, the required consternation. President Buhari missed his fourth cabinet meeting in a row on Wednesday in order to “rest;” and that his health has become the single most important factor in the 2019 political calculus, as well as the country’s wider political stability, validates our call last week for him to do the honourable thing – resign.
  • Good news has been hard to come by thus far in 2017, so this is welcome news to many; but should it be? Faced with a tough operating environment, Nigerian companies in 2016 engaged some radical solutions to cost cutting in order to produce positive financial results. Only recently, Nairametrics, a top market analysis firm, disclosed that the top 30 companies listed on the Nigerian stock exchange cut back by 26 percent, cash spent on investments in the year 2016 compared to 2015. Many companies let staff go, while across the country, others shut down factories. These, and other fat trimming moves, may have helped the companies achieve positive results but they are less positive for Nigeria’s economy as a whole. For example, down the production value chain, smaller companies have been run out of business by failure of conglomerates to spend. Fewer functioning businesses and staff earning salaries means less tax revenues for government. Coupled with reduced earnings from crude oil, it is hard to see how this government will realise its 2017 budget projections considering the abysmal 2016 budget implementation.
  • The Buhari administration made it a cardinal goal to start a national carrier and this indicates that it is moving forward with the plans. This will not be the first time in Nigeria’s history this has been tried, nor will it be the first time that foreign advisers have been engaged to aid such a venture. While our preference would be for the government to focus on resolving the surrounding issues that have made the operation of airlines in Nigeria so tough, we are keen to see if the more holistic approach proposed will deliver an efficient and profitable national carrier.
  • Stories regarding the death of Abubakar Shekau are not new, but the frequency at which he dies, or gets injured, then resurrects, or heals, is an embarrassment. Operation Lafiya Dole has a list of wanted Boko Haram suspects, but it has become clear that this is not enough. We suggest that the DHQ set up a Special Forces Task Force dedicated to hunting the leadership of Boko Haram. This SFTF should be tasked with the identification, elimination, and confirmation of kills, of the identified Boko Haram leadership.