11 Aug

The week ahead – Deal or no deal

Badly weighed down by the debilitating effect of Nigeria’s huge debts, the Federal Government Wednesday sought a way out, approving the issuance of dollar-backed Treasury bills even as it extended the maturity period from between 91 and 364 days to two and three years respectively. Throwing light on the shift from naira denomination of treasury bills to dollars, the finance minister, Kemi Adeosun said the council approved a memo restructuring the issuance of treasury bills using dollar instruments subject to the approval of the National Assembly. She insisted that it should not be construed as transacting the Treasury bill in dollars. Adeosun explained: “We are not issuing dollar denominating Treasury bills. No, we are not. What we are doing is that the naira Treasury bill, when it matures, we will then issue bonds in the capital market, international capital market.” She said the initiative would be positive “because it means that $3 billion will be coming into our foreign reserves.”

Gunmen killed 11 people and wounded 18 others in a church in south-eastern Nigeria on Sunday in an attack arising from a feud between members of the local community, officials said. However, police believe that a man the gunmen were hunting for was not present in the church and so escaped the attack. The attackers struck the church in Ozubulu early in the morning, said Garba Umar, head of police in Anambra state. They were believed to have been trying to kill a local man, who was not identified by the authorities. “The gunmen came thinking that their target was in the church but incidentally he was not,” Umar said, adding that the violence may be linked to drug-trafficking. Anambra State Governor Willie Obiano said the attack stemmed from a feud between members of the local community who were living outside Nigeria.

Thirty-one fishermen have been killed by Boko Haram insurgents in two separate attacks on islands in Lake Chad in north-eastern Nigeria. The fishermen had returned to the fishing hub of Baga on the lake’s shores days earlier and had paddled out to the two islands in wooden canoes on Friday, looking for fish. They, who were in pursuit of their source of income, met their death instead. The insurgents first attacked Duguri island where they killed 12 fishermen and injured two others who later died, AFP quotes a local fisherman. The attackers spared one fisherman in Duguri and loaded the 12 bodies of the men they killed in a canoe and ordered him to take them to Baga as a warning that no one should fish in the lake, said another fisherman Dauda Tukur. The attacks happened a week after military authorities lifted a two-year ban on fishing in the freshwater lake that straddles Nigeria, Niger, Cameroon and Chad. They lifted the ban but left no soldiers there to maintain peace and order.

As an October deadline given by a group of Northern youths to people of Igbo extraction living in Northern Nigeria to quit the region looms, a peace meeting between the Coalition of Northern Groups and Igbo leaders in the North, convened, 8 August, to find a solution to the problem has ended in a deadlock. The ten-man committee has as a result, extended its sitting by another ten days. “We sat more than thrice and we realised there are more issues on ground that should be extensively deliberated if we really want to find a lasting solution that will settle the dust,” news reports cite an unnamed source. A statement signed by Chief Chi Nwogu (Igbo leader), Alhaji Dauda S. Shamakiri (CNG), and Comrade Isa Tijani (convener of the peace meeting) said they needed more time to do a thorough job. On 6 June, a coalition of youth groups from Northern Nigeria gave Igbo people living in the region three months to leave the region or face unspecified consequences. The quit notice generated a furore, and meetings with Acting President Yemi Osinbajo. After appearing to step back from the notice, the groups, led by the National President of Arewa Consultative Youth Forum, Shettima Yerima, insisted last week that the ultimatum still stood.

Suggestions

  • The initiative explained by Adeosun is a surprising but refreshing one which if properly implemented can have the positive impact which the minister promises. This approach has two clear goals – first, reduce the cost of borrowing without reducing the amount borrowed. The FG clearly learned from the successful issuance (at about 8%) of its Eurobonds earlier this year that there is appetite for Nigerian debt in the international market. Secondly, the new focus of borrowing from the international market shifts focus from from the domestic debt market which the FG has been accused of overcrowding, thus forcing banks to seek other sources of earning returns for their capital. This should aid the real sector and eventually drive markets rates down while allowing the CBN to ease on its liquidity mopping activities, which in itself is quite expensive. Nonetheless, Nigeria expects a shortfall of $7.5 billion in its 2017 budget and the government plans to raise around half of that in foreign loans, including from the World Bank. It remains to be seen how the government will juggle driving down local debt and racking up foreign but cheaper debt concurrently.
  • SBM findings indicate that the shooting incident is directly related to a long -standing drug trade dispute in South Africa between some Nigerians who hail from that community. In the wake of the failure of a structural adjustment program in the 1990s, many Nigerians migrated abroad in the droves, contributing to a significant brain drain and leading to the establishment of new forms of economic relationships. One of them was a booming drug trade that placed Nigeria firmly on the map as a major transshipment point between central and South America,western and central Europe and South Africa. While there is no indication that this incident is emblematic of a bigger one, the potential for reprisal attacks, the resurrection of the drugs trade in the national conversation and ordinary people dealing with the unnecessary loss of their loved ones are not good looks for a country ostensibly committed to dealing firmly with insecurity.
  • The failure of the Nigerian military to have a presence at the Lake Chad after lifting the ban on fishing in the lake shows gaps in its strategy in fighting Boko Haram. It once again shows a greater tendency to protect Maiduguri and repel attacks rather than engage the terrorists outside it. It also calls into question the effectiveness of the Multi-National Joint Task Force of Nigeria, Chad, Cameroun and Niger Republic in fighting the terrorists, especially as the MNJTF’s base in Baga. It begs the question of how Boko Haram is still able to have a presence there.
  • The ongoing talks present a crucial opening for talks that stand a real chance of diffusing a potential crisis. It is to be hoped that the talks, if successful, provides a motif for dealing with ethnic tensions (admittedly abetted for parochial political reasons) in country where fiery rhetoric can easily lead to open conflict.