04 May

The week ahead – A familiar playbook

Nigeria has issued a ban on the use and issuance of permit for the importation of codeine cough syrup to curtail the gross abuse of the drug in the country.The health Minister, Isaac Adewole, stated that codeine-containing cough syrups should be replaced with less addictive ingredient-containing cough syrup, dextromethorphan. While placing a ban on the sales of codeine without prescription across the West African country, he also directed with immediate effect, the Pharmaceutical Council of Nigeria (PCN) and National Agency for Food and Drug Administration and Control (NAFDAC), to supervise the recall for labelling and audit trailing of all Codeine containing cough syrups. Nigeria’s codeine ban comes after a BBC report on an increase in opioid addiction. The report stated that nearly 24 million opioids were prescribed in 2017 – equivalent to 2,700 packs an hour.

Explosions in and around a mosque in Mubi, Adamawa have killed at least 86 people, hospital officials said. The blasts on Tuesday are the latest in a spate of attacks by militants in Nigeria’s northeast. The blasts bore the hallmarks of Islamist militant group Boko Haram. The jihadist group had last Thursday carried out an attack in Maiduguri, capital of neighbouring Borno, that killed four people. On Tuesday, Ezra Sakawa, chief medical director of Mubi General Hospital, said 27 people died and 56 were injured. The death toll has been climbing steadily since then. Mubi is around 200 kilometres (124 miles) away from Maiduguri where last week’s attack was the second in a month. At least 15 people were killed and 83 injured when militants descended on the city in early April.

The Central Bank of Nigeria (CBN) and the Peoples Bank of China (PBoC) executed a bilateral currency swap agreement on Friday. The currency swap deal is valued at ¥16 billion (about $2.5 billion, ₦900 billion). The deal will provide the Chinese and Nigerian currencies directly to industrialists and other businesses from both countries. CBN spokesman, Isaac Okoroafor said that the deal means that it will be easier for most Nigerian manufacturers, especially SMEs and cottage industries in manufacturing and export businesses, to import raw materials, spare-parts and simple machinery to undertake their businesses by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scare foreign currencies. Nigeria is the third African country to have such an agreement in place with China.

The Nigerian Export Promotion Council has said Nigerians are exporting goods worth over $40 billion informally every year. The CEO of the NEPC, Segun Awolowo, said that a lot of goods are moving from Nigeria to other African countries without being documented. He said the council had initially estimated such trade as $8 billion annually, but going by the calculation of the International Trade Centre in Geneva, over $40 billion worth of goods were informally exported. Awolowo worried that this informal trade did not reflect on the economy and sought the Nigerian Association of Chambers of Commerce, Industry Mines and Agriculture’s collaboration to formalise the trade.

Suggestions

  • Although listed by the World Health Organisation as an essential medicine, codeine is the most commonly taken opiate globally. In 2013, about 361,000 kilograms of codeine were produced while 249 000 kilograms were used. It is also cheap, the 2014 wholesale cost per dose stood between $0.04 and $0.29 and it is sold over the counter in most countries, including Nigeria before this announcement. It is also very effective, the alternative dextromethorphan is only half as efficacious and is also addictive when consumed in very large doses. The devil, as always, is in the detail. Implementation will be tricky as the ban – like those on rice, tomato paste and poultry to name just three restricted items – will almost certainly create a large black market for codeine. Addressing Nigeria’s codeine addiction problem will take a combination of increased public education, enforcing existing regulations and promoting alternative treatments, not merely swelling an already burgeoning ban list.
  • Boko Haram held territory in Adamawa in 2014 but troops pushed the insurgents out in early 2015 and Mubi was relatively peaceful until a suicide bomb attack in November 2017 that killed 50 people. Attacks still happen, and two did this week, around the Maiduguri area. It is quite clear that Boko Haram still has a lot of active cells in and around territory it once held. While the group no longer has any cogent hold on territory, it has not lost the capacity for hit and run attacks, and appears to have actually gotten better at picking soft targets for bombing. Without a change of strategy to focusing on actionable intelligence and genuinely winning hearts and minds, it will be hard to combat such terrorism.
  • This swap deal between the CBN and the PBoC is good news all round. Over the last three decades, as China has become the world’s factory, Nigerian traders have turned to the Chinese to buy finished goods from their factories. This came with a major problem – the naira’s lack of convertibility ensured that such traders needed to buy American dollars first, before conversion to renminbi, putting unnecessary strain on the country’s dollar reserves. That is, hopefully, a thing of the past. The net effect will be a reduced demand for dollars which, with noninterference with market forces, will lead to a fall in price. However, a note of caution – while this is great news for Nigerian importers, and ultimately, the Nigerian consumer, the value of our imports from China was $6.92 billion in 2016, almost three times the size of the swap deal. Essentially, while the swap deal is a good start, Nigeria needs to ramp up its exports to China in order to be able to take proper advantage of this deal.
  • The news that goods are exported informally from Nigeria through porous borders to neighbouring countries like Benin is nothing new. However, it is the new estimates given by the ITC that are stunning. In 2016, SBM Intel documented in its cashew report how more that 50 percent of the actual harvest of the crop is diverted to neighbouring countries by corrupt middle-men, labelled as produce from those countries, then exported to Asian countries to earn hard currency while Nigerian farmers are paid peanuts for their efforts, and the Nigerian government loses vital tax income. The irony is that diverted some Nigerian produce makes it possible for the factories in Vietnam and India to function all year round and many of the cheap end products are subsidised by those various governments and imported back into Nigeria to fill the shelves of our supermarkets and drive indigenous manufacturers into bankruptcy.