Nigeria Politics & Security
Nigeria Politics & Security provides weekly news and analysis on the political, economic and security issues most likely to affect businesses in the country, or those looking to invest. Nigeria’s fast-moving political scene is complicated by its federal structure, which makes Nigeria Politics & Security an essential tool to keep track and understand who the key players are. For your free sample of the publication, click the button below:
After a tumultuous 2017 for the health of Buhari, 2018 looks to be one filled with campaigning as he looks to run for re-election in the 2019 elections.
After coming to power on a wave of national and international positivity in a first, and unexpected, opposition presidential election victory in March 2015, former military leader Muhammadu Buhari spent much of the next few months disappointing Nigerians and investors by failing to name a cabinet, and earning the nickname ‘Baba Go Slow’. He was in fact busy appointing civil service permanent secretaries and chiefs of parastatals, and thus removing an important source of political patronage from future ministers and other officials – a move in line with his anti-corruption campaign. He named a cabinet in November 2015, and aimed to avoid nominating one to satisfy the competing political, factional, and regional interests and instead choose individuals with proven track records in the private sector and demonstrable skills in policy making, administration, and management. The team appeared to satisfy these requirements, but President Buhari has struggled with the more political side of ruling whereby he needs to juggle the egos of, and reward, the various members of his coalition political party.
As a result, the end of 2016 saw moves by the executive to try and reconcile with some groups within the ruling All Progressives Congress (APC) party – in particular Senate President Bukola Saraki – in order to counter the rumours that some of the big-hitters – namely the South West’s political godfather Bola Tinubu and former vice president, Atiku Abubakar – were looking to break away to create a rival mega party. Buhari believes that both Tinubu and Abubakar are on their way out of the party, but the government is now trying to reduce the impact their defections would have. While the government has struggled to show any plans for pulling Nigeria out of its economic troubles, and the party is failing to show a united front, Buhari has benefited from the factional fighting within the main opposition party, and former ruling one, the Peoples Democratic Party (PDP). While the APC administration ended the year increasingly unpopular with voters, the PDP has been tearing itself apart with two rival factions arguing over which is the rightful leader of the party. As a result the opposition has been unable to take advantage of the difficulties and disagreements in the APC, which could have helped it overcome its first elections defeat in 2015.
Critics have noted the optimistic basic assumptions made for 2017, which will make it difficult for the government to meet its target. Among these assumptions, is the ambition to increase oil production levels back up to 2.2 million b/d. This had also been the target for 2016, but was never achieved, and the country will struggle to reach it even if Niger Delta militancy does not affect the industry in the same way as it did in 2017. The re-emergence of Niger Delta militancy and low oil prices have particularly hit the Nigerian economy. After the optimism surrounding the increasing role being played by indigenous oil companies who had bought IOC’s licences, these firms went through a reality check. Production was hit by the militant strikes and, in tandem, low oil prices affected companies’ abilities to service the huge debts they had taken on to buy oil assets when the price of oil was at its highest – leaving many companies in distress. This reality (along with the production and price problems which also affected IOCs) hit the national economy which receives most of its revenue from oil. It also placed Nigerian banks, which had financed the indigenous companies’ spending, in a precarious position and thus had a further knock-on effect on the economy. With prices slowly rising and the militancy on hold for now, companies may be more optimistic about their 2017 prospects. However, these events have meant that a number of distressed assets are available in Nigeria. 2016 saw many Nigerian companies struggle, and some have had to put production on hold, in particular due to foreign exchange difficulties encountered when importing materials. The exchange rate question was one of the symbolic events of the year, demonstrating the differences between Buhari and others in government. Many had been calling on Nigeria to devalue – something opposed by the president – and it was not until Buhari left the country, leaving his vice president in control, that the economic team (led by Vice President Osinbajo) was able to force this through.
However, by this point much of the damage had already been done, as most companies were not able to access the limited dollars available at the official rate and instead having to procure them at the much higher black market rate. This meant that those companies in favour enjoyed a favourable rate, while all the others struggled with more expensive dollars, thus increasing costs. It also had the negative effect of opening a window for arbitrage, with those able to access dollars at the official exchange rate able to sell these on at a black market rate, and thus flying in the face of Buhari’s anti-corruption campaign. Even since devaluation, the currency has not been allowed to float freely, and the Central Bank of Nigeria (CBN) has sought to control its value to some extent.
Security in Nigeria
While the 2.2 million b/d target may have been unrealistically high, attacks have ensured that it was not met in two ways: firstly by hitting existing production; and secondly by discouraging new investment in the sector at a time where many oil companies are looking for production opportunities, rather than exploration ones (although legislative uncertainty also plays a part here).
The government had sought to do away with the amnesty programme which had been used to discourage the previous militancy, but this contributed to the re-launch of militant movements, although it is not clear whether the latest attacks were carried out by veteran militants or new ones. In its 2017 budget the administration has proposed increasing the budget for amnesty payments, suggesting that it may be backtracking on its previous plan. However, the state’s response to the militants has been to mobilise more military personnel to the region and try and overcome the militancy by force.
In parallel, there have been attempts to resolve issues though talks, but the opportunity to get a seat at the negotiating table led to an increase in the number of militant groups and attacks in the region. Talks between the government and representatives of the militants have not brought about any concrete outcomes, although the end of 2016 saw a lull in the number of attacks and, as a result, an increase in production.
As well as the headline problems of Boko Haram and Niger Delta militancy, the country experienced other security issues in 2016, which remain unresolved. The state risks setting off further insurgencies in the country through their treatment of a Shi’a group. In December 2015, the army allegedly killed over 200 Shi’as in a shoot-out with members of the Shi’a Islamic Movement and injured and arrested its leader, Ibrahim El Zakzaky. This was followed by Kaduna State’s total ban on the Shi’a group.
It is not lost on Nigerians that Boko Haram reign of terror started following the death in state custody of the group’s leader, Mohammed Yusuf – although Shi’as are a minority group in the country and would struggle to threaten in the same way that Boko Haram do.
2016 also saw an escalation of violence between Fulani herders, and farmers in northern Nigeria. While this is a historical issue, it is one that the authorities have done little about, and causes numerous deaths. It could become worse as grazing is further affected by climate change, and Fulani herders move further south, away from the drier lands of the Sahel.
The president long enjoyed most respect for his anti-corruption stance, however, even that is now being tainted by perceptions that the war on graft is being used to persecute opponents and ignores the allegations made about those close to him.
As 2017 progresses, political parties will be increasingly looking to the 2019 elections, and presidential ambitions will become clearer. It was initially thought that Buhari may choose to be a one-term president, but it increasingly looks like he may stand again. If he is to have any hope of winning a free and fair election, then 2017 will be a pivotal year, where he and his government must demonstrate their ability to turn things around and return the hope that brought him to power to the Nigerian people.
Flows of direct investment are strong and stock markets have been doing well, but the fiscal imbalance is hanging over these improving indicators like a dark cloud, throwing the spotlight on the proposed pension reforms. Failure to approve these key fiscal reforms will leave little space for further cuts in interest rates and would step up the pressure to carry out privatisations and offer private sector concessions.
About the author:
Its author is an award-winning financial journalist based in Lagos. Nigeria Politics & Security is crucial reading for business, NGO and government decision-makers who are working on a strategy for investment or those with stakes in Nigeria. It helps make informed decisions on this complex country and understand the key safety issues that might affect company personnel and assets.
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