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Nigeria: New Year, Old Baggage

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SBM Intelligence

In the year’s first full week, the debate over the minimum wage, the IGP sticking around for longer, the military’s performance in the NE, an attempted coup in central Africa, militants retooling their weapons in the Delta and yet another political hiccup in corporate Nigeria served a reminder that we’ve hardly left 2018’s woes behind.

Maximum challenges with the minimum wage

The FG has agreed to transmit the bill for a new national minimum wage of ₦30,000 to the National Assembly on January 23 after unions threatened a nationwide strike. The FG’s decision is coming after three days of talks between union leaders and a government delegation led by the minister of labour and employment, Chris Ngige. The unions have reportedly agreed to the date but warned that a breach will lead to action taken without reverting to the government. The NLC and other labour unions demand that the national minimum wage is increased to ₦30,000 ($83) from the current ₦18,000 ($50). Meanwhile, while inaugurating the Presidential Advisory Committee on New National Minimum Wage on Wednesday, President Buhari announced plans to slash the salaries of those who earn above the minimum wage.

There is still a disparity among some stakeholders, particularly the state governors, on what the new minimum wage should be. Whilst the federal government has agreed in principle on ₦30,000, President Buhari is reported to have made several statements in the past few weeks that signify that the issue has not yet been put to bed. First, that the government does not want to fund the increase through borrowing, but will devise other ways to ensure its implementation. Second, that salaries of workers earning above the new minimum wage will be renegotiated. It will be interesting to see the reaction of the labour unions to some of these developments.

Police chief tenure extension raises more than a few brows

The tenure of the Inspector General of Police, Idris Kpotun, expired on 3 January, and since then, there have been calls against a term renewal due to speculation that his tenure could be extended. President Muhammadu Buhari has been sued by an opposition party, Action People’s Party over purported moves to extend the IGP’s tenure. This won’t be the first extension if it happens as President Buhari approved the extension of the tenures of the military service chiefs on December 18, 2018.

From the days of Sunday Adewusi during the Second Republic to those of Tafa Balogun, Inspectors-General of Police have played a dubious role in Nigerian elections. Concerns over the possible extension of the current IG’s tenure stem from this unfortunate tradition. The conduct of security agencies has long been flagged as a high-risk factor for the credibility and legitimacy of elections with the police in particular identified as an unstable variable. If the President renews the IG’s tenure, it is likely to be perceived as an indication that the ruling All Progressives Congress will use the police to secure illicit advantages in the forthcoming polls. It will also be seized upon by political actors as a pretext for discrediting the election and rejecting its outcome, a pain point likely to lead to more political uncertainty.

On the military’s fudged priorities

Soldiers closed the Maiduguri-Damaturu highway on Wednesday, the only safe highway that leads into Maiduguri, the Borno state capital, following a series of attacks on the route by Boko Haram insurgents. At the peak of its attacks, Boko Haram bombed bridges on the major routes leading to Maiduguri, except the Maiduguri-Kano highway which passes through the Yobe state capital, Damaturu. The military and residents feared that should the Maiduguri-Damaturu road fall under the control of Boko Haram, the insurgents would have effectively won the war because the Borno State capital would have been practically cut off from all access by land. A few days earlier offices of the Daily Trust newspaper was sealed off by soldiers in Maiduguri, Abuja, Lagos and Kaduna, and the Maiduguri bureau chief of the paper, Uthman Abubakar, arrested. He was released on Tuesday. Army spokesman, Brig Gen Sani Usman said that they had gone to invite the journalists over a story published in Sunday’s edition of the paper ‘which divulged classified military information, thus undermining national security.” The story allegedly divulged planned operation and troop movements by the military to retake Baga, which was attacked and seized by ISWAP at the end of last year.

Though it was reopened that evening, Wednesday’s closure of the Maiduguri-Damaturu highway underscores apprehension over the series of reversals suffered by the military’s counterinsurgency campaign. Attacks by ISWAP on several forward operating bases in the past year and its most recent attacks on the Multinational Joint Task force base in Baga, have not only eroded the military’s footprint in northern Borno, they have also triggered a deluge of displaced persons flowing into Maiduguri while disrupting plans for returning displaced civilians to places like Kukawa, one of the local government areas that suffered attack recently. Indeed, plans for the return of displaced populations have already stalled over security challenges in liberated areas. With the military apparently unable to hold ground or control territory, and the slow pace of restoration of civil authority in liberated areas, the likelihood is that many parts of northern Borno will either lie fallow or remain vulnerable to insurgent occupation. Just as importantly, as the insurgents intensify attacks on the military, we are concerned that the recent spate of assaults is a prelude to a full-scale assault on Maiduguri, and we have pointed this out before. Unfortunately, as the military prepares to mount a counteroffensive, it has continued an apparent pattern of antagonising civil society. The forced closure of Daily Trust and the arrest of its reporters is the latest in a series of PR blunders that include accusing UNICEF of terrorism and espionage and threats against Amnesty International. This mode of engagement is unhelpful and counterproductive and ultimately does more damage to the military’s credibility.

The Niger Delta remains interesting

Oil and gas stocks listed on the Nigerian Stock Exchange have been depreciating despite the rise in global crude oil prices. Analysts have alluded the depreciation to the emergence of a new militant group in the Niger Delta known as War Against Niger Delta Exploitation (WANDE). The group had threatened to disrupt the operations of major oil and gas companies unless the region gets attention from the government. In the same vein, last Friday, a Conoil pipeline (Angle 2 field) in Bayelsa was destroyed by another new militant group, which identified itself as Koluama Seven Brothers, operating out of Koluama village in Bayelsa. Although Conoil issued a statement denying that any of its facilities had been destroyed, the Nigerian Security and Civil Defence Corps had earlier confirmed the attack.

As we had said before, the Delta has been calm not because any lasting solutions have been found, but due to the authorities looking the other way while bunkering went unabated and flourished. We noted in The Year Ahead report that as elections approach, newer groups who are either not captured in the amnesty dragnet or participating in the bunkering largess will become more violent in order to force the Nigerian state to bring them to the table. The potential impact of renewed militancy in the Niger Delta on Nigeria’s economy is just short of catastrophic. In 2018, declining oil production due to oil pipeline disruptions drove the Q2 GDP growth down to 1.5% from 1.95% in Q1 (a 22.7% drop). Since then, the Federal Government improved on its engagement with various parties in the region with the effect that oil production increased from 1.45 million bpd in Q2 to 2.05million bpd in December 2018. It is, thus, essential for the government to engage these groups to ensure such disruptions do not recur in 2019.

9mobile saga yet another body blow for investors

Two months after Teleology Holdings received approval to take over the operations of 9mobile as the preferred bidder, the company has expressed its dissatisfaction over the business relationship with its local partner and has decided to pull out of the 9mobile project. This puts the $50 million initial deposit paid for the acquisition of 9mobile by Teleology Holdings, in jeopardy. ThisDay quoted sources in 9mobile as saying that Teleology Holdings had been blocked from concluding a management services contract with the local joint venture, Teleology Nigeria Limited. The management services contract would have enabled Teleology Holdings and its team of experts oversee the implementation of the organisation’s elaborate business plans including funding proposals. CEO, Adrian Wood, who was the pioneer Chief Executive Officer of MTN Nigeria, resigned from the boards of Emerging Markets Telecommunication Services (trading as 9mobile) as well as Teleology Nigeria and has already communicated his current disenchantment with the 9Mobile project.

In the midst of a crisis around the ownership of the company, and key questions around whether Teleology should have won the bid in the first place, this is an even more disastrous outcome. The fact that an investor is rather willing to treat $50 million as a sunk cost and cut its losses than continue its investment in Nigeria is a clear signal to other serious investors. The crisis of confidence engendered by how foreign investments have panned out with regulatory risk, political risk and market risk will continue to see investors taking their money to locations where the risk profile is less, and in recent times, returns are higher. It is a sorry situation for the Nigerian economy.

Gabon as a test case of Africa’s democratic nosedive

On Monday there was a coup attempt in the Central African country of Gabon. About nine soldiers of the Gabon Army who identified themselves as ‘’Patriotic Movement of the Defence and Security Forces of Gabon’’, who wanted to “restore democracy’’ seized control of the national radio station, declaring President Ali Bongo unfit for office. President Bongo has been in Morocco for treatment of stroke for a few months. However, after a stand-off, the government spokesman, Guy-Bertrand Mapangou told reporters that the coup attempt had been foiled and that the rebel leader was captured with seven others, while two soldiers died in the attempt to retake the radio station.

The situation in Gabon is emblematic of a wider degradation of democracy across the African continent. In just the past year, there have been a slew of backward-looking elections on the continent from Cameroon, and the Democratic Republic of Congo to Gabon. Rising disaffection with long serving rulers, the slow pace of political reform and anaemic economic growth as the price of commodities continue to muddle along has led to protests in Togo, Benin and the Ivory Coast. The bigger economies are hardly faring better with slow growth and governance concerns tampering talk of this century being one of the ‘Rising Lions’ to borrow the term of choice from a 2015 McKinsey report on the continent’s future prospects. The next major test of the strength of democratic attitudes will be Nigeria’s elections, set to hold in a few weeks. The entire continent, which rallied round to condemn the forceful attempt at regime change in Gabon this week, will be watching with bated breaths.

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