Home Features The Week Ahead – Untimely Reminders

The Week Ahead – Untimely Reminders


Reminders that the right to assembly in Nigeria depends on who you are were served in brutal form during the last week, just in time, perhaps, as the unions head towards industrial action. On the issue of work, Nigeria’s power sector still has a ways to go, as do reforms that will make the business environment here conducive. Some of those reforms include security given that pirates swapped hostages, maybe part of the reasons that more sailors are abandoning our ports.

A fringe sect gets peppered
On Tuesday the police opened fire, and shot tear gas at hundreds of Shi’a Muslim protesters during clashes in Abuja, according to a witness. The crackdown came a day after soldiers opened fire on the same protest march by supporters of Ibraheem Zakzaky, the imprisoned leader of the Islamic Movement of Nigeria (IMN), killing at least 18. At least one protester was wounded by the gunfire on Tuesday. These two incidents came after video emerged of the killing of three Shi’ites by soldiers on Saturday. The army claimed the soldiers opened fire after the protesters attacked a military convoy and tried to steal weapons and ammunition. Zakzaky has been in custody since December 2015 after clashes in Zaria.

The events of the last week make up the most recent chapter in the fractious relations between the IMN and the Army since the December 2015 massacre of the sect’s members in Zaria, Kaduna. According to Amnesty International, this recent episode resulted in the deaths of 45 people over 2 days with 39 killed and 122 injured in a single day. The police arrested 400 of the protesters as it doubled down on its efforts to disperse the demonstrators. There are concerns over the potential radicalisation of the IMN given the scale of state violence directed against them over the last three years. So far, the group has remained remarkably disciplined and has not taken up arms against the state preferring peaceful protests calling for the release of its detained leader. However, this organisational discipline is a double-edged sword. Should the group decide to take up arms against the state, the discipline it has exhibited so far suggests that it will be an effective subversive force. There is also no guarantee that this war of attrition being waged on the IMN by security forces will not result in younger elements in the group discarding its pacifist approach and opting for the path of violent retribution against the state. The fact that the most recent protests took place in the centre of Abuja, Nigeria’s capital, showcases the vulnerabilities of the law and order establishment as well as the near impossibility of containing a group of IMN’s numerical strength should it decide on a sustained campaign of civil disobedience. This is all the more obvious given the well-known human resource deficits of the police, and an overstretched military. The onus is on a state already reeling from several insurgent and insurrectionary pressures across the federation to de-escalate the situation and desist from de-legitimising itself further through the reckless use of deadly force against unarmed protesters.

Pirates ahoy
Pirates boarded a container ship off the coast of Nigeria, seizing 11 crew including eight from Poland, the vessel’s management firm and Polish state media reported. The attackers struck the MV Pomerania Sky, bound for Onne, and abducted 11 of the crew, Midocean (IOM) said. This incident happened on Saturday, the same day that 12 crew members of a Swiss ship seized off Nigeria last month were freed. The crew made up of seven Filipinos, a Bosnian, a Croatian, a Romanian, a Slovenian and a Ukrainian, were then flown to Switzerland. The ship, MV Glarus, and its cargo of wheat are still in the hands of pirates who attacked on September 22nd and destroyed most of its communications equipment. The ship had been transporting wheat from Lagos to Port Harcourt when it was hijacked off Bonny Island. It is not known whether a ransom was paid by the owner, Massoel Shipping, for the crew’s release.

Rising maritime insecurity and piracy off the coast of Nigeria have made the Gulf of Guinea one of the world’s deadliest waters according to the International Maritime Bureau. In 2017, the government contracted an Israeli firm, HLSI Security Firms and Technology, to police Nigeria’s coastal territory for three years and train members of the Nigerian Navy and other security forces, after which Nigerian forces would take over the protection of the country’s waters. The Navy brass were miffed by the contract award and see the privatisation of such tasks as undermining the Navy. In the meantime, turf wars involving the Navy and the Nigerian Maritime Administration and Safety Agency (NIMASA) mean that there is little coordination and synergy of efforts among the security agencies that have jurisdiction over maritime security. The combination of the region’s largest economy, a heavily import-dependent component, and insufficiently policed coastal environments has led to thriving piracy enterprises in Nigeria that constitutes yet another lid on economic growth. It is not clear that the Nigerian government has a strategy that prioritises and addresses the threat posed by piracy to the economy. This year, freight costs have risen six times and there are serious concerns that foreign shipping companies seeking to manage the uncertainties of a high-risk environment could set a minimum sum of $200,000 (about ₦72 million) as insurance premium before dropping anchor at Nigerian ports. This added risk profile has limited the ability of investors in the oil and gas industry to take advantage of the country’s significant offshore resources, ensuring that FPSO projects like Total’s Egina, which was deployed last month, remain the exception, not the rule in these parts.

Lomé leads Lagos
Lomé, the Togolese capital, has become West Africa’s major port, surpassing Lagos. A key development backing Lomé was the commissioning of the Lomé Container Terminal. It handles close to 890,000 TEU annually, almost 75 percent of Lomé’s total throughput of 1.2 million TEU. The establishment of Lomé Container Terminal is part of a greater trend in West Africa, which sees more and more carriers becoming involved in ports and terminals. In 2017, 285 container ships sailed the seven intercontinental trade lanes to West Africa. Deployed by 24 different operators, their average capacity was 3,300 TEU. The biggest ship, a 13,600 TEU vessel, is operated by MSC in a hub and spoke service, connecting Lomé with a large number of regional ports by feeder.

Africa is leaving Nigeria behind, and it is perhaps very telling that the country’s leadership does not seem to appreciate this. Nigeria has six major ports but three, Calabar, Port-Harcourt and Warri, are virtually comatose. Two of three which are functional, Apapa and Tin Can, have serious operational and accessibility issues with the worsening traffic gridlock in the Lagos area. Onne Port is is a specialised oil and gas port. Despite the existence of these ports, a good chunk of Nigeria’s imports come through ports in Benin Republic and Togo. This is because these countries – free from the Dutch Disease – have realised that there certain services which they can provide for businesses trying to access the Nigerian and broader West African markets – including landlocked countries like Mali and Niger Republic. Our neighbours will continue to advance working around us and even Nigerians will go and use services where they work. Nigeria will continue to lose revenue especially as long as revenue, not efficiency OR volume of goods processed is used to measure the success of our ports.

Different scripts as regards wages
The Nigeria Labour Congress has lambasted the Nigeria Governors’ Forum for pegging the minimum wage at ₦22,500. The NLC subsequently pegged the minimum wage at ₦66,500. The President of the NLC, Mr. Ayuba Wabba, said this at a press conference in Abuja on Wednesday. Wabba said the NGF was not known to law and was thus an illegal body. He said all governors should return to their respective states and consult with workers rather than hide under the umbrella of the governors’ forum. The FG had also rejected the proposal in an earlier reaction.

One thing that is increasingly clear is the lack of leadership from President Buhari on this issue. Initial indications was that negotiations has resulted in an agreement which was later denied. It turns out all parties still disagree, with the FG insisting on ₦24,000 ($66.67 as of COB, 31 October), the Nigerian Labour Congress on ₦30,000 ($83.33), the Trade Union Congress demanding ₦66,500 ($184.72) and now the governors indicating that they can only afford ₦22,500 ($62.50), it appears that this standoff may just result in an industrial action which Nigeria can ill afford at this time. On the practicalities of the situation, it is important to note that even at the current minimum wage of ₦18,000 ($50) per month, many state governments are owing months of salaries, and cannot pay that without federal help. Nigeria’s unions need to understand that not all states can afford the same minimum wage, and living costs across the states differ. States need to be allowed to determine their own minimum wages based on their finances, and their own peculiar conditions. Finally, the country’s finances will not be able to take an across board increase in salaries without painful cuts in the size of the government’s workforce.

Reforming the unreformable is more than rhetoric
Nigeria has dropped a spot on the latest World Bank Ease of Doing Business ranking titled ‘Doing Business 2019: A Year of Record Reforms, Rising’ on Wednesday. In the 2017 edition of the report, Nigeria moved 24 places from its 2016 spot of 169 to 145. In the 2018 edition, Nigeria ranked 146. Mali took Nigeria’s 2017 spot. The World Bank said it tracked 314 reforms by 128 governments across the world. A total of 107 reforms were carried out in sub-Saharan Africa, a record for the region. Nigeria carried out four reforms which included making Starting a Business easier in Kano and Lagos, the two cities covered by Doing Business. Getting Electricity and Trading Across Borders also saw reforms in the two cities. In addition, Lagos made Enforcing Contracts easier by issuing new rules of civil procedure for small claims courts, while Kano, in a negative move, made property registration less transparent by no longer publishing online the fee schedule and list of documents necessary to transfer a property.

Any gains made by sheer force of will in the low hanging fruits must be followed up with systemic reforms if those gains are not to be lost and if further advantages are to be built on them. As always, the devil is in the detail, and we note that while Nigeria’s overall ranking fell, the country’s actual score rose with gains made in the categories of starting a business, dealing with construction permits, getting electricity, paying taxes, trading across borders, and enforcing contracts. The important areas of registering property and resolving insolvency deteriorated however, and getting credit is still a problem. Failing to fix the infrastructure challenge in the ports or fundamental property rights issues like the Land Use Act show that the government is expecting to reap the hype of improved ease of doing business without putting in the hard work. In the end, unless such real reforms are pursued, Nigeria will only oscillate around the same abysmal ratings, sometimes going up, and sometimes down.

Let there be light, and it got darker
The Association of Power Generation Companies in Nigeria says that power plants are being forced to operate below their optimal capacity levels by the frequency of instructions to either increase load or decrease load and, in some cases, shut down, leading to induced damaging stresses to the components of the machines. Executive Secretary of APGC, Joy Ogaji, said that these instructions, reflective of the grid behaviour, are subjecting key electrical components of the power plants to operational stresses. The generation plants, she said, are now being used as regulating power reserve by the Transmission Company of Nigeria, via its subsidiary, the System Operator/NCC, to stabilise the national grid. The nation’s total power generation has been hovering between 3,000 megawatts and 3,500MW in recent months. It stood at 3,741.30MW as of 0600 hours Sunday, according to the Nigeria Electricity System Operator.

This event puts the right perspective on the current administration’s many claims about increasing power generation to record highs. Nigeria has witnessed multiple power system collapses throughout 2018, despite claims of record power generation numbers. Since the partial deregulation of power sector about a decade ago, some progress has been made on the generation end but same cannot be said of the transmission and distribution sub-sectors. While installed generation capacity stands at about 12GW, gas problems and low load demand by power distribution companies are inhibiting the generation of over 3,000 megawatts of electricity, and in some cases causing generation capacity of over 2,000 megawatts to remain idle. There is clearly a need for the federal government, which has retained ownership of the transmission companies, to hasten its investment in the infrastructure that will ensure every watt of available power be evacuated from the generation plants and pressure the distribution companies to equally be ready at all times to utilise available power.


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