Glimpses of Nigeria in 2017

It’s been 18 months since the government of President Muhammadu Buhari and the APC took over the reins of government and during that period Nigeria has witnessed a roller coaster ride. The inflation rate has doubled from less than 10% when the government took over to almost 19%. This has been spurred by increasing energy costs with an increase in the pump price of PMS by over 70% which has increased transportation costs. The price of PMO has also increased and is now selling for over N260 per litre leading to increased production costs. With the depreciation of the Naira these have all led to an increase in the cost of locally produced and imported goods with the prices of food items more than doubling. How does all this impact on the Nigeria state? I look at three aspects of the Nigerian state and the likely scenarios that will play out in 2017

Politics

There is still a lot of uncertainty in the political arena with still a number of unresolved issues that will affect the political calculation into the lead up to the last year of this administration. The first is the legal issues surrounding the Senate President and his growing influence. It was assumed that Bukola Saraki would not last in office as the APC leadership was unhappy about the manner of his emergence as Senate President. However, he has shown his resilience and managed to play the political game very well, with a strengthening of his political clout. This coupled with the continued influence of the Asiwaju and the continued ambition of the Turakin Adamawa Atiku Abubakar and other fringe political actors such as El-Rufai and Kwankwaso means that we will see like some reengineering of the political landscape during the lead up to the next elections.

Economy

The economy remains the thorniest issue in the country at the moment. As noted in the preamble of this piece, inflation has risen and costs of essential commodities have gone up. Coupled with the increase in the cost of energy-power and fuel, this has hit the pockets of the average Nigerian and reduced their disposable income. The government’s lack of a clear economic policy and the fact that there is no economic team to steer the country out of the muddy waters of stagflation/ recession is a major concern to many and is seeing an erosion of the goodwill that this government came in with. A steady rise in the price of crude oil on the international market after the production agreement between the OPEC and nonOPEC members will impact on the Nigerian economy.

Firstly, it will provide the country with increased revenues to carry out many of its developmental projects. This is positive if the government increases its spending substantially so as to provide a multiplier effect and jump start the economy. On the other hand, the deregulation of the petroleum sector will mean that the increase in the price of crude will see an increase in the local price of PMS and PMO and this will further impact on the level of inflation, which will see a further rise in prices of goods and services and cost of production for many companies. Government must therefore be ready with the right policies to negate these effects.

Another problem which the government has largely ignored or refused to recognize as the single major contributor to inflation, is the lack of a clear foreign exchange policy. Given that importers of petroleum products source their fund from the parallel market will further depreciate the value of the Naira against the dollar and push inflation rates higher. Government must come out with a policy that will help shore up the Naira against the Dollar and this will include taking a decision regarding the activities of the BDCs. Currently BDCs aid round-tripping that has ensured that the Naira keeps losing value against the Dollar through their illegal activities. Government can consider closing all BDCs and allowing banks to carry out the sale of all foreign currency. This will allow the CBN to better manage foreign exchange trade and demand greater accountability from the banks and mete out the necessary fines if and when they break the law. If government also clears up the initial backlog of foreign exchange demand that was left hanging before the introduction of the forex policy, this will relief the pressure on the Naira.

There is also still a clear miscommunication between the monetary and fiscal authorities. Government in an effort to raise funds to carry out its developmental projects has sold long term bonds and treasury bills. The security of these bonds/treasury bills and the attractiveness of the interest rates have seen banks increasing their investments in these financial instruments rather than lend to the private sector. This has squeezed out the private sector from access to funds required to close their funding gaps. The Central Bank and the Ministry of Finance need to coordinate their policies or we will continue to go around in cycles and the recession/ stagflation will last longer than anticipated.

Conflict

The conflict in the North East has receded due to the efforts of the Nigerian Army, with the recapture of Sambisa and many Boko Haram fighters. The risk that remains is that remnants of the group will continue to be active, carrying out ambushes and attacking soft targets through the use of suicide bombers. On the other hand, there are other areas of potential conflict that are emerging. One of these is the crisis in southern Kaduna and the increasing threat of the activities of Fulani Herdsmen. This continuing conflict is reaching an alarming level where it is becoming part of the ongoing narrative of the Muslim/Christian and North/ South divide. The emerging narratives seem to indicate that Christians around the country are becoming more invested and empathize with the crisis that they see as part of the northern Hausa/Fulani efforts at dominance. Government must change the current narrative of division to one of unity. Efforts are being made by the Federal government and northern Governors and its elites to fast track the resolution of many of the regions crisis. While the establishment of 2 military battalions in southern Kaduna should only be seen as a short-term solution and more efforts must be made to address the more inherent issues that have allowed the recurrence of such interethnic/religious clashes.

There also remain the problems in the Niger-Delta and the activities of militant groups such as the NigerDelta Avengers and their threat to continue disrupting oil production which will continue to affect the revenue estimates of the country. Efforts have been made by the Federal Government to try and engage leaders of the region to find a lasting solution to the problem, however this is still at a nascent stage and we may not seed dividends of the talks anytime soon. The struggle for the actualization of the Biafran Republic will continue to be a thorn in the side of the Federal Government and while it is still being considered as nothing too serious, care must be taken to ensure that these nationalistic tendencies do not grow and become a bigger problem.

Another possible area of conflict is within states due to the non-payment of salaries and pensions. Huge amounts are still being owed workers and efforts at the state levels do not indicate that enough is being done to resolve the issue.

What then?

2017 will be a defining period on the country’s most recent history and if the Federal Government does not get it right we might find ourselves drifting further apart as a nation with the recession/stagflation making the lives of ordinary Nigerians harder, while at the same time the divisions between the peoples more apparent.

Liman wrote this piece from Abuja