Despite promising financial responsibility and accountability in his election campaign, President Tinubu continues to fiddle while Rome burns. His government appear to be increasingly blind to the people they are supposed to be representing. Nigerians are becoming increasingly pessimistic about the economic outlook for their nation. Many are already digging into their meagre savings or taking out expensive loans purely to survive. And what did Tinubu do about it as he flew off on a quick visit to France in August? He rolled out his latest purchase – a brand new Airbus A330 aircraft. This new acquisition takes the Presidential fleet to 11, including planes and helicopters. Spending priorities like this shine a spotlight on the fact that the hardships being faced by the majority of Nigerians are just not being seen, much less addressed.
Protests. Thousands of Nigerians took to the streets in early August in protest of perceived government corruption, economic mismanagement, and political impunity. The #EndBadGovernance protesters gathered in all major cities and the marches lasted for more than a week. Some violence and looting was reported. This wave of dissent has been growing for some time so it was bound to bubble over eventually. Nigerians describe their politicians as arrogant and out of touch. Tinubu’s campaign tag line was ‘Renewed Hope’ but his people are now saying they are losing theirs. Nigeria has been fighting a war on terror, banditry, and insurgency for decades. Now it is facing food and social security issues snowballing into physical security challenges that open up another front they have to police. It is imperative that this government listens to the calls for change and accountability but as always, they will not. Grassroot movements will come and go but the political landscape will remain the same.
Appointments. Tinubu has appointed two new Directors General. Mohammed Mohammed has been given the job as the new head of the National Intelligence Agency. Adeola Ajayi will lead the Department of State Security. The move follows the unexplained resignation of the previous NIA and DSS chiefs. The new NIA boss, Mohammed, joined the agency in 1995. He has served in North Korea, Pakistan, Sudan, and at State House, Abuja before ultimately becoming Ambassador to Libya. The new head of DSS, Ajayi, has also had a celebrated career. Prior to his promotion he was already serving as the Assistant Director-General of the Service. He has also served as State Director in Bauchi, Enugu, Bayelsa, Rivers, and Kogi states. Their resumes may be impressive but are they strong enough to cut it given the security situation right across the country? That remains to be seen but their jobs now definitely demand that they put all their experience to work, develop intelligence gathering teams which, if successful, will allow them to deploy their manpower where it can be best utilised. They definitely have a huge task to tackle.
Diplomacy. Tinubu will travel to China in early September where he will meet with Xi Jinping. He will also attend the China-Africa Cooperation Summit. We anticipate a visit to the China Rail and Construction Corporation, with a view to completing the Chinese constructed high-speed rail line linking Ibadan to Abuja.
The country’s real GDP grew by 0.21% to 3.19% in the 2nd quarter of 2024. In Q1 it was at 2.98%. The National Bureau of Statistics Q2 report shows that growth was driven mainly by the Services sector, which recorded a spike of 3.79%. The oil sector also grew by 10.15% in the reporting period. Inflation, however, remains worryingly elevated at 33.4%. Despite government efforts, consumer prices remain stubbornly high and continue to rise, pushing more and more people into food poverty. July’s Selected Food Price Watch report proves that. The Central Bank’s (CBN) own figures put food inflation at 40.87% in July. In response the government has quietly given the green light to some new initiatives. The biggest of these will be a 150-day tax free import window for selected food items. Also proposed is the suspension of tariffs, taxes and duty on specific food items including; wheat, maize and brown rice arriving by land or sea. The Federal Competition and Consumer Protection Commission, has also given traders one month to end price gouging and fixing, and bring prices down. Failure to do so will see individuals face heavy fines and prison sentences for breaches. How they plan to enforce this however remains a mystery in a nation where a small cash incentive can often make law enforcement officials temporarily blind to almost any infraction. The CBN will continue to tighten monetary policy measures in further efforts to control inflation. Interest rates currently sit at 26.75%. The value of the Naira continues to decline. USD1 will currently buy you NGN 1,590. In July it exchanged at NGN1,508. Foreign capital inflow dropped to USD770 million in the January to April reporting period. This is down a whopping 57.22% from USD1.8 billion on the same period last year. This and other factors make it clear that the CBN is struggling with Dollar supply so additional depreciation should be expected. Investors should brace themselves for further devaluation in coming months especially. However, if the US Federal reserve cuts rates, and we anticipate it will soon, that may bring some respite to the ailing Naira.
Floods. Torrential rain in the north of the country has left 170 people dead so far. A further 2,000 have been injured and 205,000 people displaced. More than 100,000 hectares of farmland have been destroyed. Bauchi, Zamfara, Sokoto, Niger, and Jigawa states are the worst affected. There is a high risk that the central region will also soon be affected as water levels in the Niger and Benue rivers rise. The loss of livestock and crops already documented will further push up food prices and increase food poverty. Nigeria is already home to the world’s highest number of food-insecure people according to the UN’s Food & Agriculture Organisation’s latest report. The National Emergency Management Agency estimates that 31 of the nation’s 36 states will experience severe flooding this year.
Mpox. Nigeria has become the first country in Africa to receive the Jynneos (MVA) vaccine – the received 10,000 doses are aimed at curbing the spread of the virus formerly known as monkey pox. Nineteen states and the Federal Capital Territory have recorded at least one confirmed Mpox case so far this year. Distribution is about to begin to the five states where the highest number of cases have been detected; Bayelsa, Edo, Cross-River, Lagos, and Rivers. The MVA will be given to 5,000 people identified as being most at risk in two scheduled doses. The groups identified for the first rollout are front line health workers and close contacts of confirmed mpox cases. The WHO recently declared the Mpox surge in Africa a global public health emergency. The Nigeria Centre for Disease Control is taking the threat so seriously that they are publishing weekly updates of confirmed and suspected case numbers.
Beer.Diageo has sold its Guinness Nigeria shareholding. Singapore based Tolaram will take over Diageo’s 58.02%. In a press release Diageo said “completion of the transaction is expected to be in Fiscal 2025 subject to the satisfaction of certain conditions, including various regulatory approvals in Nigeria.” Diageo will retain ownership of the Guinness brand but have licenced it long term to Guinness Nigeria. Guinness Nigeria will retain manufacturing and distribution rights for the other Diageo brands. This move is the third such step back from the African beer market for Diageo. In 2022, the company sold the Meta Abo brewery in Ethiopia and Guinness Cameroon to Castel. In our Q1 report we outlined Nigerian Breweries suspension of production at two of its nine plants after posting a loss of NGN106bn in 2023. Nigeria will remain a tough environment for breweries as inflation continues to eat into consumers’ spending power.
Terrorism. On 25th August, an armed group attacked a police checkpoint in Abuja. Two officers were killed and several more injured. Three police vehicles were set alight. In a statement, the police claimed the assault was carried out by Islamic militants saying it was, “an unprovoked attack by the proscribed Islamic Movement of Nigeria (IMN)”. IMN is a Shia group with strong ties to Iran.
Militancy. Armed groups attacked more than 12 villages in the Dutsin-Ma and Safana Local areas of Katsina State between 4th & 6th June. At least 30 civilians were fatally wounded. Gunmen launched a series of attacks against civilian targets in Shiroro, Niger State on 6th & 7th June. At least 20 people were reported killed. On 29th June, militants carried out two attacks in Gwoza in Borno State. Thirty people died in the assault and more than 100 were wounded. In one attack a suicide bomber detonated their explosives at a wedding ceremony. In the other a similar incident happened at a burial site. No group has claimed any of these incidents.
Sahel. We are seeing jihadi fighters from the Sahel region crossing into north-west Nigeria and setting up camps in the Kainji Lake National Park. They are most likely to be members of Jama’a Nusrat ul-Islam wa al-Muslimin, linked to Al Qaeda, or Darul Salam, linked to Boko Haram. The militants have moved from northern Benin. The Sahel has been a hotbed for extremism for years but this migration of fighters does cause concern. This park has been a base for other armed Nigerian militant groups, many of whom are known to have connections to Sahel gangs. A growing smorgasbord of militant groups will see the region’s already fractured security deteriorate further. Longstanding business, social, ethnic, and religious connections already exist on both sides of this border. It is in these areas that vulnerabilities exist and which create recruitment opportunities.
Unchecked corruption and wasteful spending are doing nothing to contribute towards the fiscal responsibility Tinubu promised. The government is claiming the rise in GDP as a roaring success but if you put it beside population growth there is absolutely no reason to celebrate. More must be done. The government simply must shore up revenue and promote stability which, in turn, will encourage investment. Tinubu must also vastly cut the cost of governance before he can even be seen as working to deliver a productive economy. Violent extremism will remain a problem right across the country but particularly in the north.