President Tinubu’s term in office started with a blast which saw him slash fuel subsidies, sending prices soaring right across the nation and provoking protests and violence. He quickly but subtly u-turned on this decision. But, instead of reversing the policy he has quietly tweaked it by providing special foreign exchange concessions for product importers. It was too late, the damage was done. Prices of some commodities have stabilised but not enough to allow the average Nigerian to breath out. The failure of Tinubu’s initial plan appears to have dented his confidence and left him hesitant about tackling anything major. And so his country waits for the strong leadership they were promised during the campaign at a time when they need it most. Unfortunately, it appears their President is fiddling, while not just Rome burns but the entire country.
Legislation. With so many economic, security and political problems plaguing Nigeria you would expect that Tinubu’s government would be hard at work finding effective and serious solutions to the nation’s biggest woes. You would be wrong. Instead they have chosen to focus on the most insignificant. The House of Representatives has instead been debating and passing a bill to revert to the old National Anthem. The bill has also passed its second reading in the Senate and is expected to be passed by the upper chamber. At the same time, the National Film and Video Censors Board has announced that it will prohibit the depiction of smoking, violence, criminal acts, immoral acts, ritual killings and money rituals in Nigerian TV, movies and music videos. They say it is impossible to wake someone pretending to be asleep. We say it is also impossible to get people pretending to be busy do any real work.
Diplomacy. The Duke and Duchess of Sussex visited Nigeria in May. Harry and Meghan were invited to the country by Christopher Musa, the Chief of Defence Staff and were warmly received by most. Not everyone was happy however. First Lady, Oluremi Tinubu has heavily criticised Meghan for her fashion choices during the trip saying the Duchess was flaunting her “nakedness everywhere“. The statement was made during a speech at an event to mark Bola Tinubu’s one year in office. The Royal couple also faced further controversy. On their arrival in the country they were greeted by Dr. Allen Onyema, among others. Onyema is the founder and CEO of Air Peace, the aviation carrier used by Harry and Meghan during their three day trip. He is also the subject of a US federal indictment for “bank fraud and money laundering for moving more than $20 million from Nigeria through United States bank accounts in a scheme involving false documents based on the purchase of airplanes.”
Exchange. The foreign exchange market is beginning to stabilise but it is still making it painful to operate across all sectors relying on imports for manufacture, retail or services. At the time of writing USD1 buys NGN1,482 down from an all-time high in March of NGN1,617. On the surface this looks positive but when you then consider that exactly 12 months ago USD1 would cost you NGN461 and you can see why people are feeling the pinch. In May 2023, inflation stood at 22.42%. By April 2024 this has spiked to 33.69%. A year on year 2.98% growth in Gross Domestic Product in the first quarter of the year was reported by the National Bureau of Statistics. It would be easy to celebrate this number as being the beginning of pulling the economy back from the brink but when you see that in real terms, the oil sector contributed 93.62% to GDP in this period and one realises that almost nothing has been done to move the nation away from its over reliance on oil or promote the diversification of its revenue streams.
Unions. The government has also been in talks with Labour Unions who want the minimum wage increased. Discussions are still on-going. At the time of writing the government has offered an increase from NGN30,000 to NGN57,000. Unions however are holding out for what they say is a living wage not a minimum one and say that anything below NGN70,000 will be unacceptable. Even if the unions are successful, the victory they gain will very quickly be eaten away unless significant efforts are made to reign in the ever-increasing cost of living.
Minerals. The government has begun a major crackdown on illegal mining in the country. Dozens of people have been arrested since April for allegedly mining Lithium. A mid-May raid in Kishi, Oyo State, resulted in the arrest of 32 individuals, including two Chinese nationals. At least two more incidents involving Chinese nationals have also been recorded. On 22nd April 2022, a court in Ilorin convicted two Chinese men for illegal mining. They were each sentenced to one year in prison. Tinubu has repeatedly blamed illegal mining for the ever-deteriorating security situation, particularly in the north, saying the proceeds are being used to buy arms. Bringing peace however does not appear to be his motivation to end that. Instead, he wants control of the profits from the mineral resources. As the world shifts to clean energy, the demand for lithium, used in batteries for electric vehicles, smartphones and power systems has spiked. China is a massive player in electric vehicle manufacture. The Nigerian extractive industry transparency watchdog reports that the mineral sector contributed NGN814.59 billion to Nigeria’s economy in 15 years, with 2021 earnings being the highest, bringing in NGN7.94 billion. With numbers like these we can see why Tinubu wants control of the proceeds but just like illegal oil theft before it, illegal mining will remain impossible to control due to remote locations, poor policing and local government corruption. Chinese companies are now massive investors in Nigeria and with that comes the power to pay people to look the other way.
Crypto. A case that is being watched by all businesses in the crypto sector and beyond: Nigeria vs. Binance continues. Binance executive Tigran Gambaran, now into his fourth month in detention after his employer was hit with accusations of bribery and money laundering. Gambaran collapsed in court during the second day of his money laundering trial on 23rd May, a sign surely that the stress is taking its toll on his health. Nigerian anti-corruption and tax officials have slammed Binance with accusation after allegation ranging from undermining the Naira to the facilitation of millions in illicit hard currency financial transactions. Gambaran is head of financial crime compliance. In such capacity he is not in a position to make strategic decisions, policy outlines or direct business operation practices. So why is he still behind bars? When the Naira plunged more than 75% against the dollar in January someone had to be to blamed. No way did the government want to take responsibility. In essence, Binance was in the wrong place at the wrong time and made the perfect scapegoat. The case against the company is a complicated one, but one that worries international investors in every single business sector. The risk that they too could be thrown under a bus at any time for government policies they have no control over is being treated as a very real one. This case is definitely one to watch. The speed at which Nigeria may recover economically could well hinge on it.
Beer. Breweries across the country are also feeling the pinch and suffered a combined loss of NGN169.7 billion in the first quarter of 2024. This is despite reporting revenue growth and healthy profit. The blame for this can be put firmly on soaring inflation and plunging exchange rates as companies continue to be hit hard by the FX crunch. The top three brewers in the country are Nigerian Breweries, International Breweries and Guinness Nigeria Plc. Last year, Nigerian Breweries reported a pre-tax loss of NGN145.2 billion. This was the biggest loss in its corporate history. In response, Nigerian Breweries has announced it is shutting down two of its plants as part of a ‘strategic recovery plan’. The company has said it will now focus on its remaining seven plants with plans to boost their production capacity. The company also seeks to redefine itself with the acquisition of an 80% stake in Distell Wines & Spirits Nigeria Limited. Nigerian Breweries’ swift response makes it best placed to recover fastest while it waits for the FX market to find its new normal and settle down.
Almost exactly one year after Tinubu assumed office, promising to bring peace and security to the north west of his country, it seems to only have worsened. Gunmen invaded Kuchi, a village in Niger State on 24th May. At least 10 people were killed in the assault while 160 more were taken hostage. No group has claimed responsibility. Amnesty International has said it has “deep concern” at the mass abduction. The gunmen returned on 26th setting shops alight and seizing food and livestock. Hundreds of residents have now fled the area in fear. This is just the latest in a spate of attacks and abductions in the state. The government is always quick to blame alleged Islamic terror groups for incidents like this but the truth is terrorist violence has been on the decline in recent years and has been replaced by tribal clashes and a ‘cash for kidnap’ get rich quick culture. Growing poverty will only add to that. Addressing the economic needs of people will do much to reduce the number of attacks. Promoting mediation and cooperation between ethnic and religious tribes will do even more. Most importantly, a clamp down on corruption in local government will ensure that what money is pumped into the areas is used for its intended purpose. None of these solutions are anywhere on the table at this time. Tinubu seems incapable of looking outside of major cities to see just how poor and hungry the majority of his people have become.
It really does feel like Groundhog Day in Nigeria at the moment. People wake to the same old problem and absolutely nothing is being done to change it. The economy is stagnant. Anger and frustration is almost tangible as people seek out any way just to survive. To thrive is now but a distant dream. International investment too is showing nothing to report as companies impatiently wait to see what kind of playing field they will be on should they enter a team. No changing of the national anthem or smoking bans will change that. We wait for Tinubu to lay out a clear economic plan that will tackle inflation, promote stability and attract investment but he is consistently ignoring the elephants in the room. And as the summer recess looms – we see no change to that in the near future.