Tinubu seems to be in a rush to restructure Nigeria so much so that it is beginning to feel slap-dash with no back up plans or consideration of consequences. For years we have complained about the snail’s pace speed of change in Nigeria but Tinubu’s rapid reforms have an almost Liz Truss feel to them and we all know what her Premiership did for the UK’s economy and how long her time in office lasted. It has taken Tinubu years to finally get his dream job but how he is now doing it makes us think he is making up for lost time. We don’t – necessarily – disagree with his plans but we definitely thinks he needs to consider them a little more carefully before making such big leaps. We are in for a roller coaster over the next few months so strap in tight; it is going to be quite a ride.
Tinubu. When taking office last year, Tinubu promised urgent economic reforms. He has delivered those in spades but they have been so poorly implemented they are painful. He failed to ensure he had shock-proofed the country and the economy to ride through the bumps of subsidised transportation loss and increased minimum wages. With the removal of fuel subsidies, petrol prices tripled instantly. Even a blind man could have seen the trickledown effect that would have on not only consumer pricing, but business and manufacturing too. In a nation reliant on generators for power, getting anything done is now more than 200% more expensive than it was before he came to power. His efforts to consolidate the foreign exchange markets too have been painful. His hopes of stabilising the economy have, in fact, exacerbated the cost of living, suppressing both consumer spending and investment. Tinubu was recently quoted as saying “a good foundation must be laid before bringing the restructuring in place such that if it is done in a rush without a proper foundation, the restructuring may collapse very soon but it would be done”. This is a great speech but from where we sit the concrete is already cracking before a single brick has been laid.
Legislation. Exactly twelve years after receiving it, the Federal Government has finally announced that it will begin to implement some of the recommendations made in a report by Stephen Oronsaye written in 2012 which provoked a government White Paper that was published in 2014. Aimed at reducing the cost of governance, the 800 page report counted 541, statutory and non-statutory, Federal Government parastatals, commissions and agencies. It then went on to recommended that 263 of the statutory agencies be slashed to 161; 38 agencies be scrapped; 52 be merged and 14 be reverted to departments in various ministries. Successive governments have shuffled the report around on desks but always failed to act on it. For Tinubu to finally pull the pin on it is surprising. He is very much a ‘job for the boys’ kind of guy and this will mean job losses. So far, 29 government agencies are earmarked to be merged, one will be scrapped and four more will reallocated under other Ministry portfolios. It is just a drop in the ocean but at least it is a start. If the government did fully implement Oronsaye’s suggestions we calculate they would save in excess of NGN2.5 billion annually. That is a lot of money that could do a lot of good right now. But it is also a lot of money that can be looted. Had Presidential hopeful Peter Obi been in office we are sure he too would have implemented it – it was in his election manifesto. But Obi, at least, has a history of transparent government and financial accountability. Tinubu, on the other hand does not. Tinubu promised to streamline government during his campaign yet his cabinet is larger than that of his predecessor. To suddenly decide a Paper that has been gathering dust for a decade should swiftly take centre stage has many suspicious of his motives asking; why now? Obi and many others will be watching this closely and counting the coffers.
The National Bureau of Statistics reports that GDP grew at 3.46% in Q4 of last year. Inflation continues to soar reaching 29.9% in January, its highest rate since 1996. The Naira continues its crash and burn trajectory plummeting to NGN1,624 to USD1. On 1st March 2023 this rate was NGN460. Nigeria is firmly in the middle of the worst economic crisis it has seen in years and people are angry about it. Nigerians were already being squeezed by economic reforms. Nigeria is now forecast to see some of the slowest economic growth in West Africa. The African Development bank said in an outlook report that every other country in the sub-region is estimated to grow by at least 4% in 2024, “except for Nigeria and Ghana,” who it said would register growth of only 2.9% and 2.8% respectively. Nigerians have seen their currency depreciate by over 100% since the unification of the FX market back in June and the resultant devaluation by the Central Bank of Nigeria (CBN). The result was a major surge in the use of crypto currencies in the country as people tried to protect themselves from further loss.
Crypto. In response to this, the government has ordered the blocking of all crypto currency exchanges. The Nigerian Communications Commission has ordered all telecom companies to restrict consumer access to companies like Binance, Coinbase and Kraken. Two senior Binance officials flew into Nigeria immediately after the ban was announced. They were met by representatives of the national security adviser’s office who detained them and confiscated their passports. The government then obtained a court order allowing their detention for at least 12 days before demanding that the two executives submit information on any transactions made on the Binance platform using Naira in the last seven years. Tinubu’s office has claimed that Binance was “blatantly” determining the Naira exchange rate. As February ended, Binance has disabled the Naira feature on its P2P market. The CBN had earlier expressed concern over the USD26 billion that came through Binance Nigeria from what it called “unidentified sources” in 2023. Despite the ban, Nigerians have scrambled to obtain access to VPNs to continue trading. Nigeria has the highest crypto usage in Africa and is among the most developed globally, with an estimated 9% annual growth rate. Whether the government like it or not, this growth will continue. Nigerians no longer trust their own currency and are beginning to now also lose trust in their government.
Beer. EnjoyCorp Limited has reached an agreement with Heineken BV to acquire 100% of its shareholding in The Raysun Nigeria Company Limited which in turn owns an 86.5% stake in Champion Breweries Plc. EnjoyCorp is a holding company specializing in food, beverage, and hospitality brands. In the 1st half of 2023, Champion Breweries reported a turnover of NGN5.705 billion, down by 13.23% from N6.576 billion reported in 2022. Heineken will provide 12 months of support to Champion Breweries to ensure a smooth transition of ownership. The Chief Executive Officer (CEO) of Nigerian Breweries Plc (NB), Hans Essaadi, stated recently that due to the current economic situation in Nigeria, citizens are finding it difficult to afford beer. He noted that persistent macroeconomic challenges, including rising inflation, heightened operating costs, and strained consumer income will continue to build barriers that must be broken. NB incurred a foreign exchange loss of NGN153 billion in the year ending December 2023. This can be directly attributed to the devaluation of the Naira and came despite NB increasing product price in August.
Kidnap. Gunmen disguised as security officers entered the village of Tashar Nagulle in Katsina on 21st January and abducted 31 residents. No group has claimed the attack. Suspected Fulani herdsmen attacked a community in Agatu LGA, Benue on 31st January. At least 15 people were killed in the attack, and an unspecified number of children were taken hostage. On 1st February, gunmen abducted at least 30 people near Damari in Katsina. The victims were all part of a bridal party. On 13th February, at least 40 people were kidnapped and four killed when armed gunmen stormed Kasuwa Daji in Zamfara. No group claimed responsibility and no public ransom demands have been made. This is just a small selection of incidents we have witnessed recently. To list them all would take too long. Not long ago, the biggest security problem in the north of the country came from Islamic terror groups but as you can see that has all changed. What we are seeing now is a rise in what we presume is kidnap for cash compounded with the traditional clashes seen regularly between herdsmen and farmers. This is crime for crime’s sake being perpetrated by small groups and not large organised gangs. Crimes of this nature have been an issue right across the country for decades but with poverty on the increase we predict violent abduction numbers will be too.
Military Action. The Army says it neutralised 974 terrorists and arrested 621 suspected terrorists and kidnappers nationwide in February. Major General Edward Buba, Director of Defence Media Operations also said arms and ammunition were recovered during raids but he did not specify numbers. He also said that 466 hostages were located and freed in the same time period. In January, Buba said its air component of Operation Hadin Kai had eliminated three top commanders of the Islamic States of West Africa Province (ISWAP) terrorist group in Borno State. He identified them as Abou Maimuna, Abou Zahra and Commander Saleh who were killed in an air strike on a canoe they were travelling in.
We have already seen protestors take to the streets of Lagos and other cities as the cost of living soars and we predict we will see more. Unions are also stirring up the emotions of their members and we know that hungry people are quick to anger. The truth is it really wouldn’t take much to rile up a Nigerian right now. After years of corruption, mismanagement and austerity Nigerians really do feel like they have nothing left to lose. Tinubu will have to dig deep and find something, anything, that will have an instant tangible effect for the better or he will spend the rest of his tenure fighting an up-hill battle.