Nigeria has been battling its worst floods in 30 years. Hundreds have been killed and at least 1.3 million people displaced. The cost of damage to infrastructure and agriculture cannot yet be calculated but it will be significant. As the waters subside we can see the carnage left behind and it is not just material. Nigerians are beginning to feel truly abandoned by their government. President Tinubu and his gang are, as always, dropping the ball when it comes to action and reaction. Problems that could clearly be predicted and prevented were walked past while available financial aid that could assist those most badly impacted is being left on the table. Tinubu now holds the job of his dreams but is he capable of filling the role? Once again we have to say that for now we see no signs that he wants to so whether or not he is able too remains an unknown.
COP29.The Conference of Parties (COP) conference kicked off in Azerbaijan this month. At a time when Nigeria is struggling with the aftermath of rainfall pattern disruptions and extreme weather events which led to massive flooding, finding solutions to climate change has never been more important. Nigeria’s food, and in turn, national security depends on it. The establishment of a Loss and Damage Fund has been on the COP agenda for many years but this time it looks like one will finally be established with an initial amount of USD400 million. Once up and running it will finance support to developing nations hit hard by climate change. Nigeria currently qualifies for assistance from it but at the time of writing had yet to apply for any help. Nigerians are literally starving after watching their businesses and properties destroyed. Tinubu must instruct his ministers to urgently file a claim. He must also order them to address the issue of food shortages and soaring prices but once again, his lacklustre approach to policy implementation is more likely to let his citizens down rather than lift them up.
Floods. On 13th September the Alau Dam collapsed. Borno State in particular was significantly impacted by the flooding that followed but heavy rains and overflowing rivers have impacted 18 other states. At least 85,000 homes in Borno have been damaged with the crisis being further compounded by looming famine and disease outbreaks. In a region prone to insecurity this will only see violence increase as people fight to feed their families. However as the waters subside in the north the run off meets at the convergence of the Niger and Benue rivers in Kogi State which then surges downstream towards the Atlantic. The risk of flooding in the South East, South, and Niger Delta regions is now high. Edo, Delta, Anambra, and Bayelsa states in particular will be affected as the river Niger surges through them. Expect economic disruption, drownings, displacement, crop wipe-outs, and loss of livestock not to mention livelihoods. In our last report we told you this was coming yet the government has failed to act to implement even emergency relief after the fact, never mind finding ways to avoid the problem in the first place. Anticipate unrest and protest as the floods tear through homes and businesses, causing tensions to rise.
Diplomacy. Tinubu extended his congratulations to US President Elect Donald Trump. In a post on X he said “Together, we can foster economic cooperation, promote peace, and address global challenges that affect our citizens.” During Trump’s last time in office he referred to Nigeria and some other developing nations as “s*ithole countries” – a remark he never apologised for. It is unlikely that his opinion will have changed. The UK’s Foreign Minister, David Lammy, was in Nigeria in early November. He met with Tinubu in Abuja. The pair agreed a Strategic Partnership between their two nations strengthening the bilateral relationship between the UK and Nigeria. Lammy also met with the Governor of the Central Bank of Nigeria, Yemi Cardoso. They discussed UK support for Nigeria’s economic reforms and mutual economic growth opportunities. This was Lammy’s first visit to Africa since he assumed office in July.
Inflation. The National Bureau of Statistics reports that inflation rose by 7.13% in September to 37.77%. Twelve months earlier it stood at 30.64%. Literally everything has gone up in price and Nigerians are feeling the pain. Bread, beer or beans … whatever is on your shopping list has hugely hiked in price. We knew this was coming. The government’s failure to address the issue combined with higher fuel costs is firmly to blame. In September, petrol prices jumped to NGN897 per litre up from NGN600. The fuel price increase provoked protests. We anticipate these will only continue and will intensify as the cost of living crisis continues.
World Bank. The World Bank has approved a USD1.57 billion loan package for Nigeria. The funding will support the education and health sectors. Some will also be allocated to stabilising power production and distribution. Nigeria’s power grid has repeatedly crashed in recent months. Blackouts are always expected but the frequency and duration of the recent outages are pushing businesses and individuals to the absolute brink. Commercial and residential consumers are forced to run generators and they are expensive to fuel and maintain. Increased diesel prices will, of course trickle down and further drive food prices ever higher.
Electricity. Nigeria currently has the capacity to generate 13 giga watts (GW) of electricity which falls short of the demand of a population of more than 200 million people. In rural regions less than a third of people have access to electricity. Urban dwellers fare vaguely better but still only 89% can boast they are plugged in. Nigeria’s out-dated and audibly creaking infrastructure can only distribute around 33% of the power it does produce and it does so poorly. The national electricity grid
has recorded nine total collapses so far in 2024. As demand increases this number will rise. We estimate that daily demand for power is a minimum of 20GW. Failure to fix this sector will severely impact development and growth. Already many manufacturers and business have moved their operations to neighbouring countries citing more stable electricity and economic conditions. The World Bank estimates that Nigeria loses up to USD26 billion annually to electricity deficits. Successive governments have tried to fix this problem but all attempts have so far failed. We see no new or innovative ideas being discussed. We have already mentioned the removal of fuel subsidies driving up prices but a recent decision by the government to also cut electricity subsidies for the top 15% of consumers is also a short sighted one. Driving a business’ utility bill up by more than 300% but having no concrete plan to invest the savings into increasing capacity will not inspire investor confidence. Nigerians will continue to sit in the dark.
Poverty. It is not just economics and electricity that is to causing people going hungry. Escalating violence and climate change are playing big parts too. Save the Children reports that 5.4 million children are now at risk of acute malnutrition across the country by April 2025 – a 25% increase when compared to April of this year. This can be directly linked to the impact of the floods. In response, the World Bank has also announced a USD50 million fund to be used to address Nigeria’s nutrition crisis. The money will be distributed by the accelerating Nutrition Results In Nigeria Project 2.0. Simultaneously, Vice President Shettima launched the N-774 Initiative – a programme aimed at driving locally focused food programmes in nutrition education and intervention to all of the country’s 744 local government areas. In theory, both programmes are admirable but in a nation where people can’t afford even basic food stuffs, never mind nutritious ones, it falls far short of addressing the real need of the country’s people – and that is consistency and cash. Also, no system of accountability has been published so with typical Nigerian lack of transparency we are sceptical that all funding will indeed reach those most in need. Nigeria ranks low on the corruption index for a reason.
Beer. Abuja’s Federal High Court has ruled that the breaking of alcohol bottles and wasting the contents, seized in raids is an act of “economic sabotage”. The court has ordered the Economic and Financial Crimes Commission (EFCC) to investigate every reported incident and prosecute all offenders – even if they are law enforcement officers. The court specifically mentioned one State that has been a repeat offender of what is now officially a crime saying, the EFCC must “investigate the common act of Kano State Government in seizing, breaking and extravagantly pouring away the liquid content of bottles which forms part of the Value Added Tax being shared by the federal government between it, state[s] of the federation and the local government [system] inclusive of Kano State.” In 2022 alone, Kano, in the Muslim north of the country, destroyed over 3 million bottles of beer as part of the state’s efforts “to address drug abuse, intoxication, and other social vices”. As we have covered before, for years, several other states have strongly opposed Kano, and other ‘dry’ states benefiting from federal revenues gained from alcohol sales while prohibiting its sale. Anticipate that this ruling will reignite the fire under this argument. Lagos and Rivers States will lead the charge and begin campaigning to retain revenue from alcohol products manufactured in their jurisdiction. Other States will follow if they start making headway. This could prove to be a costly headache for the government but more importantly it will be a polarising political, economic and religious debate. The North/South religious divide has for long been a very real thing in Nigeria. This will push tensions even higher.
Indigenous People of Biafra (IPOB) leader, Nnamdi Kanu, remains in custody in Abuja. Arrested in 2021 he is held on terror charges. His supporters are becoming increasingly more vocal about his continued detention and have petitioned Tinubu to release him. A plea that so far has fallen on deaf ears. In a recent statement IPOB said it ‘doesn’t require a complex analytical brain to understand that the continued illegal incarceration of Kanu, chronic youth unemployment and the shoot-to-kill and ask questions later policy of Nigeria’s security agents are the main issues propelling insecurity in the South-East.” IPOB has accused politicians of sponsoring armed gang and political violence in the region. Anticipate that pressure to free Kanu will increase and that protests and disruption will come too but … something else also to monitor; we are seeing signs of tensions within IPOB itself which could see fighting begin within as the separatists jostle for position and power. IPOB’s armed wing, Eastern Security Network, is often blamed by authorities for acts of violence and kidnapping. As group factions form, bicker, and then reform we anticipate conflicting attack orders will be issued to ESN fighters and counterproductive protests will make foes out of friends. Clashes are likely.
As the dust settles after the US Presidential election it is clear that a secondTrump Presidency will bring with it challenges to Nigeria’s economy. As Trump was declared the victor the US Dollar rallied strongly which will further strain Nigeria’s foreign reserves. At the time of writing the official exchange rate stood at USD1 = NGN 1,674.69 but on the black market 1 greenback will set you back around NGN1,750. At the same time global oil prices slumped. In a country that sells oil but buys it back as a refined product none of this is good news. Some serious fiscal belt tightening is now an absolute necessity. Nigeria must find ways to move from consumption to production, yet to do that it also must move from volatility to stability. Sadly, we see nothing on the cards that shows work has started on making such changes.
Published: 8th November 2024