There is a certain unflagging unwillingness to learn that seems Made in Nigeria – from the saga of yet another daring Boko Haram kidnapping, rising NPLs while capital bases remain shaky, legislative reform that while well-intentioned, seems doomed, and much talk when a bleeding obvious solution to an unnecessary fuel scarcity stares us, all while new regulations could affect the new stars of Nigerian commerce. At least, our animals seemed to have learned a trick or two from us humans: how to eat money.
Yobe girls school attack highlights lessons unlearned
More than 90 Nigerian schoolgirls are feared missing after Islamist group, Boko Haram attacked a village in Yobe, Reuters quotes two sources as saying on 21 February. Their disappearance, if confirmed, would be one of the largest since Boko Haram abducted more than 270 schoolgirls from the town of Chibok in 2014. That case drew global attention to the nine-year insurgency, which has sparked what the United Nations has called one of the worlds worst humanitarian crises. A roll-call at the girls’ school on 20 February showed that 91 students were absent, said the two people with direct knowledge of the matter. I saw girls crying, and wailing for help in three Tata vehicles, said a witness from the nearby village of Gumsa who was reportedly forced to show the insurgents the way out of the area and then released. Reuters reports that it was unable to verify the witness’s account, that Boko Haram had abducted girls in the attack in Dapchi on Monday evening. The Nigerian Police and the Borno Education Ministry denied any abductions had taken place, but parents and other witnesses say some girls were still missing.
That Nigeria failed to learn from the Chibok incident three years ago should be clear to all. Boko Haram has been abducting people of all sexes & ages before and after Chibok affair. This incident in Dapchi appears to have been targeted at a girls’ school, probably in the hope of using the victims to extract concessions similar to what the terrorists have gotten in exchange for releasing some of the Chibok girls. It is still unclear what faction of Boko Haram is responsible for this attack. However, a disturbing trend of official cover-up seems to have emerged. Several witnesses who spoke to Reuters did so on condition of anonymity because they had been warned by officials not to disclose the disappearance. Then there was the news that broke in a national newspaper that most of the girls had been rescued, but this was discredited less than 24 hours later. It is eerily similar to what happened soon after Chibok. Pretending that such an incident did not happen, is counterproductive, and indicates that a major lesson has not been learned. Nigeria has failed to secure schools in the North-East, and improve both intelligence gathering capabilities, and the response time to incidents such as this. We cannot risk rubbishing all the good work that has been done in the North-East by willful self-deceit.
Animal Farm syndrome obscures serious governance concerns
Senator Abdullahi Adamu was removed as the chairman of Northern Senators Forum on 21 February for ostensibly mismanaging ₦70 million earmarked for the Northern Senators. The ₦70 million belonging to the Northern Senators Forum is said to have been carted away by monkeys in the farmhouse of the ranking lawmaker. Adamu’s removal was announced in a letter read by the presiding officer, Ike Ekweremadu, shortly before the end of plenary on Wednesday, signed by the forum’s Public Relations Officer, Dino Melaye (APC-Kogi) who said Adamu was removed for, “financial mismanagement and misadministration”. Mr. Shehu Sani (APC-Kaduna) told journalists that the money, passed down by Senator Ahmed Lawan to the present caucus of Senators on their election to the Senate went missing, and there are “allegations that some monkeys raided the farmhouse of some of the executives of the Northern Senators Forum and carted away some of this money.”
Rodents chased the president out of his office, then snakes consumed ₦36 million from an office in the University examination Board and now, monkeys are raiding the farmhouses of federal lawmakers. It appears that Nigeria’s animals have gone really wild. While we think that Senator Sani’s comment about the monkeys was made in jest, we consider such a joke to be in bad taste following the earlier incidents we have mentioned. What is clear though is that Senator Adamu cannot account for the money. This calls into question, accountability within our political organizations, and the structures that are meant to ensure that accountability. The fact is that Adamu had been a vocal critic of the Legislators attempt to change the sequence of the national elections in 2019, and we believe that hes been removed because of that. Another critic, Senator Ovie Omo Agege publicly apologized to his colleagues after initially condemning their actions. This makes one wonder what type of skeletons he may be hiding in his closet.
Banana skins litter ECA reform efforts
The House of Representatives on Tuesday moved to legalize the controversial Excess Crude Account by proposing a bill to capture all excess revenue in a new account to be called Excess Revenue Fund Account. The bill, proposed by Ederin Lovette Idisi (PDP-Delta), passed second reading during Tuesdays plenary. The existing ECA is the account into which the Federal Government remits any crude oil revenue in excess of the budgeted crude oil benchmark for the current year. The account has been a source of discord between the National Assembly and the Executive as well as State Governments over the years. According to the proposal, no money shall be withdrawn from the Excess Revenue Fund Account, except with Legislative approval. The bill primarily seeks to amend Section 5 of the Allocation of Revenue (Federation Account, etc.) Act, Cap. A15, Laws of the Federation of Nigeria, 2004 by inserting a new Section 5A (1).
There are some fairly big issues to be sorted out before the legislature can get the ECA on the firmer legal ground. For one, the fund as presently structured, are assets of the three tiers of government, and some lawyers and even members from within their own fold have questioned the legality, and essence of the lawmakers latest move at retaining more oversight of its operations. Also, there is the small jurisprudential matter of whether another account outside the Federation Account recognized by the Constitution could be created by a simple bill as against amending the Constitution itself. Finally, the National Assembly attempting to decide how the States and Local Governments, who participate in ECA disbursements, spend their money by attempting to bring the ECA under its control or treat it as though it was the Consolidated Revenue Fund of the Federation-owned solely by the FG, is unlikely to receive an endorsement from these interested parties. The ECA does need better, broader oversight, and in this light, the Reps move is welcome, but one suspects that they might have unwittingly opened another front of political bickering, especially with the near certain opposition from state governors already used to this revenue pipeline.
Statements & committees won’t fix fuel scarcity, cold hard reality will
Nigeria’s state oil firm said on 20 February, that it had spent $5.8 billion (₦2.088 trillion) on petrol imports since late 2017, as it combats a fuel shortage that has left people queuing for hours at filling stations and hobbled an already-struggling economy. The corporation’s intervention became necessary following the inability of the major and independent marketers to import the product, because of the high landing cost which made cost recovery and profitability difficult, the Nigerian National Petroleum Corporation (NNPC) said in a statement. President Muhammadu Buhari in 2016 raised the top PMS price to ₦145 ($0.4603) per liter, a 67 percent hike, but did not remove a cap for fear of hurting people on low incomes. The price cap makes it tough for many importers to profit from fuel, and NNPC has imported as much as 90 percent of the country’s needs over the past year.
The NNPC statement clearly says what the fundamental issue is. Landing cost is higher than the regulated cost, making it unprofitable for the marketers to import petrol. The fact that NNPC is doing so solely does not change this – it only means that the NNPC bears this cost as a form of subsidy. From various statements from the NNPC, this subsidy amounts to between 15 and 20% of the cost of petrol imported now as our earlier report shows. The result is that in the last few months, Nigeria has spent an upwards of $1 billion in unbudgeted subsidies, with no end to the scarcity in sight. An economic body that advises the government has been in discussion with the NNPC to determine whether petrol is appropriately priced in the country. This is a moot question as it is clear to all, that it is not, precisely because it is regulated. Also, the House of Representatives has asked the Executive to submit a ₦800 billion supplementary budget to the National Assembly to offset the debts allegedly owed fuel marketers, in an attempt to address the lingering fuel scarcity in the country. The House Committee on Petroleum Resources (Downstream) said that, if offsetting the debts would end the scarcity. While it is a step in the right direction, we urge the house to take the bold step in demanding an explanation from the Executive and insisting on full deregulation.
Rising NPLs & flaky capitalization throw CBN into a frenzy
The Central Bank of Nigeria has stopped the payment of dividends to shareholders by Deposit Money Banks and Discount Houses with huge bad loans, and a low capital base, due to the rising non-performing loan profile of a few institutions. The directive comes barely a week before the release of annual reports for the 2017 financial year by the country’s commercial banks and discount houses. The regulator, in a letter dated 31 January, said the move was aimed at stemming the tide of rising non-performing loans (NPLs), and the consequent weakening and erosion of the banks capital base. Some observers say Union, Wema, Sterling and Unity banks will be the most affected by this new directive.
In Nigeria, a pattern has emerged where profits are privatized, while losses are shared by the public. While we have reservations about the CBN prescribing how profits should be handled, we wonder if the necessary provisions for these loans have been made, should the banks be able to declare the profit level they currently do. The CBN’s minimum NPL threshold for banks is five percent, but as of September 2017, the banking industry NPLs had hit 15.18 percent after rising 50 percent to ₦2.4 trillion from ₦1.6 trillion in December 2016, according to data from the Nigeria Deposit Insurance Corporation. This perhaps will create an incentive with the owners of the banks to align the bank’s performance with depositors funds with their own returns.
New EU regulation on Nigerian techs radar
The Nigerian Information Technology Development Agency has notified Nigerian businesses that collect, store, and process personal data of citizens of the European Union (EU) for the provision of goods and services, and the general public of the implications of the new EU General Data Protection Regulation. The regulation which was adopted almost two years ago, and became enforceable from 25 May, will replace a 1995 data protection directive. In a statement, the agency said Nigerian organisations that are controllers, and processors of personal data of EU nationals have more than 250 employees, or if less, have data processing capabilities that impact the rights and freedoms of data subjects or occasionally includes certain types of sensitive personal data and have offices in an EU member state and/or processes personal data of EU nationals, and residents must comply with the new rules. A breach of the regulations can attract a fine of up to 4 percent of a company’s annual global turnover or an equivalent of twenty million euro.
The new regulations, brought into force in large part due to the EU’s recent scabs with Facebook and Google, require that data controllers and processors must seek consent from data subjects in an intelligible and easily accessible form, and the consent must be clear, and distinguishable from other matters, and presented in a clear and plain language. Critics may see it as yet another layer of unneeded, unnecessary bureaucracy that businesses need to navigate through, but Nigerian companies, with robust representation in the money remittance industry, of which its nationals are among the top ten in remittances sent from the West, the growing cloud business space, and increasing participation in the fintech innovation need to pay more than a passing attention to this new regulation.