The Week Ahead – Wishful Expectations Get Bitten By Cold Realities

0

Promises of PIGB passage by the end of March, a bittersweet Dapchi release, Ghana’s uncomfortable tryst with debt, a brewing confrontation between the FG and some states over mining, a government official thinking that 100GW by 2030 is doable despite decades of contrary experience and Nigeria’s lack of excitement over a continental free trade agreement all illustrate the uncomfortable collision between wishful expectation and cold reality.

This is the bad news about the good news from Dapchi

Islamist militants freed scores of kidnapped Nigerian schoolgirls on 21 March, driving them back into the town where they had been captured a month ago. The captors gave no reason for their release, which triggered celebrations and tears, but the government denied that a ransom had been paid. Several of the girls said some of their friends had died in captivity and one was still being held. The fighters from the Boko Haram group, some shouting God is greatest, drove the girls back into the Yobe town of Dapchi in a line of trucks in the morning and dropped them off before leaving. Some residents fled as the convoy rolled in. I don’t know why they brought us back but they said because we are children of Muslims, one of the freed girls, Khadija Grema, told Reuters. Information minister Lai Mohammed said in statement 101 released girls had been registered so far. No ransom was paid to them to effect this release, he told journalists. The only condition they gave us is not to release (the girls) to the military but release them in the town of Dapchi without the military presence. Nigeria had secured the release through back-channel efforts and with the help of some friends of the country, Mohammed said in the statement.

Boko Haram received millions of euros for the release of some of the Chibok girls last year, and this played in the minds of many people when the Dapchi kidnap happened, however, the Minister for Information has said that no ransom was paid. On this claim, the possibility exists, although it is unlikely. The abduction was done by a faction of Boko Haram led by Abu Musab al-Barnawi which seems to be intent on building better community relations in order to entrench its position. The al-Barnawi group has won the support of the ISIS leadership and is trying to follow ISIS’s script closely. This makes it, in the long term, a more dangerous faction than the Abubakar Shekau faction. Based on that script, public support is crucial, hence videos that emerged of the people of Dapchi celebrating the insurgents are very worrying. The government needs to focus, and come up with a plan to win the hearts and minds of people in Yobe.

Problems aside, the AfCFTA is a very good idea

African leaders agreed on Wednesday to form a $3 trillion continental free-trade zone encompassing 1.2 billion people, but its two biggest economies, Nigeria and South Africa, did not sign up, diminishing its impact. The African Union started talks in 2015 to establish a 55-nation bloc that would be the biggest in the world by member states, in a bid to increase intra-regional trade, which sits at a measly 15 percent of Africa’s total commerce. Rwandan president Paul Kagame, the host of an AU summit called to conclude the initial negotiations, declared the meeting a success after 44 African nations signed up to establish the free trade bloc within 18 months. Nigeria is said to be involved in national level consultations but South Africa President Cyril Ramaphosa said he would sign once necessary legal processes were done.

The African Continental Free Trade Area (AfCFTA), aimed at deepening African economic integration, promoting agricultural development, food security, industrialisation and structural economic transformation through the free movement of persons, capital, goods and services, needs 22 signatories to come into force. The FEC had endorsed the treaty last Wednesday but there are still important kinks to work out. The Nigeria Labour Congress is worried about the increased competition Nigerian workers will face from the rest of the continent, while the Manufacturers Association of Nigeria is concerned about ‘rule of origin’ rules in the treaty that could theoretically permit goods from third-party, non-African countries to be repackaged in a treaty member state and imported to Nigeria under the 10 percent tariff signatory states will be subject to. Africa’s low level of intra-regional trade, currently at 15 percent, the relatively small size of many African markets – only Nigeria and Ethiopia have populations estimated above 100 million and a cacophony of competing and overlapping trade zones, ECOWAS in the west, EAC in the east, SADC in the south and COMESA in the east and south, are three of the main reasons private sector investment has been patchy continentwide, hollowing out its manufacturing base and guaranteeing Africa’s continued social and economic underperformance. The AfCFTA is a great step in addressing these concerns and while imperfect, it is in the national interest that Nigeria, with its banks, startups and manufacturers making key inroads in our near abroad, not turn its back on a potential market of a billion rapidly growing souls.

Hedging on PIGB passage

Nigeria hopes a long-delayed bill to overhaul parts of the country’s oil industry can be sent to President Muhammadu Buhari to be signed into law by the end of March, the head of a parliamentary petroleum committee said on Friday. The Petroleum Industry Governance Bill is the first part of a larger piece of legislation, known as the Petroleum Industry Bill, to pass through parliament. The PIB, debated for over a decade, was broken up into sections to help it pass into law more easily. The House of Representatives in January passed a version of the PIGB which was the same as one approved by the Senate last year the first time both houses have approved the same version of the bill. It needs the president’s signature to become law. Hopefully, by the end of the month, the National Assembly will transmit it to the president for assent, said Senator Tayo Alasoadura, who chairs the upper house of parliament’s committee on upstream petroleum.

If the way the Presidency has gone about crucial legislation in the recent past is anything to go by, we are not holding our breath on this. However, we will hold out a hope of being pleasantly surprised in this regards and have the bill that will send desperately needed positive signals in the midst of a plethora of negative signals to the global economic community.

Mining as the latest fault line in the row over fiscal federalism

The Mines and Steel Development ministry says any state that bans miners from operating in its jurisdiction could lose its share of the 13 percent mining derivation revenue. O’Seun Adewale, the technical adviser to the minister told the News Agency of Nigeria that the ministry had written to states that stopped legal miners from operating in their jurisdictions, warning them that mining was on the exclusive list. The 13 percent derivation revenue is shared among states that are active in the mining of solid minerals, just like their counterparts in the oil and gas producing areas. Lagos and Ebonyi recently banned legal miners from operating in their jurisdictions due to environmental issues and the non-payment of mineral revenue.

States do not feel invested in mining because while they bear the physical and environmental costs of production, they do not maximise the profits in terms of revenue, a large portion of which accrues to the federal government. These challenges will persist until states are allowed to legislate on mineral rights and earn directly from the sale of minerals.

Watching out for castles in the sky

The Energy Commission of Nigeria on Monday says electricity generation growth will reach 100,000MW by 2030. Prof. Eli Bala, the ECN’s Director-General, said in a News Agency of Nigeria interview that the projection would be possible with an annual economic growth rate of 7 percent and a steady implementation of the national energy plan by the Federal Ministry of Power, Works and Housing. “With the incremental power programme; every time, every year, we must have an increment in power generation. We will also increase our capacity to transmit as well as the capacity to distribute. So I think we are on course, although it is not easy. Very soon, we will get to a level where we will have a 100,000 megawatt or 100 gigawatts by 2030 and the economy growing at the rate of about 7 percent annually, he said.

There is not another way to put this-this is a pipe dream and one of those castles in the air that Nigerian officials love to build for the people close to elections. Such pronouncements should be discounted and discountenanced by pragmatic Nigerians.

Ghana on worrying debt path

Ghana is set to name four banks as lead advisers for a planned sale of up to $2.5 billion of Eurobonds, expected by June, sources close to the transaction said on Tuesday. The exporter of cocoa, gold and oil is seeking to raise $2.5 billion to pay off debt and finance its 2018 budget. Standard Chartered Bank, JP Morgan, Bank of America and Citibank will advise on the bond sale, Reuters reports quoting unnamed sources said, with Fidelity Bank and IC Securities participating as local partners. The news agency says the lenders would be meeting Ministry of Finance officials this week to finalise details of the planned transaction. Ghana is in its final year of a $918 million IMF credit deal under which it is aiming to reduce the budget deficit, inflation and public debt, which hit 68 percent of GDP last year.

Over the past decade, many African countries have been busy in the debt markets and this is nearing a crisis situation. At the end of 2016, Ghana’s debt to GDP ratio had risen to 73.4 percent which is huge compared to Nigeria’s ratio of 18.6 percent. Both economies did have differing fortunes in 2017, with Ghana’s economy growing throughout the year while Nigeria struggled to exit a recession. Both countries are trying to reduce their debt-service bills by converting mainly local debt into cheaper foreign borrowing. However, on the negative side, both Nigeria and Ghana appear to be borrowing to fund recurring expenditure rather than infrastructure and other capital projects.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Show Buttons
Hide Buttons
Powered by Live Score & Live Score App