Cheap oil is causing a currency crisis in Nigeria. Banning imports is no solution

MORE than 30 years ago, a young general swept to power in the fifth of Nigeria’s military coups since independence in 1960. The country he inherited was a mess: bled dry by pilfering politicians within and hammered by falling oil prices without. Last year that general, Muhammadu Buhari, became president again—this time in a democratic vote. The problems he has inherited are almost identical. So are many of his responses.

In the eight months since Mr Buhari arrived at Aso Rock, the presidential digs, the homicidal jihadists of Boko Haram have been pushed back into the bush along Nigeria’s borders. The government has cracked down on corruption, which had flourished under the previous president, Goodluck Jonathan, an ineffectual buffoon who let politicians and their cronies fill their pockets with impunity. Lai Mohammed, a minister, reckons that just 55 people stole $6.8 billion from the public purse over seven recent years.

Mr Buhari, who—unusually among Nigeria’s political grandees—is said to have just $150,000 and a couple of hundred cattle to his name, abhors such excess. As military ruler he jailed, fired or forced into retirement thousands of bureaucrats whose fingers had been in the till. This time, the Economic and Financial Crimes Commission (EFCC) has arrested dozens of bigwigs, including a former national security chief accused of diverting $2.2 billion. The EFCC has a poor record of securing convictions; but a single treasury account has been introduced to try to stop civil servants siphoning off cash. And agencies which may not be remitting their fair share to the state are having their books trawled by Kemi Adeosun, the finance minister.

Such measures are doubly important because the economy is swooning along with the oil price. The sticky stuff directly accounts for only 10% of GDP, but for 70% of government revenue and almost all of Nigeria’s foreign earnings.

Oil’s price has fallen by half, to $32 a barrel, in the months since the new government came to power, sending its revenues plummeting. Income for the third quarter of 2015 was almost 30% lower than for the same period the year before, and foreign reserves have dwindled by $9 billion in 18 months. Ordinarily there would be buffers to cushion against such shocks, but Mr Jonathan’s cronies have largely squandered them. Growth was about 3% in 2015, almost half the rate of the year before and barely enough to keep pace with the population. The stockmarket is down by half from its peak in 2014.

Domestic oil producers are feeling the pinch worst. Many borrowed heavily to buy oilfields when crude was worth more than $100 a barrel, and are now struggling to pay the interest on loans, says Kola Karim, the founder of Shoreline Group, a Nigerian conglomerate. This, in turn, threatens to create a banking crisis. About 20% of Nigerian banks’ loans were made to oil and gas producers (along with another 4% to underperforming power companies). Capital cushions are plumper than they were during an earlier banking crisis in 2009; but, even so, bad debts are mounting and banks that are exposed to oil producers may find themselves in trouble. “It wouldn’t surprise me if one or two went down,” says a senior banker in Nigeria.

The government’s response to the crisis has been three-pronged. First, it is trying to stimulate the economy with a mildly expansionary budget. At the same time, it is trying to protect its dwindling hard-currency reserves by blocking imports. Third, it is trying to suppress inflation by keeping the currency, the naira, pegged at 197-199 to the dollar. Only the first of these policies seems likely to work.

The budget, which includes a plan to spend more on badly needed infrastructure, is a step in the right direction. Although government revenues are under pressure from the falling oil price, Mr Buhari hopes to offset that by plugging “leakages” (a polite term for theft) and taxing people and businesses more. That seems reasonable. At 7%, Nigeria’s tax-to-GDP ratio is pitifully low. Every percentage point increase could yield $5 billion of extra cash for the coffers, reckons Kayode Akindele of TIA Capital, an investment firm. Mr Buhari also plans to save some $5 billion-$7 billion a year by ending fuel subsidies—a crucial reform, if he sticks with it. Even so he will be left with a deficit of $15 billion (3% of GDP) that will have to be filled by domestic and foreign borrowing.

Yet his policies on the currency seem likely to stymie that. The central bank has frozen the naira at its current overvalued official rate for almost a year. The various import bans (on everything from soap to ballpoint pens) are supposed to reduce demand for dollars, but have little effect. Businesses that have to import essential supplies to keep their factories running complain that they have been forced into the black market, where the naira currently trades at 300 or more to the dollar. Several local manufacturers have suspended operations. International investors, knowing that the value of their assets could tumble, have slammed on the brakes and some have pulled money out of the country just as their dollars are most needed (see chart).

Nigeria is fortunate in having low levels of public debt (less than 20% of GDP), but it is not helped by high interest rates, which mean that 35% of government revenue goes straight out of the door again to service its borrowings. It would not take much to push it into a debt crisis.

Frustratingly, this crunch is one that Nigeria has been through before—under the then youthful Mr Buhari. Then, as now, he refused to let the market set the value of the currency. Instead he shut out imports, causing the legal import trade to fall by almost 50% and killing much of Nigeria’s nascent industry in the process. Between 1980 and 1990, carmaking fell by almost 90%. Today, as in the 1980s, the president is making a bad situation worse.

SOURCE: The Economist

How I make N300,000 monthly begging in Lagos – Drug Suspect

A suspected drug addict arrested by the Rapid Response Squad of the Lagos State Command has disclosed that he made over N300, 000 monthly from begging in Ikeja.

Kehinde Olatubosun, 56, from Ibadan, Oyo State, was arrested on Saturday night along with 18 other drug addicts at a joint in Ipodo, Ikeja.

A team of Rapid Response Squad Decoy had on Monday night traced a stolen phone to the joint, leading to the arrest of a three-man gang mobile phone thieves, three hard drug peddlers and 13 drug addicts, the police said in a statement on Sunday.

Mr. Olatubosun stated that he made over N10, 000 daily begging at the Mobolaji Bank Anthony Roundabout; beside the Lagos State University Teaching Hospital; Toyin Street; and Opebi.

“All days of the week, I’m always in Mobolaji Bank Anthony Roundabout, Toyin Street roundabout and Opebi. At times, I collaborate with beggars. Whatever we make, we share but I get a larger share,” said the suspect.

“What I do is that, I get LASUTH drug prescription papers. I get it from their waste bin. With this in my hand, I convince motorists, passengers and passersby that I have a relative who is in dire need of money to buy drugs and I show them the prescription papers.

“This is what I have been doing since I was deported from Germany in 2004. Before the deportation, I was working as Electrical Engineer in Bauhusa, Colon, Germany. I was in Germany for 12 years before I was deported.”

Mr. Olatubosun‎ said his deportation from Germany was after he was caught in possession of hard drugs.

“I have four children. Two are in Germany with my wife. One is in Texas, United States and another in Nigeria,” he said.

“Unfortunately, all the money I make from this begging goes into drugs. Day after day, I am always there, seven days a week. I make more money on Fridays, Saturdays and Sundays. I make more than N10,000:00 on weekends.

“As I speak to you, I’m not on drugs but I am experiencing withdrawal symptoms, that is, the effect of not taking drugs for sometimes.”

The suspect said he was at the Ipodo drug joint when the RRS operatives raided the place and added that it was the first time he would be arrested.
“I am praying that RRS release me. I promise I won’t go back to drug again. Where I live presently was given to me by my in-law.”

Another drug suspect, Dada Ajayi, arrested at the drug joint during the police raid, said that addiction had destroyed his life.

“‎I am trying to get over it now; drug has been the cause of my stagnation in life,” said Mr. Ajayi, 48, who said he had been hooked on drugs for over 17 years.

“‎I frequent that joint because I have nowhere to go. I have lived the better part of my life consuming drugs.

“As I talk to you, the remains of my wife is in Ikeja mortuary. She was taken to Lagos State University Teaching Hospital, Ikeja. I was asked to bring N150,000 for surgery but I didn’t have N50,000 on me then. She died in the process.

“Right now, I have lost my family because of my drug addiction. I don’t know where my children are or how to start my life again. I can’t stop going to that drug joint because it is the only place where I get consolation. It is the only place I’m at peace with myself.

“If anybody want to help us, they should arrest the drug barons or dealers. Arresting us won’t solve drug problem because without the sellers there won’t be the takers.

“You arrest the dealers, I mean the merchants, then, you have cut the supply and thus saved us from getting drugs. Without that, we would always find our ways there whenever we are released.”

SOURCE: Premiumtimesng

How President Buhari is hurting Nigeria’s electoral process

Perhaps, because the more  vocal sector of Nigeria’s civil society has been co-opted into the ruling All Progressive Congress, APC, Federal Government, there is a creeping danger into Nigeria’s electoral system as President  Muhammad Buhari has serially  refused to obey the provisions of the 1999 Constitution regarding the composition of the Independent National Electoral Commission, INEC, the same body that was reformed and structured to deliver an election that ironically brought him to power.  

In the latest in a long series by Sunday Vanguard, it has been discovered that the Resident Electoral Commissioner, REC, for Kogi State, appointed on December 16, 2010,  and whose  tenure should have ended on December 16, 2015, is still sitting  pretty in office.   Either because of an oversight, or a deliberate base appeal to  primal and  ethane-religious considerations, or both, Hussaini Halilu Pai, is still in office over 39 days after the expiration of his tenure. This, at a time when  the statutory 13-member Commission is not in place, leading to half-baked and sometimes confusing policy statements from INEC.   This report will show the danger in what President Buhari is doing and why men and women of goodwill must guide him appropriately before Nigeria’s electoral system (of which he is a major beneficiary) is sent to the dogs.

Hussaini Halilu Pai, appointed December 16, 2010, and was expected to have finished his tenure by December 16, 2015, is still in office as Resident Electoral Commissioner, REC, for Kogi State.   Mind you, that was the state where the controversial governorship election produced an outcome that has confounded even the 1999 Constitution of the Federal Republic of Nigeria.   He hails from the Federal Capital Territory, FCT, Abuja.   Vanguard’s Boluwaji Obahopo, correspondent in Kogi State, upon inquiry from Kogi State office of INEC last Friday,  confirmed authoritatively that Halilu Pai was still in office operating as REC for Kogi State.

Two others, Dr. Kwanga Godwin M., from Benue State, and Mr. Akinyemi Orebiyi, from Ogun State, who were also appointed on the  same date of December 16, 2010, have since left the employ of INEC and moved on.

The question is, why is President  Muhammad  Buhari still keeping Hallilu Pai in office some 39days since the  expiration of his tenure?

Perhaps, it is traditional with the emerging realities of the modus operandi of Mr. President in his appreciation of the fundamentality of the electoral process as a critical bastion of democracy which is expected to lead to good governance.

But as was the case with Madam Amina Zakari, so it is now with Pai today.   Another question is, what infraction would President Buhari come up with again, in this macabre appreciation of the real essence of obedience to rule of law?

Many and not a few stakeholders in the politically effervescent Kogi State are wondering – particularly INEC staff – that what started in the national headquarters of INEC Abuja where an “acting Chairman” of INEC was unconstitutionally imposed and continued illegally in office even when her tenure ended on the July 21, 2015, and the National Assembly kept quiet, has now been extended to Kogi State that now has an “acting Rec” on account of the unofficial extension of the Kogi State REC’s tenure, perhaps earned, according to stakeholders, from events arising from the recent inconclusive elections in the state.

This special REC, whose conditions for appointment to the office, as clearly indicated in the Constitution, requires clearly defined consecutive steps beginning at the National Council of State and Senate approval. Consequently, not a few tongues have been kept wagging in speculative anxiety over how the political appointee earned the special treatment and the very first of its kind. Inside sources at the INEC headquarters confirmed that the REC had written a hand-over note just as the then “acting chairperson” also claimed that she was not aware of anything as she was driving home when she received a call to continue in office without due process.

No doubt, the failure of Nigerians to rise up against the first unconstitutional retention of a National Commissioner as an “Acting chairperson” of the electoral commission despite the attrition of her tenure of office, has now been taken to the states starting with Kogi.

Insiders in INEC say that what is happening in Kogi with a REC whose tenure had ended but is still staying in office could not have happened under the leadership of Professor Attahiru Jega who could not be ordered by any authority to allow someone whose tenure had ended to remain in office in violation of the five-year tenure.

A senior official of INEC in Abuja revealed further that were it to be under the regime of Jega, a letter of notice would have long been written to the REC to hand-over to the Administrative Secretary but that “right now nobody could be sure of independence of the commission”.

Regrettably, the National Assembly since the inception of this administration, has been silent on the many unconstitutional acts with respect to INEC.

It was pointed out by those who make such allusions that the former “acting Chairperson “ of INEC   Mrs Amina Zakari, worked in legal limbo, because she did not have a constitutionally defined mandate until she was recently re-appointed.

Observers of the electoral arena find such constitutional breaches deeply disturbing because under a very contested political atmosphere, constitutional breaches are grave impeachable offences and can be destabilising for political development. The current government has been plagued by several constitutional missteps regarding INEC, apart from the unguarded removal of an acting   “chairperson” as determined by the autonomous decisions of the Commission, the President then allowed the Commission to function with just seven individulas without the defined constitutional board of 13 members and perpetuated this state of affairs till date, making all actions and decisions of the Commission susceptible to legal challenges.

In the same vein, well over 20 states according to sources in INEC, have no RECs yet to be appointed.

COMPOSITION OF INEC BOARD STILL INCONCLUSIVE

The government’s early constitutional breaches when it had not appointed Attorney General were somewhat attributed to that void but since that office now has a Senior Advocate of Nigeria, SAN, as the chief legal officer of the country, how do we explain what is going on now in INEC where seven Nigerians are now running the affairs of a constitutionally provided 13-man board from which a quorum of 5 minimum members can sit to take decisions on election matters.

If section 159 of the constitution   says one third of a full board of 13 – which a Federal High Court had declared to be 5, the question then is, does one third of the current seven INEC commissioners as configured, give us five members?

Therefore, why is it that the AGF is not giving the president an unimpeachable counsel on the implications of such constitutional breaches, particularly in an atmosphere of internal and external political rancour surrounding the APC government.

The APC, which is a merged party with many internal tensions and clear obvious external tension from an opposition party that is struggling to retain its political relevance, cannot afford the luxury of constitutional violations as this is a dangerous weapon in the hands of its opponents.

INEC is one of the areas where the APC government has however continued to portray itself as inelegant in abiding by statutes and regulation.

For instance, it took the spooking reminder of a various editions of Sunday Vanguard and that of a SAN, Barr. Femi Falana, to inform the government that a subsisting court order required INEC to have its full complement of board members in order to legally conduct elections.

However – and embarrassingly so – the government only made minimalist gestures in addressing the matter by appointing an incomplete board to conduct the affairs of the Commission.

And even at that, Sunday Vanguard discovered that there was no proper background check on two of the commissioners in the light of paragraph 14(2) of the constitution.

SOURCE: Vanguardngr

FG Increases Price Of Kerosene To N83 Per Litre

Vanguard reports that the Petroleum Products Pricing Regulatory Agency (PPPRA) released its product pricing template on Sunday, January 24, in Abuja.

The agency stated that the N83 per litre price applies only to the Nigerian National Petroleum Corporation (NNPC). That means that other petrol stations and dealers can sell kerosene higher than the stipulated amount.

It would be noted that the hike in the price of kerosene came at a time when the price of crude oil dropped to record low, with the price of petroleum products dropping significantly in a number of countries.

The PPPRA’s template showed that at N83 per litre, the government will be making a gain of N10.72 on every litre as it puts the expected open market price, which is the landing cost plus total margins at N72.28 per litre. The expected open market price is the prevailing open market rate for the product in Nigeria, after taking certain costs into consideration.

The template put the landing cost of ‎the product at N57.98 per litre, while the total margin was put at N14.30. The retailers’ margin was put at N5 per litre; transporters at N3.05 per litre, and dealers at N1.95 per litre.

It further put the bridging fund at N5.85 per litre; marine transport average at N0.15 and Administrative‎ Charges – N0.15.

According to the PPPRA’s template, the official ex-depot price, which depot owners would sell to marketers, is N68.70 per litre. The official ex-depot price for collection is N73 per litre, while ex-coastal price is N68.02 per litre.

Furor In Anambra APC As Dismissed Senator Ekwunife Seeks Party's Nomination

The Anambra State chapter of the All Progressives Congress (APC) is gripped by grumbling after former Senator Uche Ekwunife ditched her political party, the Peoples Democratic Party (PDP), defected to the APC, and blanketed the state with her campaign posters seeking nomination to represent the APC in a forthcoming senatorial race.

Ms. Ekwunife contested the 2015 senatorial election on the ticket of the PDP, and was declared the winner by the Independent National Electoral Commission. However, on December 7, 2015, a panel of the Court of Appeal in Enugu nullified her election, ruling that her selection as the PDP’s senatorial candidate was irregular. The appellate court ordered INEC to conduct fresh electionswithin 90 days.

In a dramatic move yesterday, Ms. Ekwunife announced her resignation from the PDP. Her campaign then unveiled campaign posters depicting her as seeking nomination to represent the APC in the forthcoming rerun.

“The manner in which Chief Mrs. Uche Ekwunife is trying to buy the APC nomination is a recipe for disaster for the party,” one APC official told SaharaReporters. He described Ms. Ekwunife as “an unprincipled politician who is using everything at her disposal to contest the [senatorial] election as the APC flag bearer now that it is clear that Dr. [Chris] Ngige will not run.”

Another APC member complained that the rusticated senator was using her ties to some APC top shots in Abuja to bulldoze her way to a nomination. “How can she resign from PDP yesterday and by today her [campaign] posters as a so-called APC member are all over the place?” He accused Ms. Ekwunife of spreading false rumors that President Muhammadu Buhari was backing her ambition to be the party’s candidate in the senatorial contest. “Her minions have been claiming that her move to APC has been approved by President Buhari. And that her election will be funded by Governors Ifeanyi Ugwuanyi and Tambuwal [of Enugu and Sokoto states respectively],” he stated.

A top APC official in Anambra State however allayed the fears of party members who have expressed disenchantment over what he called Ms. Ekwunife’s “political antics.” “I can assure party members and all APC members that President Buhari has nothing to do with this political cesspool of corruption and immorality,” said the official. According to him, “the time for substitution of candidates has since closed under the Electoral Act. So if she’s seeking the ticket of the APC or any other party, she is just wasting her time and money.”

Another party member, a lawyer, echoed the sentiment. He stated that both the Court of Appeal and the Supreme Court had long decided that a fresh election was only for persons who were qualified to contest the nullified election, and under the same political parties they had contested.

“The courts have held on several occasions that there is no room for substitution of new candidates or introduction of more political parties,” said the lawyer.

A PDP member in Anambra State described Ms. Ekwunife’s defection to the APC as good riddance. “Just a few months ago, this desperado used [former First Lady] Patience Jonathan to hijack the PDP senatorial ticket. She used the influence of Dame Jonathan and Prince Arthur Eze to rig her way to the Senate where she was until the court sacked her. Now, she has gone to fool the APC by dressing like an Alhaja,” he said.
SOURCE: Saharareporters

Jonathan was the Idi-Amin of CBN, says Soludo

Charles Soludo, former governor of the Central Bank of Nigeria (CBN), says former President Goodluck Jonathan ran the apex bank like Idi-Amin Dada of Uganda ran his country. Idi-Amin, who ruled his country between 1971 and 1979, was regarded as a dictator based on his style of governance.
 In an interview in the current business edition of The Interview, the former CBN governor said the bank was “the ATM of the presidency,” under Jonathan.‎ “Imagine a scenario where a president can order the CBN to create an intervention fund for national stability and CBN literally ‘prints’ say, N3 trillion, and doles it out cash to the Presidency to prosecute an election campaign or for just about anything he fancies. It is a scary thought,” he was quoted as saying. “We are going down a dangerous path that ruins the economy. I don’t know any other country where such is tolerated, except perhaps what I watched in a movie about Idi Amin and his governor of central bank.
“Recent revelations regarding the ‘arms-gate’ (short for the $2.1billion scandal involving former NSA Sambo Dasuki) and the apparent abuse of the CBN as ATM by the presidency should get reasonable people thinking.” He said it was regrettable that in spite of the bank’s statutory independence, it continues to be a victim of high-wire politics, often “electrocuting” the bank’s leadership.

SOURCE: thecableng

Diversion of arms funds, heartless – Aregbesola

The Governor of Osun, Ogbeni Rauf Aregbesola has on Friday described the diversion of money meant for procuring arms for Nigeria soldiers to fight insurgency as a monumental scandal.

The Governor stated this at the 2016 Armed Forces Remembrance Day and laying of wreath in honour of fallen Soldiers held at the State House of Assembly in Osogbo.

He commended  the efforts of President Muhammadu Buhari in unravelling the crime.

He insisted all the guilty must be brought to justice to forestall future occurrence.

This year’s Armed Forces Remembrance is the first to be held at the State House of Assembly after the cenotaph was constructed next to the parliament.

The Governor stressed that the symbolism of holding the ceremony at the military cemetery is impeccable but bringing it to the parliament is of even greater significance.

Aregbesola added that the Parliament is the symbol of authority of the people and so the fallen soldiers “being celebrated today in the midst of the people for their gallantry and supreme sense of patriotism.”

He noted every well-meaning Nigerian is of the hope that all those involved in the mismanagement of the arms fund will receive full retribution.

Aregbesola lamented the situation where some of the soldiers caught and indicted have been pardoned and some losing their commission while others face uncertain future, said it is pertinent that a fresh inquiry be set up so that justice ‎will be done.

According to him, “It is even a monumental scandal of unimaginable proportion that funds meant for procuring arms for soldiers are shared among members of the Peoples Democratic Party (PDP) without the least compunction.

“I commend the efforts of President Muhammadu Buhari in unravelling this heinous crime and I sincerely hope that all those involved will receive full retribution. Some of the soldiers caught in the maelstrom and indicted have been pardoned but some have lost their commission while others face uncertain future.

“Considering the circumstances of this unusual event, it is pertinent that a fresh inquiry be set up so that justice will be given to all those involved and our gallant soldiers will not be punished unjustly.”

On the roles of soldiers in the Ekiti and Osun governorship elections in 2014 which the committee set up by Military has submitted it’s report, Aregbesola said that the deployment of soldiers was avoidable.

“‎The military high command also set up an inquiry into the roles soldiers played in the Ekiti and Osun governorship elections of 2014. The committee has submitted its report and made recommendations.

“As a victim of the reckless deployment of soldiers in those elections, I will say it was an avoidable deployment of soldiers for a civilian duty and for which there was no threat beyond the capability of the police and other security agencies”. The Governor stated.

Aregbesola, not oblivious of the fact that soldiers are trained to obey a command from a superior, described as a dilemma a situation where a soldier fails to carry out instruction.

He added that, for a military command to manipulate an election in favour of a particular candidate and harass opposition candidates and members is unconstitutional and abuse of the military.

‎The Governor said that military high command should address the abuse of soldiers  by insulating them from carrying out unlawful commands so that the military itself will not be subject to abuse by any government in power who might be drunk with the idea that the military is the armed wing of its political party.

SOURCE: thenationonlineng