The Nation Newspaper

Tag: bumpy

  • Bumpy road ahead for naira over hazy indicators

    The next three months will be tough for the naira against foreign currencies. The impact of the weekly dollar interventions by the Central Bank of Nigeria (CBN) at keeping the naira stable in the official and parallel markets is likely to wane in the months ahead in the face of new challenges. The rising election spending, drop in crude oil prices and exit of portfolio investors point to looming trouble. COLLINS NWEZE captures the state of the local currency and CBN’s measures to protect it.

    A currency speculator, Abdulkadir Tule, was preparing for the Zuhri (2’oclock) prayer when he got a text message on naira’s sudden fall against the dollar.

    His business partner, Abubakar Ahmed, had on Thursday November 29, informed him that the naira was exchanging at N370/$ in the parallel market. It was the local currency’s lowest position since August last year.

    Tule was not moved by the information since the local currency has remained stable for over a year, reducing transaction margins for speculators.

    But the information was a reminder that the naira was again faced having major stability challenge that could ignite the February 2017 debacle when it exchanged at N520/$ at the parallel market.

    To speculators like Tule, who buy dollars for keep and resell when it appreciates, the foreign exchange (forex) business has become nightmarish due to Central Bank of Nigeria’s (CBN’s) weekly dollar interventions that have prevented the naira from drastic fall.

    The naira has been exchanging at N306/$ in the official market, but at the parallel market, it is likely to face major volatility challenge in the months ahead.

    The weakening of the naira at the parallel market has been linked to drop in crude oil prices due to oversupply. The opening up of the campaigns for parties ahead of the 2019 general elections by the Independent National Electoral Commission (INEC) has also affected the naira’s position as spending is expected to rise. These occurrences are deterring foreign investors from bringing in dollars, traders claimed.

    Global prices of oil have dropped more than 20 per cent this month. Traders fear that the CBN may not have enough reserves to defend the currency against a possible further weakening of oil prices as foreign investors have been pulling money out of her local assets and new investments are not coming.

    The CBN has been using up foreign exchange reserves to keep the naira stable, spending $2.2 billion in October to prop up the currency as investors have also abandoned the market for rising interest rates in developed economies.

    An economist, Bismark Rewane, explains why the naira is on the downside. “As oil prices dipped, the CBN has prioritised stability of exchange rate in the official market. It has drawn an exclusion list of avoidable imports from being funded in the official market. With the foreign exchange demand for the items transferred to the parallel market, rates in that market have soared”.

    Besides, other factors like terms of trade, inflation differential, public debt, current-account deficits, interest rates, political stability and the overall economic health determine the exchange rate of a currency.

    The fall in crude oil prices has reduced the country’s dollar earnings, making it difficult for the CBN to fund imports. Record oil prices had helped Nigeria to build the largest currency reserves in sub-Saharan Africa. The reserves peaked at $63 billion in September 2008. But, after attaining a record-high of $147 in July of that year, Nigeria’s crude oil prices – bonny light, have plummeted.

    As at December 2, oil was trading below $59.52 per barrel and the foreign reserves level has declined to $44 billion, $19 billion lower than the September 2008 figure.

    A CBN data showed foreign reserves stood at $41.9 billion as of November 27, down 12.3 per cent from a peak of $47.8 billion reached in June.

    A large chunk of the reserves went to Bureaux De Change (BDCs) operators as weekly allocations to help close the rising gap between the official and parallel market rates. The 4,000 BDCs got $20, 000 weekly from the International Money Transfer Operators (IMTOs) and will from December 6, get additional $15,000 weekly from the CBN, to in line with the new cash sales plan to address rising dollar demand during the Yuletide.

    Today, oil sits at $59.52 a barrel, but the Organisation of Petroleum Exporting Countries (OPEC) predicts the price won’t return to above $100 until 2040. This forecast has continued to put the naira under severe pressure from internal and external factors but the CBN is not giving up.

    Analysts said dollar shortages could worsen, as investors close their books for the year unless the CBN increases its intervention in the forex market. The CBN has been raising treasury yields to lure offshore funds.

    Head Currencies Market at Ecobank Nigeria, Olakunle Ezun, said the forex market has lost its drive for profitability and is no longer exciting for players. He said the boom time for forex dealers was over after the CBN kept its dollar intervention promises.

    Ezun said: “In terms of forex business, it is not as exciting as it used to be. What makes the market exciting is volatility. The operators are not always happy when market becomes stable, because their profit margin drops. The profit-taking opportunity in the market is very lean at present and so are the turnover and spread.”

    The local currency crisis was triggered by the dip in crude oil prices, which adversely affected, he said, foreign reserves and created acute dollar shortages. To curb these dollar shortages and stabilise the naira against foreign currencies, the CBN regularly pumped dollar into the market to narrow the margin between the official and black market rates. The measure has not only led to convergence between the parallel and black market rates, it has chased speculators out of the market.

     

    CBN’s plan to save naira

     

    The CBN has imposed some currency control measures to save the naira. In June 2016, it curbed access to the interbank currency market for importers bringing in a variety of goods. In an effort to conserve its dollar reserves, the bank said importers could no longer get hard currency to buy 41 items, ranging from toothpicks and rice to steel products and private jets.

    Other measures it took include the first Naira-Settled Over-the-Counter (OTC) Forex Futures Market (FFM) launched with FMDQ OTC Securities Exchange and the planned resumption of dollar sales to the BDCs.

    The FMDQ OTC Securities Exchange (FMDQ) is an organisation with the strategic intent of bringing about revolutionary changes and fostering the development of the financial markets.

    The Naira-Settled OTC Forex Futures are non-deliverable forwards, or a contract where parties agree to an exchange rate for a pre-determined date in the future, without the obligation to deliver the underlying dollar on the maturity/settlement date. On the maturity date, it will be assumed that both parties would have transacted at the spot forex market rate. The party that would have suffered a loss with the spot forex rate will be paid a settlement amount in naira to ensure that both parties enjoy the rate that had been guaranteed to each other through the OTC Forex Futures.

    FMDQ’s Managing Director/Chief Executive Officer Bola Onadele Koko said: “The Naira-Settled OTC Forex Futures product is a major milestone development in the evolution of the Nigerian financial markets. The Futures market is an opportunity to transform risk into certainty – a major paradigm shift in the financial markets landscape.

    “This innovation offers opportunities for government, businesses, pension fund administrators, investors and individuals among others to hedge (not speculate) to cope with exchange rate risk.”

    Association of Bureaux De Change Operators of Nigeria (ABON), President Aminu Gwadabe, said other measures initiated by the CBN including the sustenance of dollar supply to over 4,000 BDC operators across the country through the MTOs forex window have helped the naira, he noted.

    ABCON has ensured that its members continue to make dollar accessible to critical end-users like travellers demanding personal and business travel allowances, school fees and medical bills payment among others. He said the operation of IMTOs was part of the CBN’s efforts to liberalise the forex market, boost liquidity and make dollar more readily available to low end users.

    He said although declining global oil prices should fundamentally lead to massive depreciation, the CBN’s’ commitment to the defence of the naira keeps providing stability for exchange rates at different segments of the forex market.

    Gwadabe said the coming of Investors and Exporters (I&E) Forex Window, was also part of CBN’s efforts to further develop the Nigerian forex market and improve market structure.

    But, an executive of the Rockview Integrated Limited, Michael Azu, said the sharp rises in the dollar exchange rate were in the parallel market as the volatility has not extended to the official market where the most economically important transactions are funded.

    “Although the dollar exchanged for N370 at the BDC, the dollar has continued to exchange at N306 to dollar since March 2016,” he said.

    To him, the CBN has taken a position – backed by the administration of President Muhammadu Buhari – which is to protect the official market from speculation and damaging devaluation.

    “But the reality is that, as a people, we have to make adjustment in our tastes. Not only should we be ready to replace foreign products with local substitutes; we must be prepared to let go of some exotic products, even where there is no direct alternative. It is part of the demand of building a virile country and a sustainable economy,” he said.

     

    Why crisis persists

     

    Rewane believes that besides the dwindling crude oil prices and reduced forex earnings, the CBN’s decision  to peg the naira in the official market, resist further devaluation, lower interest rates and increase credit to the real sector has heightened the exchange rate crisis.

    Although pundits’ debate whether the naira is overvalued or undervalued, the real issue is that the CBN’s control of the currency prevents it from being responsive to economic fundamentals. “While every economy is controlled in some way, the CBN’s refusal to allow the exchange rate and other relative prices adjust to terms of trade shocks, seems to be disrupting the country’s fundamental economic structure,” Rewane said.

    To him, the sharp decline in oil prices has created trade shocks experienced by many oil producing countries and this has led to the readjustment of most emerging market currencies.

    But, this is not the first time Nigeria has suffered from an overly controlled currency. From 1981 to 1985, during a similar period of control and oil shocks, relative prices did not adjust to restore internal and external balances. This led to low production, economic distortions, massive retrenchment and poverty.

    In contrast, from 1986 to 1991, when the Structural adjustment Programme (SAP) was introduced, the exchange rate was flexible. Economic data showed that there was increased output, better employment figures and less poverty. Both periods had negative oil price shocks.

     

    CBN’s take on naira

    CBN Deputy Governor (Corporate Services) Adamu Edward Lamtek in a personal statement at the Monetary Policy Committee (MPC) meeting released by the CBN confidence in the economy, said  was building as the naira exchange rate continues to be stable and the premium between the BDC and interbank market segments narrows.

    “The parallel market premium continues to shrink as legitimate foreign exchange transactions migrate to the formal market. It does, therefore, appear that the bold reforms of the Central Bank on forex policy and in the foreign exchange market in 2016 and 2017 are paying off. It is gratifying that the benefits of these reforms have stretched beyond the stability of the naira exchange rate,” he said.

     

    Stakeholders’ stand

     

    CBN Governor Godwin Emefiele called for a change of lifestyles by Nigerians to sustain naira’s recovery against the dollar. He said the size of Nigeria’s reserves and the value of the naira critically depend on our lifestyles and on the value and types of imports we allow into the country.

    But, to speculators, stability in the forex market is bad news anyday. They prefer volatility which makes them to declare more profits.

    Afrinvest West Africa Plc Managing Director, Ike Chioke, believes the incorporation of a long-term diversified strategy in fiscal policy is required to cushion shocks in various segments of the economy.

    For him, the persistent pressure on the naira could have been minimised if a counter fiscal policy had been developed, as the CBN cannot continue to defend the naira with foreign reserves.

    “To reduce this pressure, an inward looking policy (tax incentives, infrastructure development and production subsidy) should be emphasised to reduce the dependence on imported goods”, he said in emailed note to investors.  He explained that asides from oil receipts, the development of the Agricultural sector will in the short term reduce the forex burden of food imports and on the long run, enhance foreign receipts if its comparative advantage in the sector is efficiently deployed.

    Gwadabe said the country has not been able to build strong buffers to protect the economy against shocks as done in other climes.

    He said: “The United Arab Emirates has over $400 billion in their reserves and that is a very big buffer for them as it protects their local currency at any given time and that is what I would want to see in Nigeria. Don’t forget that without the buffers, there is no way one can defend the local currency.”

    “As a Nigerian, anytime I see the gap increasing, I’m worried and I say that this gap has to be reduced. The rising gap between both markets is fueled by compromise. Nigeria is an economy where you see compromise. Speculators are the biggest challenge facing the naira.

    “Don’t forget that speculation is on its own a business. Once the CBN follows one road, they will find a way to frustrate the policy and ensure the survival of their business. But with increased transparency and liquidity, the activities of speculators will be reduced and volume of parallel market operators will also be reduced. We should move from the era of dollar allocation to think of how to bring in the dollars”.

  • 2014: Slow, bumpy path to creativity

    2014: Slow, bumpy path to creativity

    But for some private sector operators, the last one year would have been too slow and bumpy for any significant growth in the creative industry, reports Assistant Editor (Arts) Ozolua Uhakheme.

    THE winner of 2012 ANA Poetry Prize, Mr. Karo Okoko, writes on poetry and drama. At the close of a stint at the Ebedi International Writing Residency at Ebedi, Iseyin in Oyo State, last September, he wrote in Ebedi Review his feelings and experiences. “I have learnt quite a lot from my colleagues. They see me as a loner who is always indoor, which is not strange because that is what people think of me…and that is what I am. But, when we commune, I learn a lot of things from them. Within those weeks, I was able to write and finish a novel from the scratch, title Letter; from Her, and a play title; Pellets of Power.

    In Washington DC, United States, a Nigerian designer, Ms Patience Torlowei was honoured by the Smithsonian Museum of African Arts for winning the Earth Matters Fashion competition in September. Her entry, Lady Esther, a hand painted dress named in memory of designer’s departed mother, is an illustration of the historical situations across Africa, such as apartheid South Africa, oil spillage in Nigeria and diamond mining in Congo. It was exhibited by the museum.

    On November 5, the founder, Bruce Onobrakpeya Foundation (BOF), Dr Bruce Onobrakpeya, was also honoured by the National Museum of African Art, Smithsonian Institution, US in recognition of his significant achievement in the arts over six decades. The institute held its 50th anniversary gala during which Onobrakpeya was special guest.

    These are examples of efforts of by some individuals in the creative industry that shone like stars in their chosen fields despite seemingly lack of government support. But for the significant contributions of  individuals and corporate bodies, such as gallery owners, moviemakers, artists, publishers, writers, musicians, designers among others, the year would have ended on a very sour note for the industry.

    Rainbow Book Club, Port Harcourt, is one of the leading private bodies that shaped the industry in the preceding year with Port Harcourt winning the United National Educational Scientific Cultural Oragansation  (UNESCO) World Book Capital 2014 in April. This was in recognition of the club’s successful hosting of a book festival  yearly since 2008 in Port Harcourt, Rivers State. The festival has impacted on the reading culture of the people, especially the youth who have been exposed to writing workshops led by renowned writers. It has also attracted great literary scholars from across the globe.

    Other key players include NLNG Nigerian Prize for Literature, Etisalat Prize for Literature, African Movie Academy Awards, (BOF) Omooba Yemisi Adedoyin Shyllon Art Foundation (OYASAF), Terra Kulture, Committee for Relevant Arts (CORA), Ake Arts and Book Festival, Muson Centre, Plateau International Film Festival, Olu Ajayi Studio, Unilever, Nigerian Breweries Plc, MTN and African Artists Foundation.

    The Federal Ministry of Tourism, Culture and National Orientation’s core mandate is to promote culture and tourism as a foreign exchange spinner, income distributor, major employer, a catalyst for rural development /poverty reduction and fostering peace. But, the implementation of these is often hindered by paucity of funds, policy somersault, poor planning, red-tape and corruption.

    Yet, its vision is to position culture and tourism as leverage for economic growth and development.

    How much of these have we witnessed in the sector? How effective are the nine parastatals, departments and agencies charged with implementing of policies of the supervising ministry? How far did they fare in 2014?

    Some of the flagship events, such as Abuja Carnival, Art Expo, ARESUVA, NAFEST, National Visual Art Competition, Nigerian Visual Art World Tour (NIVATOUR), annual distinguished lectures and symposium are either dwindling in terms of regularity, participation and content or gone moribund. The National Theatre, Lagos is still a monument  bedevilled by unclear agenda of outright sale or concession of its landed property.

    Former Deputy Editor, The Guardian, Mr. Ben Tomoloju described the sector in the outgoing year as a bag of mixed blessing. He noted that most of the positive developments were driven by the sheer gut of private sector stakeholders. “The Committee for Relevant Art continued to give a good account of itself in terms of consistency in quality programming. Private production outfits came up with stage hits, such as Kakadu and Saro. The Soyinka and J.P Clark at 80 events filled a huge vacuum for literary scholarship, theatre production and their multifaceted cultural dimension. The Macmillan Literary events remain on course. The Nigerian Prize for Literature sponsored by NNLG and the Wole Soyinlka Prize for Literature in Africa organised by Lumina Foundation sustains a heritage of literary excellence at the national and continental frontiers respectively. Outfits such as the Jos Repertory Theatre, Arojah Productions in Abuja and Crown Troupe in Lagos offered great promise,” he said.

    From the states, he said Cross River, Rivers, Lagos, Osun and Ondo were exemplary in  state-funded carnival, literary and heritage events. According to him, federal cultural agencies are still on the average altogether, though there are a few with a rising profile.

    Proprietor of Terra Kulture Arts Centre, Mrs. Bolanle Austen-Peters identified theatre as a major boost in the sector with productions such as Saro the Musical 2 creating new audiences and breaking barriers. “The visual arts remained relevant with art auctions and exhibitions organised by the various galleries and auction houses. New auction houses sprung up within the period with younger clientele showing interest in art collection. There was also a significant interest in Nigerian art by foreigners hence an increase in the number of exhibitions of Nigerian art outside the country,” Mrs Austen-Peters said.

     

    Centre for Black and African Arts and Civilisation (CBAAC)

    Expectedly, the Centre for Black and African Arts and Civilisation (CBAAC) held its conferences and colloquiums across the country and the Diaspora during the year under review. As early as January 14 it held the 8th Pan African Congress at the University of Witwatersrand, Johannesburg. It was collaboration with the Centre for Advanced Studies of African Society, Cape Town, South Africa.  Theme was Mobilizing Global Africans, for Renaissance and Unity: The Social and Economic Conditions of Global Afro-Descendants.

    It also partnered Pan-African Strategic and Policy Research Group (PANAFSTRAG)and the Nigerian Mission in Washington DC to organise a roundtable in Washington DC, USA on January 17, 2014. The roundtable with the theme: Culture as instrument of the Nigerian Foreign Policy in America and the Americas, was held at the Nigerian Chancery, Washington DC. Other conferences included the Black History Month at Ibadan, discussion and exhibition marking the international women day, CBAAC annual colloquium at Kingston, Jamaica and the festival and colloquium at Yenagoa, Bayelsa State in December.

     

    National Council for Arts and Culture (NCAC)

    Apart from the yearly hosting of its  events, National Festival for Arts and Culture NAFEST and African Arts and Crafts (AFAC) Expo, the council led by Mrs. Dayo Keshi completed and inaugurated the National Research Centre on Textiles Traditions Osogbo in Osun State, the National Research Centre for Masquerade Traditions in Enugu, Enugu State, the Crafts Development Centres in Ikare, Ondo State, Kano and Sokoto in August last year. It is glad to know that these centres have been inangurated but the effective utilisation of the facilities remain the concern, especially equipping them for the local craftsmen.

    Eighteen countries and 12 states participated in the AFAC expo while only 18 states and Federal Capital Territory (FCT) out of 36 also participated in NAFEST last year. This drop in participation is being linked to the ongoing political campaigns towards the general elections in February.

    But the council also held the National Culture Quiz Competition for Secondary Schools at Awka, Anambra State with little or no publicity. The council honoured nine Nigerians, including Governor Mu’azu Babangida Aliyu, Sir Gabriel Osawaru Igbinedion, former National President, Nigerian Institute of Management (NIM) Chartered, Dr. Sally Nkem Adukwu-Bolujoko and Prince Adetokunbo Kayodeat its honours lecture/awards in Abuja.

    Observers say the council should among others overhaul its marketing strategy to make NAFEST and AFAC expo attractive to states and private bodies in the industry.

     

    Nigerian Tourism Development Corporation (NTDC)

    Mrs Sally Mbanefo-led NTDC kept faith with its three strategic imperative focusing on rebuilding the corporation, growing the tourism value chain for revenue generation and re-inventing the tourism industry through PPP programmes.

    “The National Tourism Policy thrust is to develop sustainable tourism by capitalising on heritage diversity as the basis for promoting domestic and international tourism. This is aimed at competitive sustainable tourism development within the confines of the world tourism market and open up Nigeria as a major tourist destination in Africa,” she said.

    But most importantly, NTDC began campaign for domestic tourism with the authentication of tourist sites in the six geo-political zones and covered 20 states.

    Mrs Mbanefo stressed that Nigeria must put in place mechanisms through which benefits can be derived from all departures and ‘‘we must develop tourism not just for paid travel’’ but leisure infrastructure in various communities for citizens who cannot afford to travel.

    To achieve these, the corporation called for the establishment of a tourism development fund, implementation of the 2007 tourism master plan, inclusion of tourism in concurrent list of the constitution and increase funding.

    NTDC in the last one year collaborated with diplomatic community from Mexico, Sierra Leone, Malawi, Cuba, The Gambia, Turkey, Venezuela and Israel on the need to market Nigeria in their home country. In line with the spirit of PPP, the corporation signed Memory of Order Understanding (MOUs) with VISA, ABC Transport, Arik Air, Redington Hospitals, Heritage Bank, British Airways, Nigeria Turkey Chamber of Commerce and Industry, Nigeria Football Federation, Jovago (hotel bookings on NTDC web portal) and the Gambia Tourism Board for best practice exchange.

    Expert say beyond the signing, the corporation must ensure that it translates the collaborations into actions that would engender tourism growth. All the collaborations must be appraised regular to keep with the spirit of the understanding as well as to maximise the benefits.

    Unlike in the past, the corporation scaled its participation in travel markets to when necessary and affordable. It maintained international profile at major travel markets such as World Travel Market, London, ITB Berlin, World Travel Market, Cape Town, South Africa as well as the hosting of Nigeria Fans Village at the FIFA World cup in Brasil.

     

    National Gallery of Art (NGA)

    Going by records, the outgoing year was not particularly eventful for the National Gallery of Art (NGA) as it could not hold some of its major programmes such as Art Expo, Nigerian Visual Art World Tour (NIVATOUR), ARESUVA, annual distinguished lecture and symposium. In its place were new programmes such as Art of Friendship, Nupe Art Conference/Exhibition held at Bida, Niger State. It featured traditional artists from the old Nupe kingdom exhibiting different works ranging from paintings, sculptures and textiles.

    This was followed by the annual NGA Children’s Day Art Competition, which drew pupils and students from the Federal Capital Territory, Abuja to the Women Development Centre. Then came Art of Friendship initiated in 2012 as a platform for Nigerian artists to cross-fertilise ideas with their counterparts from other nations through their embassies in Nigeria. The Art of Friendship 2 featured artists from Nigeria and four countries- Republic of Czech, France, Italy and Korea showcasing about 40 works of art comprising paintings, mix-media, drawing, sculpture and printmaking. Is Art of Friendship a replacement of NIVATOUR?

    The National Visual Arts Competition/Awards, NGA in-house exhibition, tagged, Together Again, and the unveiling of the Abuja Biennial logo were the other programmes NGA executed in the preceding year.

    Observers wondered what has become of the old programmes that have been abandoned for new ones. If it is difficult for NGA to improve on Art Expo, Aresuva and NIVATOUR, distinguished lecture and symposium what guarantees the success of the new ones such as Art of Friendship, Abuja Biennial? Or is it a problem of name or location of event? And if poor funding is the bane of the old programmes, NGA must look beyond the box to source funds for the success of these new programmes otherwise high turnover of events may not give the gallery a good image.  In the year under review, apart from NCMM, other culture agencies seemed to be less concern in executing capital projects that will provide the enabling environment for the thriving of the artist s and the arts.

    Specifically, museum and gallery deserve befitting national edifice that should serve as a home for the display of their collections. Nigeria has priceless works of art that

     

     

  • PDP: Bumpy road to October 7

    PDP: Bumpy road to October 7

    The Peoples Democratic Party (PDP) peace talks are expected to resume on October 7. The cracks continue to widen. Assistant Editor, GBADE OGUNWALE reports that it has been a classic case of one week, one trouble for the ruling party.

     

     

    THERE is no evidence that peace will return to the Peoples Democratic Party (PDP) on October 7. The two factions are not yet prepared for a truce. Although a meeting is slated for Abuja on that date, sources said that the two sides are not ready to give concessions.

    It does not require any intuition to situate the genesis of the crisis rocking the ruling party. The power struggle started shortly before the 2011 election, when contending interests, conflict of ambitions and clash of egos characterised its nomination. Up in arms against President Goodluck Jonathan, under the cloak of zoning, was a group of Northern elders under the leadership of a former Finance Minister, Mallam Adamu Ciroma. In the group were prominent presidential aspirants, including former military President Ibrahim Babangida and former Vice President Atiku Abubakar.

    The Ciroma group streamlined the list of aspirants and came up with Atiku’s name as the consensus choice of the northern establishment. On that platform, Atiku went into the primaries with Jonathan, who had mastered the chessboard, with the active backing of his political godfather, former President Olusegun Obasanjo.

    Like others before it, the presidential nomination did not come without row. for inexplicable reasons, majority of the northern governors, who had earlier jumped into the zoning train, massed their delegates into voting for Jonathan at the convention. Thus, a supposedly rustic and shoeless boy from the backwaters of Otuoke, Bayelsa State, trounced the politically experienced, urbane and sagacious Atiku to clinch the ticket. The rest, as they say, is history.

    It was not until March that the nation was made to understand why the northern governors gave in to the Jonathan candidacy for the 2011 poll. Niger State Governor Babangida Aliyu mounted the rooftops to proclaim that he and his fellow governors decided to back the President, based on a mutual agreement that Jonathan would serve for only a single term from 2011 to 2015.

    The pronouncement jolted the otherwise phlegmatic President, whose body language had not left anyone in doubt of his desire to seek re- election in 2015. The battle line was drawn, with a flurry of clandestine moves by both parties struggling to outsmart each other, ahead of the 2015 presidential nominations. The veil was torn to reveal a more determined Jonathan when, on January 1, posters announcing his intention to contest surfaced in strategic locations at the Federal Capital Territory. And the poster war began.

    Thereafter, posters of Governor Aliyu, his Jigawa State counterpart, Sule Lamido, and Rivers State Governor Rotimi Amaechi flooded various locations in the North. While the posters announced Aliyu and Lamido for the presidency, Amaechi was touted as running mate to Lamido. Kano State Governor Musa Kwankwaso’s name also featured as one of the presidential aspirants. The Jonathan camp went on the rampage. The aviation authorities, apparently acting in proxy, started raising prying questions about documentation of a Rivers State-owned aircraft used by the governor for his shuttles. That was after the plane had been grounded for allegedly breaching aviation guidelines. Shortly after, the executive of the Rivers State chapter of the PDP was supplanted by a new team, in deference to a “court ruling”.

    Then entered a new executive headed by Felix Obuah and the assault on Amaechi went full circle. The Obuah team, with the active backing of Minister of State for Education Nyesom Wike, went straight for the governor’s jugular.

    Besides, the heavy hand of the Presidency was stretched to the ranks of the 23 governors elected on the platform of the PDP. This gave birth to the PDP Governors Forum, with Governor Godswill Akpabio as chairman. About 16 of the governors form the actual membership of the Akpabio-led Forum. They were meant to upstage Amaechi in the pending election of the Nigerian Governors Forum (NGF). Plateau State Governor Jonah Jang was propped up as the Presidency’s lackey. But the 12 opposition governors joined forces with Amaechi and six governors of the PDP that are opposed to Jonathan. Ameachi defeated Jang by 19 votes to 16. Jang and his group formed a parallel NGF with him as chairman. But Amaechi’s group of 19 is still holding up. The Forum has continued to remain in tatters.

    The fight to bring Amaechi to his knees has continued on the upward scale. With a script dripping with ink from the godfathers in Abuja, the governor was asked to reinstate the executive council of the Obior/Akpor Local Government suspended by the Rivers State House of Assembly a few weeks back. He declined. The Bamanga Tukur-led PDP handed him a suspension. The Rivers State police command, headed by Commissioner Mbu Joseph Mbu, was co-opted into the Amaechi haunt. In the heat of the crisis, five governors from the north, who are sympathetic to the governor’s cause, headed to Port Harcourt, the Rivers State capital, in solidarity with their troubled colleague. On arrival, they were marooned at the airport by hired hoodlums, who held them hostage for hours. When the governors were eventually allowed to venture into the city to meet their host, the mob escorted them out of the precinct of the airport with a hail of missiles, stones, pebbles and all. Next, seven members of the 32-man Rivers Assembly attempted to impeach the Speaker, Dan Amachree and replace him with one of their own.

    That would have led to the impeachment of the governor, if they had succeeded in the plot. The contending groups met force for force as the remaining 27 lawmakers loyal to the governor resisted the move. It turned out to be a rowdy affair, a bloody one for that matter.

    In a show of shame, Michael

    Chinda, one of the opposing

    lawmakers, was beaten by the pro-Amaechi legislators. The governor’s camp won the round. The stage moved to Abuja. Deputy National Chairman former Sam Sam Jaja, one of Amaechi’s diehard loyalists, became the next target. By virtue of a position paper by the Independent National Electoral Commission (INEC), Jaja and others, who were elected into National Working Committee (NWC) of the PDP in the party’s 2012 convention through an opaque process, were forced to resign.

    The 18 affected party officials were given a chance to re-contest for their various positions. But a few days to August 31, 2013 convention date, the Obuah-led Rivers chapter of the PDP announced Jaja’s expulsion from the PDP. The reason for the action could not be located anywhere in party’s constitution. But that did not stop the plot. The Jonathan camp had already marked another candidate, Uche Secondus, for Jaja’s job.

    Having seen the handwriting on the wall, PDP governors in the Northwestern states had positioned their delegates to vote for Jaja on the convention ground. Having got a whiff of what was in the offing for the Amaechi camp, the party prevented the pro-Jaja delegates from the Northwest from taking part in the election. Atiku and six other governors, their delegates and supporters walked out of the convention. In a jiffy, they regrouped at the Yar ‘Adua Centre where they were joined by Amaechi.

    At the centre were Atiku; a former acting national chairman Alhaji Abubakar Baraje; Governors Amaehi; Musa Kwankwaso (Kano); Murtala Nyako (Adamawa); Aliyu Wamakko (Sokoto); Babangida Aliyu (Niger); Sule Lamido (Jigawa); and Abdulfatah Ahmed (Kwara). Others were Jaja; Senator Abdullahi Adamu (Nasarawa West); erstwhile national secretary of the PDP, Olagunsoye Oyinlola; deputies to the protesting governors and others.

    The group announced the birth of the New PDP, with Baraje as the chairman, Jaja as the deputy chair and Oyinlola as the national secretary.

    The protesting chieftains said the group was forced to leave the Tukur-led PDP as a result of arbitrary actions and dangerous permutations by Tukur, with the backing of President Jonathan towards the 2015 presidential race. They also protested against the arbitrary suspension of notable members. To drive home its point, the Baraje faction wasted no time in getting a national secretariat of its own in Abuja.

    The Jonathan camp moved swiftly to seal off the premises before the factional members could move in. The siege is still in force. Then, the Jonathan camp initiated a series of reconciliatory moves. In the reconciliatory train are prominent elders and leaders of the party. Chairman of the party’s Board of Trustees (BoT) Chief Tony Anenih, two former party chairmen, Ahmadu Ali and Barnabas Gemade, were also on board. Obasanjo, Babangida and President of the Senate David Mark were also drafted in. But while the reconciliation and peace talks were ongoing, Jonathan, who initiated the talks, was shooting from the hips in ways that suggested that he was fully prepared for a fight, good or bad.

    Obviously taking a cue from his combative political mentor, Jonathan has chosen to fight bare knuckles. He sacked nine of his ministers, who had links with Obasanjo and other PDP chieftains, who are believed to be opposed to his re-election bid. Oyinlola had lost his position as the national secretary of the PDP in what the party leadership ascribed to obedience to a subsisting court order.

    There are also ongoing moves to wrest the control of party machinery from the “adversarial” governors. In Kano, a caretaker committee has been set up to run the affairs of the party. Leaders of the Kano chapter had in June, officially informed the national leadership that the tenure of the State Executive Committee would expire on August 15. In the memo to the national chairman, the Kano leaders had implored the national body to commence the process of conducting a valid congress to elect a new leadership to replace the expiring exco.

    But no action was taken till

    September 16 when Tukur

    announced the composition of a caretaker committee for the Kano chapter. The appointment of the caretaker committee coincided with a visit to the party’s national secretariat by a former Speaker of the House of Representatives, Umar Ghali Na ‘Abba, and a former ambassador, Aminu Wali.

    A few days after Na ‘Abba and Wali’s visit, Mohammed, the son of the late maximum ruler, Gen. Sani Abacha also came calling. Abacha had joined the defunct Congress for Progressive Change (CPC) in 2010. He left the party the same year when he failed in his bid to secure the party’s governorship ticket. He announced his return to the PDP during the visit. The Kwankwaso camp is said to be viewing the development as one of the moves by the Jonathan camp to hand over the state party machinery to forces opposed to the governor.

    The Adamawa State chapter has been thrown into crisis as a result of the power tussle between Governor Nyako and Tukur. While Tukur is believed to be positioning his son, Anwal, for the ticket, Nyako also is scheming to have the slot for his preferred candidate. As at now, the chapter is torn between the Joel Madaki and Lawal Mijinjuwa factions, with the former backed by Tukur and the latter, by Nyako. The situation is not different in virtually all the PDP chapters in the Southwest states where various factions have been fighting for the control of the party machinery.

    Anambra State presents a different kettle of fish. There is the Ken Emeakayi faction, which is recognised by the national body, while the Ejike Oguebego faction enjoys the recognition of the Independent National Electoral Commission ( INEC). The two factions had conducted separate governorship primaries on August 24.

    While the Emeakayi faction presented Tony Nwoye as candidate, which the national body endorsed, the Oguebego faction elected Senator Andy Uba as its candidate for the same November 16 election. The crisis has earned Uba, his brother, Chris and two others in their camp an indefinite suspension from the Tukur PDP.

    In Sokoto State, the story is not different. Senator Umar Gada, who is a Political Adviser to Tukur, is being used as a counter force against the governor. It’s too early to tell how far Gada and his team could go, but the various permutations indicate that he enjoys the backing of the PDP.

    Apparently in doubt about Mark’s support for the President’s re-election bid, the party has enlisted Lawrence Onoja, a PDP chieftain from Mark’s Benue South Senatorial District. Onoja contested the Benue South seat with Mark in 2011 on the platform of the defunct Action Congress of Nigeria (ACN), but lost to the President of the Senate. Many view his defection to the ruling party as part of the scheme to whittle down Mark’s influence in the Benue chapter of the PDP.

    Perhaps, the greatest threat to the survival of the PDP is the faction. The faction has continued to attract members across the states and the National Assembly. This appears to be threatening the peace moves initiated at the instance of the President.

    The media war between the two camps has taken a fiercer dimension. The last round of talks did not yield any positive result, forcing the parties to slate the next round of talks for October 7. Events in the ruling party have continued to take new twists by the day.

    The President has been oscillating between perceivably phlegmatic and palpably hyperactive reaction to the events in the party. With his actions since the crisis broke out, he appears to be embracing reconciliation with one hand, and at the same time throwing punches with the other. Obasanjo, who is one of the prominent members of the reconciliation team, is also having it rubbed in the face.

    Apart from having his loyalists thrown out of various positions in the party’s national executive, one or two cabinet ministers who got the job through his connection were affected in the last cabinet purge. Despite his role in the peace process, the Jonathan camp does not trust the former President.

    With regular shots in the

    arm, the President’s foot

    soldiers have been on the prowl against “disloyal” members of the party. Others are stoking the embers with unguarded utterances and provocative actions. Chief Edwin Clark, elderstatesman and one of the opinion leaders in the Southsouth zone, decided to join the fray.

    Though many say Clark’s intervention was unsolicited, he has been persistent in his attacks on real and perceived political foes of the President. Jonathan, he insists, must be allowed to run in 2015. The recent visit to the National Assembly by chieftains of the Baraje faction has opened a new chapter in the crisis. This appears to have brought a schasm between the leadership of the federal legislature and the Jonathan camp.

    More troubling to the President’s camp is the pacifist role played by the President of the Senate during the faction’s visit. Mark received the factional members warmly, but he admonished them to embrace peace . The Baraje faction has presented a list of demands to the reconciliation team as conditions for peace.

    Among others, the group is demanding the removal of Tukur as national chairman; lifting of the suspension order on Amaechi; return of party structures in the states to the governors; resolution of the Anambra PDP imbroglio; and dropping of Jonathan’s 2015 re-election bid. But these are pills the Jonathan camp and the Tukur led PDP may find difficult to swallow. With his body language and recent actions, President Jonathan may not be in a hurry to accede to all the demands tabled by the faction.

    Dropping re-election bid may not find any place in the President’s mind. On the other hand, the faction considers it politically suicidal to back out on any of its demands, considering the possible backlash on the political careers of the members. They seem to have crossed the rubicon. Depending on the initiative of the Obasanjo led peace team, the warring factions may reach a win-some, lose-some compromise.

     

  • ‘Nigeria faces long, bumpy road to making the lights work’

    ‘Nigeria faces long, bumpy road to making the lights work’

    In an unwanted daily routine lasting 17 years, Phillip Cleatus sits in the dark doorway of his shoe-making shop in Nigeria’s northern city of Kaduna, waiting for the lights to come back on.

    President Goodluck Jonathan is trying to persuade Cleatus and some 170 million other Nigerians that things will soon change.

    Yet while his plan to privatise power is creeping forward, it is likely to take decades to end the chronic electricity shortages that are among the main barriers to investment and growth in Africa’s second biggest economy and top oil producer, Reuters analysts have said.

    Nigeria is in the process of breaking up the defunct state power company into 17 private generation and distribution companies and selling them for about $2.5 billion in total, as part of efforts to increase electricity output tenfold over the next seven years.

    It might be its most advanced effort yet to end its perennial power shortfall, but progress has been so slow that Jonathan’s targets look far too optimistic. Industry experts believe some improvements will be felt in two-three years.

    If Nigeria gets the lights working, it would reduce business costs by up to 40 per cent, add three per cent to Gross Domestic Product (GDP) and cut the mass unemployment that fuels unrest seen in oil theft in the south and a bloody Islamist insurgency in the north, the Reuters economists say.

    It could also spur a boom in labour intensive areas like manufacturing, food processing, textiles and pharmaceuticals, while opening up the opportunity for new low-cost service industries like the call centres that aided India’s rise.

    The $13 billion a year that Nigerians spend on diesel, most of which is imported, would be a bill of the past. Power from generators costs more than twice as much as from the grid.

    “This is killing my business, I lose 45 per cent of my annual profit to poor power supply,” Cleatus, 38, told Reuters.

    A glitzy ceremony hosted by Jonathan last week, celebrated the first payment by private companies which are taking over the unbundled state electricity firm and a deal by the World Bank to give an initial $145 million risk guarantee for gas supply.

    A close look at the private companies which won the bids, shows a mix of oligarchs and influential figures connected to Nigeria’s political elite, and some recognised technical partners, like Siemens and Manila Electric.

    This has raised some questions about the expected efficiency of the privatisation process and what it can deliver, but there are those who argue that effective business in Nigeria is impossible without political connections and patrons.

    “Much has been achieved, yet the race will not be over until Nigerians can take electricity supply for granted,” Jonathan told dignitaries and power companies last week at the State House, Abuja..

    Electricity capacity had been in steady decline for a decade when Jonathan launched his reform plan in 2010, pledging Nigeria would boost generation from 3,000 megawatts (MW) to 10,000 MW by the end of this year, and 40,000 MW by 2020.

    Generation has increased to around 4,000 MW, but experts say there is zero hope of meeting government targets, while the scale of the task means power output will initially fall after the privatisation is completed at the end of this year.

    Despite being Africa’s top oil producer and holding the world’s ninth largest gas reserves, Nigeria’s power output is a tenth of South Africa’s for a population three times the size.

    “It will probably take Nigeria another 50 years before it attains the same level of electricity consumption per capita as South Africa currently enjoys today,” said David Ladipo, whose company Azura is spending $700 million to build a 450 MW plant.

    Ladipo thinks electricity output could grow to 6,000 MW in the next two years and to 9,000 MW by 2020. before seeing a potential boom as post-privatisation investment kicks in.

     

     

     

     

    One industry expert told Reuters Nigeria’s potential demand is estimated to be as high as 140,000 MW and rising, so just keeping up with demand will be a huge challenge.

    THE TURNAROUND?

    Even Ladipo’s more modest projections, which several other industry experts broadly agreed with, face hurdles.

    Privatisation is months behind schedule and government is struggling to get the funding it needs for crucial transmission and gas supply infrastructure. Powerful labour unions are blocking attempts to pay off 40,000 state electricity workers.

    Nigeria says it has found 340 billion naira ($2.1 billion) to pay off the workers, but they remain reluctant to leave.

    The African Development Bank is providing $150 million to aid with transmission and some of a $1 billion debut Eurobond would help with upgrades. But in Nigeria, just making the money available doesn’t always mean it will be used wisely.

    Some $40 billion has gone into several power reform drives in the last 20 years, industry experts say, much of it wasted.

    “In the past the problem has not been capacity of government to find money for the power sector: billions have been allocated – and billions have been squandered or stolen,” said Antony Goldman, head of Africa-focused PM Consulting.

    Still, there remains optimism that wrestling power out of government hands will eventually lead to progress.

    “Given the scale of the challenge and the history of the sector … reform is progressing very well,” said Fola Fabule, a Lagos-based investment banker focused on infrastructure finance.

    “The key… will be commitment to see reforms through.”