Tag: reforms

  • Reforms take balance of payments surplus to $4.6b, FX reserves to rise

    Reforms take balance of payments surplus to $4.6b, FX reserves to rise

    The Balance of Payments (BOP) surplus, the ongoing surge in diaspora remittances and continued accretion to external reserves are direct outcomes of crucial financial sector reforms. The $4.60 billion BOP surplus recorded in the third quarter of 2025 marks a sharp turnaround from the deficit position in the previous quarter. This performance highlights strengthening external sector fundamentals, growing investor confidence, and the sustained impact of reforms in the foreign exchange market, monetary policy implementation and the domestic energy sector, reports Assistant Editor COLLINS NWEZE

    The monetary and fiscal authorities have made remarkable strides in restoring macroeconomic stability, bringing down inflation, enhancing data analytics, ending the practice of monetary financing of deficits, and narrowing the foreign exchange (FX) market gap to under two per cent. Central Bank of Nigeria (CBN) reforms have played a pivotal role in organically rebuilding FX reserves, which are projected to surpass $51 billion this year, driven by stronger non-oil export performance and improved market functioning. These reforms have also spurred growth in key economic sectors and attracted a notable surge in foreign capital inflows.

    Reflecting these gains, Nigeria recorded a Balance of Payments (BOP) surplus of $4.60 billion in the third quarter of 2025, a turnaround from the deficit recorded in the preceding quarter, according to CBN data. The improvement was underpinned by a sustained current account surplus of $3.42 billion, supported by robust trade performance, resilient remittance inflows, higher financial flows, and continued accretion to external reserves. The goods account remained in surplus at $4.94 billion, reflecting higher export earnings and strengthened economic fundamentals during the period.

    “Exports increased to US$15.24 billion in Q3 2025, from US$14.90 billion in Q2 2025, on account of increases in crude oil and a refined petroleum products exports. The country is gradually switching from a net importer of refined petroleum products to a net exporter.  Import of petroleum products decreased by 12.7 per cent to US$1.65 billion,” the CBN said.

    Also, net out payments in the services account increased to US$4.07 billion in Q3 2025, from US$3.74 billion in Q2 2025. “The increase in net out- payments for services was due to increases in net import of transport, travel, insurance, computer & information, other business, and Government services not included elsewhere. The debit balance in the primary income account increased significantly to US$2.95 billion in Q3 2025, from US$1.25 billion in Q2 2025,” the report said.

    “This was largely attributable to repatriation of reinvested earnings by domestic banks on their foreign investments abroad especially on direct investments. The secondary income account balance decreased slightly to US$5.50 billion in Q3 2025, from US$5.51 billion in the preceding quarter. Personal transfers (workers’ remittance) from Nigerians in diaspora slightly decreased in Q3 2025 to US$5.24 billion, from US$5.30 billion in Q2 2025,” it added.

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    Crude oil exports rose to $8.45 billion, while exports of refined petroleum products increased by 44 per cent to $2.29 billion, indicating further progress in domestic refining capacity and Nigeria’s gradual transition from a net importer to a net exporter of refined petroleum products. Total goods exports stood at $15.24 billion, while imports of refined petroleum products declined by 12.7 per cent, resulting in an improved trade balance.

    Workers’ remittances also remained strong, with the secondary income account recording a surplus of $5.50 billion, including $5.24 billion in remittance inflows from Nigerians in the diaspora. Developments in the financial account further supported the overall BOP outcome, with Nigeria posting a net lending position of $0.32 billion.

    Foreign direct investment inflows rose to $0.72 billion, while portfolio investment inflows remained robust at $2.51 billion, reflecting improved investor sentiment and continued non-resident participation in domestic financial instruments. The country’s external reserves increased to $42.77 billion at end-September 2025, up from $37.81 billion at end-June, thereby strengthening Nigeria’s external buffers.

    According to the CBN, the Q3 2025 BOP outcome underscores strengthening external sector fundamentals, firmer investor confidence, and the continued impact of reforms in the foreign exchange market, monetary policy implementation, and the domestic energy sector. CBN Governor, Olayemi Cardoso had earlier reaffirmed that the banking system remains resilient, with continued vigilance on emerging risks. At the 60th Annual Bankers’ Dinner, he outlined the Bank’s 2026 priorities which include strengthening the banking system, ensuring price stability, modernising payments, deepening financial inclusion and supporting responsible fintech innovation.

    He also noted growth in digital payments, expansion of contactless cards, improved agent-banking controls, and Nigeria’s exit from the FATF grey list as major confidence boosters. He concluded by restating the bank’s commitment to disciplined, transparent, and forward-looking policies to keep Nigeria’s economy stable and positioned for sustainable growth.

    Journey through reforms

    The CBN had embarked on a series of bold reforms to attract more foreign capital to the economy, achieve price and exchange rate stability. In 2023, the new administration, alongside the CBN under Governor Cardoso, implemented landmark reforms to stabilise the economy. The authorities liberalised the foreign exchange market, ended central bank financing of the fiscal deficit, and reformed fuel subsidies. Simultaneously, the government strengthened revenue collection and took targeted measures to rein in the surging inflation rate. Since these reforms were implemented, international reserves have increased, and people can now access foreign exchange in the official market.

    Besides, Nigeria successfully returned to international capital markets last December and was recently upgraded by rating agencies. A new domestic, private refinery is positioning Nigeria up the value chain in a fully deregulated market. CBN’s policies, including the currency reforms, led to investment inflows from abroad and reduced interventions in the domestic forex market. The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.

    Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy. In its efforts to tame inflation, the CBN recently hosted the Monetary Policy Forum 2025, featuring fiscal authorities, legislative, private sector, development partners, subject-matter experts, and scholars with the theme: “Managing the Disinflation Process.” The forum is a major push to improve monetary policy communication, foster dialogue, and collaborate on critical issues shaping monetary policy.

    During the event, Cardoso explained that the apex bank’s focus is to sustain price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship. He said the apex bank is continuing its disciplined approach to monetary policy, aimed at curbing inflation and stabilising the economy. Cardoso reiterated that the goal of the CBN is to ensure that monetary policy remains forward-looking, adaptive, and resilient.

    In addressing our economic challenges, collaboration is key: “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence. Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” Cardoso said.

    The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy. These reforms and developments reflect the Bank’s commitment to creating an enabling environment for inclusive economic development.

    However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance. “As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso stated.

    Continuing, he said monetary policy easing became necessary following a review of macroeconomic developments. According to him, the decision by the MPC to ease the policy stance was made in the light of improving inflation trends. “The committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts,” Cardoso said.

    Forex sources expand

    The CBN under Cardoso is cultivating multiple FX sources to increase dollar inflows, boost dollar access to manufacturers and retail end users. From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorized dealers and other players in the value chain. The move has led to substantial accretion to the gross FX reserves and supported the stability of the naira. Given that FX inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN under Cardoso puts in a lot of efforts in attracting more inflows into the economy.

    Diaspora remittances to Nigeria, estimated at $23 billion annually remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming. The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.

    Remittances into the economy are expected to rise further, supported by the CBN’s ongoing efforts to strengthen public confidence in the foreign exchange market, build a robust and inclusive banking system, and promote price stability—measures that are critical for sustaining long-term economic growth. Director of Trading at Verto, Charlie Bird, said dollar liquidity dynamic is now more balanced, with foreign investors and airlines able to repatriate funds. Speaking during Cordros Asset Management seminar titled: “The Naira Playbook,” he said Nigeria is now darling of foreign investors because of improved dollar liquidity in the economy due to positive CBN’s reforms.

    Economic gains through reforms

    According to Cardoso, over the past 12 months, Nigeria’s economy has transitioned from crisis management to laying the groundwork for a sustainable recovery. “After nearly a decade in which real GDP growth averaged about 2%, reforms have restored momentum and confidence in our broad macroeconomic environment. Our economy grew by 4.23 per cent in the second quarter of 2025, the strongest pace in four years, driven by improvements in telecommunications, financial services, and oil production,” he said.

    “More importantly in terms of long-term stability, inflation, while still high, has moderated consistently. From a peak of 34.6 per cent in November 2024, it has more than halved to 16.05 per cent in October 2025. This marks seven consecutive months of disinflation. Food inflation, the largest single component of the basket, fell to 13.12 per cent in October, down from 16.87 per cent in September and 21.87 per cent in August,” he said.

    This significant, steady decline in inflation is restoring real purchasing power for households and businesses. It also demonstrates disciplined execution and Nigeria’s return to orthodox monetary policy. “We continue with determination to bring inflation down further. The current double-digit rate cannot be acceptable. Price stability is the foundation of sustainable growth. Our transition to an inflation targeting framework is gaining traction. We have improved data analytics, strengthened communication, and ended monetary financing of fiscal deficits. These actions have strengthened monetary policy transmission and anchored expectations.”

  • Turning reforms to tangible gains

    Turning reforms to tangible gains

    Nigeria’s energy sector this year appears set for a significant transformation, with expected unprecedented stability in the downstream petroleum sector due to domestic refining and a strong push for renewable energy investment. The overall outlook is cautiously optimistic, contingent on effective policy execution and infrastructure development, writes MUYIWA LUCAS and AMBROSE NNAJI.

    The country’s energy sector is looking up to a promising year ahead. After years of production slumps, underinvestment and policy uncertainty, in the closing quarters of 2025, increased crude oil output, improved security conditions in parts of the Niger Delta, regulatory certainty under the Petroleum Industry Act (PIA) gaining traction and operational activity picking up across segments of the value chain, were precursors to hopes for the sector in 2026. The momentum garnered in may have since set the tone for high expectations this year in the sector.

    Stakeholders and economists are optimistic that the oil and gas sector will significantly contribute to Nigeria’s GDP growth and positive external account balance through increased exports. This is why they call for more public-private partnerships (PPPs) and technology transfer to overcome financial and technical hurdles.

    While 2026 looks promising for incremental recovery in the sector, it however hinges heavily on resolving security issues and fully leveraging the PIA to boost investment and output.

    Oil and Gas

    The upstream production is expected to witness modest production growth, driven by infrastructure improvements, pipeline security and gas monetization. While government targets hitting 2.1 million barrels per day (mbpd) production output, analysts remain conservative with a forecast of around 1.7-1.8 mbpd. They however hope that this will get higher following potential restarts of oilfields in Ogoni.

    The implementation of the Petroleum Industry Act (PIA) and renewed upstream investment will equally impact on the sector this year.

    In the downstream sector, the steady operation of the Dangote Refinery is expected to be a major factor, potentially supplying 60 per cent to 75 per cent of national fuel needs from domestic sources in Q1 2026. This is projected to ease pressure on foreign reserves and stabilise petrol pricing within a band of N800 to N900 per liter.

    The anticipated glut in the oil market, following the US action in Venezuela, will further keep petrol prices steady barring any government policy that may lead otherwise, like the implementation of the 15 per cent ad valorem tax on petrol.

    This fear has been further confirmed by the International Energy Agency (IEA), which forecasts a record high glut in the crude oil market this year, with supply outpacing demand growth by a staggering 3.84 million barrels per day. This oversupply dynamic is the primary headwind, driving prices down and compressing the revenue potential for incremental barrels.

    This is why analysts at AInvest submit that the global oil market is entering 2026 with a fundamental imbalance that directly threatens the value of any new production, including Nigeria’s.

    “The policy environment is volatile and reactive. While OPEC+ has paused its planned output hikes for the first quarter of 2026, the group still maintains a significant 3.24 million barrels per day of output cuts in place. This creates a precarious balancing act where the market is held in check by a large but potentially adjustable floor of supply. The group’s cohesion is tested by internal tensions, yet its decisions will be the key variable in determining whether the glut is absorbed or deepens.

    “This oversupply is already pressuring prices. The IEA’s forecast suggests the Brent crude oil price will fall to an average of $55 per barrel in 2026. For a producer like Nigeria, this means the economic value of its production gains is being severely undermined. Even if output increases, the revenue per barrel is forecast to decline, turning a potential upside into a muted or even negative financial outcome. The bottom line is that external market forces are creating a structural ceiling on oil prices, making it exceptionally difficult for new supply to find profitable demand,” the AInvest editorial team argued.

    NNPCL Group Chief Executive Officer, Bayo Ojulari, described the 2026 outlook as encouraging, citing improved asset integrity, reactivation of shut-in wells and better coordination with security agencies.

    “The direction of travel is positive,” Ojulari said, projecting gradual progress toward the government’s medium-term ambition of crossing two million barrels per day.

    Yet analysts caution that production targets alone do not tell the full story. The experience of 2025 exposed persistent vulnerabilities beneath the recovery numbers. Improved surveillance and community engagement reduced crude oil theft, but claims of near-total success remain largely unverified.

    For government officials and industry operators, these developments signal a sector regaining its footing. For independent analysts and economists, however, the recovery remains fragile, uneven and vulnerable to reversal.

    “Recovery must not be mistaken for transformation,” Professor Emeritus of Petroleum Economics and Executive Director of the Emmanuel Egbogah Foundation, Abuja, Wumi Iledare, warned.

    According to him, the defining question for 2026 is not whether Nigeria can produce more oil or gas in the short term, but whether it can finally build the institutional discipline needed to sustain performance.

    This tension—between optimism and realism—frames expectations for Nigeria’s oil and gas industry in 2026. The year is shaping up less as a moment for dramatic breakthroughs than as a test of consolidation: securing hard-won gains, closing governance gaps, and proving that reforms can outlive political cycles and headlines.

    “In 2026, the industry must move from administrative estimates to independently auditable measurement systems. Investors, lenders and fiscal authorities need credible data, not optimistic approximations,” Iledare insists.

    According to Iledare, there is also growing pressure for rig activity to translate into actual barrels. Growth figures inflated by low base effects—following years of suppressed production—will no longer suffice. Expectations for 2026 he notes include disciplined capital deployment, prioritisation of brownfield assets and predictable evacuation infrastructure, without these, upstream optimism risks remaining fragile.

    Global concerns

    Yet, there are concerns of global market glut which the country is not immuned against. This concern has been further accentuated by the US takeover of Venezuela oil sector. This further exacerbates the global supply shock that deepens the existing price glut. Energy markets enter 2026 in a downbeat mood, with the International Energy Agency forecasting supply to exceed demand in 2026 by a head-spinning 3.85 million barrels per day.

    This oversupply dynamic is the dominant threat. AInvest argued that a failure of OPEC+ cohesion or a geopolitical shock, such as a Russia-Ukraine peace deal could further increase global supply. It noted that the group has already paused output hikes for the first quarter of 2026, but the underlying tension over production quotas remains. “If a peace deal materialises and sanctions on Russia ease, it would add another significant source of crude to an already glutted market, putting severe downward pressure on prices. For Nigeria, which is trying to boost output to two million b/d, this would be a direct blow to its fiscal and economic recovery plans,” AInvest said.

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    Gas

    While fossil fuels will remain central to Nigeria’s economy in 2026, energy transition pressures are reshaping strategy. Gas-to-power projects, petrochemicals and decarbonisation initiatives are increasingly paired with traditional oil and gas operations.

    Regulatory policies, evolving carbon markets and global investment trends are gradually pushing some capital toward lower-carbon solutions—even as producers maintain core hydrocarbon businesses.

    For Nigeria, analysts say the challenge is balance: leveraging oil and gas for development while preparing for a more carbon-constrained global energy system.

    In the aspect of gas infrastructure, a pivotal milestone for the year is the anticipated commissioning and “first gas” of the OB3 gas pipeline, which would unlock significant east-west gas balancing and boost supply to power plants.

    Besides, the government is expected to continue to prioritise major gas projects like the Ajaokuta–Kaduna–Kano (AKK) pipeline as well as developing midstream and downstream infrastructure to enhance energy security. 

    Power and Renewables

    Government is working with partners, including the UN and the Dutch government, and has secured a $1.1 billion facility from the African Development Bank (AfDB) to expand electricity access by the end of 2026.

    Although the national grid experienced relative stability last year, improvement is still expected to be sustained in this regard. The government aims to add 4,000 MW of electricity generation capacity in 2026, a critical step to address persistent shortfalls; current generation hovers around 4,000-5,000 MW from an installed capacity of over 12,000 MW.

    Renewable energy growth

    The renewables and clean energy sector is projected to grow at a CAGR of 13.2 per cent from 2021 to 2026. The Federal Government has pledged massive investment in this area, building on the “Renewed Hope Solarisation Programme” to provide power to unserved and underserved communities.

    Metering and grid modernisation

    There is a significant push for rapid deployment of smart meters to close the metering gap, a key trend in modernising Nigeria’s power infrastructure. The government intends for 2026 to be a pivotal year in closing the national metering deficit, which stood at over five million customers without meters as of late 2025.

    This year, through the Presidential Metering Initiative (PMI) and the Distribution Sector Recovery Programme (DISREP), which aim to provide millions of free meters, government aims to close the metering gap.  The PMI is a high-priority, direct presidential intervention with secured funding of approximately N700 billion from the Federation Account Allocation Committee (FAAC) to roll out an estimated two million meters annually for five years, with an overall target of installing up to 18 million meters.

    DISREP, an initiative backed by a $500 million World Bank loan, targets delivery of over 3.2 million meters by the end of 2026 through various procurement models, including international competitive bidding (ICB) and national competitive bidding (NCB).

    The combined efforts of the PMI and DISREP are expected to significantly accelerate the pace of meter installations beyond previous years’ averages.

    Challenges

    Yet, the challenges of resolving liquidity issues and outstanding debts to gas producers, managing potential global oil price volatility and mitigating the risks of pipeline sabotage stares the country and sector in the face this year. Experts say overcoming these is hinged on disciplined policy execution, transparency in subsidy management and attracting foreign direct investment (FDI).

    Still, 2026 is shaping up as a test of institutions. According to stakeholders, strong regulatory guardrails, empowered boards and accountable leadership are no longer optional. Nigeria’s oil and gas industry, they argued, is too strategic to be managed through episodic interventions or personality-driven reforms.

    “The lesson from 2025 is clear. Announcements do not substitute for institutions. Recovery without endurance is reversible,” Iledare said.

    The road ahead

    As 2026 unfolds, expectations for Nigeria’s oil and gas industry are sober but demanding. Though his is attainable, but there are things to be done: Consolidate security gains; anchor production recovery structurally; govern downstream reforms with neutrality; deliver gas infrastructure with discipline; translate barrels into revenue.

    “Above all, let institutions—not slogans or short-term targets—drive outcomes. If 2025 was about re-anchoring, 2026 must be about proof: proof that Nigeria’s oil and gas sector can finally sustain progress- quietly, credibly and consistently,” Iledare admonished.

  • Overdue reforms

    Overdue reforms

    • Our constitutional democracy necessitates remodelling the military

    With the Armed Forces Reform Bill currently before the Senate scaling second reading on November 12, a major step has been taken towards modernising and improving the legal context within which the Nigerian military operates in accordance with the tenets of the country’s constitutional democracy.

    Sponsored by Senator Abdulaziz Yar’Adua, the proposed legislation seeks to repeal the existing Armed Forces Act, Cap A20 Laws of the Federation of Nigeria 2004, “and re-enact a modern, constitutionally compliant and operationally responsive legal framework for the Armed Forces.” According to Yar’Adua, “This Bill is not merely a legal update. It is a statement of our national commitment to a disciplined, professional and accountable military. It aligns our armed forces with constitutional and international standards while ensuring justice within the ranks.”

    We agree that the current law which came into effect in 2004 and updated preceding military decrees enacted in the 1960s is long overdue for a comprehensive review to reflect new operational challenges and realities confronting the military, developments in the polity and society, and the evolution of the law, democracy and the constitution in Nigeria.

    A cardinal feature of the new bill, which underscores its significance, is the proposed replacement of the current court martial system by providing for trial of military personnel for offences as well as convictions in civil courts.

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    Under the current law, special military tribunals are established to try disciplinary and criminal offences committed by members of the armed forces through the court-martial process. Convened by a higher military authority or commanding officer, a general court-martial handles grave offences and can impose severe punishments including death sentences while the special court-martial deals with less serious infractions of military discipline.

    This creates the impression of a dual legal process, one for the civil populace and the other for the military, which reinforces the deeply ingrained notion, especially within the military, of the uniformed person’s superiority to ‘bloody civilians.’

    Providing for judicial review of military tribunals’ decisions, the bill also reinforces the constitutional authority of the elected President as Commander-in-Chief to command the military while the Chief of Defence Staff takes responsibility for the daily operational administration of the armed forces.

    It empowers military lawyers to represent the armed forces in civil courts, thus reducing both costs and delays, and abolishes the situation in which reports or enquiries serve as a basis for convictions without trial by a court of law. The law also prohibits the recruitment of persons below the age of 18 into the armed forces in consonance with the Child Rights Act and global best practices.

    Other provisions of the bill include redefining offences and ensuring proportionate punishment, replacing obsolete fines with percentage -based penalties pegged to salary levels and extending rights and protections to non-commissioned officers to improve morale and promote fairness.

    Improving the legal context within which the military operates in accordance with the demands of democracy and constitutionalism will enhance transparency, accountability, and efficiency in the administration of the military with beneficial impact on operational efficacy.

    Most important of all are the potentials of the reforms to deepen and strengthen the critical notion of military subordination to civilian authority and constitutionalism. This is because of the continued culture of arrogance and disdain for civilians by persons in uniform.

    However, it will take much more than legal provisions for the necessary change in consciousness of military personnel. Rather, it would also require persistent enlightenment and re-education of military personnel to appreciate the fact that their weapons are procured through public funds, including taxes by the populace, and that the uniform does not confer superior status on those who wear it.

    Equally important is the need to re-educate the civilian populace on the equality of all citizens, military and all other people, before the law. This is because large numbers of civilians also tend to exhibit an attitude of inferiority to military personnel, which is a continuing residue of our long experience with military dictatorship.

  • Reforms: Rising FX inflows expand offshore investors’ interest in economy

    Reforms: Rising FX inflows expand offshore investors’ interest in economy

    Data from FMDQ shows that total inflows into the Nigerian Foreign Exchange Market (NFEM) rose sharply by 62.2% month on month to $5.15 billion in October from $3.18 billion, marking the highest level in five months. Before then, capital inflows into the economy stood at $5.6 billion in the first quarter of 2025, the National Bureau of Statistics (NBS) data shows. The inflows represent significant gains from diverse reforms instituted by the Central Bank of Nigeria (CBN) to make Nigeria attractive destination for local and foreign investors, reports Ibrahim Apekhade Yusuf

    For many stakeholders, rising FX inflows into the economy is an indication that financial sector stability is buoying investors to the domestic economy.

    There is rising interest from domestic and global investors in Nigeria assets, as seen in the latest capital inflows to the country.

    The rising investors’ interest is linked to fallout of crucial reforms instituted by the Central Bank of Nigeria (CBN) under the Olayemi Cardoso leadership.

    Upon assuming office in October 2023, the apex bank leadership had prioritised reforms to rebuild Nigeria’s economic buffers and strengthen resilience.

    CBN’s policies, including the currency reforms, led to investment inflows from abroad, and reduced interventions in the domestic forex market.

    The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.

    Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy.

    Cordros Securities Limited in an update to investors explained that the surge reflected strong participation from both foreign and domestic investors, supported by improving market sentiment and the global shift toward monetary policy easing.

    Foreign inflows—which accounted for 64.5% of the total—soared by 89.7% month on month to USD3.32 billion, up from USD1.75 billion.

    The significant increase, according to Cordros Securities Limited, was driven mainly by a rebound in Foreign Portfolio Investment (FPI) inflows, up by 120.7% in Oct, and higher receipts from the Other Corporate segment, which climbed by +30.5% in the same period.

    This offset the decline in Foreign Direct Investment (FDI) inflows, which reduced by 25.5%, according to data cited by Cordros Securities Limited.

    Also, domestic inflows increased by 28.4% in October driven by a surge in individual contributions, which surged by +370.6%, and a 30.8% inflow surge from Other Corporates.

    “We expect total foreign exchange inflows from both domestic and foreign sources to remain robust, surpassing the 2024 average level of USD 2.51 billion, driven by sustained market confidence and still-attractive carry-trade opportunities,” Cordros Securities Limited said in a note.

    Assessing reforms impact on FX inflows

    These reforms have led to surge in capital inflows into the Nigeria economy. The inflows rose to $5.6 billion in the first quarter of 2025, the National Bureau of Statistics (NBS) report has shown. The inflows represent  67.12 per cent jump  from $3.4 billion recorded in the same period of last year.

    The latest “Nigeria Capital Importation Q1 2025” report released represents 10.86 per cent surge from the $5.1 billion reported in fourth quarter of 2024.

    “In Q1 2025, total capital importation into Nigeria stood at US$5642.07 million, higher than $3.37 billion recorded in Q1 2024, indicating an increase of 67.12 per cent. In comparison to the preceding quarter, capital importation increased by 10.86 per cent from $5.08 billion in Q4 2024,” the report stated.

    The NBS also stated that portfolio investment ranked top with $5.2 billion, accounting for 92.25 per cent, followed by other investment with $311.17 million, accounting for 5.52 per cent.

    The report indicated that, “Foreign Direct Investment recorded the least with $126.29 million accounting for 2.24 per cent of total capital importation in Q1 2025.”

    According to the NBS, the banking sector took the lead with the highest inflows in Q1 2025.

    The report stated, “The Banking sector recorded the highest inflow with $3.1 billion, representing 55.44 per cent of total capital imported in Q1 2025, followed by the Financing sector, valued at $2.09 billion (37.18 per cent), and Production/Manufacturing sector with $129.92 million (2.30 per cent).”

    The report further noted that capital importation during the reference period originated largely from the United Kingdom with $3681.96 million, showing 65.26 per cent of the total capital imported.

    In emailed note to investors, Managing Director, Afrinvest West Africa Limited, Ike Chioke, explained that Portfolio Investment (92.2 per cent of total capital) dominated flows, rising by 30.1 per cent quarter-on-quarter, and 150.8 per cent year-on-year to $5.2 billion.

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    The bulk of the FPI flows was to Money market instruments (up 162.2 per cent year-on-year to $4.2 billion), while Bonds (up 108.5 per cent) and Equities (up 137.7 per cent) attracted $877.4 million and $117.3 million respectively.

    Rebased GDP presents new opportunities

    Nigeria’s hope of achieving $1 trillion economy by 2030 will gain significant support from the banking sector.

    Nigeria’s Statistician-General, Adeyemi Adeniran, had explained how the economy fared in the rebased Gross Domestic Product (GDP) report. He said: “In nominal terms, the rebased GDP for 2019 stood at N205.09 trillion N213.63 trillion in 2020, N243.30 trillion in 2021, N274.23 trillion in 2022, N314.02 trillion in 2023, and N372.82 trillion in 2024”.

    The NBS noted that in 2019, the rebased nominal GDP at basic prices represented an increase of 41.7 per cent over the nominal GDP of 2019 of the old base year (2010), 39 per cent in 2020, 38.7 per cent in 2021, 36.1 per cent in 2022, 34.6 per cent in 2023 and 35.4 per cent in 2024.

    “The results show that the structure of the Nigerian economy has changed significantly with a rise in the share of agriculture and services sectors and a fall in the share of the industries sector in nominal terms, indicating a shift in the structure of the Nigerian economy than earlier reported,” the NBS said.

    Adeniran further explained that the rebasing allows the country to better reflect the realities of the economy. “It’s not just about a bigger number but about accurate, timely data that supports smarter policy and economic planning,” he said.

    Banking sector to the rescue

    A well-recapitalised banking sector is undeniably crucial for the growth of the domestic economy. Hence, Olayemi Cardoso, Central Bank of Nigeria (CBN) governor, advised banks to prepare for a new round of recapitalisation to ensure they have the necessary capital to support the Federal Government’s plan to achieve $1 trillion Gross Domestic Product (GDP)  target by 2030.

    He said that President Bola Ahmed Tinubu’s economic plan aims to reach a $1 trillion GDP by 2030, emphasising that the current bank capitalisation is insufficient to support such a large economic scale.

    Cardoso asked: “Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. That action was the ongoing recapitalisation of banks, meant to prepare them for expansion and attract big ticket transactions to support economic growth.”

    The Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a GDP of $1 trillion, with clearly defined priority areas and strategies.

    Adeniran revealed that incorporated new and emerging sectors, consumption baskets update, and data collection refining methods helped produce a more complete picture of national output.

    Aliyu Ilias, developmental economist, noted that several sectors have previously remained un-captured in official data, particularly entertainment. “By rebasing our GDP now, included those areas properly. This new visibility will make Nigeria appear much stronger to foreign investors, which will naturally help us attract more capital,” he said.

    He explained that the exercise will also reveal untapped economic potential and guide government resource allocation. “It will show where we are strongest structurally, such as in mining or other emerging sectors. That insight will help the government focus its efforts more strategically.”

    “Finally,” he added, “it will support economic policy formulation, helping us align our strategy with the reality on the ground. We will know exactly where to put more effort.”

    Ilias explained that while this statistical adjustment does not instantly generate new revenue, it creates a more reliable framework for fiscal planning, investment strategies, and development interventions.

    For him, by aligning economic data with current realities, the government and private sector can more effectively target policies that stimulate job creation, improve productivity, and sustain long-term growth.

    Seun Onigbinde, director of Civic Technology Group BudgIT, said the previous rebasing underscored the substantial impact of policy changes in the services and ICT sectors, such as telecommunications deregulation and banking sector recapitalisation. “Rebasing of the GDP must reflect changes in the economy, which are a product of public policies over time,” he added.

    Rebasing is also critical for domestic policy. It allows the government to better assess tax collection efficiency, measure sectoral contributions, and design social programmes that are data-driven and results-oriented.

    While commenting on the rebasing, Gabriel Okeowo, former Country Director for BudgIT, said, “Rebasing allows planners to be more intentional about solving Nigeria’s biggest problems: poverty, infrastructure gaps, and job creation.”

    Lagos-based economist, Nelson Adedeji, explained that despite the bump in GDP size, the rebasing never a silver bullet.

    “We must acknowledge that genuine economic growth extends beyond statistical adjustments. For ordinary Nigerians to experience meaningful improvement in living standards, the President Bola Tinubu administration must complement GDP rebasing with substantive policies addressing infrastructure deficits, security challenges, agricultural productivity, manufacturing capacity, and the overall ease of doing business,” he stated.

    Views from stakeholders

    While US President Donald Trump’s widening trade war has taken emerging markets on a wild ride, Nigeria has quietly held its own, attracting foreign capital reassured by currency reforms and other measures designed to revive the economy of Africa’s most-populous nation.

    “Nigeria appears to be back in business as long-awaited economic reforms take shape,” said Emre Akcakmak, portfolio manager at East Capital. Key measures include improved currency liquidity, leeway for investors to repatriate their profit, and the stable naira.

    “We feel the Central Bank of Nigeria will continue to stem any sharp appreciation of the naira to limit profit taking from the fast money community,” Akcakmak said.

    “Portfolio inflows have likely been supported by improved confidence amid key structural reforms, better FX market functioning and moderating dollar-naira volatility, as well as the still-robust nominal yield buffer,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc told Bloomberg.

    “Besides, Nigeria’s local market is seen as less correlated with global risk conditions than more liquid EM peers,” he said.

    The Nigeria’s economy and businesses will have so many things to cheer in 2025 and the impact of the economic reforms in FX market, exchange and huge budge outlays begin to pay off for them.

    How S&P rating is boosting FX

    Expectedly, economic and financial experts who have reviewed the outcome of the S&P rating have stated that this will bode well for the economy, with positive rippled effect.

    In a chat with The Nation, renowned economist and Founder, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the new rating is very positive for the Nigerian economy.

    According to him, “It positions Nigeria in good standing to attract both foreign portfolio and foreign direct investment. It is also good for the private sector as it makes it easier to attract capital.

    “This is premised on the impact of the positive rating on Nigeria country risk and perception as an investment destination. It would also moderate insurance and interest costs generally. This rating is also a reflection of the progress that has been made with regards to current economic reforms,” he stressed.

    Echoing similar sentiments, Mr Oladele Adeoye, Chief Operating Officer, DataPro, one of the foremost rating agencies in the country said the development was something to cheer about.

    While admitting that the positive outcome of the rating may not percolate the average Nigeria just yet, Adeoye however argued that it is a boost to the macroeconomy ultimately.

    “You know, Nigerians’ understanding of economic improvement is that the average man on the street is able to buy something less than he or she was buying before now. But for the economic managers, it’s something to be excited about because when your outlook is improved from stable to positive by a rating agency, what that means is that there are indices that are being monitored by the rating agency, and that the country now has a high possibility of its long-term rating being increased from what it is as of now. So if not for anything, literally, what that means is that you are doing something that is exciting or that is reassuring to the rating agency, and that the improvement that they are monitoring is actually pushing you, economically speaking, towards your rating being improved. So for the economic managers, it’s something to be excited about. It means that if they put a little bit of effort into what they are doing currently, the rating of Nigeria will likely change.”

    Pressed further, the DataPro chief, who tried to draw a correlation between rating and economic change, said, “Improved rating simply means that you can borrow cheaper as a country than you were doing presently. It means that your credit quality has improved as a country. And because your credit quality as a country has improved, investors are willing to lend you money.

    “And when investors lend you money, your risk premium is priced lower than your counterparts that are borrowing from the same market. So from that point of view, what does that mean? That therefore means that Nigeria as a country can borrow at a cheaper rate, and you will not have to use all your revenue to be servicing your debts. And they can channel those funds, whether the ones gotten directly by way of borrowing or the portion of the revenue that is being used to service the debt.

    “All of these can be combined together at this point in time and can be channeled to other aspects of the economy that can enable business and enhance productivity. And that is where it gets exciting. Where such an enabling environment can be created, it therefore means that productivity will improve and that we have direct bearing on GDP. So that is the connection. So in one way, it is correct. We can now use money that has been used to service debts to now begin to channel them to improving infrastructures and creating an enabling business environment within our country.”

  • Reforms: Things are getting better

    Reforms: Things are getting better

    By Sheriff P. Bulus

     Security and the economy are the two most significant issues affecting Nigerians in their daily lives, whether through soaring prices or fear of violence. This is especially so for low-income earners who must carefully monitor market prices, haggle over the cost of every food item and make their own arrangements for security – decisions crucial to their well-being and survival.

    Things especially became tough at the inception of this administration, with the gale of reforms introduced to stabilise the economy and to improve security. The two most notable policies were the removal of the petrol subsidy and the unification of foreign exchange rates, which eliminated the vast difference between the official and black market rates.

    You may add a third, the president going against recent precedent to appoint Mallam Nuhu Ribadu, a retired police officer, as the National Security Adviser, rather than following the tradition of making a retired general the NSA. With Ribadu, the government’s security approach changed significantly from the past, prioritising an intelligence-led, community-driven policing method to address security concerns. However, the security gains were not immediately visible, with some analysts wondering whether the choice of the former policeman was the right one.

    On the economic front, the immediate consequence of the reforms was a high rate of inflation, which hovered around 30 percent. Prices of goods and services, especially transportation costs, skyrocketed, causing temporary hardship and complaints that the government was uncaring. The government spokespeople explained that these reforms were necessary, even essential, to forestall a total collapse of the economy.

    Two years on, it appears the government is right, as things are looking up in both these crucial sectors of the economy and security, even though we are not there yet. President Bola Tinubu’s reforms are beginning to bear fruit and becoming visible for all to see.

    Read Also: NASENI Unveils InnovateNaija, A 250million Naira Innovation Challenge designed to Shape the Future of Nigeria’s Infrastructure 

    Only recently, the Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala, noted this much after a meeting with the president. “The president and his team have worked hard to stabilise the economy. The reforms have been in the right direction,’’ she stated.

    Okonjo-Iweala should know. Having twice served as Nigerian Minister of Finance and Coordinating Minister of Economy – the first woman to serve two terms in that role, Okonjo-Iweala’s assessment carries weight, and these were not just flattery, but a validation of recent data, which shows that inflation has reduced to about 21.3 percent and that the economy, in the first quarter, grew by 3.13 percent. No doubt, we are not there yet, but we are making steady gains economically.

    Also, Yemi Kale, Nigeria’s former Statistician General and head of the National Bureau of Statistics (NBS), explained that “macroeconomic indicators are steady, meaning that businesses, investors, and consumers can feel more confident making long-term plans.”

    By that definition, Nigeria is inching closer to stability than it has in years—a fact that even critics cannot ignore. Not only are the current macroeconomic indicators stronger, but there are also more hopeful signs that steady recovery and long-term growth will occur.

    For instance, data from the NBS indicate that the agricultural sector contributed 23 per cent of Nigeria’s real GDP in the first quarter of 2025, up from 21 per cent in the same period of 2024. Significantly, headline inflation, which had peaked in 2023, is easing. Food inflation rate dropped sharply to 21.9 per cent in June, an 18.90-point decline from 40.87 per cent a year earlier.

    These are not just statistics. They demonstrate that the reforms are making a positive impact as the prices of food items are now stable after the initial spikes. Hopefully, we will see more gains in the coming weeks and months.

    As in the economy, so it is with security. Nigeria also appears to be making a turn for the better in that critical sector. The recent arrest of two top leaders of the al-Qaeda affiliated Ansaru terrorist group, Mahmud Muhammad Usman, the self-styled “Emir of Ansaru”, and his deputy and Chief of Staff, Mahmud al-Nigeri Bara, by Nigerian security forces, is an indication that the NSA’s intelligence approach is beginning to achieve desired results.

    It was more than a mere tactical victory; it provided succour for rural farmers and traders across Niger, Kebbi, and Kwara states, where the presence of these terrorists had crippled economic activities, particularly farming and livestock production, and displaced thousands.

    Similarly, the renewed targeted onslaught on banditry has led to the killing of tens of bandits in the northeast and the rescue of many hostages, who were returned to their states of origin by the NSA. This demonstrates the turn of the tables against the forces of insecurity and restores Nigerians’ hope for a better life, not one dominated by fear of kidnapping and other terrors of banditry.

    Now, farmers can return to cultivate their farmlands, petty traders can move around freely, and rural markets and economic activities can resume without fear of kidnapping or terror attacks. This means more produce in the market, lower prices to consumers, better livelihoods for farmers and their families, and generally, Nigerians can breathe easier.

    Although it is not Uhuru, steady progress is being made in these crucial sectors, with the economy and security taking shape. Nigerians can now look to the future with more optimism, confident that the worst days are behind them.

    •Bulus, a public affairs analyst, writes from Abuja.

  • 2025: Reforms must transcend rhetoric

    2025: Reforms must transcend rhetoric

    As the clock ticks into 2025, Nigeria teeters on a precipice where adversity and hope interlock. The stage is set for a decisive year as the country’s major sectors hum with latent energy: the economy struggles to shed its old skin, politics braces for reform, and the creative industries moot a new narrative. The new year pulses with the promise of rebirth and the threat of regression. Some would call it the epoch of Nigeria’s reckoning—a litmus test of spirit and ambition.

    Against this backdrop of intrigues, a groundswell of apprehension sweeps across the country, beckoning a collective resolve to either seize the moment or risk further decline. In this pivotal year, every facet of national life becomes a battleground of will and transformation as the country’s most significant sectors hurtle between progress and paralysis. The stakes have never been higher, and the journey more profound.

    This is Nigeria in 2025: The economic outlook for 2025 stands at a crossroads of hope and hard truths. President Bola Tinubu’s ambitious tax reform proposals hold the potential to unlock $7.5 billion (about N7.5 trillion) annually, a treasure chest capable of rejuvenating the nation’s fiscal landscape. Yet, this ambition is shadowed by a burgeoning debt-to-GDP ratio, climbing from N97.3 trillion in 2023 to a staggering N138 trillion by late 2024.

    The challenge is clear: reforms must transcend rhetoric. If implemented effectively, these measures could stabilize the naira, curtail inflation, and rebuild investor confidence. However, failure would deepen fiscal woes and push millions further into hardship. To traverse this precarious path, Nigeria must prioritize efficient tax collection, diversify revenue sources, and foster an enabling environment for small businesses. Debt management will demand fiscal discipline and transparency.

    Perhaps the most heartening narrative in this economic tale is the resurgence of local refining capacity. With the Dangote, Port Harcourt, and Warri refineries ramping up operations, Nigeria’s energy sector has shifted from dependency to competition and export potential. This renaissance promises to temper fuel prices and reinforce foreign reserves, heralding a future unchained from imported petroleum.

    Despite global efforts to transition away from fossil fuels, Nigeria’s oil and gas sector remains pivotal. The proposed national credit guarantee company could inject much-needed liquidity, while anti-theft measures aim to boost production. However, over-reliance on this sector is a perilous gamble. Diversification into renewable energy and investment in local refining capacities will be essential for long-term stability.

    Read Also: Armed Forces Remembrance Day: Tinubu urges Nigerians to shun violence, promote unity

    Through it all, Nigeria’s creative economy may experience further reawakening. Buoyed by global recognition of Afrobeats, Nollywood, and literary icons, the sector’s revenue is projected to leap from $5 billion in 2022 to $25 billion by 2025, according to the National Council of Arts and Culture (NCAC).

    The heartbeat of Nigeria’s cultural identity subsists in its storytellers, musicians, and filmmakers. Nollywood’s record-breaking haul in 2024 sets the stage for another stellar year. Meanwhile, Nigeria’s fiction writers continue to elevate her literary reputation globally. Support for this sector through grants and international collaborations will amplify voices that inspire and challenge societal norms. As a soft power tool, Nigeria’s cultural exports hold the potential to reshape perceptions and nurture diplomatic ties.

    The government’s $100 billion growth plan outlines ambitious initiatives: improved infrastructure, digital accessibility, and intellectual property reforms. Yet, creatives must also leverage technology and explore untapped markets. By harnessing strategic partnerships, expanding training programs, and nurturing grassroots talent, the industry could become a cornerstone of Nigeria’s GDP, offering employment and a unifying narrative.

    The agriculture sector remains a stronghold of prospects and optimism. With the government’s tariff waivers and investment incentives, farmers are poised to scale production, tapping into growing regional demand. Yet, challenges such as climate change, outdated practices, and inadequate financing threaten to erode gains. Empowering farmers with access to modern technology and reliable financing will catalyze growth, anchoring food security and economic stability.

    In 2025, the government has committed N826.5 billion to revitalize the sector, underscoring its resolve to enhance food security, generate employment, and reduce food import dependence. Key initiatives include investments in irrigation systems, mechanization, and value-chain development. Efforts to attract foreign direct investment through tariff waivers and agribusiness programs are also expected to transform the sector.

    Despite these plans, food insecurity looms large, exacerbated by climate change and limited modernization. Scaling up food production to meet the growing population’s demands—exceeding 220 million—is paramount. While the sector contributed 28.65% to GDP in 2024, modest growth highlights the need for sustained efforts to strengthen the industry.

    Telecoms, a lifeline for millions, face a tough year. Exchange rate fluctuations threaten profitability, but tariff adjustments and renegotiated leases offer a lifeline. Expanding internet access, especially in underserved areas will unlock new economic and educational opportunities, driving digital inclusion.

    As political tides shift, 2025 will demand accountability and humane leadership. With a national budget expanded by 74.18% to N47.9 trillion, expectations are high. Yet, the real test lies in execution: will this budget translate into meaningful infrastructure, security improvements, and job creation? The political climate, increasingly volatile, may witness a redefinition of Nigeria’s democracy. State actors must address electoral reform, corruption, and regional discontent to maintain stability.

    By May 29, President Bola Tinubu will reach the halfway point of his tenure, a milestone that could shape perceptions of his administration. His decision to implement controversial reforms early in his term was strategic, ensuring hardships fade from voters’ memories if positive outcomes materialize by 2027. Every success strengthens his political standing. In contrast, opposition parties—including efforts to create a “mega party”—face internal fissures and power struggles. Despite these challenges, they will remain significant players in upcoming elections.

    Insecurity casts a long shadow over the country, with insurgencies in the North, communal clashes, and rampant banditry exacting a heavy toll. Despite the defense sector consuming a significant portion of the national budget, many Nigerians remain disillusioned, yearning for safer roads and thriving communities.

    Achieving stability will require collaborative efforts between federal and state governments, strengthened by international partnerships. A combination of technology, intelligence-led operations, and grassroots peacebuilding initiatives is essential. Experts emphasize that a stronger economy, improved welfare for security personnel, and better intelligence gathering will be pivotal.

    Grim statistics from the National Bureau of Statistics reveal that Nigerians paid N2.23 trillion in ransom to kidnappers within a year, while over 614,000 lives were lost.

    Perhaps the most heartbreaking subplot of Nigeria is the erosion of its middle class into 2025. Inflation, unemployment, and taxation have bludgeoned this demographic, leaving many in dire straits. Historically, the middle class serves as the backbone of any nation, driving consumption, innovation, and economic stability.

    In Nigeria, this group has become increasingly vulnerable, caught between rising costs of living and stagnant incomes. Limited access to affordable social services has deepened their plight, making it difficult for families to afford basic necessities or plan for the future. Reviving this social stratum will require intentional policies: affordable housing, access to quality healthcare, and educational reforms that prioritize skills for a modern economy. Without this revival, the dream of shared prosperity will remain elusive.

    No doubt, the narrative of Nigeria in 2025 remains indistinct, its contours shaped by state actors. From policymakers to creatives, farmers to technocrats, this year demands purposeful engagement from all. Whether Nigeria advances or regresses will depend on the collective determination to confront its challenges with clarity and resolve.

    As the year progresses, the measure of success will not be in lofty rhetoric but in tangible progress.

  • Reforms and respiration

    Reforms and respiration

    Disturbing figures from the National Bureau of Statistics (NBS) indicated relentless inflation in the country. According to its latest Consumer Price Index report, month-on-month food inflation rate, for instance, increased in September, notably affecting prices of staples such as rice, maize, beans, and yams. There were also significant price increases in housing rentals, transport, and medical services.

    Responding to the NBS report, the Director of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, was reported saying, “The reality is that the dynamics driving inflation are yet to be effectively subdued.” He observed that these factors include “the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, climate change including resultant incidents of flooding, insecurity in farming communities and structural bottlenecks to production.”

    Taming inflation demands tackling these challenges, which are mainly the consequences of reforms introduced by the President Bola Tinubu administration.  The World Bank recently said the reforms were crucial for the country’s long-term stability. “Turning back or opposing the reforms would only make things worse,” said Ndiame Diop, World Bank country director for Nigeria, at the launch of the Nigeria Development Update (NDU) report in Abuja.

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    Predictably, the World Bank’s position drew public criticism in a country struggling with a crushing cost-of-living crisis. However, Diop added that the ongoing reforms “must be accompanied by reforms enabling the private sector to create more and better jobs. With targeted support to youth and women.” This was a way of saying that the hard results of the Federal Government’s reforms can be softened. The World Bank report also noted the need for structural reforms, such as reducing trade barriers, improving infrastructure, improving the business environment and supporting household businesses for inclusive growth.

    If the ongoing reforms were inevitable to achieve a better future for Nigerians, the authors and promoters of the reforms should understand that it is counter-productive to carry out such reforms without considering and implementing sufficiently ameliorative measures.

    The alarmingly deteriorating cost-of-living crisis in the country is a bad advertisement for the Federal Government’s reforms. It is important to ask what the three levels of government have done, and what they are doing to save Nigerians from hardship occasioned by the reforms.  They are expected to urgently find solutions to the cost-of-living issues in the spaces they govern. 

    No argument that reforms negatively impacting Nigerians are a necessary means to a positive end will make sense if the people can’t breathe.

    This article was first published on October 21, 2024 

  • States to Earn $4.5m each in Business Reforms Programme

    States to Earn $4.5m each in Business Reforms Programme

    A new government programme is offering millions of dollars in incentives to states that implement reforms aimed at improving the business environment. 

    The State Action on Business Enabling Reforms (SABER) Programme, a collaboration between the Federal Ministry of Finance, the Nigeria Governors’ Forum (NGF), and the World Bank, is offering up to US$4.5 million to each participating state.

    Dr. Ali Mohammed, National Programme Coordinator for SABER, announced the initiative at a workshop on the Framework for Responsible and Inclusive Land-Intensive Agriculture (FRILIA). 

    He emphasized the programme’s potential to transform Nigeria’s economic landscape.

    “This reform will strategically position your States for local and Foreign Investment, hence, creating more jobs and eventually, propel the much desired Economic Growth,” Mohammed said.

    The US$750 million, three-year programme (2023-2025) targets four key areas for reform: SABER aims to streamline land administration processes, making it easier for businesses to acquire and utilize land.

    The programme seeks to create a more favorable regulatory environment for private investment in fiber optic infrastructure, crucial for improving internet connectivity.

    SABER will incentivize states to strengthen the services provided by investment promotion agencies and public-private partnership units.

    The programme also wants to enhance the efficiency and transparency of government services for businesses operating in participating states. 

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    Disbursements of the $4.5 million will be based upon verification by an independent body, ensuring that reforms are successfully implemented.

    The workshop focused on FRILIA, a key reform advocated by SABER. Dr. Mohammed acknowledged Nigeria’s food production growth, but expressed worries over food security as a persisting challenge. 

    He attributed this partly to “systemic issues around land administration and compliance with best practice standards.”

    FRILIA serves as a roadmap to address these challenges. It promotes responsible land-based investment in agriculture, ensuring that investments benefit both businesses and host communities. 

    This includes protecting the rights of communities, employing environmentally sustainable practices, and providing fair compensation for any land acquired.

    The Federal Ministry of Finance, through SABER, is expected to provide participating states with the necessary support. This includes advisory services, technical workshops, and peer learning sessions facilitated by the NGF.

    The NGF is playing a critical role in the SABER programme. Mr. Asishana Bayo Okauru, Director General of the NGF, emphasized the challenges that have plagued land-based investments in the past, including unclear governance structures, weak support systems, and inadequate consideration for social and environmental factors.

    “These have impacted negatively on the cost of doing business, agriculture value chain, livelihood, environment and ultimately, economic development,” Mr. Okauru observed.

    He underscored the importance of strong governance and administrative systems for states seeking large-scale land-based agricultural investments.  The NGF is advocating for the adoption of FRILIA and its principles by all stakeholders.

    The NGF has already made significant progress.  In collaboration with the World Bank, they convened a dialogue on FRILIA adoption in 2021.  

    Furthermore, seven states (Borno, Edo, Ekiti, Kebbi, Nasarawa, Niger, and Zamfara) have developed Executive Orders mandating FRILIA implementation with the NGF’s support.

    The model Executive Order establishes governance and administrative mechanisms, while committing to international best practices regarding land and human rights, inclusion, gender equality, environmental and social sustainability, and responsible natural resource management.

    Okauru expressed gratitude to the World Bank and the Federal Ministry of Finance for their ongoing support in advancing reforms for sub-national development. 

  • ‘Expect positive impact of reforms from Q3’

    ‘Expect positive impact of reforms from Q3’

    The Director-General, Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, in this interview with TOBA AGBOOLA, speaks on the various reforms put in place by this administration and the expected effects on the economy.

    Tell us about the Nigeria Employers’ Consultative Association (NECA) outlook for the year

    This government came in when this economy was to, a large extent, shattered and they came up with some certain reforms, which, we believe, are fundamental.

    Don’t forget that every drug that is meant to cure a sickness must initially have a bitter taste. Looking at the reforms that this government has initiated – the removal of the subsidy, reforms of the forex, monetary policies and so on – we know that these are reforms that will yield fruits at the long run. For instance, the collation of the exchange rates.

    Before now, the last administration had been defending the naira with billions every month and this makes us not have the real value of the naira. But this administration said this could not continue. Unfortunately, the inflow that can help you to stabilise the naira is not coming from the context of dollars; we still have lots of naira pursuing few dollars. The principle of economics says once the demand is higher than the supply, prices will go up. We are hoping that with the Dangote Refinery and the Port Harcourt Refinery coming on board, it will reduce our propensity to spend money on fuel importation.

    The money borrowed from AFEX, which is $2.5 billion, would also help to shore the dollar inflow. The long-term solution is: let us produce what we consume. Let us give the real sector some attention. If we can produce what we are consuming and we can produce sufficiently to export, to a large extent, we will solve our dollar challenge. We are importing almost everything and this is putting pressure on everything – manufacturing, naira etc.

    If we don’t deal with revenue from the inflow of dollars, we are just playing round the issue and we won’t have a long-term solution.

    Diversification.This is another area we have been talking about for a long time. The government must diversify our sources of revenue, our forex. The sources of forex have not been diversified because about 90 per cent of it still comes from crude oil, which price we don’t have control over or how many barrels we sell per day,  because the Organisation of Petroleum Exporting Countries (OPEC) still gives allocation per country.

    If the government can remain focused on the reforms,  it will go a long way. There are fiscal and monetary policies being pushed out through the Taiwo Oyedele Presidential Committee. Lots of reforms on Customs and even the Minister of Finance and Economy came up with some papers, giving waivers on some products. So, we believe that with  all these, towards the third quarter, we should start seeing the benefits of these reforms.

    But for the first and the second quarters, we might still have some challenges. With the confirmation of the CBN Governor that they are doing everything to make naira find its true value, we believe that by the third quarter, things will improve.

    What impact will the Dangote/Port Hacourt Refineries make?

    The fact that we have Dangote and Port Hacourt refineries, something should count for it. We don’t believe on the argument that the price of petrol will not come down as a result of this. Even the NNPCL GMD also confirmed recently that the price of petrol would come down. With those refineries working, it means we will be refining locally; we will not be sending the crude abroad. That margin should count as something for Nigeria.The comparative advantage should also count for us.

    We can’t continue to say we use international or global market price and when it is convenient, we say our economy is not denominated in dollar, it is denominated in naira,, which we must spend.

    So, if our economy is denominated in naira, then why are we using the context of a global dollar price to deal with local issue of fuel? Those arguments are neither here or there. The government needs to be more transparent and build consensus around its policies so that Nigerians can rally round its policies and we will make it work.

    What is the solution to unemployment?

    The solution might get a bit worse if you follow the International Labour Organisation (ILO) Social and Employment reports that employment will be worse in 2024, especially for the income low-country like Nigeria. And this is based on what is on the ground. The economy is not picking up. The inflation keeps going up, the exchange rate keeps going up, the real sector is struggling to survive. And jobs don’t come from the sky. You have to be productive to create jobs. And that is our concern. Employers are getting squeezed. Businesses are facing multi-dimensional challenges and those that can’t withstand the heat are leaving. It will be unfortunate if we take their leaving with levity. If we say that they have the right to come and go, then we are not really understanding the consequences of their leaving. Because, for a big business to close shop, there are many small business in the value chain that are probably supplying some input.

    If that big business closes shops, the small businesses in the value chain are most likely to close shop or reduce their operations which might also involve people losing their jobs.

    There are no two ways to it. The private sector remains the engine of development and the biggest job creator. If you want to resolve it, focus on the private sector. Let’s support it. We hope the Taiwo Oyedele Presidential Committee will come up with its recommendation and we hope that it will be implemented. The FIRS chairman also said two weeks ago that they were working on how to reduce multiple taxes. We hope that this will promote growth and production. Hopefully, if this happens, more businesses will stabilise and the economy will grow. We cannot reduce the unemployment rate, if we don’t creat jobs.

    The second option we are canvassing is technical and vocational training. Few weeks ago, the Federal Government gave the ITF the mandate that they must register or produce about 20 million artisans. I think this is one of the ways to go. We have the NECA-ITF Project, which has been on for about 20 years. That project has trained over 10,000 artisans that have gainfully employed and those that are not employed have started their businesses. That is another model to reduce unemployment.

    The third way is through social intervention. Unfortunately, our social intervention programme ran into controversy at the Ministry of Humanitarian Affairs. In most economies, the social intervention fund plays a very major role in driving the economy, especially for those on the zero-level income.

    The idea is to make sure that their capacity continues to fuel production. This creates capacity to continue to purchase and that keeps the business running because the companies  keep producing. If those countries give like $30, $40 or $50 to some  individuals every month, it is to make sure that the ability to buy or consume is not compromised. Because it is when they can buy that businesses can produce. This is one of the problems in the manufacturing sector.

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    Recently, they said they had about N272billion unsold goods, which could expire. In other words, if you take action A, it will affect action B, C and D toward the growth. That is one of the critical things the government needs to look into.

    You will see yourself pumping money into projects without any effect. The government needs to be proactive.

    How does the govt tackle insecurity?

    We are complaining about the effect and we keep fuelling it. One  thing that is fuelling insecurity is unemployment. For instance, during the #END-SARS protests in 2020, do you think any body that was gainfully employed would be part of the protest or be looting malls?

    If we solve unemployment, that will reduce the numbers of hands in crime. Then, our budget on insecurity will reduce and   focus would be on external aggressions. Those are are the critical issues.

    The issue of multiple taxes has refused to go.  Is NECA doing something about it?

    We are happy that the Taiwo Oyedele Presidential Committee is looking into this. We have also submitted our recommendations and we are hoping that they will be accepted by the government. The comment by the FIRS chairman that the issue of multiple taxes would be look into is also encouraging. We don’t want to pre-empt the recommendation of the committee, but from what we have heard,  the committee has made good decisions that will change the situation.

    Access the NECA-SEC partnership

    The partnership with the Securities and Exchange Commission (SEC) is to deepen the private sector participation in the capital market, which will also aid business activities. To deepen public- private sector partnership, not only to drive the infrastructural development but to drive the national growth. The growth of other developing countries can be ascribed to private-public partnership. And we believe this is the way to go. It will allow businesses in need of financing to come to the capital market to raise cheaper finance and increase employment because when businesses have investment projects that promise best of returns and can source cheap financing of the projects profitably, the ability to employ more people will increase.

    Is the govt’s monetary policy working?

    We commend the bold efforts that have been taken by the government on the reforms. We understand that it will take some time before those reforms will start yielding results. We urge the Federal Government to remain focused and continue to engage with the stakeholders. One of the challenges with the last administration has was that  when the policy is not working, they keep pushing it.

     Meanwhile, it is not giving the expected results. You see, you cannot persist in error.  When a policy is not working, you stop it.  Sometimes the International Monetray Fund (IMF) and World Bank give us policies that may not suit our situation or work. So, you have to stop it. But, very importantly, this administration needs to continue to engage the stakeholders.

    Your take on decent job

    As the employers’ representative and the voice of businesses in Nigeria, what we preach is responsible enterprises. They align with the ILO principles of decent work absolutely. We align with the ILO concept that labour is not a commodity and should not be treated as such.

    In our engagements, we have emphasised the need for decent work. Not only that but also for those at the global level – business rights – because businesses are also delving into human rights. It is quite interesting and we align with that concept.

    What is your advice to the government?

    We urge this administration to remain focused on its reforms. The government should take a second look at the priority. They should focus on the action that will enhance its seven-point agenda. There is the need for serious coordination. While we commend the efforts of the Minister for Finance and Economy, we believe much is needed to be done in coordinating the inter-ministerial activities, so that the failure experienced in the last administration will not continue.  Lastly, they should deepen engagement with the private sector and other stakeholders.This will be helpful not only to the government but also to the economy.’

  • Functional police reforms: must for economic development

    Functional police reforms: must for economic development

    What sort of reforms do the police need in today’s Nigeria. Why are those reforms essential? How should it be done? Ogbonna Chukwumerije and Emmanuel Olukanni point the way in this letter to the Minister of Police Affairs and the Acting Inspector General of Police

    Introduction

    The effect of insecurity and the overt highhandedness of security agencies on the citizens of a country and her economic development cannot be overemphasised. Apart from creating a hostile environment for business development, it creates uncertainty in the minds of prospective investors about investing in businesses operating within the country. This discourages domestic and foreign direct investments, reducing competitiveness between business organisations, and occasions a decline, or at best, static in the employment rate among the citizens which eventually leads to stunted economic growth.

    Naturally, investing in policy reforms to tackle this issue should be of utmost concern to the government of any country. The International Peace Academy (IPA), in its policy report titled “Challenges in Police Reform: Promoting Effectiveness and Accountability”, interestingly said that: “Some development agencies and international financial institutions have recently overcome longstanding resistance to involvement with armed institutions and have supported… police-reform projects. Under the rubric of ‘security-sector reform’, these projects reflect interest in enhancing the environment for economic development, removing impediments to foreign investment, and reducing the costs of crime and violence…”

    Nigeria as a country, is bedevilled with an avalanche of security issues. Since the emergence of democratic governance in 1999, the Federal Government has made little effort to improve human rights protection and secure the lives and properties of its citizens. Ranging from sectarian clashes, which continue to claim hundreds of lives within the country, to terrorism, electoral violence, and corruption among others, the government has demonstrated a lack of political will or interest in investigating the cause(s) of these incidences or better still, making necessary reforms, especially within the various security agencies to address the issue. Members of the security forces have on numerous occasions, been implicated in incidences of extrajudicial killings, torture of suspects, and widespread extortion and corruption without being investigated or held accountable.

    The wide acceptability of the rule of law as a pivotal tool in aiding the growth of an economy is critical to every nation’s development. This is because, fundamentals, which are crucial to the development of any business, like owning land and property, transportation, and importing raw materials, among others will not be possible without proper enforcement of laws regulating these areas. Ignoring corrupt practices by top officials in security agencies, turning a blind eye to the collection of bribes, extortion and neglecting to address the overriding issue of insecurity within the country are contributory factors to the downward spiral currently being experienced by Nigeria’s economy.

    In this article, we will be discussing the incidences of corruption within security agencies, police highhandedness and its impact on the country’s economic growth, and the lack of an enabling environment for successful functional reforms. We will also suggest workable reforms the Nigerian Government can immediately implement geared towards promoting economic development.

    The Police and Economic Development: The Impact

    It is evidential knowledge that security is essential in the economic development of any democratic country. A secure environment is conducive for investment, trade and innovation. What is more, it allows businesses to operate without fear of theft, violence, extortion by security forces, violation of fundamental rights and policies and disruption of business activities. Also, it promotes social cohesion and stability.

    Of significant importance is the role of security agencies like The Police, in securing the environment for both local and foreign businesses to thrive. They work to prevent crime, protect people and their properties, uphold the rule of law and respond to emergencies when required. Gathering intelligence on threats to the sovereign integrity of the country, terrorist activities and suspicion of crime are all part of what security agencies in various countries do to make such countries fertile for foreign direct investment and create a breathing room for local businesses to operate without disruption.

    One study conducted by the World Bank in 2016, found in its report,  that countries with better-functioning police forces experience a reduction in crime and criminal activities, which inevitably creates a more secure environment for businesses to operate. Another study by the National Bureau of Economics Research, titled: “Police Force Size and Civilian Race”, reported that police reforms that reduce racial bias can lead to increased economic growth. The study found specifically, that its finding above was because racial bias in policing can discourage investment in minority communities, which can lead to lower economic growth.

    Furthermore, there is proof that countries that tend to invest in security agencies and policy reforms in that respect usually witness more domestic investment because such reforms lead to ease of doing business within the country. Such countries also attract more foreign investors than their counterparts.

    Policing Reality in Nigeria: Economic Chokehold

    The existence of a large functioning police force in a country should ordinarily connote that the cost of doing business will be reduced, and properly regulated.However, the case is reversed in Nigeria. It is common knowledge that the police in Nigeria significantly undermine the rule of law. Studies have shown that 36 per cent of police bribes are paid to circumvent and speed up usual procedures, 29 percent to avoid fines and 10 per cent for no specific purpose than to “cut corners” and avoid paying the expected taxes and dues that might have otherwise generated revenue for the government. For example, because of how easy it is to bribe securities agencies in Nigeria, investors and manufacturers sometimes find it easier to avoid paying taxes and tariffs on imports and exports which might have otherwise generated revenues for the government to invest in public infrastructure capable of boosting the Nigerian economy.

    Similarly, there are various instances where even if these investors and business owners are willing to pay the necessary dues, the police officers will prefer bribes. It will be almost impossible for businesses to transport goods within the country, especially from the various ports across Nigeria without setting aside some amount of money for bribes at police checkpoints in addition to paying the necessary dues.

    The agricultural sector is not left out of this conundrum. A large percentage of trucks/lorries transporting agricultural produce across the country are forced to pay bribes to transport the goods across state borders. Nigerian police officers are known for demanding unmerited compensation at every roadblock, checkpoints and intersections. In utmost absurdity, the rise in food prices currently being experienced within the country has been partly attributed to the Nigerian Police. Evidence abound of Police officers demanding levies for food produce transported by road by farmers and food importers. Logistic businesses that operate large and medium-scale food deliveries are not left out. Their drivers have reportedly complained of having to go along with large sums of money in bribes whenever they are transporting food products from large-scale farmers and ports to bribe police officers at checkpoints. It is the view of the authors that these acts of bribery not only affect the price of foodstuffs but will also negatively affect the logistics companies that will be forced to charge humongous amounts to transport agricultural products. This may lead to a loss or reduction in demand for services for the logistics companies.

    The ongoing racket going on at Apapa and Tin Can Port in Lagos is such example of bribery and corruption among security agencies and government officers. A cankerworm which has eaten deep into the fabrics of morality among the Nigerian police officers. The process known as ‘fast track’  witnesses truck drivers parting with between N250,000 to 500,000 per delivery, depending on the value of the products being cleared and transported to avoid their trucks being delayed.

    Drivers who are unable to pay might have to watch their produce, (especially where such products are perishable) get rotten and spoilt to the point that by the time they come to claim their trucks, there is usually little to nothing left of the imported food products.

    Now the effect of the expose above is that retail sellers, restaurant owners, farmers and traders who deal in food products to compensate for the huge sum of money they pay in bribes will ordinarily pass on the cost to customers. This extortive practice fans the embers of the economic hardship currently permeating the country. Farmers who operate on a large scale which arguably contribute immensely to the country’s economy, are met daily with more reasons to look for a more conducive market for their products or to think twice about their profit margins and decide whether to continue with the business or fold it up and invest in some other ventures.

     Little wonder why The Guardian (a Nigerian Daily Newspaper) in an article titled “Nigerian Police, Roadblocks and the Ease of Doing Business” by Senator Sam Ohuabunwa, published on March 12, 2018, stated that if there is one place, we as a country need urgent and revolutionary change, it is the Nigeria Police (Force or Service). This is because the Nigerian Police is fully symptomatic of what is troubling Nigeria and her economy. According to the write-up, our perennial low position on Transparency International’s global Corruption Perception Index (CPI) is strongly influenced by the pathetic picture of our Policemen extorting money from drivers in the full glare of the public. The good Senator also pondered how “…this practice of our Police on our roads improve our ease of doing business rating or global competitiveness? 

    What does this mean for Nigerian companies and investors who wish to do business in Nigeria? It means higher costs in time and money for companies carrying on businesses within the country, low or zero inflow of direct investment as the economy becomes less attractive to foreign investors, and an alarming rise in the price of commodities. Apart from corruption and bribes, a general lack of security in itself is a chokehold on the economy.

    Studies have found that the most important determinant in attracting foreign investment is “trade openness”. For a country that is not an open economy, it then makes sense that investment by foreign investors will be near impossible. Likewise, for middle-income countries like Nigeria, one most important contributor to economic growth is safety and security. Where such a country suffers from insecurities, then it becomes less attractive to investors, leading to a vast reduction in foreign exchange inflow, a massive blow to the country’s economy.

    In addition, it has been the experience of the authors that more often than not, expatriate clients have complained about police officers coming up with scrupulous and scandalous petitions with the singular aim of extorting money from them. Expatriates who own and carry on major business enterprises within the country are invited by agencies on baseless petitions only to be asked to pay huge sums of money in bribes on getting to the office on threat of arrest or disruption of business operations. This, in our opinion, will only operate to discourage other expatriates who may otherwise be willing to carry on businesses in Nigeria from doing so.

    The Tech Ecosystem: The “Young Money Syndrome”

    The infamous act of the police officers in targeting young individuals in the tech industry, under the false claim and assumptions that they are involved in illegal activities as a result of their earnings or because they carry their laptops around have had a somewhat disproportionate effect on the tech ecosystem. This is not to deny the ever-present evidence of internet fraud orchestrated by a minuscule number of Nigerian youths both within and outside the country. What is evident from a proper observance of the activities of these security agencies is that because of the bribes they might have otherwise obtained from these internet fraudsters, they tend to go after those who are making honest living in the tech industry, forcing them to pay huge sums in bribes. Anyone who witnessed the harrowing experiences of influential startup founders, Yele Badamosi  and Adegoke Olubusi  at the hands of the now-disbanded SARS, will think twice about investing in the tech industry or starting up a tech company in Nigeria.

    This highhandedness of the police in harassing and victimising young-bright minds, arguably responsible for one of Nigeria’s fastest-growing industries is part of the major contributory factor to the brain drain currently being experienced in major sectors of the country’s economy.  An effect which is not only limited to the tech sector but also the education, health and medicine, oil and gas and renewable energy, among others.

    The Oil Sector

    As earlier mentioned, the oil sector is not left out of the overbearing effects the actions and inactions of security agencies have on the country’s economy. Kidnapping, oil thefts, vandalism, and police corruption are recurring themes in this sector. This has occasioned some International Oil Companies to divest from onshore activities and focus more on challenging onshore ventures because of the level of corruption and insecurity being experienced. 

    According to the Guardian Newspaper, in 2012 in a leaked international financial data, nearly 40 per cent of Shell’s total security expenditure over the three years totalling the sum of $383m (244m euros), was spent on protecting its staff and installations in Nigeria’s volatile Niger Delta region. In 2009, $ 65 million was spent on Nigerian Government forces and $75 million on “other” security costs, believed to be a mixture of private security firms and payments to individuals. According to Ben Amunwa of London-based Oil Watchdog Platform, “It is staggering that Shell transferred $65 million of company funds and resources into the hands of soldiers and police…” You will agree with me here that, no company or individual will be happy to invest in an economy where the bulk of the profits and proceeds from such investment will be spent on security and bribes for government agencies.

    Need for Reforms

    According to Marenin O. in a specially issued article on Public Administration and Development titled: “Style of Policing and Economic Development in African States” published on the Wiley Online Library;

    “Economic development, at the minimum, requires threshold conditions of social order, political stability and governmental performance. Economic development will not occur without a societal environment that is able to provide minimal security to all, inspires confidence that the political system (the overall decision-making processes that distribute powers, resources and rights) will follow basic rules and norms with integrity, and provide the belief that the routines of life are protected and predictable to some degree.

    What this means in practice is that the general populace and salient groups have confidence that the system will not be undermined by private self-interests, fraud, crime, corruption, the use of force or the general mismanagement of the economy by government and private companies. That confidence is reinforced if the public believes that there exist, and will be brought to bear, effective accountability and control mechanisms to limit the inevitable temptations experienced by people inside the political and economic systems to exploit their positions and powers for private gains.”

    From the panoply of discussions as presented above, it is quite evident that at this juncture in our country’s economic journey to unobstructed development, there is a need for a clarion call for reforms, especially within the police force. This is not only necessary to address the prevalent issue of insecurity and corruption pervading the country, but also, to prevent the country’s economy from being further cauterised by the continued highhandedness of security agencies and their officials. 

    Investing in security infrastructures and implementing functional reforms have proved to be an effective tool of economic development in both developed countries like the United States, and Post-Conflict Countries like South Africa, Kenya, and Liberia, among others.

    Partially Successful Police Reforms in Africa and Beyond; Case Study

    In the United States, the aftermath of the 9/11 attacks witnessed the United States Government, investing heavily in security  through policy reforms and infrastructural upgrades, among others. This in retrospect, helped to create jobs and boost the country’s economy.

    A study by the Brennan Centre for Justice found that states that implemented police reforms saw a decrease in crime rates and an increase in economic growth. The report concludes that considering the immense social, fiscal, and economic costs of mass incarceration, programs that improve economic opportunities, modernize policing practices, and expand treatment and rehabilitation programs, all could be a better public safety investment.

    Similarly, investors became more amenable to investing in a country like Mexico, one of the high-ranking countries in notorious drug-related violence,  because the government worked relentlessly to improve security, by developing security frameworks to address specifically, drug-related crimes and implementing policy reforms among its security agencies. This enabled the country to attract more foreign investment, thereby boosting her overall economic development.

    In the same vein, there have been notable attempts at reforming the police in some African Countries in recent years. In countries like Kenya, the government has invested in security to protect tourists.  This helped in reviving the tourism industry, a major source of revenue for the country. 

    “Kenya’s economy achieved broad-based growth averaging 4.8% per year between 2015-2019, significantly   reducing poverty (from 36.5% in 2005 to 27.2% in 2019 ($2.15/day poverty line).”

    According to Mr. James Kamula, a regional coordinator of Coastal and Marine Projects in Nairobi;

    “The environment is under increasing stress due to continued overexploitation of resources. This threatens ecosystem productivity in the coastal area, and therefore economic growth. COSMAR is helping countries to include environment concerns in all development policies and actions,”

    Also, according to a UN report analysing sustainable tourism in the country. The tourism sector creates jobs for 11 per cent of Kenya’s workforce. It diversifies the economy and boosts other sectors such as transport, food and beverages, entertainment and textiles. Investing in policing reforms to address security threats to tourists and those who might be interested in carrying out coastal projects within the country has contributed to Kenya’s economic growth.

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    Also, in South Africa, the South African Police Service (SAPS) witnessed a post-apartheid transformation which focused on three main issues, first, a change in the personnel composition and management of the SAPS; second, a shift in the underlying ideology of policing from protecting white rule to a community policing approach through the creation of community-based forums to partner with the police and to increase the flow of resources provided to black communities; what then followed is an institutional change, which witnessed the centralisation of control over the newly formed police in the post-apartheid government. The government made successful reformative policies due to the implementation of four factors as identified by Bayley (2008) , to wit; a political settlement, shared values of governance, administrative capacity and a vibrant civil society.

    The South African Government enjoyed much external support due to these changes. Foreign Governments, private consultants, investors and NGOs eagerly sought to show that they were on the right side of history by carrying out aid projects and investments which inevitably led to the enormous growth of the South African economy.

    Effective Police Reforms in Nigeria

    Over the years, most international reformative efforts by the Nigerian Government have focused on selected aspects of policing such as improving control of transnational crimes, control of fraud, community policing reforms, and on developing professional skills in management. However, research by academics and local NGOs suggest that the performance and image of the Nigerian Police Force (NPF) have witnessed little change since the country’s independence in 1960, despite the focus on the above-mentioned reforms. This is as a result of a couple of factors. For one, politics still dominates the strategic and operational priorities of the NPF, especially in response to communal violence. The wishes of the political leadership, whether that leadership is the military or an elected civilian regime, still dominate. There is very little external capacity for oversight of the police, by civil society or established government oversight institutions, and the police enjoy widespread impunity.

    Also, the fact that Nigeria, a country operating a Federal System of Government, composed of 36 states has one National police force centrally controlled creates numerous potentials for conflicts between the centre and the states, especially where the political parties in power at the federal and state levels differ. The sheer size of the country’s police force numbering about 340,000 also creates management and oversight problems, thereby vitiating well-intended reforms.

    Take Away

    The takeaway here is that changes in organizational arrangements and priorities are not likely to have an impact on street-level policing, in the absence of a clearly expressed and continuously enforced policy by effective central and local reward and sanctioning management policies, oversight and anti-corruption efforts. Second, as elsewhere, police reforms have to be supported by political will, in a political environment that grants the police some operational autonomy.

    What then can be done to create a conducive environment for functional police reforms to be effective?

    Suggested Approach to Functional Police Reforms

    The major preconditions for any successful reform are an overall political agreement and sustained political will. This applies majorly to functional policing as they majorly challenge the major power holders in the country.

    1.            Re-orientation and Effective Enforcement of Fundamental Rights and Riot Control

    There is a specific need for awareness sensitisation among police officers as to the behemoth value technology holds in our modern-day economy.  researchers estimate that the digital economy is worth $11.5 trillion globally, equivalent to 15.5% of the global GDP, and has grown two and half times faster than global GDP over the past 15 years.  The Nigerian Police force needs to be made aware of the need to promote the development of digital technology as a springboard for the country’s economic growth and the important role the Nigerian youth has to play in this sector. The traditional mindset that a young vibrant youth cannot legally amass wealth should take a back seat in the enforcement of our security policies. Technology is highly rewarding, and the possibilities achievable through its utilisation are endless. Incessant clamping down on young entrepreneurs should be revisited. Proper investigations and findings should be made to ascertain incidences of financial fraud. This will ensure that more individuals are encouraged to invest in the technology sector.

    Similarly, the tenets and core values of the police force and other security agencies should be re-engraved in the minds of every officer. Upholding the rights of every citizen and enforcing laws and statutes regulating the operations of both local and foreign businesses should not be left on the pages of the Constitution and other relevant regulations. Active steps should be taken towards ensuring that every officer plays by the book. All hands must be on deck to ensure that wherever riots break out within the country, security agencies and riot control units operate in a way that does not encourage further riots and destruction of properties as inept and brutal riot control tends to do.

    2.            Increase Salaries and Entitlements

    There is no gain saying that the salary of an average police officer in Nigeria is nothing short of atrocious which leads to deflation in the morale of affected officers. A police officer below the rank of Inspector General of Police earns less than 80,000 naira per month. While this does not excuse the incessant bribes and corruption within the police force, an increase in remuneration and benefits will go a long way in easing the poverty rate among the officers, thereby eradicating the need to constantly demand bribes or extort businesses.

    We also recommend that the Federal Government ensures beneficiaries of the Group Life Insurance Scheme provided for Police Personnel can claim same without the hassles of red tape/bureaucracy. This will go a long way in encouraging the police officers and men/women who have been working hard to ensure the security of lives and property across the country.

    3.            Investing in More Stringent Anti-Corruption Policies

    Economic mismanagement, fraud and corruption are tightly linked to ineffective policy reforms. Addressing this will require strong investigative capabilities by the police and other security agencies as well as the political will to allow investigations into cases of corruption and mismanagement and the ensuing sanctions to run their course. This can be done by putting in place more stringent anti-corruption policies and backing them up with effective enforcement and sanctions. Also, the control of high-level corruption and organized transnational crime requires sophisticated investigative techniques, equipment and skills.

    4.            Border Controls and Improved Habour and Airport Security

    Control of borders and improved harbour and airport security are essential to control smuggling and protect commercial import and export activities. Harbours are often controlled by armed gangs who loot ships and warehouses. At airports, gangs have been known to stop planes as they taxi and empty their cargo holds. Appropriate equipment and the use of specially trained units could assist in dealing with these sorts of specific security threats to international and local economic activities.

    5.            Rigid and More Rigorous Procedure for Selection of Members of the Police Force

    The procedure for qualification and admission into the Police Academy  for members of the police force is somewhat lax and too flexible in Nigeria.  There is a need to make this procedure more rigid so that whoever is going to be admitted into the Nigeria Police Academy would have gone through some rigorous scrutinization process and background checks before being admitted into the academy. It will also help if the curriculum at the academy is revised to include more humanitarian and functional courses that will equip graduates from the Nigerian Police Academy with the necessary skillset to be able to address the security challenges within the country.

    6.            Encouraging Interests in Local Politics by Foreign Investors and International Reformers

    The most essential element for functional policy reform to be effective in promoting economic development is the need for investors and international reformers to learn how to play local politics. For such players to be successful within the country, they cannot refuse to be drawn into local events. According to Donais T. (2008),  Police reforms are political reforms for they alter the existing distribution of authority, powers, benefits and rights. Policing reforms will always be resisted by some and supported by other local stakeholders. There will be perceived losers and winners. Reformers and implementers need to play hardball with those who oppose reforms and not let them become “spoilers.” Reformers need to find or create supportive stakeholders and promote them as much as possible.

    Policing reforms will only become effective in promoting economic growth in a country like Nigeria if the minimal threshold conditions for social order are achieved. A community implementation of all the above suggestions is subsumed into these threshold conditions, and it is only after this threshold has been crossed, that policing reforms will become functional, sustainable and legitimate.

    7.            Implementation of State Police/Policing

    In order to complete law enforcement and policing triangle, it is suggested that state police be implemented. States already have divisions of High Courts, Magistrate Courts, and Customary Courts. The State is in a ready position to establish state policing in order to address the high incidences of insecurity in various states across the country. The clamour for state police is made more prominent in the various news reports periodically published by Nigerian Newspapers, one of which is a recent publication by Guardian Newspaper in what can be described as an open letter to the president, titled “Mr President, We Need State Police”.  Establishing State Police as part of the country’s security architecture will go a long way in ensuring prompt response to issues of insecurity especially cases of emergencies. What is more, states can raise revenues and make local policies to regulate Police operations within the states.

    8.            Amendment of the Nigeria Police Act 2020 to include Independent Investigating Bodies

    Nigeria can take a page out of the United Kingdom’s (UK) policing policies by amending the Nigeria Police Act to include the establishment of an independent investigating body or ombudsman infused with the powers to investigate allegations against erring police officers. For example, the UK’s Policing and Crime Act 2017  and Police Reforms Act 2002, grant separate powers to the Independent Office for Police Conduct (IOPC),  a non-departmental public body, which succeeded the erstwhile Independent Police Complaints Commission (IPCC), to oversee the police complaint’s system in England and Wales, investigate the most serious matters relating to police conduct, and improve police practices through shared learning.

    Also, there are countries like Northern Ireland,  among others who have established the Office of Police Ombudsman with the statutory duty of securing an efficient and effective independent complaint system, saddled with the responsibility of receiving and investigating complaints and allegations against conducts of police officers.

    It is expedient that Nigeria amends her Police Act to include similar independent bodies to address issues of police highhandedness and conduct unworthy of the uniform, independent of the Nigeria Police Force as a body. The Nigerian Police Act 2020, only makes provisions in its Part XV, granting the Director General of Police the power to establish a Police Complaint Response Unit to be headed by an officer not below the rank of Chief Superintendent of Police. This, in essence implies that the receipt of complaint, investigation and recommendation as to disciplinary actions are all treated within the police force and supervised by police officers. 

    Establishing an independent body to investigate complaint’ and allegations against police officers will not only ensure that the investigations are carried out without prejudice, but will also replenish the already depleted trust and confidence in public policing, while ensuring that erring officers are adequately investigated and disciplined. 

    9.            Discipline of erring officers

    Increased disciplinary measures will also help in discouraging involvement in extortive practices. Disciplinary measures cannot be successfully implemented without focusing on eliminating external safe havens for large-scale corrupt gains. This will ensure that High-level politicians, the so-called big men and women and high-ranking police officials who are in the position to steal massive sums from public treasuries and take huge sums as bribes have no safe havens to spend their ill-gotten gains. Every bank account should be investigated upon such officials leaving office, and every property and asset should be audited.

    Ogbonna Chukwumerije Esq., is a Team Lead at Pinheiro LP, his core areas of interest and practise are Intellectual Property Law, Technology Law and Environmental Law.

    Emmanuel Oluwaseun Olukanni Esq , is an Associate at Pinheiro LP, his core area of interest and practice are Technology Law, International Trade and Investment Law, Litigation and ADR.