State of the Nation

There is no doubt that political risk is elevated. “Boko Haram” terror attracted its first serious reprisal in Kaduna last month. Anger is rising within the Christian population as bombing of churches is now a “Sunday-Sunday” fare and no one can be held accountable. While “Boko Haram” says it is acting in the name of Islam with the objective of Islamising Nigeria, mainstream Muslims say the group does not represent them. Public anger, meanwhile, is directed at the government, rather than the terrorists, for not “catching” the terrorists precisely as Boko Haram sponsors calculated, and indeed threatened. Northern Nigeria – especially the North-Eastern core of Borno and Yobe, and its periphery, stretching to Kano and Kaduna – is essentially ungovernable. All that remains is for Boko Haram to have a successful operation anywhere in Southern Nigeria, and for reprisals to follow subsequent bombings North or South, and Nigeria may enter a sectarian crisis of immense and unmanageable proportion. Government and public attention should now focus sharply on the terrorist group and on ascertaining who its financiers, sponsors and collaborators are. Whatever happens, however, Nigerians should NEVER countenance or cooperate in any action that interrupts Nigeria’s constitutional order and democracy, as some appear to desire. Boko Haram, even though with social (poverty, unemployment and ignorance) and religious (extremist religious ideology and pursuit of religious hegemony) contexts and roots, is a deliberately escalated crisis designed to achieve explicit political ends. One of those objectives may include providing justification for military intervention in Nigeria’s governance as a last stratagem of the “ungovernability” agenda. Nigerians must not acquiesce in such stupidity. The democratic freedoms we enjoy must be preserved in spite of insecurity, political or economic difficulty and any other challenges we may face as a nation. I always remember those who rejoiced in 1983 when Sani Abacha announced the entry of the Buhari military dictatorship! Soon it became evident (as the NPN leaders had always warned) that there were only two ruling parties in Nigeria – the NPN and its military wing! Not surprisingly, the emergent military regime concentrated all its brutal attention on opposition governors and politicians while exonerating leading ruling party leaders and members. It was a similar experience when members of the “June 12 movement” and civil society activists (Beko Ransome-Kuti, Olu Onagoruwa, etc) naively collaborated with Oladipo Diya to bring Abacha into power during the Shonekan Interim Government. Soon afterwards, the full weight of Abacha’s brutality was turned upon MKO Abiola and his supporters once Abacha consolidated his position! Evidently, the pursuit and promise of power can rob people of their judgment, insight and foresight! Meanwhile, economic risks are increasing as well. The Greek voters stepped back from the precipice recognising that while in the first election they could vote with their hearts against austerity, in the re-run election they had to vote with their heads in favour of Greece’s stay in the EU and eurozone. Now markets will, and are already shifting their attention to Spain, Italy, Portugal, Ireland and others as bank deleveraging, fears of sovereign default and bank ratings downgrades fill the European airwaves. Europe may already be affecting global demand. More critical for Nigeria is falling oil prices, which will threaten our foreign reserves accretion, exchange rates and budgets. Except we make the required domestic fiscal adjustments, most of which are and will be unpopular, a substantial decline in global oil prices will lead Nigeria into adverse economics, which, if combined with current security challenges, may be explosive. The critical question for economic policy managers is whether the decline in GDP growth rate to 6.17 percent witnessed in the first quarter of 2012 is a temporary blip or a new reality. There are factors that suggest the latter – Northern insecurity may already be reflecting in agricultural output, and food production in subsequent seasons may weaken; low purchasing power appears definitely to be affecting manufacturers and FMCG companies; financial sector growth is weak and credit growth to the private sector remains muted; and oil sector output growth is again negative. On the positive side, there are useful reforms which can transform the economic outlook – agricultural reforms are promising; power privatisation, if concluded in October, may be truly transformational; port and customs reforms are being sustained; investments in critical infrastructure – road, rail and aviation – imply a medium-term improvement in infrastructure; and the January oil price increase reduced the budget spend on notorious fuel subsidies, and a new Petroleum Industry Bill draft has finally been written. Economically, Nigeria is at a crossroads of sensible reforms and an unsettling political and internal security environment. The government has to ramp up employment generation and wealth creation initiatives such as the “You-Win” programme and its promised public works programme. The approach to such initiatives cannot be leisurely or at the public sector speed of project actualisation. There is a jobs and poverty emergency out there, and action must be stepped up to ensure we engage urgently with the 24 percent (or more) who are unemployed (especially the 37.7 percent who are aged 15-24 years!) and the 60 percent drowning in poverty and lack. The most significant short-term policy action that President Jonathan can take is, however, to ensure successful completion of the power sector privatisation in October 2012 as promised. Power privatisation will be an economic game changer!