Wednesday, November 27, 2013

Multiple Levels of Uncertainty

The policy highpoint of 2013 was substantial privatization of the unbundled PHCN entities by the federal government with only three outstanding transactions-Sapele and Afam Gencos and the Kaduna Disco. Outside the power sector, the other area of progress remains continuing reforms in agriculture. GDP growth in the third quarter at 6.8% suggests that full year output will grow within our target band of 6.5-7% for 2013. Some sectors appear to be doing quite well-retail; hotels and restaurants, and indeed the wider entertainment sector; electronic payments and e-commerce, driven by improvements in the financial sector with regard to the payments system, and continuing telecommunications sector growth over 30%. The CBN has succeeded in managing inflation, bringing it down in the last three months (8.2%, 8.0%, and 7.8%) consecutively. There has been some progress too in financial and capital markets-apparently stable deposit money banks; rising capital markets with 2013 YTD growth around 35%; efforts at financial deepening and increased trading sophistication through the creation of two new over-the-counter exchanges for unlisted PLCs (NASD) and bonds, derivatives and other money market instruments (FMDQ); and growing international interest in our bond markets with J.P Morgan, Barclays and the IMF/World Bank all taking interest in Nigerian bonds. The government has conducted sensible foreign relations and recorded significant achievements in global football-winning the African Nations Cup and FIFA Under-17 World Cup, and qualifying for the 2014 World Cup in Brazil. Less positively, the government continues to grossly mismanage the oil sector-the Petroleum Industry Bill remains stuck in parliament; oil theft and piracy are rampant in the Niger-Delta costing the federation billions of dollars (and challenging federal and state budgets!); and under-investment and divestment by the international oil majors continues unabated. To compound our domestic oil sector incompetence, the outlook for global oil market fundamentals does not appear robust especially into the medium and long term. In this context, the CBN pursues its emotional defense of the Naira at current levels while the markets appear to have assumed depreciation is inevitable sooner or later, and the later it is, the more likely it would be devaluation! Not surprisingly, the spread between the CBN’s official dollars and autonomous market rates is widening. Meanwhile at the cost of scarce foreign reserves, we continue to subsidize imported consumption, capital repatriation, foreign education, holidays and some limited manufacturing! University students remain at home, five months after ASUU declared a strike, which appears motivated by a desire to inflict political costs! In all this, the social context remains bleak-significant levels of corruption; massive poverty and unemployment; the collapse of public services; high levels of crime and insecurity; and a continuing “civil war” against “Boko Haram” in the North-East region which remains under emergency rule. In addition, ethnic cleavages and religious polarization are increasing and the 2015 elections appear certain to widen those divides. In 2014, we would enter into the full political season as most of the electioneering campaigns will happen early; and we may have a “national conference” to discuss fundamentals of our union. The consequence is that in 2014, we will pay more attention to politics, rather than policy and economy, and political risk may be elevated. We should however complete outstanding PHCN privatisations, carry out the NIPP version and may also sell off the four government-owned refineries. A new CBN governor should be appointed and some monetary policy directions may change, although the incumbent may yet shape the financial markets for most of next year. 2014-2015 may also test our vulnerability to oil markets around multiple indices-oil prices; revenue and budgets; exchange rates; and inflation. It is possible that attention may also shift to stimulating investments in the solid minerals sector, but FDI may fall in 2013-2015 as investors adjust to perceptions of higher political risk. If CBN goes ahead to increase CRR on public sector deposits, we may see some financial sector “blues” in terms of constrained liquidity within segments of the industry, but probably not of cataclysmic proportions. And if PIB remains unpassed in 2013/H1 2014, it may be sensible to consider an unbundled PIB which allows us pass less controversial elements in smaller pieces of legislation. In my view, the top three risks for 2014 will be political; oil sector vulnerabilities; and exchange rates with upside possibilities from privatization of additional power assets and refineries. Overall I see 2014 as a year with multiple levels of uncertainty-around politics and complex national scenarios, with a determined opposition ranged against a president who wants a second term and is strengthening his hold on the tools to accomplish that desire, within the context of an election that may accentuate regional and religious fault lines; continuing insecurity and sectarian violence; sustained global economic risks including low growth, unemployment, uncertain oil markets, and discussions of US tapering of quantitative easing from Q2 2014 (though it now seems clear Janet Yellin will not be aggressive in that regard); multiple domestic economic concerns around exchange rates, interest rates, inflation (in the context of increased political spending, though official budgets may be lower) and the impact of higher CRR and MPR on financial sector liquidity. GDP growth is likely to stay broadly around current levels or slightly lower.

Wednesday, November 20, 2013

Jonathan and the Conference

In the two-part serial, “The National Conference”, I made the case for those who believe Nigeria’s federalism is structurally defective; that this deficiency has negative, possibly fatal social, economic and political consequences; and that a fundamental constitutional restructuring is required to remedy Nigeria’s dysfunction, to embrace the Jonathan administration’s national dialogue initiative. In particular, I urged our compatriots in Western Nigeria who for more than two decades have persistently called for a national conference to seize, or at least actively test this window of opportunity provided for such restructuring. As one compatriot noted a few days ago in an e-mail endorsing our point of view, whether this opening is due to “sleight of hand or hand of God” it is expedient to grab the chance to improve our federal system in line with our long run strategic interests, rather than focus on narrow, tactical considerations, transient advantages, self-interest and partisan politics. This willingness to embrace the possibility of a national conference is not because we are naïve about what may be President Jonathan’s motives in embracing the idea of a conference. There are at least two plausible hypotheses about why Jonathan turned around to support and indeed activate the conference. One is as a tactic to raise his bargaining power in the struggle against his geo-regional adversaries, principally from Northern Nigeria and their Southern allies, towards 2015. As another senior compatriot argues, Jonathan’s objectives may not go beyond “muddying the waters a bit to expose the internal contradictions in the opposition party, strike fear into the internal opposition in his own party, so that the status quo can be maintained by a hung conference”. In this thinking, Jonathan may not really want or care about a conference and this may just be a ploy, in essence Jonathan’s “third term” (in his case second term!) conference to secure personal political advantages. And it is of course a hypothesis that cannot be ruled out! But there is another plausible counter-hypothesis-Jonathan is Ijaw from the Niger-Delta. The first recorded attempt to “restructure” Nigeria was by Isaac Adaka-Boro, an Ijaw activist and hero. The Ijaws have fundamental complaints against the structure of the Nigerian state that have manifested in persistent calls for “resource control”, true federalism, environmental remediation etc, thus the Ijaws and Niger-Delta/“South-South” have significant stakes in any effort to discuss the fundamentals of Nigeria’s union and particularly its fiscal federalism, and the Ijaw National Congress, the powerful assemblage of Ijaw interests is clearly in support of the conference. Beyond geo-ethnic interests, Jonathan’s personal experience may have focused his mind on the reality of political inequality in Nigeria-those who selected him as running-mate to Umaru Yar’adua probably did so seeing him as a weak and pliable “minority”; his path to the presidency was strewn with insults and danger especially during the Yar’adua “vacuum” when he was severely underrated with his party chairman announcing that the presidency was zoned to the North; a “Northern Political Leaders Forum” emerged to pursue a Northern consensus against him; and since he became substantive president, he has faced relentless efforts to undermine his office and person-“Boko Haram”, NGF, “new” PDP ad infinitum! Jonathan must be aware that whatever happens, he will leave office in 2015 or 2019, and unless Nigeria is restructured, the Ijaws and other Niger-Deltans will return to their pre-2010 status quo as de facto “spectators”, while dominant ethnic groups spend the oil wealth derived from their homeland! Whichever is truth, the point is that true believers in the concept of a national conference must decide how to respond to this opportunity in a way that maximizes the possibility that such a conference will hold, and under terms favourable to the achievement of our objectives. I am convinced the optimal response is to seize the initiative and endow it with momentum transcending the objectives of the regime, whatever they are! We must organize to ensure a lock-in into the conference and challenge those in the Presidential Advisory Committee on the National Dialogue, some of whose antecedents suggest commitment to the idea-Senator Femi Okurounmu, Solomon Asemota (SAN), Anya O Anya, George Obiozor, Tony Uranta and Akilu Indabawa amongst others, to define the conference in terms consistent with the popular will. Fortunately the preponderance of submissions to the Committee are clear that an acceptable conference is one based on equality of representation by geo-political zones; fair representation of ethnic nationalities and sub-groups within each geo-political area; and whose result is submitted for ratification by a referendum of Nigeria’s peoples in whom sovereignty resides. Now we must be vigilant and ensure we protect this opportunity. We must ensure the conference is not a negotiating item as Jonathan and his adversaries seek accommodation with each other. We must form alliances across geo-political zones, nationalities and groups to foster consensus and ensure realization of shared objectives. And we must educate and mobilise our people to understand the case for a national conference and the historical imperative of not wasting what may be a unique and probably last opportunity to save federalism and effect fundamental positive change in Nigeria. In the final analysis, Jonathan has a decision to make-will he be a man of history, who exactly one hundred years after the amalgamation re-defined Nigeria and did what strong men could not do, or is he a historical footnote, who came, saw and left things as they were?

Wednesday, November 13, 2013

The National Conference (2)

Last week I expressed support for the planned conference to discuss Nigeria’s fundamentals because Nigeria’s most important challenges are structural and in its current form, the country is politically, economically and socially unsustainable; Nigeria’s problems will not be solved by any elections (they may in fact restore avowed unitarists to power and worsen the prospects of federalism) but by a restructuring of the federation in line with the desires of its geo-political zones and ethnic nationalities; the National Assembly has neither the credibility nor institutional integrity to perform this task being itself a product of the gerrymandering of Nigeria as proven by the type of irrelevant palliatives and unitarist proposals it has offered since 1999 as constitutional amendments. I am in support of a conference, irrespective of its designation, based on equal representation of the geo-political zones, representative of Nigeria’s ethnic nationalities and in which the outcome is submitted to a referendum of Nigeria’s peoples in whom sovereignty resides. I believe that irrespective of the President’s motives (which in any event may not be conclusively improper) we should seize the opportunity to effect positive change in Nigeria’s constitutional arrangements. I am encouraged by published comments attributed to Governor Kayode Fayemi of Ekiti State who said in a THISDAY interview, “if you know my background, you will know where I stand on national conference. In my previous life, I was a convener of the Citizens Forum for Constitutional Reform…and I spent the better part of my time from 1999 till I came into politics, working on the constitution. I was an unofficial adviser to the late Chief Bola Ige on the Constitution Review Committee that they set up at one time and we produced a model constitution. I was in PRONACO. I had written extensively about this. I am a federalist. For me, what President Jonathan has done, coming from an earlier position that was utterly negative, is not something Kayode Fayemi can personally be negative about. I cannot! I was actually in the Yoruba Assembly. You only need to google my interviews and other things I have said so it would be opportunistic on my part to say national conference is not appropriate…I’m not going to talk about a motive -whoever set up anything has a motive and there is no perfect time for anything. Whatever anyone does in life, there cannot be 100 per cent perfect time. That is the time you must do it. So people are saying why now, why not another time? It is not for me the essential argument. Again, whether it is called national dialogue or national conference is not really relevant, what makes a conference relevant is the input of the large population of people and that can only be arrived at by a referendum. That is the only vehicle of sovereignty.” I am relieved by Fayemi’s comments which are on ‘all fours’ with my column of last week. I note also that my views are in tandem with representations to the Presidential Advisory Committee on National Dialogue (PACND) by all groups from Western Nigeria-Afenifere, Afenifere Renewal Group (ARG), Yoruba Assembly, Yoruba Unity Forum, Coalition of O’Odua Self Determination Groups (COSEG), O’Odua Nationalist Coalition (ONAC), Eko Foundation, Atayese and Okun Peoples Forum all of whom seek Yoruba autonomy within a federal Nigeria and a conference of geo-political zones and ethnic nationalities, whose output is put to a referendum. Indeed the memorandum jointly submitted by ARG, Pro-National Conference Organisation (PRONACO), COSEG, ONAC, Eko Foundation and Atayese, and presented by ARG Chairman Olawale Oshun, demands a conference of ethnic nationalities “that seeks to restructure Nigeria in a way that grants Yoruba people, and other ethnic nationalities seeking it, unfettered autonomy to develop it’s region and its own space within the framework of Nigeria’s multi-ethnic federation”. Incidentally Governor Kayode Fayemi (along with Rauf Aregbesola of Osun State) is a leading member of ARG. The memoranda presented by Afenifere (with Chief Reuben Fasoranti as leader and Yinka Odumakin as spokesman), Yoruba Unity Forum (YUF) led by Bishop Bolanle Gbonigi and Yoruba Assembly are in pari materia with ARG’s position. The Yoruba Assembly led by General Alani Akinrinade notes that it is “a welcome development that President Goodluck Jonathan has finally decided, two years after the election that brought him to power in 2011, to organise a national conference” and seeks a conference which allows “Nigerian nationalities to confer and design Nigeria as a federation wherein each of Nigeria’s federating nationalities shall be protected from domination by any other Nigerian nationalities and wherein each Nigerian nationality shall be able to develop its economy at its own pace within the framework of a united Nigerian Federation” The Yoruba Assembly further notes that the “the Yoruba nationalities in Nigeria have for decades persistently called for a rational restructuring of the Nigerian federation, as well as for a sovereign national conference” to address the national question, and points out that “although the sovereign status of the proposed conference is not clear in the swearing-in speech given by President Jonathan, the decision to establish a forum for a national conference is appropriate and a welcome development“ and urges that the conference “should not be subject to the stresses of partisan political party confrontations”.

Wednesday, November 6, 2013

The National Conference

I should say upfront that I support efforts by the Jonathan Administration to organize a conference amongst Nigerians to discuss fundamental issues afflicting the country. I have been convinced for many years that Nigeria’s most important challenges are structural-the country has been designed (actually deliberately mis-designed since 1966) such that the country’s structure ensures that it will not work. In an attempt by Nigeria’s unitarists to ensure the perpetuity of their stranglehold over the destiny of its diverse peoples and nationalities, they have created a dysfunctional, sub-optimal, pseudo-unitary constitution and nation that is neither federal nor rational and that ensures that Nigeria as we know it is politically, economically and socially unsustainable. We now have a country that discourages productivity by its federating units, since the vast resources taken from the federating units accrue to a wasteful supra-entity, a “national” entity that belongs to no one, and is accountable for nothing and to no one! The country is politically hobbled, unable to find any agreement beyond a lowest common denominator on any worthwhile matter as ethnic, religious and regional cleavages dominate national discourse. If a minister blatantly steals money, her tribal affiliates defend her; if a leading Representative is caught on video collecting bribes and stuffing the cash in his cap, his powerful regional patrons ensure he suffers no consequences, yet we are all required to utter the empty words, “national unity” and “Federal Republic of Nigeria” even as we know deep in our hearts that they are meaningless in our current context! There is neither shared vision nor common project! The 2011 elections were fought almost entirely on regional lines, and the approaching 2015 version promises to be contested completely on the basis of region, religion and ethnicity. We are living dangerously and it is wise in my view to have a dialogue on the fundamentals of our union. I am convinced that Nigeria’s problems will not be solved by mere elections! Our national drift predates and will endure beyond Jonathan so long as we retain the failed constitutional structure. The paralysis and dysfunction will persist or in fact worsen as avowed unitarists take over the presidency! Most names I have heard mentioned for instance are complicit in the destruction of Nigeria’s federalism and have evidently learnt nothing and regret nothing! Indeed current House of Representatives Speaker, Aminu Waziri Tambuwal believes that rather than restore Nigeria’s federal structure, the solution is to completely destroy it, in favour of full unitarism by elevating local governments to a third-tier of government; abolishing state electoral commissions; denying state police; and retaining the distorted and inefficient exclusive legislative list! Rabiu Musa Kwankaso’s public comments are so shockingly irredentist and parochial that one shudders what type of leadership he would provide in a multi-ethnic and multi-religious society. He recently suggested representation at the national conference on the basis of 774 local governments! The attitudes and inclinations of other leading unitarists are well known! I am also totally convinced that the National Assembly does not have either the credibility or institutional integrity required to embark on the restructuring of Nigeria, which is what is required. The Assembly is itself one of the biggest evidence of the gerrymandering of Nigeria by soldiers who created states and local governments in pursuance of narrow strategic objectives-regional, ethnic, religious, even personal! The distribution of federal legislative constituencies, particularly in the House of Representatives confirms why the institution is disabled from any tangible and credible constitutional change, beyond irrelevant palliatives. If you need any confirmation of the federal parliament’s disability, please look to the (lack of) substance and quality of amendments they have proposed to our Constitution since 1999!!! My support for the National Conference is of course not unqualified! I support a conference in which representation is on the basis of equality of the six geo-political zones; in which representation within the zones is representative of the ethnic nationalities domiciled therein; and in which the decision thereof will be submitted to a referendum of Nigeria’s peoples and the outcome unalterable by any authority since sovereignty ultimately resides with the people. If a conference carries these attributes, I do not care what it is called or how it is described! I am not naïve about whether President Jonathan may or may not have any “motives” in convening this conference, but I would seize any chance to improve Nigeria’s structure nevertheless until proven otherwise. In any event most change in Nigeria has come because of someone’s tactical considerations-the amalgamation itself due to British budgetary concerns; independence due to changing post-second World War British realities; the creation of Lagos, Rivers and other states in 1967 due to Gowon’s need to under-cut Ojukwu’s Biafran secession; the Obasanjo Presidency due to Northern tactical outreach to pacify the Yorubas after “June 12” etc. There is nothing wrong with seizing a president’s tactical opening to effect fundamental positive change! Substantively however, there is basis to think that President Jonathan’s Ijaw nationality has good reasons to favour a fundamental restructuring of Nigeria as persons like Ankio Briggs and Professor Kimse Okoko may have argued. What I imply is that President Jonathan’s support for a national conference may not be entirely tactical. Whatever Jonathan’s objectives, we should seize this opportunity such that it acquires a momentum of its own! Let the dialogue begin!!!