SEC Versus NASS: The Kettle and the Pot

Everyone now knows the story-the House of Representatives Committee on Capital Markets decides to conduct a public hearing on the capital market, as should be its purview. It fixes a date and arranges other logistics for the hearing, and then writes a letter inviting the Director-General of the Securities and Exchange Commission (SEC), the government-established regulatory agency for the capital market, again as it should be expected (or indeed required) to. The problem arises when it attaches the budget for the hearing to its letter to the SEC DG, implicitly or explicitly soliciting a donation in support of the hearing. This is the principal agency which the committee by virtue of its mandate exercises legislative “oversight” over! We can go on and on about the capital market committee, but it seems this is a regular, indeed routine practice between the legislative houses and agencies and ministries (and perhaps even private sector entities?) affected by matters which are before the legislature and its committees! This practice makes absolute nonsense of the independent judgment parliament is required to exercise on behalf of the electorate whenever conducting investigations or considering some legislation. Essentially the consequence of such a practice, even if individual legislators did not benefit in any way from the “assistance” offered by these entities is to bias the legislature and erode its independence and impartiality. It is worse if members of the investigating panel actually receive benefits in cash, or kind (such as airline tickets-probably first class or business, to the Dominican Republic!) from parties with an interest in the outcome of investigations or legislation. Other questions also arise-do ministries, departments and agencies include monetary support for the National Assembly in their annual budgets? If not, how do they procure the funds they utilise for such purposes? Should tax payer or public funds be utilised in this manner? Where public funds are used by an executive or regulatory agency in this manner, is the public required to know? Has there been transparency around such payments, which by all accounts appear to be a regular phenomenon? Aren’t there appropriations in National Assembly budgets for its committee sittings and public hearings? But then let’s go back to the story! SEC decides to “support” the committee hearing and duly approves a sum of N30million to be disbursed to the committee! At this point, both SEC and the House Capital Market Committee are indictable for corruption!!! As we know, both the person who solicits a corrupt inducement and the one who pays or offers to pay are potentially guilty of a crime! Again questions arise-did SEC have provisions in its budget for paying for legislative investigations? Can such a hearing be covered by the omnibus phrase “capital market development”? In what way does the “reformist” leadership of SEC think this action was different from the behaviour of its predecessors which it claims to be reforming? Anyway for some reason, the consensus-ad-idem between SEC DG Arunma Oteh and the House Committee Chair, Herman Hembe breaks down and the committee chair decides to go for Oteh’s jugular! And fortunately he has some fairly strong ammunition in his hand!!! Apparently Ms Oteh has been living in Nigeria’s most expensive hotel, Transcorp Hilton for over nine months running up a bill to the tax payer in excess of N30million! Mrs Oteh’s defence is to blame her subordinates for misleading her and not providing alternative accommodation as promised! Quite frankly, these statements somewhat validate Mr Hembe’s allegations of incompetence even if in his case, they may have been motivated by malice! The day the DG reported at SEC, she became CEO at the agency and became accountable for all the public funds entrusted to it. It became her responsibility to familiarise herself with rules and regulations guiding SEC and public service and to ensure that public funds were not spent in an irresponsible manner. Of course she must be aware of the maxim, “ignorance of the law is no excuse”! Indeed it does not require knowledge of any specific laws or regulations for a responsible public officer to know that spending N30million in a hotel cannot be a prudent manner of expending the resources of a financial market regulator! Could she have done that at the African Development Bank where she came from? Could an official of the US SEC spend the agency’s funds in that manner? How different was her behaviour from that of those she dismissed at the Nigerian Stock Exchange? Ms Oteh had also apparently engaged the services of two personnel from a publicly-quoted bank who worked in her office even though she claimed their work did not form part of the agency’s regulatory core? Again why did she feel comfortable risking accusations of potential conflict of interest and bias given that the bank was involved in significant transactions before SEC at the time? Well the SEC DG then fought back with a public attack on SEC employees whom she evidently suspected of leaking information to the committee and revelations that the committee chair had requested a bribe of N44million, and obtained funding for a trip to Dominican Republic which was never made. If you ask me, this sounds like the pot and the kettle-both look very black to me!!!

SNC or Scattered Monologues?

I have usually been cautious about the call for a “sovereign” national conference. I am a student of constitutional law, and I understand the complexity of trying to vest “sovereignty” in a “conference”, especially while there is an elected president, a dual chamber national assembly comprised of senators and members of a house of representatives; thirty-six state governors (many of whose elections have been tested in the courts and affirmed by the judiciary, up to the nation’s Supreme Court); and houses of assembly. If we were to convene a “sovereign national conference” (SNC), what would happen to all these institutions and offices? Would they be in abeyance, or be abolished? Could those offices continue concurrently with such a conference? What would happen to the constitution itself, since it doesn’t recognise or envisage such a temporary (or permanent) transfer of sovereignty? Would our armed forces, the intelligence agencies and police report to such a sovereign conference or would they continue to report to the president and commander-in-chief of the armed forces, whom the existing constitution regards as having operational control of those agencies? What if the conference is unable to reach consensus (since all agreements will have to be negotiated) on issues before it? Does sovereignty revert to the elected institutions or will it be extinguished or dissolved? Or will extra-national institutions (United Nations, African Union, etc) assume authority over the country? Will the judiciary recognise such a conference? Questions about the mode of representation and other modalities of convening, operating and reaching agreements at such a conference so far remain unanswered. Clearly, it is easier to call for SNC than to define exactly what the implications and other details of the proposed conference are, or will be. On the other hand, I am also not impressed by those who simply dismiss calls for SNC, insult its advocates, or simply raise queries without putting forward alternative views or recommendations towards resolving our current grave national condition, which confirms that the national question regarding Nigeria is far from settled. When “Boko Haram” and its sponsors call for Islamic Sharia all over Northern Nigeria, or indeed all over Nigeria, demands which are also not envisaged within the context of the current constitution, aren’t they in effect calling for some extra-constitutional discussion about the nature of the Nigerian federation? Why hasn’t “Boko Haram” forwarded its demands to the national assembly as proposals for constitutional amendment? Why did arguments over zoning and/or rotation ultimately result in Northern post-election violence last year? Why didn’t the Niger-Delta militants present their grievances to the national assembly for required legislation? Why did they resort to armed militancy? Why did late President Yar’Adua agree to engage with the militants and substantially accede to their demands? When Northern governors gather requesting review of revenue allocation formula in their favour in order to redress Northern poverty, aren’t they asking for some sort of negotiation? Why is South-West Nigeria perpetually calling for true federalism? Can these calls be ignored in perpetuity? Why do Igbos (and increasingly many others) celebrate Ojukwu as a hero? Isn’t that a sign that his battle to enthrone a more equitable union and reject hegemony now resonates with many more Nigerians? Why are South-South leaders looking to President Jonathan’s eventual exit from office with dread, worried that the region will simply return to being the goose that lays the golden petro-dollars, while others benefit, and they look on in despoiled anger? Why do we so regularly turn upon each other, killing and maiming fellow citizens in ethnic, religious, political or communal bloodletting? Why are nomadic herdsmen killing farmers and indigenes all over North-Central Nigeria while the whole country keeps quiet? Why is there a war going on over ownership of territory in Jos? Why do we have 60 percent poverty and 24 percent unemployment in spite of so much economic potential? Aren’t these all symptoms of something deeper and more fundamental? In spite of all these, there are those who arrogantly insist that every important issue about Nigeria has been settled. What type of spouse tells his partner and their children who complain about their family, with multiple instances of crisis and dysfunction, that every important matter concerning their home is settled? Wouldn’t it be more curious if the complainant happens to provide 85 percent of household resources while the dismissive spouse is economically dependent on the unhappy partner? Why are virtually all ethnic and regional groups in Nigeria retreating towards ethnic and regional formations and development agendas – BRACED Commission in the South-South; DAWN (Development Agenda for Western Nigeria) in the South-West; the usual Arewa/Northern formations (which recently appear to recognise the imperative of focusing on development rather than political power and religion); and the South-East governors who would most certainly follow suit. One may question whether a sovereign conference is possible, but we certainly need a national constitutional conference where leaders and representatives of all ethnic nationalities, the six geo-political regions and other stakeholders can have a sincere conversation about the structure and future of this dysfunctional unitary federation. A national dialogue is better than the scattered and intermittent monologues expressed through violence, threats and mutual intimidation currently going on. Of course if we don’t agree to talk now, we can have post-mortems later.

Security and Development in Lagos State

Security is one of those things which motivation scholars describe as “hygiene” factors – a state of security is not appreciated until insecurity is prevalent, then we seek earnestly for security, and once a state of security emerges, we are relieved and appreciate it, until the previous insecurity fades away, and then we forget. Ask Lagosians the achievements of the Fashola administration in Lagos, and they are likely to talk about tangible or visible phenomena, particularly infrastructure and social services: road construction, new school buildings, hospital services, environmental greening, clearing of Oshodi, improved refuse disposal system, BRT buses, etc. Very few people may immediately mention security of lives and property. I happen to think that is in fact the most significant achievement the Lagos government has recorded since 2007. Using my own personal experience, I recall facing four different armed robbery attacks between 2000 and 2007 – a brand new car was snatched in 2000, never to be seen again; armed robbers lurking at my gate in 2001 (apparently waiting to snatch my car) snatched my wife and a neighbour’s bags when I didn’t turn up in time; in 2003, while visiting a junior colleague who had just given birth, my entourage and I were attacked by robbers; and in 2007, my home was attacked during the night by armed marauders. Since 2007 (thanks be to God!), I have not had a similar encounter. My story may not be a scientific sample, but practically everyone I knew had tales of car snatching, home attacks, robbery during traffic snarls and worse up till 2007. Somewhat “miraculously”, much of these have ceased, even though episodes of crime have of course not been eradicated from Lagos. All over the country, crime and insecurity prevail – the Eastern states rife with armed robbery and kidnapping; while militants may have declared a (temporary) ceasefire in the Niger Delta, kidnappers and armed robbers (who may in substance be the same people as the erstwhile “militants”) continue unchecked; Edo and Delta States are overwhelmed with criminals and kidnappers. During a December 2011 visit to Warri, I realised the alarming extent of crime in the oil city and its negative impact on the local economy and night life). Many parts of the North have, as we know, been overtaken by terrorism and violence, subverting the economic potential of many Northern cities and states. In the later months of 2011, the South-West states (minus Lagos), especially Ogun, Oyo and Ondo, were taken over by armed robbers, leading in some cases to the closing down of banks and businesses, and consequent decline in commercial activity. Why has Lagos State been, by and large, exempt from the virtual breakdown of law and order and prevalence of crime and insecurity across the nation? Clearly, the state of security in Lagos is not happenstance or mere co-incidence but the consequence of a deliberate strategy encompassed in the activities of the Lagos State Security Trust Fund (LSSTF), which was set up by Governor Babatunde Raji Fashola under a law enacted by the State House of Assembly in 2007. The LSSTF is a public-private initiative created to address the issue of inadequate funding of the police and other law enforcement/security agencies by the federal government which is constitutionally charged with that responsibility. It is one of the acute incongruities of Nigeria’s current constitutional order that the federal government insists on not permitting the establishment of state police while abandoning not just the police, but most other federal agencies domiciled in the states (SSS, Customs, Prisons, Immigration, and even some federal secretariats) to the state governments for funding and operational maintenance. In effect, the state government neither eat their cake, nor have it. The LSSTF was created to bridge the huge funding gap which had condemned the police to ancient methods, untrained and ill-motivated personnel, ineffectiveness and almost total irrelevance in the fight against crime in Nigeria. Since its inception, LSSTF has mobilised over N8.4 billion as at October 2011 to support the activities of the police and other security agencies through provision of armoured personnel carriers, patrol vehicles, motorbikes, radio and communication equipment, kitting, training, incentives and personal allowances, fuelling and maintenance of vehicles, and other varied support. From available records, LSSTF mobilised N4.4billion in the seventeen months to December 2008, with Lagos State government (LASG) providing 56% while private sector entities provided the balance. In 2009, N1.12billion was raised, with LASG responsible for 74%. In 2010, N1.27billion was realised, with LASG contributing 67%. And in the ten months to October 2011, the fund generated N1.56billion, with LASG donating 82%. The enhanced equipment, mobility, competence and motivation of security agencies in Lagos State is the basis upon which the current relative peace and security in the state is founded. That peace and security is what substantially accounts for the economic and commercial progress made in the state. Businesses – local and foreign – can invest; a night economy has (at least partially) developed; firms can grow and generate new employment; the state’s tax base has expanded as a consequence; and more funds can be generated for investment in infrastructure and social services. I am told the Lagos State model is now being transferred to several other states. The sooner, the better!

Ojukwu and Nigerian Federalism (3)

With failure of the majors’ coup, and Major-General Ironsi prevailing, Nigeria entered military rule with Ironsi as Head of State. Nzeogwu expressed regrets that tribal considerations subverted the coup which in his words “failed because of incompetence and misguided considerations” of the Southern contingent. Ironsi was ill-prepared and ill-suited intellectually and administratively for national leadership, displaying serial mis-judgments culminating in the counter-coup which terminated his regime and life in July 1966. The final spark was the unification decree-Constitution (Suspension and Modification) Decree No 34 of 1966-which sought to abolish the four regions, convert them into “groups of provinces” and unify public services under a single Public Service Commission. The decree engendered strong objection from the North-Northern civil servants staged public demonstrations and Northern Emirs reportedly sent Ironsi a secret memorandum demanding abrogation of the contentious decree or secession. In May 1966, riots and a bloodbath erupted in the North with at least 3,000 Easterners killed, and others fleeing South. How did Ojukwu, who had become Governor of the Eastern Region since January 1966, react? He pleaded with Igbos to return up North and in June 1966, barely a month after the massacre, he appointed his old friend, Emir of Kano, Chancellor of the University of Nigeria, Nsukka! These couldn’t be sensibly described as reactions of someone nursing secessionist ambitions!!! On July 29, 1966, the much-awaited (multiple sources, including General Madiebo, later Biafran Army Chief had warned Ironsi) revenge-coup took place. The initial objective of the Northern officers who led the coup (Murtala Muhammed; Yakubu Gowon; Theophilus Danjuma et al) appeared clearly to be secession (“araba”-separation in Hausa) from Nigeria until they were reportedly persuaded by the British High Commissioner that “you’ve got it all now; why settle for half” and Gowon became Head of State leading to Ojukwu’s first disagreement with the Northern military establishment. Consistent with his (naïve) nationalism and pro-establishment inclinations, as well as his desire to maintain the integrity of the last remaining national organisation-the army, Ojukwu insisted on following military hierarchy which required Brigadier Ogundipe, Ironsi’s No 2 as Chief of Staff, Supreme Headquarters and Western officer to take over as Head of State. Unfortunately Ogundipe had been successfully intimidated from staking a claim to the office, and accepted posting as High Commissioner to the United Kingdom! Many Eastern/Igbo officers had been killed during the July counter-coup evidently as collateral revenge for the earlier deaths in January. In September 1966, a second pogrom commenced with large scale killings everywhere across Northern Nigeria. After Gowon’s broadcast on September 29, rather than abate, the killings intensified! Pain, anger and rage was felt across the East, especially by Ojukwu who to his eternal regret had urged those who fled in May to return, many to their brutal end! I find it hard to fault Ojukwu’s subsequent resolve to insist on ensuring security and protection for the Igbos. There was a manifest need for Nigeria, if it wanted Igbos in the country, to offer regrets, firm assurances and restitution, but none was forthcoming. Even if some military officers of Igbo origin were guilty of killing Northern military and political figures, that could not excuse genocide directed against thousands of civilians, especially after revenge had already been vented against Ironsi and several Igbo officers. The first threat of force was issued by Gowon on 30/11/66 and the first shells were fired on 6/7/67 by the “federal” side. The Aburi agreement, meant to resolve the crisis, freely signed by all parties under Ghanaian leader, General Ankrah’s auspices was unilaterally rejected by Gowon, upon his return to Lagos on 26/1/67. The accord established equal, federal control over the armed forces through the Supreme Military Council (SMC); a military HQ with equal regional representation; regional military area commands; major national appointments-diplomatic, senior armed forces and police, and “super-scale” federal civil service and corporations would be made by the SMC-in effect, Ojukwu’s quest was equality of federating regions and rejection of hegemony! Unceasing calls for “true federalism”, “zoning”, “rotation”, “federal character”, “non-marginalisation” etc. show that Ojukwu’s position was prescient. He had his faults-questions about military strategy and governance in Biafra; neglecting fears of non-Igbo minorities; naively joining the NPN upon his return from exile; an anti-June 12 (and pro-Abacha) posture during the Abiola and Ken Saro-Wiwa matters etc, but his place in Nigerian history (and Igbo folklore) is assured. In 2012, forty-six years after 1966, we still talk about politically-inspired violence, such as last year’s post-election killings! The report of the Justice Onyuike Tribunal in 1966 suggests that 45,397 were killed and over 1.6million fled East. Was Ojukwu expected to acquiesce in this? Was “Biafra” not entitled to legitimate self-defence in these circumstances? It is time the truth about 1966 is established. The underlying issue in the events of 1966/1967-1970 was the nature of our federalism and the need for equity and equality amongst Nigeria’s federating units. That issue would not go away! As Professor Attahiru Jega wrote in “Foundations of Nigerian Federalism: 1960-1995” edited by Elaigwu and Akindele, “in a pluralistic society such as Nigeria, with a federal set-up in which dominant nationalities are regionally located, with skewed access to power and societal resources, where national resources are concentrated at the centre and the military have dominated politics, centrifugal forces would, invariably, tend to predominate”. When federalism was accepted by Nigeria’s leaders at the Constitutional Conference in 1953, it was recognised as “the only feasible answer to the problems of national integration".

Nigeria in 2012 (2)

Nigeria’s economic fundamentals and outlook should ordinarily be considered excellent-large population, labour force and market; 7-8% GDP growth; strong oil markets; interest from foreign investors; a democracy that has lasted from 1999, the longest since independence; a consumerist society with strong inclination to purchase goods and services; entrepreneurial, resourceful people, reasonably educated and enlightened people who speak English. These advantages are however offset by corruption; and since the 2011 elections, by the post-election violence which forewarned of regional tensions; “Boko Haram” fundamentalist terrorism; the fuel subsidy crisis; some elements in the opposition who seem bent on the overthrow of the current government; and strong anti-reform lobby and vested interests opposed to privatisation and economic reforms. Given the “dangerous demographics” which I highlighted last week, and the shocking poverty data just released by NBS, the potential for social crisis is high! By NBS’ figures, absolute poverty (minimal requirements for minimal standards of food, clothing, healthcare and shelter) was 60.9% (99.28million people); relative poverty (by reference to living standards of the majority) was 69% (112.5million); and by the World Bank’s dollar per day measure, 61.2% (100.5million) were poor! Subjectively 93.9% of Nigerians considered themselves poor!!! NBS projects that relative, absolute and $/day poverty may have risen to 71.5%, 61.9% and 62.8% in 2011. Why doesn’t economic growth translate to lower poverty and greater employment in Nigeria? As I have argued several times, the answer lies in the structure of our GDP and governance! Around 75% of GDP (in Q3 2011, it was 76.2%) is made up by only three sectors-agriculture (43.64%), crude petroleum and natural gas (14.27%) and wholesale and retail trade (18.29%). Agriculture is sub-modern, largely subsistence, non-value adding, not sufficiently linked to agro-allied and manufacturing, and does not create jobs. The oil sector is dominated by crude export carried out by multinationals who simply pay governments share of revenue over to the treasury-for appropriation and spending by corrupt politicians and bureaucrats! The downstream refining, petrochemicals and allied sectors are undermined by a misguided petroleum subsidy and the industry value-chain remains undeveloped. Our traders import and sell foreign produced goods and most manufacturing raw materials are also imported. In effect, across sectors we add no value domestically, and whenever we consume, we create jobs offshore. Consequently GDP growth makes no impact on poverty and unemployment irrespective (by and large) of the growth rate. The large size of government (numerous federal MDAs, large recurrent spending, multiple and overlapping commissions and agencies; 36 states with inefficient bureaucracies and 774 local governments; and the relatively large expenditure devoted to maintaining the legislature at federal and state levels and a myriad of political appointees) means there is very little left for capital and social spending. Poverty and unemployment indices will not change iuntil we restructure both our economy and our politics! In terms of sectors, telecommunications remains the outstanding growth sector in Nigeria at over 35% in Q3 2011 (it remains a mystery that Nigerians refuse to apply the lessons of telecommunications to downstream petroleum and power), far ahead of wholesale and retail trade (11.84%), hotels and restaurants (11.81%), solid minerals (11.5%), and building and construction (10.72%). With the exception of the low value-adding (!) trading sector, all the other high-growth sectors are too small to matter! Manufacturing has shrunk to 3.51% of GDP, grows by 8.15% and utilises only 57-58% of its capacity! Upstream oil GDP growth has slowed in 2011 and was actually negative (-0.34%) in Q3 2011 due to the absence of clear industry structure and fiscal terms which the petroleum industry bill was supposed to provide. Until recently agricultural sector growth was a function of divine benevolence (rainfall) and not policy-hopefully the new minister is changing that. For now the sector grows at a low 5.82%. Finance and insurance has also contracted to a shocking 2.98% of GDP, with abysmal growth rate of 3.98%, due almost certainly to incessant policy changes, industry restructuring and effects of industry mistakes made between 2005 and 2009. The capital market remains well below its 2008 peak, and the likelihood is that recovery, both in financial and capital markets may yet be deferred at least to second half of 2012, or beyond! All indications are that 2012 will be an inflationary year, with multiple drivers-petrol prices, electricity tariffs, tariffs on some imported food commodities mid-year, wages, fiscal push, high interest rates and depending on oil sector developments, possibly higher exchange rates as well. While stressed European and developed country economies may lower global oil demand, geo-political issues in the middle-east (especially Iran versus Israel) may push prices in the opposite direction. However we expect Saudi-Arabia to attempt to bridge absence of Iranian oil in global supply and therefore mitigate a sustained rise in prices. We are likely to see gradual rise in electricity output from 2012 and greater investments in the sector. It is critical that government completes it power sector privatisation this year, having missed earlier deadlines. Consumer purchasing power will be lower, and business operating costs will be higher! Policy makers, managers and entrepreneurs have their work cut out in 2012-global risks; difficult reforms and fiscal stress; domestic inflation and challenging markets; concerns over security of assets and people; and rising operating expenses. We may take solace in the fact that peers all over the world may face similar challenges!

Nigeria in 2012 (1)

Nigeria will be confronted with various challenges in 2012. Externally we will face a risky global environment while at home we grapple with self-inflicted political wounds and difficult economic reforms and structural change. Macroeconomic fundamentals will remain strong, but all the post-election optimism about the country’s outlook may be dissipating somewhat in the face of insecurity, socio-political and religious tensions and deferred financial and capital market recovery. Risky Global Context! One word will characterize the global economy in 2012-“difficult”! The World Bank in its Global Economic Prospects 2012 says, ““The world economy has entered a very difficult phase characterised by significant downside risks and fragility”. The principal cause is resumed financial turmoil induced by European fiscal crisis which is spreading to developing and high income countries. The Bank also notes declining capital flows to developing economies and probability of European recession accompanied by slowing growth in developing countries. Based on the above, the bank lowered its growth prospects for 2012 to 2.5percent. UNCTAD similarly revises projected global growth downwards to 2.6percent, noting that “the world economy is on the brink of another major downturn” and expresses concerns about continued jobs crisis, European sovereign debt, banking and financial sector concerns, fiscal austerity, unemployment and poor business and consumer confidence. The IMF notes that “global recovery stalls, downside risks intensify” in its January 2012 World Economic Outlook Update and also revised projected growth down to 3.5per cent. Many European economies have suffered ratings downgrades and have negative outlooks, and all three reports highlight significant downside risks! In this sombre context, global demand may fall and oil prices (and other food and commodity prices) which appear to have peaked since April/May 2011 may be susceptible to decline. With our lower reserves cushion, high foreign currency demand and budget deficits, a shock in global oil and commodity markets will affect Nigeria, probably severely. Dangerous Demographics!! Domestically the biggest cause for concern, and probably the fundamental underpinning of our socio-political problems may be the looming demographic catastrophe Nigeria faces! According to NBS data, Nigeria has over 104 universities; 75 polytechnics, more than 30,000 junior and senior secondary schools; and almost 100,000 primary schools. Our universities had an average of 800,000 students over the last five years; over 1.37 million students were enrolled in universities, polytechnics and colleges of education in 2006, and over 1.98million in 2007, meaning that perhaps 2-3million graduates will enter the labour force by 2011/2012! Our 2011 population was 164million people, with a potential labour force of 67.2million people, of whom 16million (or 23.9%) were unemployed! Unemployment has risen from 13.4% in 2004 to 23.9% by 2011. Within the restive age group of 15-24 years, unemployment is 37.7%! Twenty percent of graduates of all tertiary institutions are unemployed! In 2011, 2.217million persons joined the ranks of the unemployed!!! In many states (Yobe, Zamfara, Sokoto, Imo, Bauchi, Gombe, Jigawa, Katsina, Rivers, Delta, Borno, Kano, Kaduna, Benue), unemployment is higher than the national average! Meanwhile this idle and disaffected population is angry, more engaged and better connected! There are 95.3million active telephone lines (as at November 2011) according to NCC data, and the telecommunications sector now has capacity to provide every Nigerian with a telephone line (with total installed capacity of 172.4million lines. Internet penetration is rising and more people are connected to social media. The potential for citizen action is significantly higher as well-demonstrated during the fuel subsidy protests. Policy Challenges! Elevated Political Risk!! Nigeria’s government barely scraped through a mini-insurrection over removal of fuel subsidies. The 6-day nationwide strike, by our firm RTC’s calculations cost the nation N215.77billion ($1.4bn). Our assumptions note that the upstream petroleum sector was not on strike leaving oil production and export unimpaired. We also included a (probably) generous discount of 25percent of agricultural output to account for front-end activities including possible transportation delays. Several other policy battlegrounds however remain-power privatisation; rise in electricity tariffs; resistance to economic reforms and privatisation; rationalisation of federal MDAs; petroleum industry bill; cashless Nigeria, and the deferred battle over downstream petroleum deregulation. We expect some intra-government tensions and a possible confrontation between the House of Representatives and the Executive. Vested interests-regional interests, crony capitalists, bureaucrats and their allies in parliament and others, along with labour will oppose economic reforms all the way! The best policy outcome in 2012 will be successful power sector privatisation. There are dangerous political scenarios in 2012 and beyond. The 2011 elections and anger over North-South power sharing; and “Boko Haram” terror and insecurity are straining national unity and cohesion. We expect Nigeria to step back from the brink, as usual, but worse outcomes are possible! There are elements in the political space who appear willing to over-extend political brinkmanship beyond margins of safety, and it is easy to project the activities of “Boko Haram” to a point in which citizens head back to their home regions.

The Evolution of "Boko Haram" (2)

It seems Bauchi State Governor Isa Yuguda was instrumental in persuading late President Yar’adua to curtail the menace of “Boko Haram”. Yuguda having decamped from PDP to ANPP, duly won the governorship in 2007. He subsequently became Yar’adua’s son-in-law, and returned to the PDP, possibly losing some political goodwill in the process. He may have dreaded returning to the electorate in 2011 with “Boko Haram” roaming free in Bauchi! I have previously noted that having fallen out with the sect, then Borno governor Modu Sherrif was also eager to see off Boko Haram. When security forces turned on “Boko Haram” between July 26 and 29, 2009, they responded in a surprising manner-in Maiduguri, they exacted “revenge” in a perverse manner by turning on the nearest Christians! While under attack from the army and police, Muhammed Yusuf ordered his followers to capture hundreds of Christians. The male captives had a simple choice-renounce your faith or die! For the females, it was renounce your faith or stay as captives, meaning slavery, servitude or worse! The worst treatment was reserved for Christian clergymen-three pastors were be-headed, with the executioners shouting “Allah Akbar” in wild celebration accompanied by celebratory gunfire. Pastor George Orjih of Goodnews Church, Wulari, Maiduguri was one of the three. Muhammed Yusuf personally urged him to renounce his faith and live, which the Pastor rejected and instead actually preached to Yusuf to accept the Christian salvation! Incensed, Yusuf ordered his immediate slaughter! Fortunately for most of the captives, government prevailed in that confrontation, so most of them were released after Yusuf’s capture. Once it launched its Jihad in 2010, Boko Haram has had four categories of targets-specific Islamic clerics who disagreed with its teachings or methods; government and security institutions and personnel; institutions which they considered abhorrent to Islam particularly hotels and beer parlours; and Christians and/or Churches. It is easy to understand why they would attack the first three groups-opposing Islamic clerics could potentially undermine their theology and legitimacy; government and security agencies had attacked them and killed their leaders; the disdain Moslems are supposed to have for alcohol and prostitution is well-known. The resort to targeting Churches and Christians, who till then had played no part whatsoever in this essentially intra-Muslim quarrel was inexplicable-the then president, governors of all states in which BH were attacked, the then National Security Adviser, etc, all being Muslims. The trend of BH attacking Churches and Christians has since accelerated, rather than decline culminating in the Christmas day 2010 attacks on Churches in Jos; 2011 bombing of the Madalla Church and killings in Yobe, Adamawa, Gombe, Borno, Bauchi, Niger and Plateau States. As previously stated, one can observe a clear transition from BH when it was pre-occupied with local politics in the North-East and Kano, and the newer version which seems to have a national or even international agenda (evidenced by the attack on the UN headquarters). It is clear that BH has been influenced by Nigerian politics in general, and the North-South power struggle that ensued after Yar’adua’s death in particular. Indeed it is possible to interpret their January 2 2012 ultimatum on Southerners to leave the North in explicit political terms-perhaps an attempt to reverse the April 2011 scenario in which a Christian Southerner obtained twenty-five per cent of the votes or more in most Northern states! One could also draw a parallel between the objectives of this ultimatum and the post-election violence which erupted across Northern Nigeria last April. Northern politicians such as Adamu Ciroma, Lawal Kaita, Yahaya Kwande, Muhammadu Buhari and Atiku Abubakar had made statements which may have contributed towards creating an environment conducive to or indifferent to political violence. Changes in Boko Haram’s methods and activities (such as suicide bombing) also suggest a link-up with Al Qaeda. The body language of some Northern leaders (such as Borno elders who spoke out only whenever government took military action and the initially tepid response of the Northern establishment) while not establishing complicity with BH, indicated at least mixed emotions! The Arewa Consultative Forum (ACF) very recently issued a shocking statement claiming falsely that BH’s ultimatum was in response to an earlier one issued by the “South-South”, in effect justifying same! The most blatant justification of BH has however been the one by CBN governor, Sanusi Lamido Sanusi who claimed to the Financial Times, that the BH phenomenon was a consequence of divergent federal resource flows to the South-South and North-East since the 13 per cent derivation principle in 1999! Sanusi ignored any facts that contradicted his logic-Cross-River and Edo States (both in South-South) which get next-to-nothing from derivation should then be consumed by terrorism; South-West and North-Central States who do not benefit from derivation haven’t shown the same tendency; the South-East zone actually receives lower federal allocations than North-East; and how does Sanusi explain pre-1999 religious riots in the North (when Northern States took the highest allocations based on population figures) including the 1980 Maitatsine crisis, or the 1995 beheading of Gideon Akaluka in Kano? I recommend that anyone interested in resolving the crisis of poverty, unemployment and ignorance in the North, should seek the solution in education, skills acquisition, focus on economic development and avoidance of extremist religious philosophy! The BH crisis has its roots in a dangerous combination of extremist religious ideology, abysmal social conditions and political brinkmanship!!!