Cost of Nigeria’s multiple crises

Cover-Muhammadu-Buhari-Obama-visit

By Olisemeka Obeche, Osaze Omoragbon and Pita Ochai

Cover-Muhammadu-Buhari-Obama-visitPresident Muhammadu Buhari would be the first to admit that never have things been so bad in Nigeria; not just for the ongoing battle against powerful but corrupt public officials and the monumental graft that caused British Prime Minister David Cameron to describe the country as “fantastically corrupt”, but the seeming intransigence of a concert of socio-economic headwinds buffeting the Nigerian ship of state.
While working hard to fully rout the Boko Haram insurgency in the North East, the Buhari administration has been plunged into another mire in the volatile oil-rich Niger Delta region by a resurgent armed agitation for resource control. In the eastern states, particularly the region known as the South East geo-political zone, the ghost of Biafra, the ill-fated secessionist state that plunged the nation into a three-year civil war, has been roused by agitators.

Nor is that all. Fulani herdsmen are increasingly engaged in peace-disturbing conflicts with farming communities across the country, just as the spate of kidnappings that was once prevalent in the south eastern region has blown over to the south western region.

The implication of this convergence of crises on the economy reflects in declining economic activities and tumbling of economic indices: slowing growth, rising inflation, worsening unemployment, dipping productivity etc.

The Buhari administration, which rose to power on the wings of a commitment to stop the rot in the economy, now has its work fully cut out. The crises are costing government billions of dollars in lost revenues, and much more in resources that should go into reinvigorating the economy, weakened by falling commodity prices.

To move forward, the administration must first confront and address each of these economy-destroying upheavals.

Renewed militancy in the Niger Delta
Just when Nigerians thought that the amnesty programme had brought an end to the reign of terror foisted on the nation by such groups as the Movement for the Emancipation of the Niger Delta (MEND), a new shadowy militant group, the Niger Delta Liberation Force (NDLF), the latest set of audacious militants have threatened to take the war right to the doorsteps of government. The group says it has in its gunsights Government House, Aso Rock, the National Assembly and various sensitive locations in Abuja, the nation’s capital, and Lagos, the commercial nerve centre of the country. The group went a notch tougher than the Niger Delta Avengers who currently are on a bombing spree of oil installations, by vowing to “reduce production to zero”.

While the NDLF’s threat may be waved off as mere grandstanding, the effect of the renewed sabotage of the all-important Nigeria’s oil industry has caught government’s attention. Latest reports indicate that the federal government has commenced moves to start a dialogue with the militants by relaxing its all-out attack on the known hideout of the militants in the difficult Niger Delta riverine terrain.

Nigeria’s crude oil production, according to Dr Ibe Kachikwu, Minister of State for Petroleum Resources, declined by about 800,000 barrels per day in the middle of May due to the activities of the militants. Nigeria, in Kachikwu’s estimation, produced about 1.4 million barrels per day in mid-May which is a sharp drop from the 2016 budget benchmark of 2.2 million barrels per day. However, production has since plummeted to 1.1 million barrels per day following sustained attacks by the militants. The minister even put the amount lost to the non-passage of the Petroleum Industry Bill (PIB) each year to a whopping $15 billion.

The 2016 ‘budget of change’ signed in May, in analysts’ view, is already unworkable even as the economy is set to face further challenges. With crude oil price hovering around $50 per barrel and 1.1 million barrels cut from daily production, Nigeria currently loses N11 billion to the saboteurs, a figure that amounts to a staggering N330 billion monthly. This is not inclusive of the cost of repair and clean-up of the environment when peace eventually returns. This figure is more than the budget of most states and that of some federal ministries. For example, the monthly revenue loss is equivalent to the combined 2016 budgets of Edo (N111.5b), Zamfara (N109.3b) and Katsina (N114b) states and more than the federal budget for health (N221.7b) and Transport (N202b).

Worse, Nigerians fear that more production cut-ins will be recorded before peace is restored to the region. The plight of workers and pensioners, as a result, is set to worsen as most states owe workers and pensioners up to 11 months in wages and pensions. Edo State owes pensioners 11 months; Ondo State, five months. Kaduna State workers are yet to be paid seven months wages. In all, about 26 states, according to reports, owe workers’ salaries even as they celebrated May Day.

Nigeria is constrained to lose more in the coming years owing to environmental degradation due to oil spillage. The problem is being exacerbated by the activities of militants. The clean-up of Ogoni land, one of the worst affected communities, is estimated to take 30 years at a cost of $1billion.
Indeed, most communities in the Niger Delta suffer from repeated oil spillage as result of frequent vandalism. The consequences of environmental pollution are dire as aquatic life; fauna and flora are devastated, leaving most communities that depend on the environment without livelihood. Families are also often dislocated as raging fires that occur from vandalism often leave farms, homes and schools destroyed; turning indigenous people into refugees in their homelands.

Threat of Boko Haram insurgency
The battle against Boko Haram has been waged at a huge cost for Nigeria. On assumption of office in 2015, President Buhari had directed the immediate release of $21 million (N4.2 billion) to the Multinational Joint Task Force (MNJTF) fighting the insurgent group. Nigeria also made a pledge of $100 million as part of funds needed by the MNJTF, made up of troops from Nigeria, Chad, Niger, and Cameroon.

Many state governments have made donations to the Internally Displaced Persons (IDP) camps in spite of the well-known financial handicap their chief executives face. For instance, Abia State Governor Dr Okezie Ikpeazu was in Adamawa State IDP camp. He reportedly donated N20 million.
Apart from the widespread loss of lives and properties being witnessed in the northern part of Nigeria, the activities of Boko Haram have severe economic consequences on the Nigerian economy. Nigeria has Africa’s largest population of displaced persons numbering 3.3 million, the third highest in the world behind Syria with 6.5 million, and Colombia with 5.7 million.

In the 2016 budget of the federal government, about N10 billion is earmarked for relocation and resettlement of IDPs. A total of N4.62trillion was allocated to the federal security sector between 2011 and 2015. Year after year, the security sector continues to gulp the highest chunk of the country’s expenditures. In the 2015 budget, for instance, N934billion was allocated to the security sector, the highest for the year. The figures for 2011 and 2012 were N920billion and N924billion respectively while N923billion each was thrown at the sector in 2013 and 2014.

The nation’s huge outlays on security notwithstanding, the IDPs have continued to receive support from several governments and humanitarian groups both in the country and across the globe. The U.S. Government provided $44 million (about N8.7 billion) in humanitarian assistance to internally displaced persons in the North-East of the country. The U.S. Embassy in Abuja said the U.S. Agency for International Development had also awarded a $10.5 million (about N2billion) grant to Adamawa, Borno and Yobe states. The grant was in continuation of the U.S. humanitarian assistance to the IDPs in the three states.

The private sector has also been of help. Aliko Dangote, the president of Dangote Group, announced that he would invest N2 billion to create jobs and end hunger for Borno State residents living in IDP camps.

The impact of Boko Haram is pretty obvious in the country’s economy. When Boko Haram emerged from the shadows, one of the first economic concerns was the almost immediate drop in foreign direct investment (FDI), with the concern being whether the government had the wherewithal to deal with the serious insurrection or stave off the many decades of political instability the country has faced. According to the World Investment Report (WIR) 2013, FDI flows into Nigeria dropped by 21 percent in just one year — from $8.9 billion in 2011 to $7 billion in 2012.

Pro-Biafra agitation
Commercial activities in the South East geo-political zone of the country have equally suffered tremendous set-backs in the wake of renewed agitation for actualisation of the defunct Republic of Biafra. The series of street protests organized by the splinter group known as the Indigenous People of Biafra (IPOB) and the Movement for the Actualization of Sovereign State of Biafra (MASSOB) have not only turned bloody and destructive, but also taken a heavy toll on the economy of the region and the country at large.

The recent protest march to celebrate the ‘Biafra Day’ on May 30, in memory of the leader of the defunct Biafra Republic, late Chukwuemeka Odumegwu Ojukwu, also deteriorated into a bloody clash with security forces in Onitsha, Enugu and Asaba. Although, official reports indicated that five people lost their lives during the mayhem, IPOB’s Public Relations Officer, Mr Emma Powerful claimed about 30 lives were lost, with over 50 protesters arrested.

The protests not only witnessed its heavy casualties in Onitsha and Asaba, it paralyzed economic activities. Following the mayhem, the commercial city of Onitsha, especially the Nkpor axis, was locked down with the security operatives taking over the roads. Commercial activities and movements grounded to halt as billowing flames and smoke enveloped the commercial city, the result of bonfires lit by the protesters on major roads and streets.
Similar protests in December, last year, blockaded the Niger Bridge. Consequently motorists and commuters travelling to the South East through the Niger Bridge and those doing business in Onitsha were held hostage for about 72 hours as the Joint Military Task Force (JTF) battled to dislodge the protesters to restore law and order. By the time the stand-off between the protesters and security operatives was over, about nine lives were reportedly lost and scores sustained injuries. Representatives of the main markets in the areas estimated properties destroyed to be worth more than N1billion.
President of the South East Amalgamated Traders Association (SEAMATA), Mr Okwudili Ezenwankwo, also explained that such protests and resultant bloody clashes are taking heavy toll on the commerce and economy of Onitsha and the country.

Spate of kidnappings in South West

The unabated spate of kidnappings in parts of the country has continued to add to the economic woes facing prominent Nigerians. The abduction “business,” which started from the Niger Delta region with the kidnappings of expatriates for ransom and later spilled over to the Southeast, has gradually crept into the South West region. Since the abduction of Chief Olu Falae, former Minister of Finance and a former Presidential candidate of the Alliance for Democracy in October 2015 and subsequent release following a purported payment of N5 million in ransom, kidnapping has become a regular phenomenon in the South West zone. The most recent case took place in Lagos with the abduction of three girls from the Babington Junior Seminary in Ikorodu, Lagos. The schoolgirls were eventually rescued by a combined team of the Police, Department of Security Services (DSS) and the Army without paying a dime, but the signal was already sent — kidnapping now thrives in Lagos.

In late April, former Nigerian Minister, Senator Iyabo Anisulowo, was abducted while returning from her farm in Sawonjo in Yewa North Local Government of Ogun State. Anisulowo’s kidnappers demanded N200million as ransom but the police were able to rescue her six days later without paying the hefty ransom. Similarly, it took a drastic measure by security operatives on May 22 to successfully rescue two Catholic nuns (Apo Perpetual and Roseline Familade), along with their driver, Zwugwa Zibai, who spent one week in captivity after being kidnapped at Kajola village, along Benin-Ijebu-Ode road, in Odigbo Local Government Area of Ondo State. These were the lucky ones. Others were not so lucky.

Before then, a kidnapped king of Ubulu-Uku Kingdom in Aniocha North Local Government Area of Delta State, HRM Obi Akaeze Ofulue III was reportedly killed by his abductors. The deceased king was on January 5 abducted by suspected Fulani herdsmen on Obior/Igbodo Road, Delta State, and was eventually found dead after so many days in captivity. Even former President Goodluck Jonathan was not spared, as his foster father was also abducted from his Otuoke-home in Bayelsa State.

TheEconomy estimates that hundreds of millions of Naira are paid in ransom to kidnappers annually across the country while the economic cost of loss of investment and disruption of economic activities are more. Security agencies, including the police, have yet to convince the citizenry not to pay ransom since the record of arrests and prosecution of the criminals behind the surge is nothing to write home about.

Fulani herdsmen’s deadly attacks  
Over the years, Nigerians have lived peaceably with herdsmen who traverse the land with their cattle in search of grazing land. As the population increased, and more people lay claim to more parcels of land, clashes between farmers and herdsmen have assumed frightening dimension with the invasion of communities such as Agatu in Benue State, the Gassaka and Bali local government councils of Taraba State.
It was alleged that the kidnappers of Olu Falae, former Minister of Finance were Fulani herdsmen who he had disagreement over the destruction of his farm.

In Nimbo, Enugu State, close to 50 persons were reported killed during clashes between the farmers and cattle rearers. Similar experiences were reported in Lagelu, Oyo State, and other parts of the country that have remained unreported. Government has mooted the idea of creating grazing reserves in states of the federation to contain the herdsmen itinerary and forestall clashes over land. Past efforts to reserve grazing areas for the cattle Fulanis have failed. These include those of the Mid-Western State to have a functional ranch in Ubiaja as well as the Eastern Regional government to operate the Obudu Cattle Ranch. The challenge today is getting all stakeholders to agree on the best way to address the grazing land Palaver without invoking the wrath or displeasure of either side of the divide.

As the multiple crises threaten the Nigerian economy, experts believe it has become imperative for the Federal Government to move swiftly to address their root causes, especially the issues of marginalisation, poverty and deprivation.

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