Monthly Archives: March 2017

Rejoice and despair

By Rafiq Raji, PhD

Even as economic growth was negative in the concluding quarter of 2016, it was positive for the full year; though a paltry 0.3 percent. And the South African economy would probably pull further ahead in 2017. Much of the constraints (load-shedding, political noise, rand weakening and volatility, drought-induced food imports and price spikes) which hitherto bogged down the economy have become relatively subdued. The rand has rallied lately. Barring the now expected negative political event now and then – most recently, the social welfare payments crisis – the Zuma government has been relatively well-behaved as well. Nonetheless, growth remains far short of the authorities’ target. That is even as growth is expected above 1 percent this year. Policy uncertainty has also been raised a couple of notches: Would land be expropriated without compensation? Is the treasury going to be weakened? Is finance minister Pravin Gordhan going to be fired?

Mixed promise
After the better than expected current account deficit data for the fourth quarter of 2016 – which came out at 1.7 percent of GDP, much lower than the consensus forecast of 3.5 percent – expectations have been raised that the South African Reserve Bank (SARB) would be able to cut rates sometime later this year, from the current benchmark level of 7 percent. Besides, the rand has been strengthening lately. Naturally, it is wondered whether this would be sustained at a time that the US Federal Reserve is decidedly now on a policy tightening path and external and internal political risks abound. Also, annual consumer inflation may remain above the SARB’s 6 percent upper bound target for most of the year. For instance, even if food prices become stable (a much bumper maize harvest is expected this season), power tariffs could rise: Eskom has already secured approval from the electricity regulator to raise tariffs by 2 percent in the 2017/18 fiscal year, in addition to getting leave to make additional hike requests if necessary. And should crude oil prices rise as envisaged, fuel prices would probably rise in tandem. Despite these though, the outlook looks promising, by and large.

Judging and ruling
Land expropriation without compensation. Xenophobic attacks fuelled by politicians trying to deflect attention from their corruption. Impunity enjoyed by certain favoured officials in the face of palpable incompetence. These are just few examples of the recently complicated turn of South African politics. In February, opposition Economic Freedom Fighters MPs were forcefully ejected from parliament as they frustrated the state of the nation address by South Africa’s president, Jacob Zuma; amid an unprecedented military presence on parliamentary grounds. And as the judiciary increasingly reins in the excesses of the executive, it has started having misfortunes of its own. The office of the chief justice was recently burgled, with crucial case files carted away, raising suspicions that those who could potentially be on the wrong side of the court’s judgements decided to be proactive. Such thinking is not farfetched. The boss of the elite police unit (“The Hawks”), Berning Ntlemeza, had his appointment revoked in mid-March by a high court, in a case brought against him by two non-governmental organisations. And only just before this recent rebuke of the executive by the judiciary, the constitutional court did not hold back its punches against social development minister Bathabile Dlamini, whose incompetence nearly put at risk welfare payments due 17 million people on 1 April.

With the courts becoming a pseudo-government of sorts, President Zuma has been pushing back: he rose in defence of Mrs Dlamini, an ally; albeit her survival is not unconnected to her leadership of the influential African National Congress (ANC) Women’s League, a voting bloc Mr Zuma needs if his preferred choice for the party’s presidency is to win the day in December (The two principal candidates are deputy president Cyril Ramaphosa and erstwhile African Union Commission chairperson Nkosozana Dlamini-Zuma). An imminent cabinet reshuffle by Mr Zuma is expected to help position Mrs Dlamini-Zuma for the top job. Mr Zuma has also deftly used the welfare payments crisis to bring the responsible agency under his direct control via his oft-used interministerial committee mechanism. Other power grabs are afoot. In mid-March, the ruling ANC indicated its desire for Mr Zuma to be “the strategic centre of power”, not the treasury. They want him (or whoever is president) to be the one who sets budget priorities that the treasury simply puts into action without question. Needless to say, the potential for abuse is best left to the imagination.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz.

Steady as it goes

By Rafiq Raji, PhD

It would be recalled in my column of 3 January 2017 (“Will Nigeria get out of recession in Q1-2017?”), I suggested Nigeria would likely get out of recession in the first quarter of this year. After the vindication of my 2016 1.5 percent growth contraction forecast, one feels more confident that this would likely be the case: at least my clients should be, after worries back then that such a view seemed somewhat optimistic. Authorities have also joined their voices to this possibility. My reckoning is that economic growth would be between 1-3 percent year-on-year in Q1; albeit my actual forecast is closer to 3 percent than to 1 percent. Yes, I am an optimist. Subsequently, I reckon the conversation, amongst ever so many pundits these days, would shift to whether technically getting out of a recession is the same as being out of recession in reality. No matter. What is more important is that once out of recession, stakeholders in the Nigerian economy would have their ‘mojo’ back: confidence is contagious.

Commentary since the release of the authorities’ economic recovery and growth plan (ERGP) has been mixed though. Some say it reads like a self-motivational book. If it does and in fact motivates the relevant stakeholders, that might not be such a bad thing. Others suggest the forecasts and goals are a little ambitious, considering the short timeframe and all. Well, better a plan than none at all. And yes, those who say the document was poorly drafted have a point. But that is the extent of our agreement. There is nothing in the ERGP that is farfetched. The problem has never been one of plans – and there have been better ones than this current one – but that of political will.

So as the Nigerian economy turns a corner, especially as much of its woes hitherto were policy induced, it behoves Nigeria’s monetary authorities to at least ensure nothing is done to upset the recovery. And the recent dip in headline inflation – which fell to 17.8 percent in February from 18.7 percent the month before – heartwarming as it is, should not spur even the slightest consideration of lowering interest rates; benchmarked currently at 14 percent. To do so would be premature, at this time. Firstly, prices continue to accelerate intensely: monthly inflation was 1.5 percent, the highest in eight months; not even the opportunistic price increases during the festive December and January months were enough to push the month-on-month inflation rate that high. But is year-on-year inflation going to continue on a downward trend? Almost certainly, yes.

Uhuru, uhuru
Crude oil prices, have remained by and large above US$50, boosting the central bank’s foreign exchange reserves: the level beat the $30 billion mark in March. In turn, the Central Bank of Nigeria (CBN) has ramped up FX supply. The naira has appreciated in the black market consequently, narrowing the premium to the official rate by a bit. But is it sustainable? Quite frankly, it all depends on the crude oil price outlook. If oil prices continue to rise, the CBN would be able to continue defending the currency. Are oil prices expected to continue on an upward trend? Most of the indicators suggest this is likely. Compliance by OPEC members to production cuts announced at their last meeting has been encouraging, with Saudi Arabia going the extra mile, cutting its output by more than it promised. And non-OPEC members have been reasonably compliant as well, fulfilling about half of their production cut commitments. Besides, there is a surfeit of dollars in domicilliary accounts: banks are reportedly now pushing dollar sales to avoid losses.

Needless to say, the CBN’s recent aggressive FX interventions have begun to unnerve speculators – from the average bank customer to the big corporate – who hitherto were expectant of a devaluation. And despite suggestions in the ERGP of an eventual free-floating exchange rate, this is not likely. Not only would support for the naira likely continue, FX bans on about 41 imported items would likely remain. This much, CBN governor Godwin Emefiele, asserts. Besides, having held on to its unpopular FX policies during the period of sub-$50 oil, it would be almost irrational for it to now change course at just the point it could claim victory.

Hunger games
Indications are that the ailing Nigerian leader, Muhammadu Buhari – recently returned from a 7-week medical vaction in England and soon to return for another round of medical checks and probably routinely thereafter – would not be able (or allowed) to run for a second term in office. Violent incidents, leaks of private correspondence to the press, and all sorts of mischief are already about to ensure that this is the case. President Buhari’s health condition is enough reason for him to take a bow after he concludes his first term. Those gunning to replace him are not taking any chances, however. The problem is that there are many potential candidates – most in middle age – from the north, the region expected to keep the presidency for eight years to 2022 at least. May the odds be ever in our favour.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz.

Itinerant Nigerians

By Rafiq Raji, PhD

It is almost always true that when abroad and you sight a black man, it is well worth taking the risk that the person is Nigerian. You’d be surer if in response to polite entreaties, the passerby is deliberately snubbish. It depends on the setting though. Wait long enough, there would soon be the occasional irritation, the response to which would almost definitely confirm his origins. One out of every five blacks on planet earth is Nigerian. And no matter how much he feigns the perfect British or American accent, his archetypal Nigerian mannerisms are hard to conceal. Some argue we travel a lot because of our chaotic situation back home. Not necessarily. Yes, a lot seek the good life. Most are just curious. But a lot really travel just to show off. Take away the pictures of them at popular foreign landmarks, showing how ‘they are enjoying life,” some Nigerians might consider the trips a waste of money. Even the uber wealthy ones want to show how much ‘jollofing’ they are doing, posting pictures of themselves in their first or business class plane cabins or seats on social media. And these are the ‘small boys’. Big boys fly their private jets, with our stolen foreign exchange neatly tucked in their luggage it turns out – pictures of their vanity never include those for sure. You’d think with that much wealth they wouldn’t need the phony gratifications that soon pour afterwards. Nigerians are very curious and vain cats. We want to know: Where is it? What is it? What do they do there? Who runs things? (That curiosity, unfortunately, has not extended to science, innovation and progress. And it is not because of a lack of capacity for hard work. We are rarely slothful. In that vanity that we all seem to share perhaps lie the answer to our continued suffering, well-hidden under forced but outwardly believable smiles.)

Act, not bicker
So, imagine the anxiety of itinerant Nigerians when the nightmarish campaign promises of now American president, Donald Trump – especially on immigration – began to become reality. In the typical Nigerian fashion, our officials – when they are not busy behaving like we don’t exist – took to bickering over jurisdiction. The presidential adviser (‘senior special assistant’) on foreign affairs and the diaspora, the ever dynamic Abike Dabiri-Erewa – whose long-earned reputation for candour and palpable compassion from her days as a government-employed journalist is well-known – in her characteristic way, took to her first constituency, the media, advising Nigerians to re-consider non-essential travel to America, after a number of Nigerians were detained upon arrival at American airports and subsequently returned; even as they had valid visas.

You would think the Nigerian foreign minister, Geoffrey Onyeama, a meek personality, would be a little pleased. He was not amused. Ordinarily, there is usually a power-play of sorts between presidential advisers and ministers. In most cases, the advisers prevail; because they often have the mandate of the chief of staff, who functionally acts for the president in most administrations. One does not know if Mrs Dabiri-Erewa consulted Mr Onyeama before going on air about her concerns. Bear in mind, the American incidents came not too long after the most recent xenophobic attacks on Nigerians by South Africans. Considering how slow the wheel of governance turns in the public service, I would not be surprised at all if what actually transpired was that the no-nonsense Mrs Dabiri-Erewa finally lost her patience. And quite frankly, she is a more credible figure. After spending an entire career exposing untruths, advice coming from her is instantly credible. By his own admission to a local radio station, Mr Onyeama did not have a conference with her before his ministry issued a counter-advisory asking Nigerians to ignore her advice. The stakes are much too high for such pettiness. Mr Onyeama is a gentleman. But leadership requires dynamism as well.

Between getting an American visa, purchasing a ticket and so on, a Nigerian would have parted with at least a million naira (more than US$3,000), never mind the unbelievable stress in between. And upon getting to the American airport, the Nigerian typically has to endure myriad questions by security officials. With the Trump administration’s anti-immigrant stance, however, this scrutiny has taken on gargantuan proportions. So is the Nigerian better served by being told to travel only just to be served the bitterness of the many indignities Africans tend to endure at foreign airports? Or is it better to wait till one is sure all that toil ahead of the trip would not come to naught at just the time when one was beginning to sing praises? Surely it makes more sense for Mr Onyeama to focus on addressing the latter concern.

Give more than hope
There are numerous tales of woe by Nigerians, who upon reaching a foreign airport, are made to go through all sorts of screening. And this scrutiny is even more enhanced in Asian airports. Some candour here though. It is said Asians have difficulty differentiating African faces, hence why if you land in a Chinese airport, say, they single out Africans for more ‘enlightening’ pictures. At least that was my experience at the Shanghai airport some years back. Most Nigerians would ordinarily bear this (not that we are left with much of a choice) – as did I – if at the end of it all, with their documents deemed valid, they are allowed to go about their legitimate business. The uncertainty that comes with the possibility that even after all these, one may be ‘returned’ is hard to imagine.

Could it be that Mr Onyeama, a blue-passported minister, has so soon forgotten the experience of what it feels like to be a Nigerian abroad? Perhaps it is true then that not until our leaders compulsorily experience our daily challenges, they might not be more sensitive to our plight: our undeservedly pampered government officials must now ply the Abuja-Kaduna expressway, after the forced closure of the Abuja international airport for repairs. Needless to say, the road has become virtually anew overnight. Regardless of what motivates Mrs Dabiri-Erewa, the passion with which she does her duty is refreshing. Undeterred, she gave South African politicians covertly encouraging xenophobic attacks against Nigerians a piece of her mind only this past weekend. Stars just shine. Those who can’t bear the glare should shut their eyes.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz.

When Buhari returns

By Rafiq Raji, PhD

Considering The Most High did bring to naught the futile calculations of dark figures around Umar Musa Yar’Adua, the last ailing Nigerian leader from the north, brethren of that ilk around the current one are here forewarned: do justice or another would be put in your place and they would not be like you.

Muhammadu Buhari, president of Nigeria, who after much ado succeeded to his current exalted position, must have had a foreboding of his present dilemma. I suppose it informed his meticulous consideration of candidates presented by his All Progressives Congress (APC) party to run with him on its presidential ticket in the 2015 elections. Even though his hands were tied somewhat – it was politically expedient for the choice to be a southerner and a Christian – he was spoilt for choice regardless. So, the trait then candidate Buhari valued uppermost and sought was total and absolute loyalty. Because even though a vice-presidency is really just a ‘velvet ghetto’, with all the pomp and ceremony of office but no real power, the office-holder could by an Act of God be called upon to lead the country.

Bola Ahmed Tinubu, a mystical figure in Nigerian political circles and the quintessential Yoruba political leader, was clearly not going to be acceptable: not only was he already so influential in the south, it was well-known he had presidential ambitions of his own. He is also officially a Muslim. Babatunde Raji Fashola, the celebrated former governor of the country’s commercial capital and state, Lagos, was reportedly disqualified for the same reason. A Muslim-Muslim presidential ticket would have been considered insensitive. Even so, Mr Buhari likely rejected Mr Fashola’s candidacy for the vice-presidency with some pain. President Buhari has not hidden his liking for Mr Fashola, a very serious man with a demonstrated capacity for hard work, diligence and follow-through: he put him in charge of the country’s infrastructure (works, power and housing), making him perhaps the most powerful minister in Nigerian history.

Stoop and conquer
Being quite intimately conversant with the ways of the Hausa-Fulani, I am almost certain Mr Buhari’s health status was known to his close aides long before he assumed office. The Fulanis rarely fear a confidence would be betrayed: the consequences can be grave if one earns the reputation for being a blabbermouth. So, those with presidential ambitions within Mr Buhari’s inner circle – call them ‘the cabal’ if you like – were quite aware early on that he may not be able to serve a second term. So when Yemi Osinbajo – a southerner and Christian – was offered as a similarly ‘no-drama’ alternative (but whose presidential prospects were not as bright) to Mr Fashola, ‘Buharists’ were somewhat relieved. Restless beings that they are, which is typical of the ever-scheming Nigerian politician, they remained antsy: Vice-president Osinbajo was not only disrespected on occasion by some very senior Buharists and a particularly vocal northern state governor who is very close to Mr Buhari, they reportedly did so sometimes in the presence of their principal. Such is Mr Buhari’s stature in the north, that when he reportedly ordered his associates to keep the peace, they mellowed.

So, it is to Mr Buhari’s credit that Acting President Osinbajo has been allowed to do his job. It is not happenstance. It was envisaged he may have to do the job at some point – maybe not this early though. And Mr Buhari has had some experience with this type of rule. Back when he was military leader in the 1980s, he allowed his deputy, Tunde Idiagbon (a Muslim southerner), considerable latitude. Thus, those who are already praise-singing Mr Osinbajo are not doing him any favours. He couldn’t do the job effectively without the political cover of his principal. What Mr Buhari lacks in strength, he has in an able vice-president. True, it was unwise of him not to have allowed the humble law professor take on more responsibilities early on. But better late than never.

Respect zoning
Indications have emerged that suggest Mr Buhari would probably need regular medical care during the remainder of his tenure in office. So although he may return anytime now, or later but just in time before the statutory ninety days, after which his deputy may be vested with full authority, he would probably have to visit his British doctors much more regularly. An admonition: wolves already circling should let him be. And Mr Buhari must make it clear to his loyalists that Mr Osinbajo is to be allowed a peaceful rein. They would probably listen to him. But there is just one man they all worry about.

Mr Tinubu, titular national leader of the APC, was a little ‘indiscreet’ lately, suggesting he might contest the presidency in 2019; comments considered insensitive by the northern establishment in light of Mr Buhari’s ill health. While he is not in government, the potential casualty of what is clearly an ill-advised action at this time, would be his ‘political son’ (albeit not as close as many others, but now to be certainly given the utmost political affection), Mr Osinbajo. Yes, he has since clarified his statement, asserting his loyalty to Mr Buhari and declaring he would never contest against him. Still, his message has been heard loud and clear: astute and experienced politicians of his ilk do not make such utterances without careful consideration. And his cohort in the north have definitely taken notice: measures to avoid a repeat of their Yar’Adua – Jonathan loss are probably now in high gear.

In the interest of our peace and security, the political elite must ensure zoning is not jettisoned yet again. It may seem self-interested for northern politicians to clamour for it at this time, in light of Buhari’s potential single-term presidency, but essentially the north-south power-rotation arrangement benefits minorities in the long-run. And we should not soon forget what happened the last time that pact was betrayed.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz.