Tag Archives: Politics

Liberia: Weah’s long wait

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

George Weah, the famous ex-footballer, must wonder how many more “almost there” moments he would have to endure before clinching the Liberian presidency. Having won the most votes in the first round of the presidential election in October, it should ordinarily have been just a simple next step to proceed to the runoff. Not so quick; his opponents likely wondered with a mischievous smirk on their faces. First, the third place candidate, Charles Brumskine of the Liberty Party, went to the Supreme Court alleging the 10 October vote was besmirched by irregularities and should be declared null and void; and a rerun ordered. Thankfully, the court ruled otherwise. And though the judges likely came to a decision based on law, they most definitely were mindful of American and European urgings about the dangers of delaying the election process in what is still a very fragile country. The Americans were more forceful. And in Liberia, the Americans have a special place. They asserted the October vote was as credible as can be. Whatever motivated the court to uphold the first round vote is not really important. It was the right and sensible thing to do.

Spoiler alert
Curiously, second place candidate in the October poll, vice president Joseph Boakai of the ruling Unity party, joined in Mr Brumskine petition. You would think as he was already qualified for the runoff vote, he would not bother with such distractions. Never mind that he took issues with his principal, President Ellen Johnson Sirleaf, accusing of her of bias and interference. One incident he harped on was a certain meeting Ms Sirleaf had with election magistrates prior to the vote. He was not being entirely troublesome. Ms Sirleaf never hid her aversion to him succeeding her. (In my column ahead of the first vote in October, I highlighted this; see link viz. https://www.businessdayonline.com/liberia-finally-george-weahs-time/). Most of Mr Boakai’s actions thus far suggest he does not see himself winning the runoff vote today (26 Dec). Because even after the Supreme Court ruled on 7 December that the runoff could go ahead subject to a “clean up” of the voter register, he went back to court asserting the clean-up condition had not been met. Thankfully, an ECOWAS team did the task; arriving on the same day the National Elections Commission (NEC) announced the runoff vote date for Boxing Day. In a nutshell, his suit was rightly dismissed. Known with the uncomplimentary epithet of “Sleepy Joe”, Mr Boakai has proved to be anything but sleepy.

Christmas gift
Many of the actors in the 15-year Liberian civil wars that ended in 2003 have managed to permeate decent society; some rich, in politics or have found religion. So it was not entirely surprising that Mr Weah would choose someone influential in those circles. Jewel Howard Taylor, ex-wife of former warlord Charles Taylor, was a smart choice. That is even as memories still run deep about the atrocities her ex-husband and his associates committed. Even so, the levers of power and influence in Liberia are still controlled by them. The choice is already bearing fruit. Former warlord Prince Johnson declared his support for Mr Weah ahead of the earlier scheduled but court-stayed 7 November runoff vote; one of the reasons it is believed Mr Boakai began to get really nervous.

Considering the first vote had as much as twenty presidential candidates, the probability that any one candidate would be able to secure the needed half was predictably low. With only two candidates on the ballot for the runoff, the choice before voters is binary. The more popular man, Mr Weah no doubt, could easily secure victory this time around. But there is a catch. The timing of the runoff is a little weird. It is taking place a day after Christmas; when celebrants would be resting off what tends to be very hectic nights before. So turnout might be low. Besides, during the festivities, people tend to go to the hinterland to celebrate with aged family members. If voters registered elsewhere, in the city, say, where most tend to live, it could be a little difficult for them to participate in the election. The NEC had little choice in the matter. In order to ensure that the victor would be sworn-in on schedule, on 22 January 2018, the runoff needed to be conducted and concluded before the end of the year. Liberians would likely show some understanding.

South Africa: Zuma goes legacy shopping

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

After much anticipation, the ruling African National Congress (ANC) party’s leadership race started during the weekend (15-20 December). It got off to a slow start. Ahead of the elective conference, I sought the views of fellow Africa economists for an article for African Business magazine on what the implications for the South African economy could be depending on who emerges victorious. (See link viz. http://africanbusinessmagazine.com/region/southern-africa/south-africa-markets-weigh-ancs-next-leader/). I also published my preliminary personal views. (See link viz. https://macroafricaintel.com/2017/12/15/macroafricaintel-south-africa-a-race-of-three/). Although deputy president Cyril Ramaphosa was leading with nominations and expected to win, the race still had an element of uncertainty. There were a few twists and turns, for sure. The national executive committee (NEC) decided in an emergency meeting before the start of the conference – which was actually the reason for the lengthy delay in the first place – that nullified structures of the Kwazulu-Natal and Free State provinces by the courts would not vote, for instance. Incidentally, these were the strongholds of one of the leading presidential contenders, Nkosazana Dlamini-Zuma, ex-wife to outgoing party president, Jacob Zuma; who incidentally gave his own shocker just before the start of proceedings. He announced a free education policy; much to the dismay of market participants. It did reveal one thing, though. President Zuma does not want all that is remembered about his presidency to be the scandals that plagued it. He wants a good legacy. This late in the game, you probably wonder. I actually did think Mr Zuma would do something desperate to secure his postion in the aftermath of the conference. But considering the negative reaction of market participants to finance minister Malusi Gigaba’s mid-term budget and the sharp reaction of the rand to rumours before the conference that Mr Zuma might announce a free education policy and his denial afterwards, whatever potential outrageous move Mr Zuma was going to make, I did not think free education would be it. That said, it was the perfect populist move. Free education is such a popular issue with the masses that no matter the wrongs Mr Zuma may have committed, they could be overlooked on the back of it. That said, it is a negative for the fiscus and the authorities’ oft-touted fiscal consolidation drift. The move also raises fears that earlier denials about potentially negative policies like the declaration of a state of emergency might actually just be another ruse.

Worry about money later
Mr Gigaba, who was delivering a speech at a business breakfast event at the ANC conference when Mr Zuma announced his free education policy, says whatever is done would be done in a fiscally sustainable way. He left the details to the 2018 budget in February. Did he even know about it, though? Because it is highly unlikely he would have known about it without at least mentioning it during his speech. His remarks were made afterwards, when reporters accosted him on his way out of the breakfast venue. Besides, it made naught of the many right things he said in his speech. In any case, S&P Global Ratings’ decision in November to downgrade the country’s rating further into junk territory has clearly now been vindicated. And Moody’s? Well, if this does not move the rating agency, nothing else will. Free education is desirable. But a sustainable model is what is needed, not a populist, financially constraining and unsustainable move like the one Mr Zuma just made.

Factions for nothing and something
One key thing palpable from the conference proceedings are the deep divisions within the ANC. Most are just for mundane reasons. But some are ideological. Take the issue of land expropriation. The party’s youth wing wants it done without compensation. The older cadres reason some compensation would be appropriate. How the party should be structured is also an issue. It was proposed at the conference that there should be two deputy presidents, for instance. The argument proffered in support of this was that it would help unify the party. It was really Mr Zuma’s idea. He had earlier opined that the second position presidential candidate should automatically get a deputy presidency; a development that would have required having two slots available. The proposal did not enjoy majority support and was thus turned down. Take another example. The ANC women’s league’s official position was to support the leading female candidate for president; that is, Ms Dlamini-Zuma. Instead, outgoing party chairperson, Baleka Mbete, a woman and hitherto a presidential contender, chose to support the male frontrunner; Mr Ramaphosa. Her reasons made sense: Mr Ramaphasa was a better candidate to beat whoever the opposition might present for the 2019 elections. But you get the dynamics, at least. As I submit this column, no one could confidently say who would win. In fact, rumours surfaced South Africa might have its first female president this week.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz. http://www.businessdayonline.com/south-africa-zuma-goes-legacy-shopping/

Call me Mr President

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

On 12 December, a “president” would have been inaugurated in Mombasa, Kenya. At least, that was the plan. But the president of where or what? Because just weeks before, one was sworn-in. His name is Uhuru Kenyatta. And he looks nothing like the one that could have taken another oath of “office” this week. I have been at my wits’ end trying to fathom what Kenyan opposition leader Raila Odinga was trying to achieve by committing what could on the face of it have been deemed a treasonable offence. Mr Odinga lost to President Kenyatta in the August elections which was annulled by the Supreme Court over irregularities. As he did not participate in the second one, which incidentally was validated by the court, it beggars belief on what legal basis his purported presidential inauguration would have stood upon. With some reflection and after reading commentaries here and there, I came around to an understanding of what he might have been trying to achieve. A man could call himself anything. If I wrote in this column that I am the “president” of this page, who is to query me? Some companies entitle their chief executive “president”, for instance. In Nigeria, the head of the Senate is what again? Mr. President. But is Bukola Saraki, the president of the Nigerian Senate, the president of Nigeria? Surely not. So Mr Odinga might actually be on to something I thought. Since he is almost assured of the support of about half the Kenyan population, designating himself as “president” of some assemblage, a “peoples’ assembly”, say, might just do the trick of getting on the nerves of his rival in the presidential palace. In a nutshell, what Mr Odinga had planned today may actually have passed the test of legal scrutiny. At least, so I thought; until a press release by his party over the weekend postponing the swearing-in stated he would have been inaugurated as “President of the Republic of Kenya.” Say we ignore this about-face. Let us also assume he was not about to be foolhardy to the point of actually declaring himself the President of Kenya. With some creativity, he could actually get away with something close to the real deal.

Much ado about a title
Going around the country as the “president” of “something” that everyone knows represents about half of Kenya could actually be the perfect revenge from the scion of a family forever at odds (and always at the losing end it seems) with the Kenyattas. A good analogy can be found in China a long time ago. While Deng Xiaoping was the de facto leader of China in the late 1970s and for most of the 1980s, he was never officially head of state. At one point, the only title he had was that of honorary chairman of the China Bridge Association. Even then, he was able to wield tremendous power. Mr Deng proved the point that power is not so much about the title as it is about legitimacy. It seems to me Mr Odinga’s plan should be to hold on to the half of Kenya that he is now almost sure would pledge fealty to him if he asked. That way, as he and his party “resist” and ask for electoral reforms, they would be able to sustain the current momentum until the next elections. Mr Kenyatta and his men are not likely to sit idly by while he does this, though. Opposition strategist, David Ndii, was recently arrested by the authorities, likely in the hope that incriminating evidence would be found against him, Mr Odinga and the other principals of the National Super Alliance (NASA). As Mr Ndii recounts after his release on bail, they did not succeed.

Catch-22
Had the “president” been sworn-in today as planned, the president (which one now?) would have had little choice but to arrest and prosecute him for treason. Until the postponement was announced, I came to the resolution that perhaps Mr Odinga reckoned it would not be such a bad idea to be in the news in that manner. After all, he has been in prison before. In the event, attention would be drawn from whatever potential good Mr Kenyatta might be doing for the people towards the likely spectacle of a treason trial. He could still do some sort of oath-taking within the confines of the freedoms of association, expression and so on. But when the swearing-in eventually takes place, if ever, how should Mr Kenyatta respond? If he arrests and prosecutes Mr Odinga, the subsequent drama would be a tremendous distraction. If he does nothing, Mr Odinga would increasingly look presidential. Maybe it should end with the postponement.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays)

MainaGate: We must be fair

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

I have followed the “MainaGate” saga with great interest. (It refers to the furtive reinstatement into the public service of Abdul-Rasheed Maina, the former head of a presidential task force on pension reforms, who to the knowledge of the public had been declared wanted for myriad corruption allegations but was purportedly at large.) My views are mixed. After watching a 2-hour video recording of the investigative hearing by a committee of the lower house of the Nigerian legislature, what is clear to me is that Mr Maina has the sympathies of some people in the current government. He returned to a post at the interior ministry without any fear it seems. And the country’s chief spy, Lawal Daura, acknowledges action on a request on behalf of Mr Maina of a threat to his life. Mr Daura says since Mr Maina is a Nigerian and that they indeed found his fears to be credible, they had no choice but to take action. Nigerians likely find this interesting: You could not get past the gate of the premises of the spy agency if you were not “special”, talk less have the ears and heart of the agency’s chief. Besides, why would any agency help someone who everyone in the public domain thought to be a fugitive from justice? It could be that they are privy to a truth; but which would be injurious to the state if made public. Mr Daura also revealed without the slightest equivocation that Mr Maina is not on his agency’s watch list; hence why he has not been arrested. Furthermore, is it possible that Mr Maina would make incorrect claims about helping the authorities to recover assets in the knowledge that should these be found to be untrue, it would not help his already unfortunate circumstances? There are just too many questions. And many remain unanswered.

Passing the buck
My primary concern is really just about fairness. I am usually very wary when a narrative dominates the airwaves to the point that people become reluctant to espouse anything different. And in my experience, narratives with such prominence tend to contain some untruths. In time, the real state of affairs tends to unfold; but by then, it is usually not that useful for the victims of the earlier falsehood. But in this case, the lives of a man and his family are at stake. And the matter has been so publicised to the point that anything short of a proper resolution would be a great injustice. And the potential victims are not just Mr Maina and his relatives. A senior civil servant has accepted full responsibility for Mr Maina’s supposedly illegal reinstatement. I doubt very much he is as culpable as he claims. But there is a culture amongst the people from the part of the country he comes from about keeping to pacts and acting courageously. So should push come to shove, those he is likely protecting can sleep quite restfully in the knowledge that he would not change his tune later. To be clear, I am not taking sides here. But if murderers can be allowed the presumption of innocence until proven guilty, a purportedly corrupt former public servant can surely be allowed some accommodation.

Truth at all times
I think President Muhammadu Buhari was likely privy to at least some elements of the events that led to Mr Maina’s now supposed illegal reinstatement and promotion. When he became aware is the part one cannot objectively infer. To be fair, the president is procedurally apprised of only high-level details of issues. It is only when he prompts further that he is made aware of more. And even when a president does this, the details are still watered down. It is not the practice, however, for any president to probe too much; at least, not if his principal staffer, the chief of staff, Abba Kyari or any person in the position, has his full confidence. But when Mr Maina started gracing the full cover of newspapers, it would certainly have been impossible for Mr Buhari, who is well-known for his love of the papers, not to have become fully aware of the controversy and the injury it was causing his administration. Predictably, he directed that Mr Maina be immediately disengaged from the civil service and asked for a full report on the great matter. That said, Mr Maina’s issue has become so controversial that even when he receives the fairest hearing, it would be unwise to allow him back into the civil service. Besides, the matter could be left to the court which Mr Maina’s lawyers claim ordered his reinstatement in the first place; albeit he would probably be better off collecting his emoluments and retiring into a quiet life should he emerge victorious. Even so, some pragmatism could be applied to make the matter a win-win for all concerned. If his claim that he could help the authorities recover about three trillion naira in stolen public funds and assets – more than a third of planned public spending next year – is found to be credible, for instance, it should be pursued in exchange for some plea bargain deal (if applicable). But there is a broader issue about how public pension funds have been perennially misappropriated by public officials; ironically, the raison d’etre of Mr Maina’s task force. My advocacy is to Mr Buhari and not his underlings. No matter how villainous Mr Maina may have become and the potential costs to his government if he chooses to be fair, Mr Buhari must stick to the path of truth. Mr Maina should be given fair hearing, full protection by the security services whilst this lasts, and the judgements and resolutions by competent bodies on the matter should be implemented to the letter.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/mainagate-must-fair/

African central banks to close year cautiously

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Over the course of this business week (starts 20 November), central banks of the largest regional economies on the African continent would decide on interest rates. They are likely to keep them unchanged. Even as inflation has been slowing gradually in Nigeria, it remains high. And it is primarily driven by food inflation. Improved agricultural production on the back of a good harvest is expected to moderate prices over time. Besides the authorities are currently marketing a Eurobond that could be as much as $5.5 billion if everything goes well. It is not likely the Central Bank of Nigeria (CBN) would like to be seen making decisions other than ones that are data-dependent. In any case, CBN governor Godwin Emefiele has signalled the benchmark rate would stay pat at 14 percent for the remainder of 2017, with potential cuts next year when inflation would have slowed considerably.

For South Africa, the rand went into a tailspin lately, rising above the psychological 14.0 level for much of the past two weeks, as rumours persist about the desire of the Jacob Zuma-led government to make higher education free, amid well-known financial constraints. With a pliable finance minister at the helm, it is also now widely believed President Zuma has successfully ‘captured’ the Treasury. So even, as annual consumer inflation likely slowed to 4.8 percent in October, from 5.1 percent earlier, it may accelerate in November and December on the back of rand weakness and volatility. The headline would probably be no more than 5 percent by year-end, though; within the 3-6 percent inflation target band of the South African Reserve Bank (SARB). Over a 12-18 month horizon, consumer inflation would probably slow to 3-4 percent, however. Under different circumstances, this could justify a rate cut. However, the November monetary policy committee (MPC) meeting, the last this year and one just weeks before a tense leadership contest in the ruling African National Congress (ANC) party, require the SARB to exercise the utmost restraint. And even as the SARB pretends not to be perturbed by market moves, it does pay attention to the inflationary impact of rand weakness and volatility; and indeed the political noise that tends to be the trigger lately. A balanced outcome would thus be for the benchamark rate to remain unchanged at 6.75 percent.

And for Kenya, ongoing troubles related to a controversial presidential election rerun boycotted by the opposition, mean the Central Bank of Kenya (CBK) would need to continue exercising caution. It has shown much dexterity throughout the impasse thus far, though, as the shilling has remained largely stable. And inflation has been slowing; came out at 5.7 percent in October from 7.1 percent in the prior month. More importantly, inflation expectations suggest the headline would likely come out much lower in coming months; about 4.5 percent in December, say, and plausibly less than zero percent in Q2-2018 due to base effects. Even so, it would be better if it kept its benchmark rate unchanged at 10 percent at this meeting with a view to easing policy when the political situation improves.

Politics, politics, politics
The elective conference of South Africa’s ruling ANC party in December is on everyone’s minds. Mr Zuma’s rhetoric about the preferred candidate by the business community has not been comforting. The president has all but mentioned his deputy, Cyril Ramaphosa, in name when making accusations about the presence of western-backed traitors in the ANC. Judging from his countenance and body language, Mr Zuma is likely to do everything in his power to block Mr Ramaphosa from replacing him. Turns out, though, Mr Ramaphosa is leading in support from the party’s branches, whose delegates to the conference would elect the next party president. Many reckon if Mr Ramaphosa wins, he would move swiftly against Mr Zuma in a bid to replace him as head of state much sooner. Should his rival and Mr Zuma’s ex-wife, Nkosazana Dlamini-Zuma win, however, it is highly probable Mr Zuma would retain his position till it expires in 2019. To further this goal, it is believed Mr Zuma might fire Mr Ramaphosa as deputy president in the coming weeks. Ironically, this could actually boost Mr Ramaphosa’s chances.

In the Nigerian case, all indications suggest President Muhammadu Buhari would be seeking a second term in office; after ill-health hitherto increasingly made it unlikely he would do so. His recent activities point to a full campaign mode. He visited the southeastern part of the country recently; albeit to campaign for his party’s candidate at elections in one of the states there. But that only provided cover for his visit; he seemed reluctant to embrace the region hitherto. He and his aides vehemently deny this, of course. His defence rings hollow in the face of his actions, however. His inner circle is very exclusive. A recently announced ambitious N8.6 trillion budget for next year also has political coloration. Put simply, the political cycle is in full steam. There are thus risks of fiscal slippages as the administration rushes to show it has been doing well. Recently announced plans to appoint more ministers are not necessarily borne out of a desire for efficiency as they are about dishing out patronage. Such behaviour tends to cascade down to lower levels of government, with negative effects for the fiscus.

Leading opposition figure in Kenya, Raila Odinga, who recently returned from an American trip amidst police-induced chaos, has been leading the charge for secession in the western and coastal areas. Political motivations inform the recent ratcheting up of tensions in this regard. Besides, Mr Odinga is advocating the estalishment of a Peoples’ Assembly via a proclamation of parliament, where the ruling Jubilee party, which is averse to the proposal, has a majority. Continued protests and tight security measures have been stifling business activities and would definitely weigh on economic growth in the fourth quarter of this year. A ruling by the Supreme Court on 20 November on petitions about the conduct of the presidential election rerun could either ease or heighten tensions. In the past, the outcome would have been expectedly one that would not cause much disruptions. After a bold landmark ruling cancelling the first poll in August, the court’s judgement could go either way. With such political dynamics about in these key African countries, it makes sense for their central banks to be on guard.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/african-central-banks-close-year-cautiously/

Flattered Trump achieves little in Asia

By Rafiq Raji, PhD

Donald Trump, the American president, concludes his 5-country Asian trip in The Philippines today (14 November). Heralding his arrival in Beijing a week earlier – his third stop after earlier ones in Japan and South Korea – was a reminder of China’s trade surplus with America, data for which came out at US$26.6 billion for October; about US$223 billion thus far this year. And if he thought his trip would make China buy at least as much American goods and services as go the other way, he was a tad disappointed. Of course, there was much pomp about the US$253.4 billion in deals signed between the two delegations. But much of these were not substantive. And some were actually just old deals. The extent of the divergence in the views of the Chinese president, Xi Jinping, and President Trump, would become writ large in Da Nang, Vietnam, at the Asia-Pacific Economic Cooperation (APEC) summit, where they both headed afterwards. They provided sharply contrasting visions on trade in their speeches to the gathering of Asian-Pacific leaders. While President Xi espoused multilateralism, openness, and globalisation, Mr Trump was unapologetically insular in his views. Brief incidental interactions with Russian president, Vladimir Putin, at the APEC summit, in place of a much anticipated formal meeting, did not yield much either. Because even though the Kremlin published a joint statement on the crisis in Syria, there was not much there that was new; a missed opportunity. It did not help of course that the controversy over alleged Russian meddling in the 2016 American presidential elections would not just go away; no doubt made worse by Mr Trump’s equivocation on the matter. In fact, what little progress that was made during his time in Asia was actually on matters antithetical to his agenda. A deal was reached by the 11 countries remaining in the Trans-Pacific Partnership (TPP) trade agreement he ditched, for instance; albeit there were a few hiccups here and there before that came about.

Playground rhetoric
Mr Trump came out a little bruised on the North Korean matter as well. After initially striking a somewhat conciliatory tone towards the communist regime, urging it to do a deal over its nuclear weapons programme, he adopted an aggressive posture shortly afterwards in his address to the South Korean legislature; defiantly telling the volatile man up north not to test America’s might. Unsurprisingly, the North Korean regime replied with insults, calling Mr Trump an ‘old lunatic’, ‘warmonger’ and ‘dotard.’ Not one to take such expletives lying down, the American president threw back a few of his own, suggestively referring to Kim Jong-un, the North Korean leader, as ‘short’ and ‘fat’. Even so, if there is a slight chance of some deal with the communist regime, Mr Trump’s unusual style probably makes him best-placed to make it happen. China remains crucial to any potential progress, however. Unfortunately, they did not offer more than they already had on the matter.

Flatter to naught
The Japanese were more gracious at least; they imposed additional unilateral sanctions on North Korea. Not that this could necessarily be attributed to Mr Trump’s powers of persuasion: North Korea fired missiles over Japan in mid-September. And this was despite Mr Trump’s taunts at prime minister Shinzo Abe: He went on unabashedly about how the Japanese were inferior to Americans and wondered aloud why the Japanese did not shoot down the North Korean missile, suggesting how if they had American-made weapons, they would have been able to do so easily. (The Japanese are officially pacifist but have a military for self-defense purposes.) Little wonder then his Japanese trip turned out to be a failure somewhat. He did not get much from them on trade; a major issue for him. (Like China, Japan also maintains trade surpluses with America; albeit at 9 percent of the total American trade deficit, it pales in comparison to China’s 47 percent.) As if to buttress the point, the Japanese ruled out a potential Free Trade agreement (FTA) with the Americans, Mr Trump’s preferred route to dealing with trade imbalances. Instead, Japan led the effort to ensure a deal was reached on the so-called TPP-11. The Asians were all smiles but gave him little.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/flattered-trump-achieves-little-asia/

2018 budget should be passed before year end

By Rafiq Raji, PhD

Muhammadu Buhari, the Nigerian president, presents his 2018 budget statement to the legislature on 7 November. He reportedly wanted to do it in late October; to allow ample time for the spending proposals to be considered and passed by December. Some lawmakers have expressed reservations about this. BusinessDay, the newspaper which publishes this column, found out why. There are at least three executive proposals currently under consideration by the lawmakers. First is the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). Second is a N135.6 billion virement proposal. And third, a US$5.5 billion foreign borrowing request. My view is that the lawmakers can get them all done on or before 31 December. And they should. Considering how much they get paid, it would not be too much to ask that they go into overdrive, consider and pass them all before heading for their Christmas break.

More spending
In the MTEF, the 2018 spending estimate is put at N8.6 trillion, up by about 16 percent relative to the 2017 budget of N7.4 trillion. Oil production is assumed at 2.3 million barrels per day (mbpd), which would probably be no more than 1.8 mbpd if a likely OPEC production cap in November is sanctioned. But even this level of production may be weighed on by imminent militant attacks on oil and gas infrastructure by agitators in the Niger Delta region. Additional tax measures are planned. A 15 percent tax on luxury goods from 5 percent currently, for instance. An ongoing tax amnesty programme till March 2018 should also boost the government’s finances. Tax revenue performance this year has been quite impressive, with respect to VAT at least; N797.5 billion was realised between January and October 2017, up about 20 percent from the same period last year.

Better narrative
It is not news that the 2017 budget was only partially implemented; never mind shortfalls here and there even for the parts that were. As the authorities likely plan to issue a US$5.5 billion eurobond imminently, it would help a great deal if investors are able to see how things are beginning to indeed change for the better. There have been some positive developments lately. The World Bank recently affirmed the authorities’ ease of doing business reforms are working, raising Nigeria’s ranking 24 places to 145th out of 190 countries. Central bank governor Godwin Emefiele was also recently conferred with an award by Forbes magazine. And in late October, Nigeria kept its place in the MSCI Frontier Markets Index (country weight of 8 percent); attributed to a rebound in the foreign exchange market. So, imagine how truly positive the Nigerian investment narrative would be if the authorities are able to also demonstrate they are succeeding with fiscal policy.

Good plan
Concerns have been raised about the supposedly planned US$5.5 billion eurobond, though. The country’s historical pains with indebtedness make Nigerians naturally wary. Public debt of N19.6 trillion (US$64.2 billion) in June, about 16 percent of 2016 GDP of US$405 billion, should ordinarily not be concerning. But electioneering for the 2019 polls has started in earnest. And President Buhari, hitherto thought might not be seeking a second term in light of his fragile health, recently signalled he has decided otherwise. So there is the risk that new borrowings might not be spent wisely. In response, finance minister Kemi Adeosun is taking pains to explain the rationale behind the plan. Of the US$5.5 billion they plan to borrow, US$3 billion would be used to refinance the authorities’ current debt portfolio. The remaining US$2.5 billion, which would be new borrowing, is intended to in part fill a hole in the 2017 budget; already appropriated for. It seems like a good plan, if you ask me.

Be bold
Feelers that came out initially were that the planned foreign borrowing would be done in two parts. I do not believe this to be wise. Interest rates are rising in the developed world, with the American Federal Reserve expected to hike rates again in December. And only last week, the Bank of England raised its benchmark rate by 25 basis points to 0.5 percent, the first time since 2007. What this portends for African sovereigns looking to issue eurobonds is that potential subscribers are going to insist on higher yields; albeit they would by far still not be as dear as those in their domestic debt markets.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/2018-budget-passed-year-end/