These are not the best of times for the Nigerian national currency, the Naira. It is buffeted on all sides by a fast depreciating value. Already, the weak local currency is taking a toll on the nation’s economy which is now encountering declining industrial production, massive job losses, escalating cost of living, worsening insecurity and difficulties in transportation, among others. When condensed, they present a hazardous slide towards a comprehensive economic meltdown. The flit needs to be stalled.
The Naira has been in a free fall. It plunged to a new low of N620 to US$1 last week in the parallel market, heightening fears of a further devaluation by the Central Bank of Nigeria (CBN). According to data published by FMDQ Group, where forex is officially traded, the Naira, which opened trading at N426.63, closed at N430.33 to a dollar last Friday. Experts say this is the weakest the Naira has exchanged this year. This upturns fiscal planning in the public and private sectors.
As businesses and citizens fussed over the foreign exchange volatility and its attendant negative effects, the CBN raised the benchmark interest rate from 11.5 per cent to 13 per cent for the first time in two years. This will invariably push inflation further up. The local currency is diminishing steadily following increased speculation, receding external reserves, and low forex inflows.
External reserves fell by $313 million in March, says the CBN. The rise in the acceleration of political activities is seen also as a key factor in the depreciating exchange rate. Meanwhile, politicians are reportedly mopping up dollars for the 2023 electioneering. The Federal Government is not managing the headwinds effectively. The country remains import-dependent and relies on crude oil for over 80 per cent of its foreign earnings.
Nigeria is not profiting from the increasing oil prices fuelled by the Russia-Ukraine war. This is because of a lack of capability to heighten production as a result of enormous crude oil thievery and dwindling investment. Diaspora remittances, which depict an important source of forex inflow into the country, have been on the fall recently from $12.3 billion in the second half of 2018 to $9.3 billion in the first half of 2021, according to CBN data.
The collapsing Naira is a huge trouble for our nation. The random way the CBN has been overseeing the economy is a reason for worry. The system is replete with contrariety, patronisation and corruption. Analysts fear the currency may wreck farther N1,000 to $1 shortly. The apex bank’s many exchange rate regimes power massive fraud. Connected operators generate tremendous profits, while those in the real sector can scarcely procure forex. They are compelled to get dollars from the parallel market, as the official sources rarely satisfy a fraction of their demands.
This is further worsened by the CBN Governor, Godwin Emefiele’s recent involvement in politics which has corroded the modicum of faith Nigerians and international investors had in the CBN’s capacity to navigate the economy on the corridor of advancement and oversee inflation, forex, and interest rates. The National Bureau of Statistics (NBS) said inflation jumped to 18.6 per cent this month, the highest this year, following a comparable uptick recorded last month on the back of higher energy and food prices.
Again, Nigeria’s cumulative debt burden rose to N39.55 trillion in December 2021, denoting N1.55 trillion or a 4.1 per cent increase in three months from N38 trillion in September 2021. The regime’s craving for borrowing is phenomenal. Last April, President Muhammadu Buhari solicited authorisation for an upswing in the 2022 budget deficit to be financed through domestic borrowing a few days after the Debt Management Office (DMO) disclosed a schedule of the Federal Government’s N720 billion domestic borrowing plans for the second quarter of 2022.
Industry cessations and the attendant job losses, congestion at the ports, and rising JET-A1 price that has almost incapacitated the domestic aviation industry are unmistakable signs of a falling economy. The Federal Government should put a stop to borrowings in another phoney bid to rebuild the doomed refineries, the Ajaokuta Steel Company and other unreasonable overheads.
For the Nigerian Naira to grow, the exchange rate must stabilise. The current situation has already affected the country’s manufacturers significantly. For instance, how do manufacturers who import raw materials strategise in a regime of volatile exchange rates? Many of them have complained bitterly about how the plummeting exchange rates impacted their planning and put them in a most difficult situation.
Furthermore, foreign investors have to be attracted to the nation’s capital market. The problem requires a multi-pronged solution, and it is achievable if more seriousness is attached to it. The concerns that make capital importation dwindle must be addressed. The absence of foreign investors is drying up the source of foreign exchange which could have provided succour to the waning currency.
The highly exorbitant political system Nigeria runs is not boosting the Naira. For example, presidential aspirants under the ruling All Progressives Congress (APC) paid a minimum of N100 million to obtain the party’s presidential form, while the opposition Peoples Democratic Party (PDP) expended N40 million. At the just concluded convention of the two leading parties, it was reported that delegates were reimbursed profoundly in dollars.
Meanwhile, the electioneering span has just begun, and now the Naira is exchanged for N620/$ at the parallel market. More money will still be injected into the political space in an election season such as this. Therefore, there is no assurance that the exchange rate will not worsen. The economy cannot experience any meaningful growth if this particular trend is not stopped.
Efforts are also needed in demand management to promote Nigerian-made goods, manufacturers source raw materials, and eliminate political interference in foreign exchange allocation to qualified end users. If these policies and many others are not adopted, the rapid depreciation of the Naira would prolong indefinitely, with its concomitant effect on the inflation rate. These would not be in the overall best interest of the palpitating Nigerian economy.
As UNGA Meets …
At least 150 world leaders are attending the 78th United Nations General Assembly in New York,
United States. The event commenced on September 18 to conclude today and was scheduled to be attended by heads of state and government from at least 145 countries. Some high-profile issues include climate change, poverty and food insecurity, war and humanitarian needs, and growing inequality.
This year’s event, themed “Rebuilding Trust and Reigniting Global Solidarity: Accelerating Action on the 2030 Agenda and its Sustainable Development Goals towards Peace, Prosperity, Progress, and Sustainability for All,” is featuring African leaders addressing global and continental issues, as well as discussing the situations in their respective countries.
The Chairperson of the African Union (AU) and President of the Union of Comoros, Azali Assoumani, is expected to deliver a speech at the event. As one of the African leaders, his address, along with those of other heads of state, would reflect the continent’s regression and expectations from the world.
African leaders must remind Western nations that despite emitting fewer greenhouse gases, the continent is disproportionately affected by climate change. They should highlight the recent floods in Libya caused by Storm Daniel, which tragically claimed the lives of over 11,000 people.
Also, African heads should urge the international community to fulfil its previous pledge of $100 billion in annual climate finance, as well as to accelerate the phase-out of fossil fuels and establish a loss and damage facility. We believe that these demands were emphasised at the Climate Ambition Summit on 20 September, held alongside the general assembly.
The need for a more level playing field on the global stage should be accentuated, particularly in multilateral institutions, including the United Nations itself. Africa has been campaigning for a permanent seat on the United Nations Security Council, and the calls should be louder now. African leaders have to emphasise this in their speeches. The global financing system is another key issue. Africa says it is being treated unfairly, leading many countries to fall into “debt traps”.
The war between Russia and Ukraine will certainly come to light again. African heads of state must highlight its impact on the continent’s food security. They should call for a peaceful resolution to the conflict and demand that Russia rejoin the Black Sea Food Agreement, which Turkey brokered with UN support in July 2022. The pact helped export more than 32 million tons of Ukrainian agricultural products through the Black Sea, of which nearly 19 million tons were destined for developing countries in Africa.
Nigeria’s President and Chairman of the Economic Community of West African States (ECOWAS), Bola Tinubu, joined other world leaders in his inaugural outing at the event. Before engaging in the general debate, the President joined other leaders to participate in the High-Level Political Forum on Sustainable Development (UN 2023 Summit on SDGs).
President Tinubu’s address encompassed several issues, such as sustainable development, climate change, global cooperation, and the imperative to address inequalities and global humanitarian crises. He addressed the issue of coups in the region and efforts to promote democracy. Recall that there have been five coups in the region so far: Burkina Faso (January 2022), Guinea (September 2021), Chad (April 2021), Mali (August 2020), and Sudan (October 2021).
In the case of Niger, ECOWAS initially threatened military action to restore deposed President Mohamed Bazoum to power, but later preferred dialogue as a way to resolve the situation. Tensions are further rising among the three West African Sahel countries governed by Mali, Niger and Burkina Faso. The military governments signed a security treaty pledging mutual aid in the event of any rebellion or external aggression.
African leaders must address their nation’s governance challenges, as corruption and impunity are the main reasons for increasing coups. This culture weakens nations’ foundations, erodes public trust, and threatens essential services. As a result, ordinary people bear socio-economic hardships, with leaders gaining wealth while infrastructure and services erode, leading to political instability and military intervention. Solutions must be found to these issues.
A democratic government and peaceful power transfers are essential for a nation’s functioning. West Africa has experienced a series of coups, revealing the fragility of democratic institutions and mistrust of political processes. Countries fighting for democracy are now grappling with the reality that coups are more common than fair elections, highlighting elected officials’ failure to uphold democratic principles.
Fraud is prevalent in the electoral system of many African countries, particularly Nigeria. Unfortunately, our electoral integrity is threatened by factors like voter aparthy, election rigging, and lack of trust in electoral officials. This leads to a decline in citizen trust in democratic institutions following poor governance and electoral corruption. The independence of electoral institutions is also in doubt, as many believe that whoever pays the piper dictates the tune. Integrity in elections is crucial for building citizens’ trust in democracy.
The Nigerian state, like its counterparts in Africa, grossly underperforms due to lack of state capacity to deal with the contemporary complexities of governance. Governance and political leadership in the country have been driven by self-interest and other primordial considerations, which take priority over that of the public. The state has failed in three major areas: security of lives and property, promotion of the rule of law, and provision of visionary leadership.
Given that this year’s UNGA theme focuses on the 17 Sustainable Development Goals set by the global body in 2015 for a 15-year period, Nigeria must redouble its efforts to attain the SDGs by 2030. All development indices point southwards for the nation. Poverty, and hunger allevition education, health, peace, justice, strong institutions, climate action, gender equality, clean water, and sanitation have remained unattainable. Therefore, at the ongoing 78th UNGA, Tinubu must compare notes and learn from those who have made giant strides towards attainment of the SDGs.
That IGP’s Directive On Illicit Arms
In response to the escalating insecurity in Nigeria, the Acting Inspector-General of Police (IGP), Kayode Adeolu Egbetokun, has taken a drastic step by introducing an ad hoc committee. The committee’s primary objective is to conduct a thorough review of firearms licensing and regulations by the Nigeria Police Force, aligning them with the existing Firearms Act and other relevant laws. This initiative aims to ensure public safety and enhance overall security in the country.
The IGP deserves commendation for the move towards mopping up illegal firearms from Nigerians. The alarming supply of illegal arms within the country is a cause for concern. According to former military Head of State, Abdulsalami Abubakar, there are over six million small arms in the possession of non-state actors, far surpassing the meagre 586,600 arms held by the Armed Forces and law enforcement agents. This stark disparity in numbers is deeply troubling and poses a serious threat to the security and stability of Nigeria.
While gun control measures are necessary, completely removing legal firearms from the public under the guise of reviewing gun licences, would have negative consequences. This would lead to an increase in illegal guns, leaving only criminals armed. Innocent citizens would be exposed to greater dangers and denied their right to self-defence. The government should implement international conventions to control the spread of small arms and light weapons.
We are worried that there is increased number of deaths resulting from terrorism, kidnapping, banditry and other violent crimes. The security agencies should go after the criminals who are perpetrating these nefarious acts with unlicensed guns. Every action of law enforcement agents should target illegal gun owners and their arms, not lawful possessors. There should be institutional actionable policy or plan to mop up small arms and light weapons that are at the centre of these crimes.
A recent survey by the United Nations Office on Drugs and Crime revealed that illicit small and light weapons in Nigeria accounted for an outrageous 70 per cent, or 350 million, of the total 500 million within the West African sub-region. This overwhelming abundance of illegal arms highlights the urgent need for stricter measures to combat their proliferation and guarantee the safety of the nation and the citizens.
Security operatives must develop a well-coordinated and effective strategy to combat the flow of illicit arms and address the rising levels of insecurity. Since the appointment of Egbetokun as the Acting IGP in mid-June, the police have made important progress in apprehending suspects involved in illegal arms possession. A total of 297 individuals have been arrested, with 520 firearms of various calibers, 4,043 rounds of ammunition, and 264 stolen vehicles seized.
The International Action Network on Small Arms and the International Peace Information Service 2022 report estimated over six million legal and illicit firearms in Nigeria and ranked her 16th (the only African country) among the 25 states with the highest firearms possession worldwide. Nigeria, alongside Algeria, Egypt, Ethiopia, Ghana, Kenya, South Africa, and Sudan were listed as African countries where local manufacturing of arms is prevalent.
President Bola Tinubu has inherited the problem. But unlike his predecessors, he should not allow it to defeat him. He should rejuvenate relevant security units to tackle this menace on multiple fronts. One area of concern is the importation of illegal arms through both legal and porous borders. Also, the increasing presence of local illegal arms fabricators poses another challenge.
Furthermore, the sale and leasing of arms to criminals by rogue elements within the security forces also contribute to the problem. To address these issues, Tinubu must take decisive action and implement comprehensive strategies to curb the influx of illegal arms, dismantle local arms manufacturing networks, and ensure the integrity and professionalism of the security forces.
The multi-faceted strategy should include stringent border controls; the air routes, waterways and ports must be effectively policed. Law enforcement agencies must collaboratively go beyond arrest of peddlers, confiscation, destruction of illicit arms, to the dismantling of the cartels and the unmasking and prosecution of the barons and financiers. Financial surveillance should be stepped up. Corrupt officials facilitating the illicit trade should be smoked out and prosecuted.
There have been reports that some security agents aid and abet the illegal arms dealers. Those found culpable should be made to face the music to serve as a deterrent to other would-be collaborators. There is a need for the country to collaborate with neighbouring countries, including the African Union Commission’s Economic, Social and Cultural Council to combat arms proliferation.
Our ports and waterways are also easy routes to smuggle in arms. They must be well manned and made impenetrable for the influential cartels. Nigeria should reject the attempt to make it a destination country for small arms. The signs are ominous and proactive strategies and intelligence-led operations by able security agents backed by biting legal framework can wholly halt them.
The correlation between terrorism, banditry, and overall security instability has been widely recognised. Currently ranked 15th on the Fragile States Index 2023, it is critical to address the issue of arms trafficking and prevent the further deterioration into state failure. To effectively combat these challenges, a more robust and intelligence-driven law enforcement strategy, supported by advanced technology, is needed.
Overhauling Nigeria’s Pitted Democracy
Today, September 15, is the International Day of Democracy, a global event to appraise the state of democracy and foster its principles worldwide. Democracy is not just a goal, but a participatory undertaking that hinges on the involvement of people, national governments, the global community, and civil society. Through everyone’s contribution, democracy can become a reality and be savoured by all.
The essential elements of democracy include freedom, respect for human rights, and regular genuine elections. Democracy strengthens and promotes human rights effectively, which is vital for countries. In 2007, the United Nations designated 15th September as the International Day of Democracy to uphold these principles.
The designated theme for this year’s International Day of Democracy is titled: ‘Empowering the Next Generation’. It is centred around the role young people play in the advancement of democracy and the inclusion of their voices in the decision-making process, which carries consequences for their world. Youths serve as both the present and future guardians of democracy.
Not much is said by the Nigerian government on the International Democracy Day. However, some media organisations discuss the day. This could be because, since 1999, the country initially declared May 29 as Democracy Day but later changed it to June 12. The decision to choose June 12 was in remembrance of the unjustly annulled presidential election held on that date in 1993 by General Ibrahim Babangida’s military junta.
The country must strengthen its democratic institutions to promote the rule of law. What specific institutions are we referring to? These include political parties, electoral management agencies, legislative bodies, judicial agencies, administrative agencies, media and civil society. While these institutions operate within the country, they have to demonstrate greater efficiency and effectiveness.
Unfortunately, our political parties are disappointing, as they lack internal democracy and cohesion, often violating electoral laws, particularly those concerning money politics and electoral violence. Nigeria’s political parties recruit leaders who are more interested in looting the treasury, prioritising themselves, and lacking integrity. Shamefully, after 23 years of the Fourth Republic, the country has little to offer in terms of democratic benefits to the struggling masses.
We must understand that political parties give birth to at least two out of the three arms of government. They are the executive and legislature. The products of these two vital organs of government have not justified the implicit trust and confidence that make Nigerians vote for them at elections. It has been more of a personal aggrandisement for them and nonchalance towards the plight of the poverty-stricken populace.
The Nigerian state is fragile because of agitations for self-determination, including the call for secession by the Indigenous People of Biafra. Additionally, the emergence of groups like the Movement for the Emancipation of Niger Delta and Niger Delta Avengers has further heightened tensions. In the North, the ongoing activities of insurgents, killer-herders, and bandits have prevented lasting peace across the country.
Even schools are not immune to the threat of kidnappers. These malicious criminals are constantly lurking, ready to inflict torment and abduct innocent children and youths. The mass kidnapping of schoolgirls has particularly highlighted this horrifying reality, bringing shame upon the country and propelling its mushrooming terrorist groups to the top ranks among the world’s deadliest terror outfits.
Nigeria’s economy is in ruins, despite three periods of bumper oil revenues. The country’s infrastructure is miserable, and it is ranked as the 11th most wretched place on earth to live in. Nigeria also has the highest out-of-school population in the world and scores low on every human development index. Its democracy is nightmarish, and it is considered the world’s 12th most fragile state, perched precariously at the edge of state failure.
Our nation has reached a precarious juncture. Democracy has failed to mend the fractures within the fragile federation; instead, these differences have deepened into insurmountable divides. There is an alarming level of animosity prevailing across ethnic, regional, and religious lines. Interestingly, the only unity observed is among politicians who engage in cooperative concentration of power and control over resources.
Heeding the call for economic and political restructuring will stabilise the nation. Adhering to the principles of the rule of law, including supremacy, equality, and protection of human rights, is required for fostering peace and stability in a democratic country. Prioritising these regulations is necessary for Nigeria. Justice is essential for peace, and development relies on peace.
Active citizens are critical in driving democracy, as it cannot be achieved solely through a constitution. Protests, sit-ins, rallies, and recalls are relevant in established democracies. When institutions fail or politicians violate rights and norms, citizens have the right to take action. Nigerians must commit to organising and reclaiming their rights and sovereignty lawfully. Failing to do so may lead to increased suffering and potential state failure in the future.
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