Niger coup crisis signposts Tinubu's policy blunders


ECOWAS’ current dilemma in Republic of Niger over the coup crisis reflects the policy blunders of President Bola Tinubu since coming to power.

When, during his inauguration as president on May 29, President Tinubu made an off the cuff announcement that fuel subsidy “is gone“, immediately causing panic and scarcity of the product, many hailed it, regardless, as taking the bull by the horn, and testimony to his ability to take tough decisions.

But three months down the road, the jury is out. The decision had been taken hastily, without proper planning in terms of how to cushion its effects, and amid growing discontent among the populace over the rapid rise in the cost of living, the president, last week, returned subsidy through the back door.

“What is obvious is that the president is struggling to operate at the national level,” says Chidi Anthony, Abuja based lawyer and policy analyst.

“He is yet to understand that Nigeria is not Lagos State, where his words are laws and his decision is final. He doesn’t understand that the national scene is different, and every decision you make has far reaching impact. You cannot be announcing subsidy removal so casually at your inauguration speech for example.”

But the subsidy quagmire is only one of many poorly planned policy decisions the Tinubu administration has made in its first three months. Indeed, even his appointment of ministers was so shoddily done that one of the nominees, Maryam Shetty only learnt that her nomination had been withdrawn while waiting at the National Assembly complex for screening.

Yet, at the end of the screening process that saw 48 nominees screened, the Senate confirmed only 45 of the 48, with Nasir El-Rufai, former Kaduna State governor; former deputy governor of Taraba State, Senator Abubakar Danladi, and Stella Okotete from Delta State, failing to be cleared because they had, as Senate president, Godswill Akpabio, claimed, security reports that had to sorted out.

Regardless, security clearance are typically obtained before nominees are forwarded to the senate.

“The embarrassing but totally preventable flip-flopping of the Tinubu administration is becoming truly unsettling,” remarked Farooq Kperogi, U.S. based professor of journalism, in response to the withdrawal of Shetty’s nomination.

“I don’t recall if there is any precedent for this kind of embarrassment. Why was her name announced when the president hadn’t made up his mind that he wanted her on his cabinet? The public ridicule she has been subjected to can’t be redeemed by any compensatory appointment.”

Kperogi also argued that while El-Rufai is a “detestable, self-important, unfeeling, overweening, and divisive political villain, whom I once called the most dangerous Nigerian politician alive, he is more central to Tinubu’s emergence as president than the people on whose behalf Tinubu has thrown him under the bus.”

Indeed there’s been hardly any decision taken by the president within his first three months that hasn’t been mired in one controversy or the other. And ultimately, it’s been three months within which period the country is now on the verge of leading a military confrontation with Niger Republic; university education has become unaffordable for millions, and protests over economic hardships have become sporadic.

“I feel bad about subsidy removal,” notes Prof. Iyorwuese Hagher, a one time presidential aspirant on the platform of the defunct Social Democratic Party (SDP).

“The elite created a vehicle to share money without working for it. The money that was being paid out as subsidy was largely fraudulent and to entirely remove that subsidy that was being doled out and debit the citizens is unfair. I wish the government will listen less to those Bretton Woods Institutions from New York and read the citizens’ hungry faces more.”

There was strong argument among economic analysts that the corruption- riddled subsidy regime, which cost the federal government a whopping N4.9 trillion ($10bn) in 2022, and N3.9 trillion ($7.5bn) up until June 2023, in a country spending over 90 percent of revenue on debt service, had to go.

But many had suggested that policies be put in place to ensure that the impact of its withdrawal is minimized, even as some argue that the important thing would have been to tackle the corruption associated with the regime, as opposed to withdrawing it entirely.

“In every functional society, the government helps the poor and the middle class. The United States subsidizes petrol consumption with up to $50 billion per annum. That’s why petrol is cheaper in many parts of America today than it is in Nigeria. With a minimum wage of at least $1,500 a month, Americans are paying less for petrol than Nigeria with a minimum wage of $60 per month,” Kperogi argues.

“America also has unemployment benefits for people, who lose their jobs; free money for food (called food stamps) for the desperately poor and the unemployable; free money for citizens, permanent residents, and other legal residents during recessions so people can spend money to regenerate the economy; free medical care for the poor and the aged; and so on.

“It’s only Third World countries that the IMF and the World Bank recommend soulless, conscienceless, laissez-faire capitalism for and, because our leaders are sadists and mean-spirited and many followers are clueless and ignorant, they embrace their self-immolation with smiles and pride.”

Tinubu’s predecessor, Muhammadu Buhari, weary of the overwhelming negative impact such removal could have on on the economy, deferred it to Tinubu, who didn’t hesitate to yank it off.

And perhaps basking in the euphoria of kudos received for being bold enough to withdraw subsidy, the new administration would, one week later, float the country’s currency, the naira; a decision that again received applause from policy analysts.

But like fuel subsidy withdrawal, floating the naira has had very negative impact on the economy. The naira tumbled in the open market to a record N950 to the dollar – while the official importers and exporters (I&E) window remained within N760+ – before recovering to N850 following threat on Monday, by the acting governor of the CBN, Folashodun Shonubi, to clamp down on speculators using means he failed to disclose.

Subsequently on Thursday, state oil firm, the Nigerian National Petroleum Corporation (NNPC) Limited announced that it had secured a $3 billion emergency crude repayment loan from the African Export-Import Bank (Afreximbank) to ‘support the naira and stabilise the foreign exchange market.’

The choice of NNPC in this case being probably informed by the fact that the CBN is already hobbled, amid recent revelation that it owes Goldman Sachs $500 million, JP Morgan $7 billion in securities lending, and another $6.3 billion owned in foreign currency forwards, which are forex obligations it needs to make to foreign investors; which is feared to cost the country 40.7 percent of its entire foreign reserves currently standing at $34.1 billion.

The $3bn may bring momentary reprieve to the battered naira, but with weak production base, and oil production still impacted by massive theft, analysts say it’s not sustainable.

“Nigeria can’t afford a peg,” argued Kalu Ajah, an economic analyst. “Nigeria can’t afford a float. Both are “die” but with the float you can decide to cut back on expenses and survive. A peg means you want to borrow to keep up with the Joneses.”

Meanwhile, the CBN last week, announced operational mechanism for the Bureau De Change segment of the market to trade foreign currencies at similar rates obtainable on the Investor & Exporter forex window.

It gave the directive to all BDCs and the general public in a circular number TED/FEM/PUB/FBC/001/007 dated August 17, 2023, titled, ‘Operational mechanism for Bureau De Change operations in Nigeria’, released on Friday.

The apex bank said in the circular signed by the Director, Trade & Exchange Department, Dr. O.S. Naji, that its implementation should be with immediate effect.

It said this was in support of the drive to improve the efficiency of the Nigerian foreign exchange market.

The circular stated, “The spread on buying and selling by BDC operators shall be within an allowable limit of -2.5 per cent to +2.5 per cent of the Nigerian exchange market window weighted average rate of the previous day.

“Mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly), on the financial institution forex rendition system, which has been upgraded to meet operators’ requirements.

“Operators are to note that with effect from the date of this circular, non-rendition of returns would attract sanctions, which may include withdrawal of operating licence. Where operators do not have any transaction within the period, they are expected to render nil returns.”

The guidelines indicate that the apex bank wants to once again peg exchange rate, in another forced policy reversal. Opinions are divided between those, who argue that the bank should maintain some kind of intervention to keep the naira stable, and those, who insist that it cannot afford to maintain such intervention, as scarcity of forex means that it would only resort to borrowing, which is tantamount to kicking the can down the road.

“Between 2016 and 2021, Nigeria’s import bill rose from N8.73tn to N20.84tn, according to the Central Bank of Nigeria and the National Bureau of Statistics data,” Ajah says.

“And you want to peg? Thus making imports attractive? The problem is not the exchange rate; that’s a symptom. The real problem is the high cost of manufacturing in Nigeria; that’s why imports are attractive because they are cheaper.

“Fix the high cost of making goods locally, and imports will fall due to competition from local substitutes.”

Students Loan and Hike in Fees

President Tinubu had also in June, signed into law the Access to Higher Education Act, 2023, otherwise known as Students Loan Act, which is meant to provide interest-free education loans for Nigerians willing to acquire tertiary education.

The Act, which stablishes an Education Loan Fund to help Nigerians fund their higher education, while they pay in instalments two years after completing their participation in the National Youth Service Corps (NYSC) programme, was initially hailed by some observers.

But the scheme – meant to kick off in September – has guidelines that already disqualifies many, who might be needing the loan, even as federal universities and colleges have hiked fees astronomically, meaning that many could be forced to abandon education altogether.

For instance, those eligible for the loan are those, whose family income must be less than N500,000 per annum, while they must provide, at least, two civil servants, as guarantors, who must meet specific criteria, such as being a level 12 civil servant with, at least, 12 years of service, or a lawyer with, at least, 10 years of post-call experience.

“One thing you notice about this administration is that policies are never thought through before they are unveiled, it’s a kind of trial and error,” says Anthony.

“You cannot be introducing students loan that is meant to assist the indigent, but at the same time, asking them to provide level 12 civil servants as guarantors. Again, when you say families that earn N500,000 and above are not eligible, what you have said is that a family that earns N50, 000 a month is not eligible. But we all know that that amount is not able to sustain any family for a month, let alone, train their children.

“Now, we have a situation, where schools are already charging close to N200,000 per session. What you are simply doing is forcing as many people out of school.”

Last month, the management of the University of Lagos (UNILAG) confirmed an increment in fees of the undergraduate students of the institution.

The students of the institution previously paid N19,000 but the management fixed new fees at N190,250 for students studying medicine, while for courses that require laboratory and studio, students are to pay N140,250.

The management explained that the increment in fees had become imperative given the prevailing economic realities of the nation and its obligations to its students, staff, and service providers.

Similar increments have been made by other universities, including federal government colleges, whose fees were hiked from N45,000 to over N100,000, with many students already fearing that they might have to drop out of school.

“What will happen is that the majority of students, whose parents cannot afford it (the fees) will pull out of school in anger and you know what that means, they will fight the society back.

“But let us get the correct information first before knowing the next steps,” warned Emmanuel Osodeke, president of Academic Staff Union of Universities (ASUU) when the act was signed into law in June. Tinubu-led ECOWAS on the verge war with Niger.

In yet another blunder that, many say, could have telling impact on not just Nigeria but the entire sub-region, the Economic Community of West African States (ECOWAS) chaired by Tinubu, had in the immediate past of the military intervention in Niger, issued a one-week ultimatum to the junta to return power to the democratically elected president, Mohamed Bazoum, or face military action.

Two weeks on, tension is rising. The junta has snubbed ECOWAS, and the regional body, determined to maintain its relevance, is preparing for a war that could potentially destabilize the West African sub-region and send shock waves beyond.

Rising from their two-day meeting in Accra, Ghana on Friday, ECOWAS defense chiefs stated their readiness to participate in a standby force that is preparing to intervene in Niger.

The meeting in Accra followed an earlier meeting on Thursday fortnight ago in Abuja, during which the sub-regional body resolved to, among others, “Direct the committee of the Chief of Defence Staff to activate the ECOWAS standby force with all its elements immediately.

“Order the deployment of the ECOWAS stand-by force to restore constitutional order in the Republic of Niger.”

Although the body said in the communique read by pesident of the ECOWAS Commission, Dr Omar Touray, that diplomatic channels should further be explored and that all other options were still on the table, what has followed since Thursday is military build up.

Videos of tanks imported into the country through Onne Port in Rivers State, allegedly from France, and moved northwards have trended on social media, despite opposition by both Nigerians and Nigeriens, who appear to be happy with the military junta.

This is even as the Niger military juntas in Mali and Burkina Faso, have remained resolute in their backing of Niger, having declared that any military intervention there would be seen as a declaration of war against their own countries, in what may turn into an all-out regional war.

“This is a war that (Bola) Tinubu cannot afford, both physically, intellectually and militarily,” said Mahdi Shehu, a public affairs commentator and member of the opposition People’s Democratic Party. “I think he’s using this war as an alibi; a sort of cover to cause war between Nigeria and Niger that will enable him invoke emergency rule.”

Protesters in Niger, on Friday, besieged French military base in Niamey, the country’s capital, demanding an end to intervention in their country.

The initial threat by the sub-regional body was greeted by spirited push back by political and religious leaders of the north, which shares physical borders and ethnic affinity with Niger, and practically everyone else in the streets and within the diplomatic circle.

Many have repeatedly noted that there’s the obvious danger of an intervention destabilising the sub-region, which is already battling multiple security challenges and severe economic difficulties.

This is even as many have argued, Nigeria really has nothing substantial at stake to warrant such a risk.

“The question to ask is, what is Nigeria’s interest in deploying troops to Niger? Wondered TV anchor and columnist, Dr. Reuben Abati. “Is ECOWAS superior to the interest and views of Nigeria?”

But while the push back in Nigeria and elsewhere has continued, amid what seems like obvious popular support for the coup in Niger, the West, particularly France and the United States, which have interests in the country, have actively encouraged ECOWAS to intervene, promising to provide necessary support for such intervention.

When the regional body met for the second time in Abuja, upon the expiration of the one-week ultimatum it gave to the junta to return power to the deposed president, Mohamed Bazoum, two key factors seemed to be prominently at play; ego and Western interest.

The Abdourahamane Tchiani led junta had rebuffed every ECOWAS-led attempt to broker diplomatic resolution, perhaps angered by the initial threat of military intervention by the sub-regional group.

A delegation sent by Tinubu, comprising former Nigerian head of state, Abdulsalami Abubakar; the Sultan of Sokoto, Muhammadu Sa’ad Abubakar among others was again denied access to the coup leader on Saturday, while another delegation comprising ECOWAS, African Union and the United Nations was turned down altogether last week.

For ECOWAS, therefore, it is perhaps now a matter of standing by its threat to remain relevant.

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