Nigeria's President Buhari: Not On Anyone’s 100 Day Clock – A Look at His Current Economic & Anti-Corruption Efforts

This two-part FEEEDS Blog Series on Nigerian President Buhari’s time in office (on the eve of his UN visit) provides an analysis of his game plans (Buhari Doctrine); how they are working thus far, and what we might expect as his administration tries to address issues surrounding both the country's economic and security environments.

We start with, Part One, examining the positives and challenges in the economic-investment sectors for a country which boast having Sub-Saharan Africa's (SSAfrica) largest population (178 million) and economy (Nigeria rebased in 2014), although it is struggling to get its financial footing back, and keep investors engaged. Here is today's environment:

-- Key source of revenue and foreign reserves – from the oil sector – has been hit by massive drops in world oil prices;

-- Unemployment remains high (hovering around 7.6 percent) in the 15-34 median age range, where youth and female populations clock-in at around 60 million and 80 million respectively;

-- Devaluation pressures remain high on the country's currency (naira); raising cost for the private sector and daily living needs.

Despite these economic struggles, Nigeria is still considered a go-to frontier capital market; and, remains one of the most important investment destinations in SSAfrica along with Kenya, South Africa, and Ethiopia. It is important to keep in mind that most – not all – of the current economic challenges pre-date the May 29 inauguration. However, that being said, it is now Buhari's Administration's responsibility to both address and resolve.

A Closer Look - Current Business & Investment Environment:

The private sector from China, United States, India, Brazil, and Europe still see Nigeria as a premier investment destination. What makes Nigeria attractive for these foreign businesses? Answer…return on investment (ROI).  The average ROI, (despite risks noted below), can average 28-36 percent -- matched with Nigeria's largely untapped consumer market for good and services. There are specific sectors which provide the greatest returns and/or are growth areas for goods and services. There are seven sectors (not in priority order), from FEEEDS' perspectives that are the most notable for foreign investors:

1.) Power – Nigeria partially-privatized its power sector (generation and distribution) in 2013, giving foreign investors an opening. With this, other attendant opportunities were also created for soft and hardware, and skills transfer (i.e. equipment, metering, asset management, and technical assistance). Nigeria barely produces 2-3 thousand megawatts per day. While, daily power needs are estimated at 40-50 thousand megawatts for consistency in service delivery. Although potential ROI is great, so are risks around poor transmission to the national grid, heavy debt service on acquired national assets, lack of technical production capability, and concern over timely  payments.

2.) Information Communication and Technology (ICT) - Nigeria has the largest number of mobile phone users in SSAfrica with 100 million out of 650. Any ICT investor focused on innovative mobile services, and smartphone hardware, can take advantage of Nigeria’s market. Smartphone penetration is only 27 per cent, as most Nigerians still primarily have feature phones.

3.) Natural Gas – Nigeria has roughly 180 trillion cubic tons of untapped natural gas – making it one of the largest in the world.  This nascent sector remains ripe for services, infrastructure, and developing  gas fields.

4.) Agriculture – About 70 per cent of Nigeria's population lives and works in this sector. It remains underserved as it lacks infrastructure, modernization, insufficient commodity production or food processing, and poor rural-to-urban transportation services. All of these sub areas are good investments; high ROI will be a bit delayed given how far behind the sector lags. But if you are playing the long game this is where to be.

5.) Manufacturing - Nigeria has the odd triangulation of a low manufacturing base, large population, and a growing middle class consumer market all at once. Thus, manufacturing of any product (non-edible or edible) will have ready-made customers.

6.) Extractive industries – Extraction of fossil fuels (petroleum) remains Nigeria’s main export resource, despite low world oil prices. Nigeria also has a wealth of other natural minerals from iron ore (200 million tons of proven reserves), coltan (key for cellphone and appliance manufacturing) gold, silver, zinc, etc.

7.) Housing – There is a 17 million affordable  housing deficit. Meaning if you are poor or unemployed you either do not have adequate housing or housing at all. Although, the sector is ripe for investment, the government will need to move forward with frameworks that provide some form of sovereign guarantees. This will help spur construction financing and mortgage guarantees – two key impediments, thus far, affecting building starts. Nigeria’s new (2013) Mortgage Refinance Corporation, NMRC, also needs these two issues addressed so it can begin to support projects meeting its mission. To date, NMRC has not had a case/project it can approve.

Doing Business in Nigeria – What You Should Know?
Despite the opportunities and high potential for ROI, what are the basics you should know, particularly regarding ease of doing business, and the lack of consistent (and by some accounts unclear and unfriendly) monetary policies. Recently the World Bank 2015 Ease of Doing Business Report  rated Nigeria low, 170 out of 189 countries reviewed on their transparent and friendly business practices. In 2014 Nigeria was ranked 175, so it has improved a bit. Nigeria’s Central Bank (CBN), in its efforts to support the country’s floundering currency -- the naira, under devaluation pressure -- has made it increasingly difficult for both foreign and Nigerian businesses to do transactions in convertible currencies such as dollars or euros. That being said, the positives on this action are: Nigerian companies have to provide the CBN with foreign company business information and contract payment amounts in order to obtain foreign exchange to pay partners or clients. This is an important transparency element in the anti-corruption tool box for both the country and foreign partners.

Buhari required by September 15, all ministries use their CBN accounts, called Treasury Single Account, for all government monies. Meaning, ministries cannot deposit government funds into commercial banks – a past practice where it is believed substantial state wealth disappeared. Ministries’ compliance thus far has been good.

Always in Nigeria there is a flip side. The Nigerian commercial banks, previously holding these funds now have to scramble to find new business to counter huge losses resulting from these transfers. Banks already have started to lay off employees adding to the 7.5 per cent unemployment rate. Most affected will be bank workers in the mid-ranks in their prime wage earning years (25-35).

On the federal budget, reports are Nigeria will move to a clean-slate 2016 "zero-basing," linking needs and costs, and that Buhari's "look ahead" focus will be on infrastructure development, social needs, manufacturing, and job creation.

President Buhari’s  Anti-Corruption Efforts; Economic Team:
FEEEDS also gives Buhari high marks for his unwavering commitment to address endemic corruption. In addition to his above actions, he has publicized his personal wealth (good first tone-setting step); appointed new leadership to the problematic National Petroleum Company (NNPC); worked to carefully vet senior appointments; and, asked foreign governments, including the U.S. to help return $150 billion in stolen state wealth. He is famously known for saying “I belong to everyone; I belong to no one,” underscoring his intolerance for the two forces of evil behind stolen state wealth – corruption and influence peddling.*

For sure Buhari inherited nearly empty national coffers, a struggling currency, coupled with ever-declining world oil prices. However, he is being very systematic and thorough in the formulation of his new government.  This includes deciding who his economic team will be and how they will address current economic issues. We will have to wait for finance minister appointment, and what the full economic vision might be. There is a little ankle biting that he is going too slow ("Baba Go-Slow" or Father Goes Slow, nicknamed by some) to appoint ministers. We also have an additional underlying theory: he may not want to have to negotiate with ministers on vision and direction, putting everything in place first, and then handing them his game plan.

Either way, FEEEDS gives him high credit for taking his time. As deep as the two evils of corruption and influence peddling run, it is prudent to carefully vet. Buhari never put himself on the artificial, but politically-expected “first 100 days” clock. Okay, 8-9 months from now, we might take a different view. Let’s get good, unencumbered folks (from past or present questionable deeds) on board, and go from there.   

Buhari said he would be "steady" in truly setting the tone for a new, reborn Nigeria to achieve its full economic, investment, development, democracy-leadership roles, so given what he inherited, let's give him more time to get there.

Part Two will focus on Current Political-Security Positives & Challenges

*From Buhari's Inaugural speech
A FEEEDS Blog Spot

Dr. Sanders:Imperatives of Building Strong Africa Democracies & Spurring Economic Development

"Frameworks in the New African Security Context"

June 12, 2015 Keynote Speech

By

Ambassador (Dr.) Robin Renee Sanders

CEO-FEEEDS Advocacy Initiative

19^th Wole Soyinka Annual Lecture

Greenbelt Marriott, 3700 Ivy Lane, Greenbelt Maryland 20770

It is said that every decade or so our world creates a new global order – as generations shift, leaders transform, visions change, and creativity and innovation force us all to live our lives better, longer, differently and certainly with more challenges. Today, more than ever, we need to address security challenges, abject poverty and the lack of development -- protecting in the course of these efforts, basic civil and human rights.

So today I want you to think like a leader in the 21st Century – think about both the challenges around the world, and development issues – both in my view are strategic issues -- needing more innovative thought, better strategic communications, and more partnerships as we move forward in the 21^st Century.

This is a tall order, therefore since I am primarily before a Nigerian audience today, let's narrows this down to the practical – looking at both Africa and Nigeria. Africa's security and development landscape is much, much different than it was 10 years ago, 5 years ago, or even last year, and so is Nigeria's. I consider both these key components -- security and economic development -- fluid, needing our evermore robust, innovative efforts, action, and creative thinking.

Imperatives to addressing Security & Economic Development

So what are the imperatives? How and what does one focus on to have strong economic development in these challenging, fluid and sometimes very difficult times? African countries from Nigeria-to-Kenya-Tunisa-Libya-to-Mozambique, or better said from -- Maiduguri-to-Mombasa-Midoun (Tunisia)-Misrata (Libya)-to-Maputo --  and in between, are all grappling with these core pillars of today's policy challenges. The foundation we all recognize is good governance and addressing the needs and concerns of the people in a society, in a community. When neither of those is met, they set in motion, in many respects (not all), the security challenges we see today.

Factors Affecting Security

Let's take factors affecting security first and what might be driving the challenges we see today and then apply these to Nigeria and the Continent.

In my view, many of today's security challenges are all wrap-up in global demographics:

What do I mean by demographics – as my definition of demographics is an expansive on. I mean, everything that impacts outcomes and geo-political relationships – from economic disparity to population sizes and breakdowns by age and gender; world resource locations (where is the oil, timber, jobs, lack of jobs, etc., where are land and water resources; what role religious differences or groups might impact community or world views, or affect perceptions. In essence, what are the human, community, or country cultural differences of which you need to be aware which might be impacting security today.

Some examples

Let's look at some examples of broad demographic categories and then drill down from there.

-- What regions of the world have the most arable land and available water resources? Answer: Africa and Latin America.

-- Where is the most economic income disparity today (despite our own economic challenges in the US)? They are in Africa, Latin America, and Asia, with South Africa leading the way as the country with the world’s greatest inequitable income distribution.

-- What regions of the world have the largest growing youth and gender demographics? Africa, tops the list (in fact it is called the youth bulge on the Continent as you know), followed by Latin America, the Middle East, and parts of Asia (with Japan being an exception with an aging population, and China having both a large young and old population).

-- On women, if the numbers of women in the world made up a single nation, that nation would be the third largest in the world behind China, and India.xii   The Nigerian female/girl population is about 74 million.

-- Poverty, food security, corruption, lack of good governance, lack education and employment opportunities are also top of the list for Africa, Latin America, the Middle East, and Asia. What are the demographic figures in your country, in your community? If you don't know them you should, you need to in order to effect change as a 21^st Century leader, or organization focused on well-being and giving back.

-- 43 percent of the world’s population lives on less than $2.50 per day, and in most of Africa it is less than $1.00 a day. In Nigeria it is $1.25 (about naira 290). Keeping in mind this means – in search of $1.25, not a guaranteed $1.25 per day. Sixty percent of your population face this every single day.

-- By 2020 1 million more people in the world will be pushed into poverty on top of the current 3 billion (source: CCTV  2014, Terryane Chabet report)i; globally 22,000 children die each day due to poverty; 1.1 billion children in the developing world don’t have access to clean water; and 75 per cent of the world’s wealth is in the hands of 20% of the world’s population. 

-- All of these demographics are important because they do affect geo-political and economic relationships, and world views which can be very different from our own.

If I am saying that demographics are strategic issues – and that is what I am saying -- then what are the specifics for Nigeria? What are the demographic issues that you need to be focused on that are and can further feed into the security, development and economic challenges your nation faces today?

Here are a few to put things into perspective.

-- Let's start with your population of roughly 172 million people – the 7^th largest in the world - being both a positive and a challenge for the nation. It is a demographic which is both fluid and requires innovative thinking to meet the economic, social and quality of life needs. 

-- Unemployed youth & the youth bulge (10-35 years, will represent the bulk of your population over the next 5 decades) are next on the list. Do you know what this exact figure is for Nigeria in terms of numbers?

-- Currently it is estimated that you have 74+million young people in this particular demographic and growing. These are young people in search of their future with no current prospects.

-- Economic inequality follows. Even for those who find "underemployment opportunities," in general, the income inequality is great, not just in Nigeria, but as noted above South Africa holds the world's high stat on this issue. To further highlight in the global context, according to Farid Zakaria CNN-GPS 2014 broadcast, 18 people in the world have as much money collectively as 3.5 billion folks.

Think about that! So income inequality is another strategic demographic category to which you as a 21^st Century leader/organization will need to pay attention. 

A few other factoids for you:

-- Where does Nigeria fall on the gap between rich and poor – 44 out of 86 rated -- actually one notch above the U.S. -- on easier understood Palma Ratio which measures this and has a slightly difference focus than the Gini coefficient which heavily weights middle come in its ratios.

-- You only have 17 million Small and Medium Size Enterprises (SMEs), and in a population the size of yours that is not enough to grow your middle class, which is reportedly around 30 million today. iii

-- Nigeria has the highest rate in the world of school age children out of school at 10 million. A key stat given that 44 percent of your population is also 15 years old or younger, and 39 percent of adults cannot read or write.

Thus, these are both economic issues and security issues rolled into one supra-paradigm for the country. So the questions for this lecture are what to do, what does Africa do; what does Nigeria do? These are the imperatives that have to be addressed in order to counterbalance the escalating challenges caused by groups (e.g. Boko Haram, Al Shabaab, ISIL) which counter world goals using tools of extremism and terrorism to achieve them.

First let me say you are off to a good renewal. For Nigeria, you have  begun your initial move into a new "league of democratic nations," with the success of your March elections and the peaceful transition of power in May, as good governance, as I noted earlier, is the baseline from which to build and move forward. 

President Buhari has set out, in what I am calling, "The Buhari Doctrine," what his vision will look like. He has already begun efforts on security:

1.) Meeting June 11 with military chiefs of Nigeria's neighbors on Boko Haram (BH);

2.) Moving Nigerian Security Operations HQ  to Maiduguri;

3.) Supporting a Command Center in Chad, although Command and Control will be under the Nigerian Army;

4.) Recommitting $100 million pledged by former president Jonathan to the BH fight;

5.) Making his first foreign visit, after being inaugurated, to Niamey; and, also thanking Niger, Chad, and Cameroon in his inaugural speech.

He also made education, agriculture/food security, improving energy and health systems, and assisting IDP's as top priority development issues with fighting corruption being "pivotal-center" of his Administration. So there seems to be a chance now to contain Boko Haram. However, I also think that it is important to remember that Boko Haram is just as committed to its objectives and goals, and success might have to be measure in terms of containment and sustainability of recaptured territory.

Despite what I have laid out on the economic and social end, none of which is new, but which sounds awfully scary and insurmountable, there are positive things to build upon and to help and support the new President. Let's recap those positives. Nigeria is:

-- Africa’s largest economy at $510billion – making it the 24^th largest  economy in the world ahead of such countries as Belgium and Taiwan;

-- Only nation having 100+ mobile phone (important tools for business and education innovation);

-- One of the Premier African foreign investment destinations;   

-- New economic development sectors such as information systems and technology, continued growth of SMEs, and trading have all helped spur Nigeria to where it is today.

What to Do? What Can You Do?

Development, or lack of development, better said, are probably your biggest challenges, as noted above, feeding your security challenges. But, I would also argue that there are other things at play – intangibles that are hard to address such as a "clash of civilizations," on how groups like Boko Haram see the world. Our counter will be to make the current global context better with a focus on:

-- Poverty Solutions - combating poverty and its elements (hunger, climate smart food security, education), particularly for at-risk groups such as women, girls, youth, the disabled, and elderly; 

-- Use Information Technology to develop “work around solutions” to advance social change entrepreneurial and vocational opportunities as well as financial literacy;

-- Assist with smart climate/energy (renewables) to bring electricity/power to the nearly 120 million Nigerians without it today;

-- Help with the housing deficit. At present Nigeria has a 17+million affordable housing deficit xiv (if you are poor you are also likely not to have good shelters or shelter at all); 

--See infrastructure as a development issues as without adequate roads, rails, and water transport systems housing, business, and farming will all struggle; 

-- Work with the new Nigerian government to help improve transparency, anti-corruption efforts, and the capacity of government institutions to respond and support the needs of the people;

-- Be creative on education (include vocational and entrepreneurial, and help train and expand the number of SMEs and MMEs (companies with less than 5 people).

-- Assist, if this is within your expertise, with improving your country's health care system;

-- Participate in philanthropic efforts with the nearly 2 million internally displaced (IDP's) Nigerians affected by the Northeast conflict, and those 20 million Nigerian refugees in the 3-neighboring countries;

-- Keep in mind that Africans and Asian make up the majority of the 63 percent of world migrants today;

The majority of the above points are not just Nigeria's challenges but also for the Continent. Indeed, everything that impacts people’s lives and their social, political, and economic well-being, are for me, strategic-demographics-development issues for Africa’s and its burgeoning population.

These issues are even more important today as they are affecting those in their prime education, prime wage earning years (18-40yrs), and Africa’s youth bulge (10-35yrs) -- or nearly 600 million young people on the Continent.

Turning from Nigeria to the Continent, here are some additional back story strategic demographics to further provide perspective on just how critical these development issues are on from a Continental perspective, here are the other relevant figures in the back-story, to highlight what I was just talking about for Nigeria. For the Continent:

Challenges:

-- 75 million – current number of young Africans looking for work now, out of the 1.2 billion working age population world-wide looking for work;
 -- 10 million – number of young Africans of working age added yearly to the 75 million already seeking jobs/employment according to the African Union (Political Body of African States);
 -- 547 million – number of Africans living without electricity and energy;
 -- 227 million - number of hungry people every day who live on the African Continent;
-- 3 per cent – number of African adults with credit cards; only a quarter of young African adults have accounts at formal financial institutions -- meaning the majority of Africans are still not connected in any way to the global formal financial system.

This being said, again all the news isn't bad for the Continent either, just like it is not all bad news for Nigeria.

Here are "The Positives:"  
 -- 7 out of the 10 fastest growing economics in the world are in Africa;

-- 31 of the top 1000 Banks in the World on the “This Is Africa,” list are African Banks;

-- 39 African countries are democracies or evolving democracies, using AGOA guidelines, out of the 48 countries in the Sub-Saharan Region;

-- 90 million people in the middle (or consumer) class, largest number the region has ever had, up by 31 million in last 10 years;

 -- 18 countries have GDP’s of 5 per cent or higher.

I have pointed out both the challenges and the positives because, as the global landscape continues to change rapidly, we need to ensure that the next generation of young Africans, young Nigerians sees, feels, and believes there are opportunities for themselves and their families. 

My Message for Today -- Lean Forward!

Remember to Lean Forward! As a Diaspora Group and take a look at the possibilities of what you can do as an organization, as an individual. There are a number of economic development areas I noted above where you can help turn the tide.

1.) Think about building more relations based on partnerships (country-to-country, community-to-community, people-to-people); and;

2.) Think about philanthropic contributions. Although improving, Africans fall behind in this area more than many other world regions.

3.) Think about the strategic long term to changes these development demographics, improve them -- or in the case of population – help to build societies, communities where young people, young Africans feel: embraced, enfranchised, and most importantly empowered.

A FEEEDS Blogpost

Endnotes:

---

[i] 9/19/14 CCTV TV live newscast, Miriam Kalma reporting
[ii] CCTV 9/19/14 live TV newscast Africa Live Report
[iii] UN Week 2014, McKinsey Session on Nigeria, Remarks by Director Richard Dobbs, New York Palace Hotel, N.Y.
[iv] U.S. Small Business Regional III Advocate Official Speech, July 10, 2014, Gallup Headquarters, Washington, D.C. at the FEEEDS-Gallup-Allafrica.com US-Africa Summit Forum
[v]  2012 speech, Commandant Eisenhower Resources College, National Defense University, Washington, D.C. on occasion of ICAF College name change
[vi]   Nigeria's Palma Ranking
http://www.washingtonpost.com/blogs/worldviews/wp/2013/09/27/map-how-the-worlds-countries-compare-on-income-inequality-the-u-s-ranks-below-nigeria/
[vii]  Palma Ratio
http://www.washingtonpost.com/blogs/worldviews/wp/2013/09/27/map-how-the-worlds-countries-compare-on-income-inequality-the-u-s-ranks-below-nigeria/
[viii] www.statisticbrain.com human development report
[ix] http://www.aworldatschool.org/country/nigeria
[x] Nigeria current GDP at $510b  http://www.economist.com/news/finance-and-economics/21600734-revised-figures-show-nigeria-africas-largest-economy-step-change
[xi] Number of Nigerians without electricity http://oilprice.com/Energy/Energy-General/Not-Darkest-Africa-but-Darkest-Nigeria-120-Million-Without-Electricity.html
[xii] NB: Libyan port city from which many migrants are departing Zuwara
[xiii] Speech by former Nigerian Finance Minister & former VP World Bank Ngozi Okonjo-Iweala, Woodrow Wilson Center, February 2012
[xiv] 8/2014, Former Nigerian President Jonathan's "Housing Stakeholders Meeting"; Nigeria Former Housing Minister "Housing Stakeholders Conference," 11/2014
[xv] 6/2015 Human Rights Watch Annual Global Summit, Chicago, Drake Hotel, panel "World Migrant Issues."