A year ago (December 2012) an international newsmagazine commissioned me to look ahead, into 2012. Below is what I came up with. Interesting to see the hits (if any) and misses.
Expect a more serious one soon
2012 in Nigeria
by Tolu Ogunlesi
Nigeria’s four-year political cycle has always been characterised by relative quiet in between general elections that until recently all took place at the same time. With a slew of court pronouncements ordering fresh elections in a number of states, in the last few years – fallout of questionable elections – the electoral calendar is no longer unified. In 2012 therefore, six governorship elections will take place, INEC’s first major test since the 2011 general elections.
The most watched of them will be the governorship ballot in Bayelsa, home state of President Jonathan. The president has been careful to publicly not appear as though he’s an interested party, but the events that have played out over the last few months belie that. Jonathan is not keen on seeing Timipre Sylva return to the government house, and the curious manner the leadership of the party has treated Mr. Sylva’s second-term bid (denying him of a ticket) hints of powerful forces at work behind the scenes.
Jonathan will be keen to be – and to be seen to be – in charge of his home state, and the only way to do this would be to install his own person in the government house in Bayelsa. Sylva, who rose to the government house in 2007 without requiring the benevolence of Jonathan, may not feel indebted enough to defer to the president.
Bayelsa lies deep in the delta, and violence is likely to erupt as rival politicians enlist the support of the militant groups that, until an amnesty in 2009, terrorised the region. Discontent arising from the election results, however they play out, will stoke tension in the delta.
President Jonathan’s controversial single-extended-tenure bill, pushed to the background by the fuel subsidy controversy will likely resurface in the new year, and face stiff opposition from citizens programmed to be wary of constitutional manipulations. It will however take uncommon audacity from the president to try to push two unpopular bills – this and the Petroleum Industry Bill – through parliament.
Throughout its latest democratic stint (1999 till date) the Nigerian state has had to deal with the prospects of violent conflict – ethnic, sectarian, religious. Militant Islamic sect Boko Haram is only the latest manifestation of a pattern that sees armed groups amassing the confidence to challenge the might of the Nigerian state.
Many observers insist that at the root of much of the unrest lies poverty: despite a growing middle-class, more than half of the country continues to exist on less than a dollar a day. The North is worse off than the South, in terms of all major developmental indices: literacy, school enrolment, etc. Regular outbreaks of cholera and polio in the North, absent in the South, provide further evidence of a yawning divide. Capitalising on the discontent, and the armies of available and willing young persons – many of them originally armed by politicians to prosecute electoral battles in the run-up to “do-or-die” elections – Boko Haram is currently the Nigerian government’s biggest headache. But the last few weeks of 2011 have brought a number of breakthroughs – arrests of a number of influential members of the sect. However things turn out, Boko Haram will no doubt be one of the leading national issues in 2012, determining to a large extent the local and international perception of President Jonathan’s ability to lead Nigeria. A fifth of the 2012 budget – more than has been allocated to Education, Health and Power combined – will be spent on “security.”
Jostling with Boko Haram for the most prominent position in Nigeria’s national affairs will be the fuel subsidy removal debate. The government is bent on removing the subsidy, which helps to keep fuel prices at the prevailing prices (significantly less than what it costs the country to import them), and which currently consumes as much as a quarter of the annual budget. Civil society and the parliament and majority of the population are opposed to the removal, for two reasons: one, the poorest segments of the population will be worst hit by the food and transport and rent increases that will inevitably accompany rising fuel prices when the subsidy is removed; and two, few have any faith that the estimated savings from the subsidy removal will not end up stolen, as are much of Nigeria’s oil earnings. The government is proposing to set up a special self-accounting agency (similar to the Petroleum Trust Fund that Head of State Sani Abacha set up in 1995) to spend the savings on critical infrastructure projects.
This proposal is not likely to be convincing enough to stave off impending public protests. There will be no Arab Spring happening in Nigeria, but public protests and nationwide strikes – driven in part by social media – will succeed in crippling the economy.
Over the last decade Nigeria has been one of Africa’s, and the world’s fastest growing economies; annual average GDP growth between 2001 and 2010 stood at more than eight percent. Despite a recent downward revision, Nigeria will retain much of its impressive growth in 2012, with the new budget premised on a 7.2 percent GDP growth rate.
There will be a renewed drive to seek foreign direct investment in 2012, notwithstanding the challenges posed by the activities of Boko Haram. The theme of last year’s Nigerian Economic Summit was: “Attracting Foreign Direct Investment through Global Partnerships”, and with general elections over and a cabinet firmly in place, investors will be confident enough to make the effort to defy Nigeria’s infrastructure deficit and unfavourable investment climate to do business in the country.
The creation of a Ministry of Trade & Investment, manned by ex-Goldman Sachs banker and ex-Finance Minister, Segun Aganga – one of the handful of persons seen as reformers in the cabinet – should offer encouraging signals to potential investors.
The beer industry is a good example of an industry in which the landscape will be altered by FDI in 2012: Heineken recently acquired five existing Nigerian brewing plants, and SAB Miller’s followed up its purchase of a brewery with a planned investment of $100 million towards the construction of a new factory.
Major investment projects already lined up for 2012 include the construction of the first of three new refineries, in Lagos, by the China State Construction Engineering Corporation. Construction is billed to commence on Lagos’ new airport, while the much-delayed rehabilitation of the Lagos-Ibadan highway, one of the busiest in the country, will kick-off. The ongoing revamp of Nigeria’s rail system, already almost halfway through, will continue, so that sometime in 2012 Nigerians should be able to travel the 1,000-plus kilometres cross-country from Lagos to Kano, by train.
Eko Atlantic City, rising out of what was until a few years ago the ocean, and touted as the Manhattan of West Africa, will begin to take concrete shape in 2012, providing an opportunity to create a dysfunction-free stretch of Lagos.
Nigeria’s six power plants and eleven electricity distribution companies will be sold off in 2012, providing an opportunity for the inflow of billions of dollars in local and foreign investment. Competition for those assets will be fierce, with investors hoping for a repeat of the telecoms ‘goldmine’ experience in the power sector. Nigeria is currently able to generate only about a fraction of the power it needs, but that seems set to change in 2012 with the launch of a new nationwide electricity transmission “super-grid”, and reduced government involvement in power supply.
The controversial Petroleum Industry Bill (PIB) will very likely be passed in 2012, after suffering several delays, mostly due to the opposition of the IOCs who complain that it is unfavourable to them. The version that will be passed – it is believed there are a number of versions in circulation – is expected to be a watered down one, and the far-reaching reforms the bill is supposed to spearhead may be no more than a pipe dream.
If Ibrahim Lamorde is confirmed as substantive Chairman of the Economic and Financial Crimes Commission, then a more ferocious anti-corruption battle should be expected. The EFCC has sunk in local and international reckoning over the last couple of years, and Mr. Lamorde will be keen to revive the reputation. To mark a break from the recent past, a number of high-profile convictions should be expected in 2012. This may include one or two of the once-powerful ex-Governors currently being tried.
In light of the Senate’s passage of a bill that criminalises gay marriage in Nigeria, UK prime minister David Cameron threatened to cut aid funding to Nigeria. Expectedly the Nigerian government asked him to do his worst. Cameron’s mistake is not realising Nigeria is no Malawi, where up to 40 percent of the national budget is made up of aid inflows from Britain.
National Resources & Commodities
Nigeria’s 2012 budget is based on an assumed oil price of $70 per barrel, down from the $75 benchmark set for the 2011 budget. Since the windfall derived from surplus oil revenues (all earnings over the benchmark) is traditionally been deposited in an “Excess Crude Account”, Nigeria is set to enjoy increased savings in 2012, if oil prices per barrel, currently hovering around the $100 mark, stay stable.
Last year the government, in a bid to introduce global best practices into the management of oil windfalls, launched a Sovereign Wealth Fund which will eventually replace the ad-hoc excess crude account. The SWF took off with $1 billion, which should rise significantly in 2012.
Oil will continue to take much of the focus away from other resources, but planned reforms by new Agriculture Minister, Akin Adesina – including ambitious plans to reform a corrupt national fertilizer allocation scheme, more than double maize production, and to reduce wheat flour importation by compelling bakeries to use ensure that at least half of their flour is from locally-produced cassava – may take Nigeria closer to a now-forgotten golden age of agriculture.
2012 is going to be an exciting year especially for internet technology. The 2011 general elections provided a hint of just how powerful the internet and social media can be as a tool for political engagement and social activism. In 2012 we should expect social media to be put to non-political causes – highlighting police brutality, private sector corruption, consumer protection issues, amongst others.
2012 will be the year of internet start-ups and e-Commerce, consolidating a trend that started in 2011 with the successful launch of online travel agency WakaNowNow and deals site DealDey.
The existence of an ICT Ministry, for the first time in Nigerian history; the emergence of Lagos’ Co-Creation Hub (“Nigeria’s first open living lab and pre-incubation space being designed to be a multi-functional, multi-purpose space where work to catalyze creative social tech ventures take place”) and the increasing prominence of Google in the Nigerian market, will ensure that local software developers and IT enthusiasts attract sizeable attention to themselves in 2012, with a constant rollout of exciting ideas and ventures that will stand out for their local relevance.
With Africa’s largest population, made up mostly of young people (an estimated seventy percent of Nigeria’s population is below 35), and rapidly increasing mobile internet as well as broadband access (due to a number of undersea cable projects in recent years), the internet will be a major attraction for entrepreneurs and investors in 2012.
Two events that might have seized the headlines in Nigeria – the Nations Cup and the Olympics Soccer Tournament (which Nigeria won in 1996) – will not, because Nigeria’s teams failed to qualify for both events. Sports events generally serve to distract Nigerians from the problems at home, but President Jonathan should not count on any of that happening next year. In May he will celebrate his first year in office since being elected President (discounting the one year he served completing the late President Yar’Adua’s tenure). Already the voices of frustration are growing, as the dismal electricity situation continues, in spite of several promises of improvement.
With a population fast growing impatient, 2012 will no doubt not be an easy year for the President who, announcing his intention to run for the office of President in September 2010, boasted: “Let the word go out from this Eagle Square that Jonathan as President in 2011 will herald a new era of transformation of our country.”