Nigeria is an extraordinary country. Formed by combining 3 Protectorates from the British Colonial rule, located on the Bay of Bight in West Africa, Nigeria is home to over 200m people, combines 3 major tribes and 250 smaller tribes, over 500 languages, immense physical beauty and topography that ranges from the lush tropical forests of the south, the Shebshi Mountains rising over 2,000m between the Taraba and Benue Rivers, and the majestic Sahara desert.
The Niger River snakes over 4,000km through Guinea, Mali, on the Benin border before becoming truly awe-inspiring in Nigeria, emptying eventually into a vast delta (the Niger Delta of course), and subsequently into the Atlantic Ocean. The Niger River drains over 2 million square km of West Africa.
Nigeria gained its independence on Oct 1, 1960, amid tremendous optimism about the future of Nigeria and the future of Africa. The discovery of oil in 1951 was widely viewed as a great boon for Nigeria’s economy and people. However, despite this optimism, the road since independence has been long and difficult. A coup in 1966 took Nigeria from democracy to military dictatorship. A brutal civil war from 1967-70 resulted in the deaths of up to 2 million people.
The 1970s gave some economic respite, as the Yom Kippur War of 1973 drove up the price of crude oil dramatically, and the so-called ‘7 Sisters’ (the world’s private international oil company titans) all pitched their tents in Nigeria. GDP per Nigerian was over USD 1,000. The military leader then Gen. Yakubu Gowon quipped “the problem is not money but how to spend it.”
There was massive investment in infrastructure – the so-called cement Armada had over 20 million tonnes of imported cement in the Lagos port at one time. In 1976, Nigeria hosted one of the most lucrative tennis tournaments in the world at the Lagos Lawn Tennis Club, headlined by the remarkable Arthur Ashe, reigning Wimbledon Champion. Unfortunately, the tournament came to an abrupt end on the semi-final day during an Ashe match with an attempted coup.
Nigeria by the numbers
1976 perhaps marked the high-water mark for the economy, as oil prices never again attained their 1973 peak (in real terms). Until the mid-1980s, Nigeria’s currency – the Naira – was worth more than the GBP. However, since then, the Naira has continuously devalued – today over 600 Naira to the GBP – a powerful signal of the economic decline of Nigeria.
Overall, since 1966, Nigeria has had 5 successful coups, 3 unsuccessful coups, the horrific civil war, and a return to democracy only in 1999, a democracy that remains very much a work in progress.
Despite the painful post-colonial period, both Nigerians and those from outside the country agree on one thing: Nigeria has enormous potential. In addition to unrivalled natural resources (oil, but also, gas, every mineral known to humankind), enormous quantities of arable land, and scenery that could create many of the world’s great future tourist destinations, the success of Nigeria’s music and Nollywood on the global stage highlight the vibrancy and creativity of her people.
However, achieving this immense potential remains elusive and, on many dimensions, Nigeria is an outlier and not in a good way. On a strict GDP basis – using the Purchasing Power Parity approach, at USD 1,075.69 billion Nigeria does not appear to be doing too badly. This PPP GDP per capita of USD 5,363 is ahead of India, and most other African countries.
This seemingly reasonable PPP GDP per capita performance masks extremely worrying official numbers:
- GDP per capita has in fact been declining every year, with GDP growth since 2015 less than population
- Official unemployment statistics from the NBS show 27.1%.
- Nigeria has the most people of any country in absolute poverty, approximately 100m.
- Nigeria has the most children out of school (13.5m United Nations).
- On the Human Development Index (HDI), Nigeria scores very poorly, with 0.539, behind African countries like Ghana (0.611) , Kenya (0.601), Cameroon (0.563).
- Embedded with the HDI, Nigeria has a very low life expectancy of 54.8, compared to India and 69.7 and China at 76.6 years.
- Income inequality is extreme; while over 100m people are in absolute poverty, Nigeria was forecast to be Africa’s largest importer of champagne when oil prices were rising. (It is the second highest importer of champagne in Africa behind South Africa).
- All of this is happening against a background of rapid population growth – estimated to be 3.2% pa by the Nigerian Population Commission. This means Nigeria will be the 3rd most populous nation in the world in 2050, and Lagos is projected to be the world’s most populous city at 40m. The Lancet recently projected that Nigeria will be the world’s second most populous country by 2100, surpassing China this century.
And Nigeria continues to be plagued by corruption and poor governance, at least according to the global surveys of such issues.
Transparency International’s 2020 Corruption Transparency Index scored Nigeria 25 out of 100 (higher is better), 149th of 180 countries. In contrast, its English-speaking neighbour in West Africa, Ghana, scored 43/100 with a ranking of 75th. Ivory Coast was also one of the world’s great improvers in the Corruption Perception Index in 2018, moving from 27 to 35/100 (that is, moving from equal to Nigeria to considerably better) and a ranking of 105th.
Despite the centrality of tackling corruption to the current government’s agenda, Nigeria’s score has sadly gone backwards from 28 in 2017 to 25/100 in 2020.
On Governance, the World Bank Group has a long-standing Worldwide Governance Indicators project, which ranks countries on 6 key dimensions: Voice and accountability, Political stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption.
Not surprisingly, Nigeria is not doing very well on these. Specifically, Nigeria fares very poorly on the Political Stability and Absence of Violence/Terrorism and Control of Corruption dimensions. But on almost every dimension, Nigeria does worse than its SSA peers, and what is perhaps more worrying is from 2008-2018, Nigeria has gone backwards on 4 dimensions.
The one dimension where Nigeria performs better than SSA is on Voice and Accountability – reflecting Nigeria’s boisterous NGO, press, and the general public who are increasingly bringing sunlight to Nigeria’s challenges every day.
Both those inside and outside of Nigeria are aware of the challenges in the Northeast of the country related to Boko Haram. Beyond these, we have the increasing number and severity of clashes between pastoralists (Fulani herdsmen) and farmers. This conflict is moving further and further south in Nigeria as climate change means that the Sahara is moving further and further south, increasing pressure on the lifestyle and livelihoods of the Fulanis.
Kidnappings also seem to be on the rise. While in the past, kidnappings might have been primarily concentrated in the South-South, it appears to be moving to become more of a nationwide phenomenon, though as always it is difficult to gather accurate statistics.
Overlaid on the Boko Haram, Fulani herdsman, and kidnapping security concerns is the general level of crime –ranging from petty theft to rape and murder – throughout the country. Of course, again, it is difficult to know whether Nigeria is making progress on any of these security issues. A free press that reports incidents, a vibrant NGO sector that often assists victims and the speed of light of the internet means that we are increasingly aware of insecurity incidents from all these sources.
In 2020, a new movement rose up, End SARS. Extra-judicial killings by security forces – including many by the infamous Special Anti-Robbery Squad – finally brought Nigerians – especially young Nigerians – out on the streets. Both the Federal and many State Governments acknowledged legitimate grievances and a painful and unknown process of examination of these issues has begun.
The telling of history – and the way forward – was made much more difficult by the events of Oct 20, 2020, where security forces and unarmed civilians clashed at the Lekki toll gate. What exactly transpired is disputed by official parties to the events, but there is no question that the path to building trust between the government and its citizens has been made harder.
Beyond all these issues – high levels of poverty, low HDI outcomes, low life expectancy, security challenges, and poor scores on corruption and governance – there is a unique aspect to Nigeria that is critical to understanding how Nigeria functions: the almost complete absence of the state sector.
So far, based on the official numbers, we have painted a pretty bleak picture. Nigeria has the most people in absolute poverty in the world, the most children out of school, faces numerous security challenges, performs very poorly on the official grading of corruption and governance and the public sector simply does not have the resources to do what the public sector is supposed to do according to the orthodoxy.
Add to this that the country seems to be making little progress. Nigeria is a big, messy proto-democracy with numerous cleavages across geography, religion, tribe, language, and it is simply not easy to effect meaningful reforms in institutions or indeed the constitution.
Numerous political rivals spend their energy on how to capture more of the vanishing national cake (Nigeria basically produces the same amount of oil today as when it had 1/3 the population, meaning that the oil rents per person have shrunk by 2/3) rather than advancing the public interests, and the 2 main political parties have no distinctive ideology except to be in power (which is a life or death endeavour because politicians need the power to be able to extract the rents to pay back the costs of getting into power).
When looked at through the lens we have described – official statistics, press headlines about insecurities, global rankings putting Nigeria at the bottom of the table – you would very likely conclude that Nigeria should be a failed state … or that even if not a failed state, it is highly likely to become a failed state in the near future.
This conclusion – as argued by the authors of this book – would in fact be wrong. Every day millions of Nigerians go about their daily business (not in easy circumstances to be sure, but Nigerians are resilient). Nigerians are trying to build a business, earn their living, get an education, find a spouse, raise their children, and – certainly world-class in this dimension – party.
And this is the central question of this book: why is Nigeria not a failed state?
Our hypothesis – which the rest of this book tries to support – is that Nigeria is not a failed state because Nigerians have self-organised in the absence of a functioning public sector. That is, Nigerians organise their own security, their own power, their own education, their own healthcare, their own infrastructure, their own future. And they self-organise at every scale – individual, group, State, National – and in every sphere of human life.
Check out our website: https://selforganisingnaija.org/
Partner – Financial Services Leader and Chief Economist PwC, West Africa Dr. Andrew S. Nevin, PhD is one of PwC’s leading global thinkers, working at the complex intersection of economics, strategy, capital markets, and investment. He has over 34 years of professional experience as an entrepreneur, private equity investor, line manager, economist, and strategy consultant and is his professional career has previously lived in Asia, North America, and Europe. He has been based in Lagos, Nigeria (the world’s 7th most populous country) since early 2012.
SEC and the proliferation of unregistered investment platforms
The recent move has generated diverse views from stakeholders with some critics classifying this action as irrational.
According to a circular issued by the Securities and Exchange Commission (SEC), it affirmed its knowledge of the existence of trading platforms that allow investors access to securities listed in other jurisdictions.
The capital market regulator further reiterated the provisions of sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations which state that only foreign securities listed on any exchange registered in Nigeria may be issued, sold or offered for sale or subscription through approved channels to the Nigerian public.
The announcement furthers SEC’s quest to strengthen investor protection, promote transparency in the operations of the Nigerian capital market and ensure all investment transactions are within the regulatory purview of the commission.
Recently, the capital market regulator introduced a new requirement for the inclusion of the commission’s contact details in all prospectuses or offer documents issued to the general public in a bid to ascertain the genuineness of such securities. Besides, it is often found that the activities of illegal fund managers become prevalent during a financial or economic downturn, making the public susceptible to the juicy yet unsustainable returns promised by these managers.
The recent move has generated diverse views from stakeholders with some critics classifying this action as irrational. They cited the impact of investing in foreign stocks on portfolio diversification and the role of Fintechs in driving financial inclusion among others. On the other hand, supporters of this action argued for the need to reduce the pressure on external reserves especially at a time when the green-back is needed to stimulate economic recovery.
Also, that it helps to safeguard the country’s investing community. We recall that the recent policy by the CBN to close all accounts by Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs) involved in dealing with cryptocurrencies received a lot of backlash from the public.
On this move, however, we opine that it is still within the legal purview of the SEC to discourage investments in foreign listed securities. Nonetheless, we are aware of the concept of globalization in commerce and thus, there might be a need for a rejig of the Investment and Securities Act 2007, and other related acts to capture current trends and developments in the investment globe.
To avoid backlash going forward, we suggest more public education for clarity with regards to future policy decisions.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.
AfCFTA to promote inclusive trades for women and youth in Africa
The SMEs and Startup ecosystem in Nigeria which are dominated by women and youths should equally take advantage of these opportunities.
Inclusive economic development remains one of the core elements of both the African Union’s Agenda 2063 and the United Nations Sustainable Development Goals (SDGs). In furtherance of this, article 3(e) of the AfCFTA main Agreement and article 27(2)(d) of the Protocol on Trade in Services specifically mandate State parties to promote gender equality and “improve the export capacity of both formal and informal service suppliers, with particular attention to micro, small and medium-sized; women and youth service suppliers.”
With over 60 percent of its population being under the age of 25, Africa is regarded as the youngest continent in the world. This presents both challenges and opportunities for the continent. For instance, in Nigeria, the young population has led to attendant social risks as unemployment nears 40% creating a ticking time bomb. The popular saying is that an idle mind is the devil’s workshop.
On the positive side, however, the young population when properly harnessed will heighten productivity and provide affordable labour which in turn may lead to increase in investment. Nigerian youths just like their counterparts in other African States are known to be very innovative and enterprising. With the right policy and the enabling infrastructures, this energic population can drive the AfCFTA agenda.
Relatedly, women constitute most of the players in the SMEs ecosystem, accounting for nearly 90% of the labour force in the informal sector. A visit to the popular Balogun market in Lagos Nigeria will attest to this fact. No doubt, regional informal trades amongst women and youth within the ECOWAS region have been going on even before AfCFTA. But the new trade deal is meant to open the door to a population of 1.3 Billion people with a combined GDP of USD2.6 Trillion.
This is a huge opportunity and further buttresses the need for gender-sensitive and youth-centric implementation that will ensure sustainable and inclusive growth. As noted by a commentator, women and youth traders are less likely to be equipped with the appropriate skills, technology and resources that would enable them to benefit from trade and trade liberalization as they continue to suffer from invisibility, stigmatization, violence, harassment, poor working conditions and lack of recognition for their economic contribution.
These challenges are made worse by non-tariff barriers such as poor infrastructure, insecurity, lack of access to funds, high unemployment, weak currency, cost of capital, multiple taxations, and other regulatory hurdles. A clear example of the hurdle being the recent intervention by the agencies of the Federal Government of Nigeria in the areas of FINTECH and Cryptocurrency.
Just last week, the Securities and Exchange Commission issued a circular advising Capital Market Operators to sever ties with platforms that facilitate access to trading in securities listed in foreign markets. While recognizing the role of the regulators to protect the investing Nigerian public and their assets, however, the interventions have been interpreted by many as capable of sending a wrong signal and acting as disincentives to innovation. Again, this brings to the fore the need for Continental Free Trade that fosters inclusiveness with member States initiating policies that create more opportunities for the youth and women.
At the webinar held on 29 March 2021 to mark the signing of the MOU on strategic partnership between the AfCFTA Secretariat and the United Nations Development Programme (UNDP), the AfCFTA Secretary-General Mr Wamkele Mene re-echoed the need for inclusiveness in the AfCFTA implementation with the following words:
“We’ve learnt from other trade agreements in the world. And the lesson to draw is that if a trade agreement neglects the most vulnerable segment of the society, if a trade agreement is perceived to benefit only the multi-national corporations, only the elite, it shall not succeed and it shall not have legitimacy as far as the citizens are concerned. And so that is why I have made it my priority in the implementation of this agreement that there should be shared benefits, there should be shared responsibility with Africans across the length and breadth of the African continent in concrete areas such as affirmative action for women in trade. We are looking at concrete ways in which we can expand the benefit for young people and for women in trade. This is the type of development that we require in order to make this agreement successful. This is the type of development that we require to make sure that the benefits are inclusive.”
This Statement coming from the AfCFTA Secretariat is a clear indication of the aspiration towards gender-balanced and youth-sensitive AfCFTA. However, one is not unmindful of the limited role of the AfCFTA Secretariat in the implementation process. The actual implementation is done at the national and regional level. And this is not to underestimate the very critical albeit complementary role that the Secretariat plays in this regard.
Therefore, the change must start from each member country and percolate through the regional economic blocs and finally to the entire Africa. Nigeria through its agencies such as the Central Bank of Nigeria (assisted by the private sector) can support inclusiveness by providing AfCFTA-focused low-interest financing, training of the SMEs on cross-border trades as well as other incentives to promote the engagement of women and youth in trades on the continent.
The impact of the COVID-19 pandemic on youth and women-led businesses has widened the economic gap and further impoverished those at the lowest rung on the economic ladder – mostly women and youths. This calls for heightened capacity building in creating new trading and entrepreneurial opportunities for all. With the constant value erosion in the local currency and low-yield environment, entrepreneurs and SMEs in Nigeria can, through cross-border trades, hedge against business risks and equally take advantage of possible arbitrage that exists in different markets within the AfCFTA.
A shift from the business-as-usual approach on the issue of women and youth is needed under AfCFTA to ensure that the objectives are actualized. Although the AfCFTA is not the magic bullet or the cure for all the economic challenges facing the youths and women in Africa, it is hoped that when fully and equitably implemented, it will go a long way to address some of the factors inhibiting the economic growth of these vulnerable groups.
A recent report commissioned by the UNDP and the AfCFTA Secretariat titled “The Futures Report: Making the AfCFTA Work for Women and Youth” which was published in December 2020 has shown that beyond the projections, numbers and negotiations, the realization of the AfCFTA objectives will depend on decisive actions and collective efforts of the African people. Therefore, concrete measures and investment are needed to ensure that women and youths, who account for the majority of the population, business owners and workforce can be better integrated into the value chains, jobs and opportunities available under the AfCFTA.
As shown by the Report, many entrepreneurs and SMEs across Africa are already taking steps and positioning themselves to benefit from the free trade area and scale their businesses. Some SMEs owners interviewed noted that they are increasing their production lines and sourcing for inter-continental partnership ahead of the progressive implementation of the various phases of the trade regime.
The SMEs and Startup ecosystem in Nigeria which are dominated by women and youths should equally take advantage of these opportunities. Finally, given that trades in goods and services are fast moving into the digital space, the AfCFTA members States need to invest heavily in digital infrastructures and urgently address the high cost of data in Africa which has made it difficult for the majority of women and youths to access opportunities available online.
Nairametrics | Company Earnings
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- BUA Cement Plc announces Board Meeting
- Infinity Trust Mortgage Bank Plc records a 60% increase in profit after tax in Q1 2021.
- Tantalizers Plc reports a loss after tax of N422.05 million in FY 2020.
- NASD Plc announces admission of newly demutualized NGX shares.
- Lotus Halal Fixed Income announces dividend of N20 per unit for Q1 2021.