Centre for the Promotion of Private Enterprise (CPPE) has said that Nigeria’s current balance of payment position is weak and may not be able to support any major military engagement outside its shores, especially the military option in restoring democracy in Niger.
Dr. Muda Yusuf, Director/CEO, CPPE who stated this in a report tagged ‘Economic Implication of Military Option in Restoring Democracy in Niger’ said Nigeria’s external sector is fragile, posing a profound challenge of currency volatility.
Yusuf noted that the worsening of the external sector would adversely impact investors ‘confidence, weaken growth prospects and decelerate the pace of economic recovery.
- “In a war situation, there are inherent risks of destruction of assets, damage to infrastructures, disruption of the livelihoods of innocent citizens, softening of investors’ confidence, deceleration of investment growth, aggravation of country risk and the dampening of GDP growth prospects,” he said.
Fiscal deficit
Yusuf said the recent reforms by the current administration have impacted positively on the fiscal consolidation efforts adding that the prospects of fiscal deficit reduction in the near term look very bright.
He noted however that in the event of a military intervention in Niger, these gains may be eroded.
- “The reason is that we would see an escalation in the defence budget which would trigger a surge in fiscal deficit, worsening of inflationary pressures and a spike in debt levels and related debt service burden.
- Resources that would have been used for the funding of critical infrastructures such as roads, electricity, education health railway systems would be deployed to fund military operations.
- While it may be easy to determine the commencement of a military campaign, it is often difficult to predict the duration, scope, intensity, dimension, and ultimate cost.
- Military operations are typically dynamic. Underlying assumptions may change as military operations progress. And this may have significant budget implications.
- If Nigeria decides to go ahead with a military campaign in Niger, our defence spending may have to increase substantially possibly by 100% or more.
- Over 70% of the spending would have to be foreign exchange. Though the military option would be an ECOWAS decision, the burden of prosecuting the operation would have to be borne substantially by Nigeria.
- These are scenarios we need to worry about.
- Characteristically, it is difficult to predict what the scope of a military engagement because of the dynamic nature of such operations.
- Extant strategies may therefore not capture all the variables, many of which may be unforeseen. The ECOMOG story is a classic example,” he said.
Cost implications
Yusuf said the financial cost of a military campaign could be quite staggering and unpredictable adding that there are valuable lessons to learn from Nigeria’s military operations in Liberia and Sierra Leone over two decades ago.
- “Nigeria was the arrowhead of the then Economic Community of West African States Monitoring Group [ECOMOG], the intervention force at the time. We lost over 500 soldiers during the Liberia war with hundreds sustaining various degrees of injuries.
- The war became protracted, lasting for about 7 years, [1990 to 1998].
- At the peak of the war, there were 16,000 ECOMOG troops in Liberia, 80% of them were Nigerian troops.
- The cost to Nigeria of the Liberia war was an estimated 8 billion dollars.
- Shortly after the Liberia military operation, Nigeria led another military intervention in Sierra Leone to restore democracy in that country following the coup that toppled the then-democratically elected President, Tejan Kabbah.
- The story of Nigeria’s military campaign in Sierra Leone was not different. Nigeria spent over $4 billion and lost about 700 soldiers. The war lasted about five years from 1998 to 2002.
- The lesson here is that the cost of military interventions can be very prohibitive,” he said.
Yusuf explained that similar military operations at this time may cost considerably higher, given the inflationary trend over the past 25 years.
According to him, at the very minimum, it would cost Nigeria a minimum of $2 billion annually to prosecute a military operation in Niger, taking into account the prevailing geopolitical dynamics in the Sahel.
- “It will be difficult to accommodate such a huge financial commitment at this time without putting a serious strain on our fiscal operations and foreign reserves.
- With the benefit of hindsight, it is doubtful whether Nigeria got any significant benefit from the military interventions in both Liberia and Sierra Leone.
- Yet the operation was a huge financial burden on Nigeria. The costs to Nigeria were colossal. Military spending in a war situation is largely in foreign currency. It could therefore be a major drain on Nigeria’s reserves.
- The loss of lives was also a tragic outcome of the war.
- In the end, there was no concrete benefit for Nigeria for expending so much of its financial and human resources. Of course, we were consoled by the perception of Nigeria in the comity of nations as the ‘giant’ of Africa,” he said.
Trade Implications
Yusuf said that one of the key mandates of ECOWAS is the promotion of economic integration, adding that military actions among member states would surely negate this fundamental objective.
- “It would perpetuate fragmentation of the region and trade within the region will be severely impacted. This has grave consequences for the economies of member states and the welfare of the citizens.
- Already the recent border closure is beginning to adversely impact traders on both sides of the divide. The truth is that sanctions are typically a double-edged sword which is why it needs to be cautiously and strategically applied,” he said.
Security implication
Yusuf explained that there is a risk that the fragile security situation in the sub-region may further deteriorate in the event of a military assault on Niger.
According to him, current acts of terrorism in the region require concerted efforts by ECOWAS countries to tackle them. Nigeria needs the cooperation of its neighbours to effectively confront terrorism in the country.
- “A fragmented region cannot present an effective front to deal with the growing challenge of insecurity in the region. The countries in the region may become more vulnerable in the event of intra-regional conflict and fragmentation.
- It is instructive that the Sahel is rapidly becoming a theatre of geopolitical competition between Russia and the West. The Sahel is currently the hotbed of global terrorism.
- It is not in Nigeria’s interest to get deeply involved in the military adventures in the zone, with Mali, Burkina Faso, and Niger being major theatres of their operations.
- This could further complicate matters for the entire sub-region. Nigeria should avoid getting entangled in these geopolitical dynamics,” he said.
This assumes that both the United States and France would withhold military and financial assistance to Nigeria and ECOWAS in the event of a conflict against the junta in Niger.
The Western nations are progressively viewing the string of coups across the Sahel, coupled with Russia’s engagement with these military regimes via the Wagner Group, as a geopolitical menace comparable to the imperative of safeguarding democracy in Ukraine.