The Lectern: Oil price fall, Naira devaluation and everything else

Very recently, there has been a lot of ginger around crude oil, naira, dollars, devaluation and how they together will be the death of us. While we have all appreciated the seriousness of the situation, a great majority of us have done so without any inkling of what all the gragra is about. What is this devaluation sef? Wetin concern me, concern central bank and external resaf? Shebi the oil don finish ni?

Chuba Ezekwesili in this month’s edition of The Lectern answers these and many more. That’s the small news. The big news is that he does it in as lay a combo of terms and illustrations as you will ever find in the econosphere. He titles it The Bricklayer’s Explanation…and indeed it is. Per chance you find yourself still confused after reading this, don’t lose heart. Just keep telling yourself that all is well; after all, it is not only the beautiful ones that are not yet born…Enjoy!

That we might be read…

THE BRICKLAYER’S EXPLANATION TO OIL PRICE FALL, NAIRA DEVALUATION & EVERYTHING ELSE

So I logged onto Nigerian Twitter yesterday afternoon and found people abusing economists and financial analysts for speaking in jargons about the CBN’s actions. So for those who’re still confused about what’s going on with Nigeria’s economy and are trying to understand the implications, here’s a simplified version. No bricklayers were insulted in the writing of this post…at least, not explicitly.

So How Did This All Start?

First thing first, oil price fell. Why? Everyone’s increased their production of oil and no one plans on cutting back. In the US, shale oil’s getting cheaper, so there’s more oil out there…and we all know what happens when you have a lot more of a product — price falls. When price falls, consumers are happy and producers are unhappy. Consequently, nations that are consumers of oil have a lovely time, and oil producer countries …a not so lovely time.

So? What Does This Have to Do With the Naira?

Before we go on, a little info on currency and exchange markets. It’s important to note that our currency doesn’t exist in a vacuum. Essentially, a unit of our currency is exchanged for a unit of another currency. Hence the term, Foreign Exchange or Forex or FX, for short. When we buy products from outside Nigeria, we have to exchange our Naira for Dollars. Your Naira is useless outside of Nigeria. It’s why you convert your Naira to Dollars before you travel. You want to test it? Travel to Dubai with only Naira.

Back to the question you raised. Nigeria is fortunate(?) to be an oil producing nation…when oil prices are high. Presently, oil prices are not high and that’s bad for us. Nigeria’s economy is dependent on oil revenue: about 75% of Government revenue comes from our crude oil sales. So when oil prices fall, oil revenue falls too, and that’s bad for the economy.

In the currency market, exchange rates are often centered on the health of a country’s economy. When the economy of a country is strong, its currency is also strong in the foreign exchange market. When the economy appears to be weak, its currency loses value in the currency exchange rate. Nigeria’s dependent on oil, so when oil prices are weak, so our currency loses value in the foreign exchange market. This loss of value of Naira is called a ‘depreciation’ in currency value.

Here’s a simple example. If we began with a dollar exchange for a Naira, both are in a sense equal. However, once I have to give out 2 of my Naira for just 1 of your dollar then the value of Naira has fallen. In the past months, the exchange rate was $1 dollar to roughly N150. Thanks to depreciation and eventually devaluation (we’ll get to that later), it’s now $1 to N168.

Alright. I Get the Currency Part, But What Does Our External Reserves Have to Do with our Naira Value?

To explain this, we’ll have to look into what the External Reserves is and why it exists. Think of your External Reserves as a Savings account where you put some portion of your salary every month. That money gets saved for something later: paying your children’s university fees, buying a house, or importantly, in case things get bad in the future (perhaps you lose your job).

Likewise, countries keep these reserves, but mainly to safeguard the value of their domestic currency, boost their credit worthiness, protect against external shocks and provide a cushion for a rainy day when national revenue plummets. When Nigeria earns revenue from oil, it gets paid in dollars, so we simply stash a portion of the money in our reserves.

Moreover, the reserves of oil producing countries like Nigeria tend to benefit economically from higher oil prices. The higher the price of oil, the more money oil producing countries like Nigeria get to earn and save.

So if We Have an External Reserve, Why’re We Worried?

Well, having a bank account doesn’t mean you have money. We have a reserve, but our money no plenty. Nigeria has been dancing shoki with its reserves. When oil price was high, we apparently weren’t saving that much into our reserves. In fact, our reserves have been on a downward trend for years. We’ve been using our External Reserves to keep the value of Naira stable for months. When our currency appears to be falling, we take out some dollars from our external reserves and purchase Naira. Increased demand for Naira leads to increased value of Naira, and that’s how we stabilize our currency.

However, we sacrifice a portion of our External Reserves to pull this off. For instance, “while the central bank stepped in Nov. 7 to send the Naira to its biggest one-day gain in three years, intervening in the market has reduced foreign reserves to a four-month low of $37.8 billion.” In the last few months, even Russia with their large reserves had to devalue their currency by 23%.

So is This why Everyone Was Making Noise About CBN Devaluing the Naira?

Yes. Now there’s only so much spending from the reserves that the CBN can do, especially given that we’ve really sucked at growing our reserves when oil price was in the $100 range. It’s like when your office was paying you N100k, you were clubbing every weekend rather than saving some money. Then the minute your office decided to increase your income tax, that’s when your jobless relative comes to live with you too. So now, your salary is not only less, it’s burning faster cause there’s an extra mouth to feed.

The drop in oil price does not only send our currency downwards, it also makes it difficult for the CBN to defend our currency. It’s a double whammy. Essentially, if the CBN keeps trying to defend the rate at N150, it’ll burn through the reserves pretty fast and then we’ll be screwed. So relaxing this currency threshold to N168 means they can relax a bit. They don’t have to keep using as much of the reserves to prop up the Naira. If you’re still curious on how it all works, Feyi goes into the intricacies of devaluation in his fantastic post here.

Okayyy! I Think I Understand Now, But How Does This Affect Me?

Like many other economic events, devalution creates winners and losers. Let’s start with the losers. If you generate revenue in Naira and incur costs in dollars, this is a bad time for you. Any activity that has you converting Naira for Dollars will hurt you way more than a few months ago.

Let’s have a moment of silence for our Igbo brother who will be ‘importing containers’ this christmas. Life just got harder for them. Given that importers have to pay for their imported goods in dollars…and dollars just got more expensive, the cost of their goods have increased overnight.

Same thing happens to those tush parents who’ve got their kids in Nigerian schools that only accept their fees in dollars or Nigerians that have children schooling abroad. If you like flying, shopping or doing anything abroad, your cost of doing so has risen. On the contrary, if you earn in dollars and pay in Naira, life is looking pretty good at the moment.

Exporters also benefit. The fall in value of Naira means more exports because our exports have gotten cheaper. But ermm…what exactly are we exporting?

Phew. So It Doesn’t Affect Me Like That

Don’t be so sure. Nigeria’s an import-dependent nation, which means that most of what you purchase is produced abroad. I heard we import our toothpick too. If the prices of imports have risen, trust your Nigerian brothers and sisters to increase their prices too…leading to what’s popularly known as inflation.

I Was Hearing All These Oversabies Saying CRR, MPR. What Does This Mean?

CRR stands for Cash Reserve Ratio. It’s the proportion of what a bank can lend, to what it has in its coffers. So if the bank has N1000 and its ratio is 50%, can only use 50% of that money (N500) for business. Given that awon banks do not mess around with profit making, they will make sure that N500 brings back maximum profit. Banks are like the servant in Jesus’ parable that got 10 talents from his master, not the lazy one that got 1 talent. So to make max profit off the N500, they will raise interest rate if you want to borrow their money.

MPR stands for Monetary Policy Rate. The Central Bank uses the MPR to control base interest rate. The higher the rate, the less money in circulation. How? If interest rate is higher, will you borrow money from the bank knowing that you’ll pay much more later on? Nope. Instead, you’ll take your money from your pocket and give it to the bank, so they’ll make you more money.

Remember that thanks to devaluation, awon boys will be increasing prices left and right. General price increase in a given period leads to inflation. To tackle this, CBN increases CRR and MPR to reduce demand for money. This way, they prevent inflationary rise.

Okayy. I think I Understand That Part, So What’s This Austerity Thing Aunt Ngozi was Talking About?

That one is another long story. So, we’ve all been in situations when we’re broke. Ok, maybe just some of us. We adjust our lifestyle around the middle of the month when our salary hasn’t been paid. You go from eating jollof rice to drinking garri. When friends tell you to come out and party, you form ‘I’m very busy’.

Nigeria’s proposed austerity measures are similar…except on a grander scale. To cushion the effect of the falling crude oil prices, we have to cut back on spending and quite literally tighten our belts. The Government is cutting back on wastage (less government traveling and all that sort). The Government’s also raising taxes on luxury goods such as private jets, yachts and champagne. Somewhere in this luxury tax is the amusing observation that the revenue from taxes on the rich will still go back to the rich.

For the proletariat, the sweet subsidy you enjoy when you fuel your car will also get cut. Prepare to pay more for fuel. This is a good thing. Subsidy has to go anyways.

Wow. That was Long. So, Any Lesson to Learn from All This?

Yes. First lesson: Nigeria is the most reactive and least proactive nation you could’ve been born into. This isn’t the first time oil prices have fallen. Government should’ve gotten used to fluctuating oil price and prepared accordingly. And, since oil is the figurative oil in Nigeria’s economic engine, judicious and prudent management of oil revenue should’ve been practiced. However, we largely mismanaged our wealth during the time of booms and we’re now trying to behave ourselves in the time of slump. Let’s see how that goes.

The second lesson to be learnt is that we should’ve diversified our economic sources of revenue a long time ago to prevent price shock of primary products from affecting us drastically. Also, State Governments should’ve been pressured to increase their internally generated revenue much sooner. We can’t keep reacting to every economic shock that hits us.

Anyways, this is getting too long and no one probably got to the end, so no need for a witty or wise ending. But, if you reached this point, congrats! After spending all that time reading this, make sure you show off your new macroeconomic knowledge to your friends. And please, stop abusing econ-nerds. We have feelings too. Selah.

By

Chuba Ezekwesili

Chuba Ezekwesili currently works for the Nigerian Economic Summit Group (NESG) as a Research Aanalyst. He enjoys reading up on matters pertaining to Economics and is an avid technology geek with a belief that the intersection of both can create immense economic development. You can find him at @chubaezeks on Twitter.

If you have a piece you would like to people to read from ‘The Lectern’, send it in a mail titled ‘The Lectern’ to ojukwumartin@gmail.com. If you just know that you want to ‘be read’ but can’t figure out what subject matter to write about, no wahala. Send me an email too and we can work up something for you. We must write…that we might be read.

I am @ojukwu_martin on twitter

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5 SECRET TIPS HOW TO NOT BE A FRAUD’S-STAR.

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Fraud – internet/electronic fraud especially – is on the rise and that is only because many of us fall prey every day. Inspired by a recent experience, I shall in this post, spill the secret tips of how to not be – or be, depending on your birthstone – a fraud’s star.

Who is a fraud’s star? You don’t know?!!

sigh

Well, the story – which is totally unfounded by the way – goes that Casanova at the dawn of his philandering career lived in a mud house. A very old, broken down, mud house with the ever-dirty raffia sweep posing sentry just outside the door, beside the up-turned clay pot with broken rims and…you get the picture. The legend goes that a French princess from Serbia was on a voyage through Italy and spied Casanova’s hut from the window of her cabin. This princess had known sparkles, colors and light all her life, so she was completely enamored by the drabness of the man’s hut. So drawn was she that she had to see more, so she had her vessel parked beneath a tangelo grove and went on shore.

Casanova met her at the door. The rest of the story is a haze between that meeting and her eventual departure but it was said that before she left, she told Casanova to ask her for anything he desired and she would give it. He asked for a jewel to remember her by and she gave him her neck pendant.

After she left, he melted the golden pendant and formed it into the shape of a small star which he hung from a beam in his roof. And it became a way for him. At the closure of every conquest, Casanova took a piece of jewelry from the broken-hearted dame he was leaving behind – they always offered more but his calling was obviously not for pecuniary gains. He then melted the jewelry and formed it into a small star which he hung from his roof. Nobody knows how many conquests Casanova had in his lifetime but suffice it to say that years later, the ailing Casanova breathed his last beneath hundreds of shiny stars.

To this very day, that mud hut stands beside the tangelo tree on the southern bank of the Le Riviere Faux Pas in Venice, and Casanova-wannabes visit it to hang up the stars of their conquests. THE END.

Now you know what a fraud’s star is; if you still don’t, you need jizeees!

On to the secret tips then. These tips on how to not find yourself hanging from the roof beam of some fraudster’s mud hut are five in number but are meaningless if you do not remember to be wary of greed. Fraud preys on the intrinsic greed in every man and only when this is acknowledged, can the tips in this post come in handy.

What I received this morning was a text message which read:

“Your Line Have =N=30,000 Airtime with NCC. Just Because Your Sim is Register. To Load It Now. Logon To WWW.DATANCC.COM Your Code is 3232 You Have 2hrs Left”

Sender was ‘NCC-CARD’.

I bet you’re laughing now and thinking, “oh, who would fall for that?” and my answer would be you. Us. I can bet some of my hanging stars that had such a message popped into your phone prior to this blog post, your brain would have auto-transformed it so that to your eyes, it would have read:

“Congratulations!! Your line has won =N=30,000 airtime with NCC. To load it now, kindly log on to WWW.DATANCC.COME with the code number 3232”

But thank God for this post 🙂 , we now know to remember to not be greedy. Having remembered that, the first tip comes in

Tip #1. Nothing good in life is free – in real life at least.

Read it again, N.O.T.H.I.N.G. If it appears to be free, you have either paid for it, are paying for it, or will pay for it. Realizing and accepting this for what it is – fact – permits your brain to wander onto the next tip.

Tip #2: Locate the catch. Or the red flag.

Be careful not to confuse a red flag with a catch. In matters like this, there is always a catch. Always. Whether it’s genuine or fake – especially when it is genuine – there is a catch. Red flags however, only accompany the fakes.

The first thing you should do is search for the catch which in this case (had this been genuine) might have been a condition or a requirement of some sort which is the price for the ‘free’ gift. Next – and especially if you couldn’t find a catch – search out the red flag. The red flagS in my case were namely, the sender ID: NCC-CARD. No offense but who?

Another was the time restraint. “You Have 2hrs left” sounds more to me like, “We don’t want you taking any time to think about this, because then you’d find us out”. That and a third red flag prelude the next tip.

Tip #3: Think about it. No, really, THINK.

First, who or what does this NCC stand for?

Next, assume that it stands for Nigerian Communications Commission. If you were the manager for the PR or Sales or Free Airtime Distribution department at the commission, why would you want to reward subscribers for registering their sim cards? There could be some business sense in it for telecommunication companies but for you as the NCC, what?

Then, assume there is indeed some – however minuscule – business sense in running such a promo. How would you do it? How would you spread the information, first to the public and then to the winners? Of course, the commission wants to get maximum credit – pun fully intended – for the give-away so how would you make that happen?

I would love to read your answers as I’m sure will all be super creative. The one which you just might take for granted – because it shouldn’t be optional of course – in answering, would be assigning the task of informing winners to somebody with a above average grasp of the language used in communication. That is absolutely gbagaun-ist but I bet you agree.

Tip #4: Ask somebody.

It could be a friend who works in a related industry (in my case, the telecommunications industry), family, or good ol’ Google. Of course you will have yourself alone to blame if you go asking an ex whose heart you broke into pieces scattered all over Yaba cemetery. In asking, you will need to keep Tip #3 in mind so you don’t end up dangling as a star still, only from the roof of a different fraudster. In my case, I shared the text message – minus the four-digit code – with friends. NOBODY had heard of any such thing. If nobody you know, including Mr. Google, knows about it, and they know nobody who knows anything about it, chances are someone’s waiting to melt and form you into a star.

Tip #5: Test the water. With a long cane!

For those of us who are who are border-line optimistic or honestly, idealistic; whose minds will continue to resonate with the questions “So what?” and “What if I am the first?”; this last tip is for you. You still like to imagine that there is a chance it is genuine, right? Good, so let’s test it out. But while doing that, you want to keep yourself as insured as possible.

How? Still using my case as reference, here is an answer from my experienced friend in the telecomm industry: “Log into the site, should they require any details of yours besides your name and number (even the name is asking too much) get off”

Merely logging in was a risk; testing the water is a risk, even if you’re doing so with a long cane. Be aware of the magnitude of the risk you’re taking should you decide to press up to this point, and insure it as much as you can.

This is what happened after I took the risk…

 

I hope you noticed even more red flags. Still testing, I entered the pin:

3-2-3-2. ENTER

 

 

And I burst out laughing. I sent a reply too…

 

You can see it did not deliver; I must have hurt her feelings.

Do you have more tips to add or opinions on the tips above? We can’t wait to read them in the comments.

 

Mention me @ojukwu_martin on twitter

P.S. If you’re an EFCC official and you rushed onto this here page hoping to find a ‘big catch’, how disappointed you must be now tickles me black breaks my heart. The good news however is that I you read to the end so hopefully, you learnt a thing or two about how to catch the real fraudsters. Don’t forget to pass on my blog address to the Chief; we are on the same team after all. Besides, this blog could sure use some celebrity hits. Cheers 😉

ON TOP D MATTER: Weeks 11&12 of the National Confab

still on the matter…

It’s been another fortnight and in that time – as usual – plenty has happened. Find below a summary of the most relevant events:

1. Death. Again:

The National Confab has recorded two more deaths. First was Hajiya Maryamu Kutigi, wife of the chairman presiding over the Confab, Justice Idris Legbo Kutigi (rtd). She died at about 2am on Wednesday, the 28^th of May and was buried the next day according to Muslim rites.

At about 10am on Saturday, the 7^th of June in an Indian hospital, Prof. Mrs. Dora Akunyili followed. Prof. Mrs. Akunyili was the former NAFDAC boss whose dogged attitude on the job transformed the face of the food and drug administration agency; she was also Minister of Information and Communications from December 2008 to 2010 and was at the conference as a delegate with the Anambra contingent. In one of the earlier ON TOP D MATTER reports (see here) concerns had been raised over her emaciated physical appearance but the 59-year old professor of Pharmacy and Pharmacology allayed all fears stating that she was on her way to full recovery from ill health rather than the other way around. She was wrong though; reports filtering in suggest she lost to cervical cancer, a battle she had been fighting for nearly two years.

These deaths bring the death toll to three of confab delegates in less than three months since the commencement of the National Conference (see here for the other deaths). And this has raised concerns in different quarters of the country. Questions have begun to re-emerge with respect to the criteria that were used for validation of delegate nominations; two of the three deaths resulted from critical health situations which the victims had been diagnosed with before the Conference start date.

Since there were clearly no age limits, one would expect that there should have been screening procedures set up to discover ailing nominees. Surely such discoveries would have saved some of these invaluable lives. As is usually the case with ‘unimportant’ questions such as these, nobody is answering and we can only hope that in the few weeks left for the Confab to pack up we do not experience any more deaths.

 

2. SUBSIDY OR NOT:

On Tuesday, the 3^rd of June, the conference committee on public finance and revenue, chaired by Senator Adamu Aliero, recommended a total removal of subsidy on petroleum products, arguing that this had been a major financial burden the nation has been made to bear. The recommendation generated heated debate at the plenary and created sharp division among the delegates, who accused one another of vested interests.

However, when the recommendation was put to voice vote, delegates rejected total removal of the fuel subsidy.

The compromise was for a motion which mandated the government to meet the following requirements before attempting total removal of the subsidy:

• That the Federal Government shall, within a period of three years from the date, build new refineries and repair existing ones to full capacity utilization;
• That private sector entrepreneurs who have already been granted licenses to build new refineries shall, within a period of three years from date, build such new refineries, or automatically forfeit such licenses;
• That upon fulfillment of the preceding conditions, the Federal Government shall be free to remove any subsidy from petroleum products.

The delegates unanimously adopted this motion.

Proponents of total removal however continued to speak to reporters about their conviction that the nation was better off with the removal of the subsidy. Mrs Hauwa Shekarau, leader of Women Lawyers in Nigeria under the aegis of International Federation of Women Lawyer was one of such delegates. Referring to the existence of the subsidy as an appendage of the pervading rot in the country, she wondered “why those who in one breadth decry corruption would at another, defend or argue for the retention of a clear infrastructure of corruption”. I wonder too.

 

3. LABOR RECRUITMENT AND MINIMUM WAGE:

Delegates, on Thursday, the 5^th of June, unanimously rejected an amended recommendation of the Mrs. Ebele Okeke-led Committee on Public Service to jerk up the NGN18,000 minimum wage to NGN40,000. The decision was based on the reason that a review of workers’ salaries was unnecessary at the time.

The development came just as it recommended a complete ban on government ministries, departments and agencies from collecting application fees from applicants seeking employments into such organizations. This recommendation stemmed from the few months old Nigerian Immigration Service (NIS) recruitment exercise where many job seekers died and others injured in a stampede. The conference adopted a proposal for the setting up of recruitment centers in the states of the federation to look into issues of employment.

 

With just a little over a month to go, the National Confab gradually wraps up. That end however, is not looking as rosy as a few optimists – myself included – had envisioned it. While I pray for repose for the souls sadly fallen, I also pray for those still standing on the floor of that deliberation venue and the resolutions they will reach. So help us God.

Mention me on twitter @ojukwu_martin

ON TOP D MATTER: Weeks 9 & 10 of the National Confab

It’s been two weeks-plus since my last update ON TOP D MATTER of the ongoing National Conference and a lot has happened. WAW brings you recapitulated roll-call of events over the time since then…

1. NGN3 Trillion Security Allocation:

On the 19^th of May, Femi Falana, SAN, while contributing to a debate on the rescue of the abducted Chibok students, alleged that the government from 2010 to 2014, voted N3 trillion on security and expressed concern that nothing much has come out of it in the face of continued security challenges and ill- equipped nature of the country’s soldiers. He therefore urged his fellow delegates to demand that the government account for the manner in which this allocation was spent. His motion met stiff opposition from other delegates like Iyom Josephine Anenih, Chief Anayo Nnebe and Chief Mike Ahamba, SAN. No more was said on the proposed probe.

 

2. Dead delegates and Replacements:

The National Conference sitting in Abuja was on the 5^th of May, Monday hit by another sad news of the death of a delegate, Dr Mohammed Abubakar Jumare age 71, from Kaduna State. Dr Jumare who came to the Conference as an Elder Statesman died in the early hours of Monday in Abuja and was buried later in the day in Zaria. Until his death, he was Chairman of the Local Government Service Commission, Kaduna state. The confab you will remember had earlier lost retired police AIG Hamma Misau from Bauchi state.

Earlier on Tuesday, the 20^th, two new delegates emerged to replace the two deceased delegates. They are ex-AIG Ahmed Ibrahim Baba and Alhaji Sidi Amin, who were introduced to other delegates after the committees reconvened for plenary.

 

3. Extension By Four Weeks:

Vanguard reported that the Federal Government on Thursday, the 22^nd of May extended the National Conference by four weeks to make up for lost time occasioned by many public holidays and the hosting of the World Economic Forum on Africa (WEFA). With this, the conference will now end on July 17, 2014 and not on June 17, 2014 as was scheduled.

Chairman of the conference, Justice Idris Kutigi, announced this to delegates, saying that after a meeting with the Secretary to the Government of the Federation, Senator Anyim Pius Anyim, the Federal Government agreed to grant the conference four weeks extension. He revealed that the conference had applied for six weeks to enable it cover some lost grounds but was instead granted four weeks. Deliberating on the issues, the conference secretariat suggested that sittings should also be held on Saturdays and Sundays.

However, delegates rejected the idea and suggested that two hours of lunch time should be reduced to one hour. Again, that was not taken as the secretariat use the two hours lunch time to prepare minutes of proceedings of the conference.

 

4. Land:

The Land Tenure Matters and National Boundaries Committee has recommended the removal of the Land Use Act from the Constitution because its poor implementation has worsened land problems in the country.

According to the General A. B. Mamman-led committee, the new Constitution should give all Nigerians the right to have access to and own land irrespective of ethnic origin, class or gender as well as the right of communities to have land protected from human activities that would hinder or degrade the productivity of such land, through pollution and flooding.

It recommended the right of landowners to adequate compensation commensurate with current market value and social attributes of land in the event of acquisition by the government for public purpose, and that prior to government acquiring any land from any community, there must be compensation and when the government fails to use the land for a period of 10 years, it would forfeit the land and return it to the people.

 

5. 13% Derivation for Oil-producing states:

The issue of percentage derivation of oil proceeds is presently at 13% for oil-producing states but it wasn’t that way as at the time inner-caucus proceedings commenced. Delegates majorly from the Niger-Delta pushed for a 50% derivation against the 13% which was status quo. Their counterparts from the North sought to further reduce the 13% to 5%. After debates, a resolution was agreed upon, leaving the derivation as it was for oil-producing states – at 13%. What this means is that for all oil proceeds remitted to the Federal Government, 13% would first be paid to oil-producing states as derivation, a certain percentage to the Federal Government for administration and the remaining percentage shared equally among all states including the oil-producing ones.

Speaking with Sunday Vanguard on the 24^th of May, former governor of Akwa Ibom state, Obong Victor Attah who is the Co-Chairman, Committee on Devolution of Power, said the decision to retain the 13% derivation was taken to ensure that certain things were protected within the entity called Nigeria and to guard against what may lead to secession or further inflict wounds against the backdrop that the country was, at the moment, facing security challenges.

 

 

6. $1 Trillion for Niger-Delta Clean-up:

SOUTH-SOUTH delegates yesterday decried the harm wrought on Niger-Delta environment by oil exploitation and demanded $1trillion about N160 trillion to clean up the region and save the inhabitants. The demand came on a day that Elder statesman, Chief Edwin Kiagbodo Clark warned that Niger Delta might be wiped out without urgent clean up as delegates disagreed over the recommendations of the Committee on Environment.

Lamenting the untold hardship Niger Deltans living along the coastal lines face, he recalled that the United Nations had, in 2011, submitted a report to the Federal government stating that it would take 30 years and $20 billion to clean up the oil spills in the Niger Delta region. He said it was sad that it took the Federal Government two years to set up a committee to consider the report.

In her contribution, a Federal  Government delegate, Ms Annkio Briggs who urged the Federal Government to commence the process of clean-up of the Niger-Delta with initial budget of one trillion US Dollars,  stressed that what was happening in the region was destructive and caused by environmental pollution and degradation as a result of gas flaring and oil spillage.

 

7. Northern Bid to Scrap NDDC, Niger-Delta Ministry Fails:

Attempts by northern delegates to adopt a proposal for scrapping the Ministry of Niger Delta Affairs and the Niger Delta Development Commission, NDDC, hit a brick wall as delegates overwhelmingly opposed the proposal. The North, in a position submitted by Professor Aishatu Madawaki, a delegate from Sokoto State, said the existing ministry and agency were a duplication of the Federal Ministry of Environment, since they were performing similar functions.

They proposed that in a situation where the ministry and agency were allowed to remain, then a similar body be created equally for the northern region to take care of its soil erosion, desert encroachment, desertification and deforestation, among other issues in the region. But the proposal did not sail through as delegates opposed it.

Speculations are rife that the bid was born of the drawn-out debates over the 13% derivation paid to oil-producing states from oil proceeds.

 

 

8. Churches, Mosques Will Now Pay Tax:

DELEGATES at the on- going National Conference yesterday, the 27^th of May voted to enlist churches, mosques and religious organizations into the tax net. If the recommendations of the Conference sail through the National Assembly, leaders of religious bodies will be subjected to paying of tax like other Nigerians, business men, government organisations and enterprises.

The decision to make religious bodies pay taxes came up when a delegate representing Civil Organisations, Mallam Naseer Kura in his contribution to the debate on the report observed that religious leaders were making much money and should be taxed.

Also in his contribution, a delegate representing the Nigeria Guild of Editors, Isaac Ighure frowned at the situation where according to him pastors and heads of churches make too much money with some of them owning private jets. “Some people buy private jets when people in their churches are suffering and living in abject poverty, they should be made to pay taxes,” he submitted.

The delegates in their deliberation on the report of the committee on religion also voted that federal and state governments should stop the sponsorship of Islamic and Christian pilgrimages.

A move to scrap Islamic and Christian pilgrims’ boards however, led to an uproar which forced the conference leadership to move the vote on the issue to today, the 28th.

Delegates also rejected a motion for setting aside Fridays as free working days when the matter came up for voting.

 

 

9. Will Delegates Fast For Nigeria?

Earlier yesterday, a delegate, Prof. Yusuf Turaki had blamed both Northern political and religious leaders for allowing Boko Haram insurgents to fester in the region. Turaki, who spoke while making his contribution to the debate on the report of the conference Committee on Religion at the plenary on Tuesday, warned that Northern Nigeria is at the brinks of collapse and ruin solely on account of religious extremism, militancy, fanaticism and bigotry.

Also contributing, a delegate from Benue State, Senator Jack Tilley-Gyado, suggested that delegates should observe a three-day fast to seek the face of God concerning many sins being committed by those in authority, including past leaders some of whom he said were part of the ongoing conference.

“Please don’t serve lunch for three days” he implored, “We will achieve peace and those who are overweight will lose weight. We should go back and create the middle class. I know that no human beings can equal the Holly Books. But we are not reading them, we are not practicing them”.

 

Will the delegates go with this fast agenda?

Today and the next three days will tell…

 

 Mention me @ojukwu_martin on twirra

 

ON TOP D MATTER: Week 6 of the National Confab

The delegates at the National Confab have been on deliberations in the 20 committees they had been split into. Interesting news coming from tabloid reports inform me that Nigerians did in fact respond to the request by the National Conference Secretariat to send in memoranda embodying the different areas of life they wished committees to deliberate on.

 

The secretariat reportedly received a total of 319 memos; the breakdown according to an exclusive report by Saturday Vanguard is as follows:

Radical restructuring of the Nigerian polity – 70

Devolution of power – 42

Politics and Governance – 34

Citizenship, Immigration and Related matters – 23

Social Sector – 22

Political Parties and Election Matters – 20

Religion and Law – 15

Judiciary – 15

Human Rights/Legal Reforms – 15

National Security – 14

Environment – 10

Agriculture – 10

Trade and Investments – 10

Transportation – 5

Public Service – 5

Public Finance and Revenue – 5

Civil Society – 4

Foreign Affairs and Diaspora Matters – 4

Energy – 1

 

I do have a couple of questions for this week…

MY QUESTIONS:

1. Why is it that the broken down numbers of memoranda sum up to 324, 5 more than the reported total number of memoranda?

Surely with the rate at which authorities and media confuse numbers these days we all must now know the importance of carrying a pocket calculator!

2. And this one just occurred to me; are the delegates allowed to recommend a cut in the emoluments of government officials, or is that an untouchable?

 

Meanwhile, I was privy to a sneak-peak into the venue of one of the committees’ meetings. Two things were clear to me at the expiration of my peeping allowance:

1. Adults are not very much different from children as far as juvenile idiosyncrasies are concerned, and I mean this in the most grey-haired-loving way possible;

2. A lot of delegates seem unconvinced on the workability of a state police in the Nigeria of the near future. It remains to be seen if this skepticism extends to other matters or not.

 

 

ON TOP D MATTER: Week 5 of The National Confab

It’s been a really slow four-day weekend cum Easter holiday, and God forbid it pass by our delegates at the ongoing National Confab. They had adjourned proceedings at the end of Wednesday to enable them partake in the celebrations of the Easter season.

Last week ended in a consensus of sorts (thank resurrected Jesus!) for the first in a long time. The delegates had earlier deliberated on the composition of committees, committee work plans and the need for an extension to three weeks of the two weeks given to the committees to work.

Justice Kutigi, Conference Chairman however stuck to the existing work plan. He also shot down the attempts by some over-EGGcited delegates to extend the Easter-induced hiatus of the house. He ruled conclusively for deliberations to resume today, Tuesday, April 22. We expect the different committees, numbering about 20 in all, to resume meetings in the National Judicial Institute and halls of the Sheraton until the expiration of two weeks when the entire house will reconvene to review the committee submissions.

It is therefore with gratitude in our hearts and a heavy sense of loss in our stomachs, that we mourn the passing of the holidays and turn our binoculars once again, on the deliberations at the National Conference.

It is needless to mention that outside the walls of the Conference venue, patience is drawing thinner and thinner by the second. The write-up, reproduced below, of a Nigerian youth speaks volumes and all the angles of the present Nigerian (youthful) disposition to the Confab, a disposition Justice Kutigi and sons best be aware of:

 

My Experience & Contribution at the National Conference – Hemenseter Butu

Last night, I dreamt I was in the National Conference and I got tired of hearing delegates go on and on about seceding, division, unfair representation, etc so I stood up to speak. Hear me:

 

Good day Ladies and Gentlemen. Please lend me your ears for at least five minutes. I’ve heard all everyone has had to say and it’s becoming more and more deplorable. Hear me out this day so we can go back to finding a solution to our problems – assuming that is why we’re here.

I am a Nigerian youth, in my late twenties. I represent the largest set of the country’s demographic yet we are the least represented at this confab. Have we complained? Have our peers raised placards and threatened bloodshed? I must confess your generation doesn’t give us the respect we deserve, we have given you countless chances, Obasanjo was Head of State in 1976 and came back again as President in 1999. Muhammadu Buhari had his turn in 1983 and yet has also been given several chances to vie for President of the Republic. What have we to show for these chances we’ve given your generation over and over again? What has it benefited us? Yes, I’m talking about the young people who make up almost 70% of our population?

We’re sitting here whining over our allowances and allowances for aides, food and the lack of it. Talking about food, do you know hundreds of thousands of Nigerians go without a meal every other day? And I’m not talking about those currently being displaced by the numerous crises in the nation. They can’t complain like you are. They neither have the disposable income to afford it nor the voice to be heard, unlike most of us gathered here.

Before we talk and propose anything let us remember that 13 year old boy who’s dreaming about becoming an astronaut, not knowing there exists no infrastructure in Nigeria to support his dream. Let’s remember the young girl in Konduga who is waiting on her WAEC result only for her life to be cut short by Boko Haram. Let us not forget that uneducated boy who just wants to run his barber shop in peace but can’t because there isn’t electricity…ROUND THE COUNTRY, in 2014! *sigh* fuel is scarce and there aren’t realistically accessible loans for informal businesses like his.

Those are a few of the real issues my peers are currently facing. So please with all due respect to “Elder Statesmen” sitted here, spare me the “food didn’t get to me yesterday” talk.

My generation is growing weary of wasted chances, we hear of the millions of millionaires in Norway and we weep. We hear of the electoral reform strides in Ghana and we weep. We hear of the ranking of a Sudanese University above all varsities in Nigeria and we weep profusely, as I speak we are still weeping.

If this confab fails it will be towing the same path as every other thing in Nigeria over the years. Problems beget problems and we the youth offer another chance to be wasted yet again.

Is it not time to convert all this potential into energy? Is it not time to come together as a nation and forget about being Muslim or Christian, Efik or Tiv, Northerner or Southerner? Is it not time to force critical thinking out of every Nigerian? It is not time to do all it takes to get it right? Again I assumed that is why this National Conference was convened in the first place.

I am standing here, representing the largest constituency of Nigerians and instead of complaining I truly want to request, beg of you even, that this conference throw away all division and just get it right this one time.

 

By: Hemenseter Butu tweets via @HemButs

 

He who has eyes let him read and use his mouth to tell those who have ears alone.

Compliments of the season!

THE BRICKLAYER’S GUIDE TO UNDERSTANDING NIGERIA’S GDP REBASE

BY: CHUBA EZEKWESILI

If you’re reading this, then it means by some special power of tolerance, you’re not yet sick and tired of hearing about Nigeria’s rebasing. Kudos to you all. There’s been a lot of questions on what rebasing is and what it does for Nigeria. So here’s a simple – and perhaps condescending – explanation of what it is. I’ll skip most of the economic jargons and numbers and get to the implications.

Rebasing is carried out so that a nation’s GDP statistics give the most up-to-date picture of an economy as possible. It’s important because the GDP figure is a key determinant in estimating how much a country can afford to consume and how much it produces. Last time we did a rebase was 1990 and we all know Nigeria has certainly changed since then. Nigerian GDP now includes previously uncounted industries like telecoms, information technology, music, online sales, airlines, and film production, so Nigeria’s 2013 GDP is at $510 billion compared to the previous estimate of $264 billion. This figure now accounts for the ‘enlightening’ Nollywood movies you watch, the MTN credit you purchase and the horrid Arik flight you took. So what exactly does it change?

 

What Changes

Bragging Rights

The most obvious change is that we’ve surpassed South Africa to become Africa’s largest economy. So of course, trust Nigerians to brag about it. And of course, given that some chaps in the Nigerian government ‘no dey take last’, they’vechucked this astronomical rise in GDP to the administration’s transformation agenda. Given that it directly changes nothing for the average Nigerian, they could be more right about how it correlates with the transformation agenda than they realize.

 

Lower Debt to GDP Ratio

If a man now has more money in the bank compared to the amount he’s borrowed (Not actual money though: just money on paper), he has the freedom to borrow more money.  In Nigeria’s case, it should means the country can borrow more money to improve infrastructure. But then, is that what the money actually gets used for? Worse still, the temptation to borrow more and squander it might ironically take us back to the days where we had to pay our debts first rather than build schools, hospitals and roads. The good news is Dr Okonjo-Iweala said that the country won’t change its debt policy and borrow more. Let’s hope so.

 

Investor Confidence

Now that we’re the largest in Africa, perhaps investors will say “Ohhh! Nigeria’s large economy makes it a lovely place for greater returns on our investments”, so they’ll invest more. Well, they put more into investment decisions than that, but you get the point. If you don’t, then imagine that Nigeria is a man with a new set of nice clothes. Perhaps Nigeria now look more attractive and has a better chance of getting the ladies’ attention.

 

Foreign Financial Support 

Nigeria will lose access to a number of aid and fundings from international organizations, given that we’re now a ‘richer country’. So our funding might go to poorer countries that are seen to need it more than we do. For example, if people had the choice of giving charity to Dangote or giving it to me, they’d choose me, right? The worrisome thing in this case is that Nigeria is just me dressed as Dangote…without his money of course.

 

What Doesn’t Change

So here’s the more relevant news: none of the macroeconomic metrics that affects the average Nigerian man,woman or child changes. In Nigeria’s case, that sucks, cause we’re slacking on a number of the main economic issues that affects the masses.

 

Inflation Rate

Inflation is the sustained increase in general market prices of goods and services in a country over a period of time, usually a year. The amount of money in the economy affects this rate. Given that rebasing doesn’t add one kobo to the economy, the amount you paid for pure water doesn’t change today…neither did the amount of money I paid to jump a cramped sweaty Lagos bus to work today.

 

Unemployment Rate

Unemployment doesn’t need a definition. We see it everyday in Nigeria. So if you didn’t have a job yesterday, you still don’t have one today. It’s that simple. Well, except you have an interview and get an offer today.

 

Infrastructural Deficit

Rebasing does not improve Nigeria’s infrastructural failures. Despite the rebasing, I slept sweating and I woke up sweating thanks to the lack of power. We’re still behind in terms of power generation with only 4,000mw, while South Africa has about 40,000mw. In terms of roads, hospitals, schools and other infrastructural necessities, we’ve simply got a long way to go.

 

Your Bank Account

Check your bank account or check your wallet. Did you money double? Most likely not. So rebasing Nigeria’s GDP didn’t put money in anyone’s pocket. You might as well add another zero to the back of the figure on your bank statement. It still won’t increase the money in your account.

Some other things don’t change too, but it’ll be extraneous getting into these. So overall, the best way to understand the effect of Nigeria’s GDP rebasing is that nothing changes, but something changes. $20 billion is still missing and millions of unemployed Nigeria youths are still roaming the streets. Yes, you and I don’t get jack from the GDP rebase, but it assists policymakers in formulating more accurate decisions.  On the bright side, my ‘agege’ bread still costs N100. Let’s hope that never rebases.

 

Chuba Ezekwesili is a Research Analyst by profession. He blogs at http://www.naijanomics.wordpress.com