>>> Menas Focus 0 6 /15 Politically independent monthly news and analysis of strategic developments in Nigeria

Buhari faces insurgency, · Number 06 empty coffers, and

· Volume 16 partisan manoeuvres

The first month in power for President Muham- This would be a further recognition of Nigeria’s states such as South Africa and Kenya are more will be moving the military’s command and con- June 2 015 madu Buhari has been a whirlwind of summit central importance to US commercial and tendentious. trol centre to Borno State capital Maiduguri in meetings with world leaders, regional diplo- security interests in Africa. The fact that Obama order to demonstrate its determination to tackle macy, economic turmoil, tough negotiations made his first African visit as president to At the same time, Nigerians form one of the the Boko Haram insurgency at its source. with state governors, and gamesmanship within Ghana – not Nigeria – in 2009 still rankles with largest groups of economic migrants to Europe his own All Progressives Congress (APC). some top officials in . at a time when the migration issue is prompting The counter-insurgency effort political disarray. Buhari also diplomatically explained to his The scorecard is mixed so far. Buhari’s atten- For Western leaders, a reformed Nigeria is cen- regional counterparts that Nigeria wants to dance at the G8 meeting in Germany, hosted by tral to many of their policy imperatives in Africa. Buhari’s foreign policy strategy takes the form assume leadership of the multinational counter- Chancellor Angela Merkel, revealed the level of The trade and investment potential of the of concentric circles of priority: starting with the insurgency effort. Tensions have already sur- goodwill shown to his government by Western biggest economy on the continent is consider- region, then the continent, then the developing faced in this relationship – particularly between leaders. During the meeting, discussions started able, and its oil and gas resources make Nigeria world, and then global institutions such as the Nigeria and Chad – and Islamist insurgents are between Nigerian and US officials about an one of Africa’s top energy producers. As well, UN, World Bank, and IMF. With that in mind, he trying to exploit those strains by stepping up arrangement for President Barack Obama to resolving Nigeria’s security is key to tackling made his first foreign trips to Chad and Niger. terrorist operations in both countries. add a stopover in Nigeria to his planned trip to the crises in the wider Sahel region, and a cred- There he explained to Presidents Idriss Déby Kenya and Ethiopia in July. ible government in Abuja makes Nigeria a key Itno and Mahamadou Issoufou, respectively, After a suicide bomb in N’Djamena, the Chadian interlocutor because the West’s relations with how Nigeria is reordering its security policy. It air force announced it would be bombing >>>

Spotlight 1 Energy industry 2 5 Politics & society 6 Economy & finance 10

> Buhari faces insurgency, empty coffers, and > Corruption investigations mount > Oil spill compensation disputes > Senate and House leadership > Central Bank policy news partisan manoeuvres > Acquisitions news > Paying protection contracts > Buhari delays nominations > Banking sector scrutiny grows > Shuffles at the DPR > Oil theft in brief > Policy priorities > Falling oil revenue > Fuel crisis raises questions > governors clash > Tackling Boko Haram > PDP in opposition 2 www.menas.co.uk Nigeria Focus · June 2015 Spotlight Nigeria Focus >>> www.menas.co.uk [email protected] +44 Kingdom United 5HJ WC1B London Row31 Southampton Ltd Associates Menas © 2015 reserved rights All ISSN 1477-2426 Editor: Production Editor: Managing Director: Charles Gurdon staff Associates Menas by Produced only subscription by Sold taken asaresult of usingthepublication. appearing inthispublication orfrom any actionordecision loss), however itarises,resulting from the useof any material loss of profits, loss of businessorany indirect or consequential damage orloss(including,withoutlimitation, financialloss, by lawMenasAssociates Ltd shallhave noliabilityfor any responsible for inaccuracies. To thefullextent permissible Menas Associates Ltd cannot ensure against orbeheld Disclaimer publisher. any other means,withouttheexpress writtenconsent of the recording, taping,orbyinformation storage orretrieval, orby graphic, electronic ormechanical,includingphotocopying, resold inwholeorany part,orusedinany form orany means publication may bereproduced, repackaged, redistributed, the nameof MenasAssociates Ltd andassuchnopartof this All information contained inthispublication iscopyrighted in Copyright ( 0 ) Patrick Smith 20 3585 1401 3585 20

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1 Energy industry surprise that thegovernors hadnot voiced state salaryarrears. Thepresident expressed financial crisisandthepayment of federal and governors on23Juneto discussthe deepening that Buhariheldameeting withthe36state So depleted are the federal andstate treasuries reforms to oilandgas,thepower sector. of thenew government’s policies:particularlyits and regional securityissuesiscomplicating many The economic backdrop to high-level diplomacy Economic strains capacity to handleinformation technology. insurgency programmes and boost thearmy’s arriving soonto helpdevelop specialisedcounter- the military, with trainers from BritainandIndia over anextensive butgradual restructuring of defence inthecoming days. Heislikely to preside Dambazau, whoislikely to benamedminister of now former chief of army staff Abdulrahman Buhari’s key adviseronsecuritymatters is condition despitehaving afarsmallerbudget. when theNigerianmilitarywasinfarbetter sees theregion through theprism of the1980s, gents willtake many years. To someextent he held view that real successagainst theinsur- year. Hedoesnot accept the more commonly the Boko Haram insurgents decisively withinthe aspects of Buhari’spriorityof priorities:to defeat regional coordination onsecurityare evidently Resolving these issuesandensuringbetter Déby are linked to theinsurgents. that armssupplynetworks closeto President response from Abuja,whichhaslongclaimed in Nigeria.Thisprompted apredictably hostile Boko Haram encampments, someof whichare 2 Niger Delta and surrounded bylegaldisputes. collecting thosetaxes islikely to becomplex company andjoint-venture oilcompanies. But Nigerian LiquefiedNatural Gas( transfer fundsfrom thebacktaxes owed bythe governors want the federal government to funds to rescue thestate governments. The municipal andstate bondsissuanceto raise government embark onanew programme of Some of Buhari’sadvisersare suggesting the ment andcontracting. administrations, andoutright corrupt procure- allocations onwhiteelephant projects, bloated ing Buharifor abailouthadwasted previous and that many of thegovernors now petition- to both thefederal andstate governments, well know that financialmalfeasance extended Buhari wasbeingironic. Heandhisadvisers for thecurrent budgetary crisis. Jonathan administration, whichisbeingblamed financial malfeasance undertheGoodluck stronger concern aboutthelevel of federal >>>

5 www.menas.co.uk Politics & society NLNG) export ENERGY INDUSTRY ency Initiative (NEITI)iscallingfor Buhari The NigerianExtractive Industries Transpar- agreements. oil swaps, diesel subsidies, and strategic alliance Alison-Madueke, incontroversies suchascrude role of Jonathan’s minister, Diezani Investigations are alsobeingmadeinto the on 19June.Furtherinterviews are planned. Malabu received US$1.1 billion,at itsAbujaoffice petroleum minister DanEtete, whosecompany cial CrimesCommission (EFCC) questioned former being reviewed. Infact,theEconomic andFinan- The matter of MalabuOil&Gas andOPL245is and other oil companies to benefit. Iweala, allegedlyallowedSeplat indigenous Jonathan’s financeminister, Ngozi Okonjo- holidays, flaggedby former president Goodluck Nigerian Investment Promotion Commission tax be fullyinvestigated. leum Corporation ( gone missingfrom theNigerianNational Petro- oopers ( Lamido Sanusi,covered inaPricewaterhouseC - The claimbyformer Central Bankgovernor new. corruption investigations, someoldand Buhari’s tenure, theoilindustry facesseveral Only afew weeks into President Muhammadu mount investigations Corruption 6 PwC) forensic audit, that billionshave Economy & finance NNPC) finances still has to > >>> 10

3 www.menas.co.uk Nigeria Focus · June 2015 The EFCC isexamining swaptransactions OPAs Swaps and military andpoliticalofficials at thetime. and especiallytheirrelations withsenior Nigerian other seniorHalliburton officials inthescandal, much greater clarityontherole of Cheney and in thenew Nigerian administration want to see with asettlement of US$30million,someofficials down aNigerianprosecution against himin2010 Although Cheney’s lawyers were ableto shut unjustifiably inflated. plant construction contract, whichisregarded as paid several substantial bribesto secure thegas executive of whenthecompany the affair isreviving. Hewaschairandchief former vice-president DickCheney’s role in In theUS,politicalinterest intheprobe into the USDepartment of Justice. ruption andpaidsomeUS$2billioninfines to Corporation have pleadedguiltyto grand cor- Halliburton, LNG export plant isbeingrevived. Already An investigation into theUS$6billionBonny Cheney? about What plug thegapingholesinNigeriantreasury. Both of theseclaimedpayments could helpto government coffers. these shouldhave beenforwarded to federal oil andgascompany taxes. According to NEITI billion inunderassessment orunderpayment of posedly paidto theNNPCandat least US$7.5 Liquefied Natural Gas( billion –comprising US$11.6billioninNigerian to investigate anallegedlymissingUS$18 Spotlight Snamprogetti, NLNG) dividendssup- Technip , andJGC 1 Energy industry the Jonathan administration. politically connected, asameansto denigrate individuals involved assertthat theprobes are Niger DeltaOMLs.Someof thecompanies and ding for majorShell, (5%), whichwere majorplayers in2014bid- Tempo Energy Resources (10%)andTaleveras including of indigenousorNigerian-founded companies, The current investigation focuses ontherole based oiltraders, have addedto theintrigue. 2013 issue),whichimplicated largely Swiss- 2013 BerneDeclaration report (seeDecember between 2009and2012.Thefindings of the was lost to federal coffers from crudeoilswaps The NEITIclaimsthat at least US$500million companies are denying any wrongdoing. of theDepartment of State Security(DSS).Oil gained inprofile and attracted the attention members. Theinvestigation hassignificantly than andseniorPeoples Democratic Party (PDP) panies that somebelieve to have linksto Jona- between theNNPCandforeign oiltrading com- and offshore processing agreements (OPAs) claiming complete probity initsdealingswith on itsrole inNNPCcrudeoilswapsandOPAs, Earlier thismonth, Aiteoissuedastatement Aiteo issuesdenial servic Find outmr Email: rk fle Pr o xible, c vidng alysow ide r (85%) and its minority partners Aiteo (85%)anditsminoritypartners e fr e [email protected] om Menas: onmical, dtr , andTotal stakes in e abouthnwq ues 2 Niger Delta o.uk ange o ed t

US$150 millionasrumoured. of Alison-Madueke orJonathan, orthat itowes ‘directly orindirectly represented theinterests’ felt pressure to issueanexplicit denialthat it forced Aiteo’shand.Thecompany hasevidently The sensitivityof thematter may well have under itsarrangements. process to ensure noover- orunder-deliveries Duke Oilandiscompleting areconciliation swap andOPA arrangements withtheNNPC/ then announced,however, that itisendingits cargoes to theNNPCanditssubsidiaries.Aiteo denying March allegations that itowed upto 20 the NNPCanditssubsidiaryDuke Oiland as several officials from other oil companies such In facttheEFCC andDSShave questioned EFCC questions officials these arrangements. requested to refund US$115millionunder dismissed reports that thecompany hasbeen Duke Oil. officials have also explicitly agement andoperations agreement, alsowith with theNNPC/Duke Oiland aseparate man- denied allegations aboutitsswaparrangements businessman Taleveras, founded in2004byNigerian Talveras issuesdenial o eachindvul Sahara Energy, f s ta w tion-adsw tes inaw Igho Sanomi,hasalsothismonth 5 .menasc Ontario Oil&Gas,and Politics & society a o.uk y tha t. t is er >>> 34, 41,and42. the saleortransfer of stakes inOMLs4,26,39, ister onherallegedrole inaseparate matter: committee that appeared to exonerate themin- Representatives hasdismissedanadhocHouse under furtherscrutiny. Already, the Houseof the spotlight elsewhere, herrole isset to come Despite Alison-Madueke’s attempt to direct gas processing plant. set to changewithhisplansfor arefinery and building hisglobalcement company –thislooks has beenlow profile –hehas concentrated on Dangote’s involvement inoilandgasNigeria industry withaseniorBuhariaid.Although to have raised questions of probity intheoil Nigerian billionaire Aliko Dangote isreported or clarifytheswapandOPA arrangements. Buhari’s inauguration that theEFCC investigate appears to have requested intheweeks priorto Petroleum Minister Alison-Madueke, who Adding to theintrigue istheallegedrole of Alison-Madueke? about What reportedly beenconfiscated. ( and Petroleum Development Company ( various seniorofficials at theNNPC,Nigerian PPMC). Thepassportsof key oiltraders have 6 Petroleum Products Marketing Company Economy & finance ), NPDC), 10

4 www.menas.co.uk Nigeria Focus · June 2015 world’s biggest multinationals. indigenous industry orofficials of some of the they are leadersof thecountry’s fast-growing to have beenleft outof thescript: whether significant players intheoilindustry appear In thiswhirlof claimandcounter-claim, few Wale Tinubu’s gest that questions could bedirected towards stream operators. NigeriaFocus sources sug- deals andsubsidy-stealing marketers anddown- funds, includingbillionsof dollarsfrom oilblock are underinvestigation to recover allegedlylost It alsoappearsthat other oilandgasoperators Short waspresent. tional EITIchairandformer UKpoliticianClare at a17Junemeeting inAbujaat whichinterna- represented byVice-President Yemi Osinbajo the NEITI’snumerous recommendations. Hewas President Buharihasalsopledgedto implement Senate willfocus ontacklingNNPCcorruption. prioritising thePetroleum Industry Bill(PIB),the claimed earlierthismonth that, inadditionto on approach to theoilandgassector. Saraki State governor, , istakingahands- The new Senate president andformer Kwara Taking horns by the bull the been placedindetention orfacedarrest. of itsofficials orthose of itssubsidiarieshave Meanwhile, theNNPCdeniesreports that any Spotlight Politics &Security Nigeria Oando andForte Oil.

1 >>> Energy industry

minister, the soon-to-be-departing petroleum resources in delaying the OML83and85deal,until Petroleos’ court actionplayed asignificant role completed at apriceof over US$300million. OMLs 71and72.That salehasalsonow been also moved onShell, process commenced in2013,whenFirst E&P tion hasbeentypicalfor theindustry. The Otherwise, theprolonged nature of theacquisi- firm sufficient financing,whichitdenied. because Petroleos wasallegedlyunableto con- political andindustry influenceandnot merely over tion persists that First E&Pmay have prevailed for OMLs83and85around that time.Specula- sible whenChevron obtained licencerenewals pleted asearlyFebruary.Itwasmadepos- First E&Pclaimsthesalewasofficially com- million orso. OMLs ismodest byrecent standards, at US$70 Company ( First Exploration &Petroleum Development sale of stakes inOMLs83and85to indigenous OMLs 86and88.Itconfirmed last week its its 40%stakes inNigerDeltashallow water Chevron ismakingprogress onthesaleof participation continues. Nigerian operations andgreater indigenous ment of onshore (orshallow water at most) The trend of international oilcompany divest- First E&P purchases completed Acquisitions news Petroleos DeGeneve SA partlythanksto Diezani Alison-Madueke , finally First E&P).Thesalepricefor thetwo Total, andEnistakes in 2 Niger Delta consortium partner make itsplannedacquisition of MartResources , Midwestern Oil&Gasnow hasmore timeto Midwestern purchase The Buhariadministration’s focus on rooting out an even worse position. ( Nigerian National Petroleum Corporation to aflurry of score settling inthe DPRandthe extremely waryof allowing what could amount to follow dueprocess: hisaidessay heis wants allchangesinthestate oilbureaucracy President ginal oilfields–may beabout to change. of OMLsandtheprocess for allocation of mar- have often beenaccusedof holding up thesale Petroleum Resources (DPR)–whoseofficials The paceof areshuffle intheDepartment of DPR the at Shuffles madu Buhari’sinauguration. granted approval priorto President Muham- cause of thedelay. comment from MartandMidwestern asto the no later than10days after that. There islittle June to 16July, withfinancing to be completed an extension of itssecond deadlinefrom 15 Mart purchase was15March, hasjust received Midwestern, whosefirst deadline to agree the and therefore asignificant stake inOML18. nous a stake inOML18.News isemerging of indige- NNPC) that would leave thestate company in Sahara Group’s purchase of 40%inErotron Buhari hasmadeitclearthat he 5 of of Politics & society Erotron in thepurchase of

Madueke andothers. Petroleum Resources Minister DiezaniAlison- politically motivated blockingof dealsby a reduction inhorsetrading andtheallegedly of salesprocesses, perhapscounterbalancing corruption willnecessitate additionalscrutiny matters. and another inKaduna–has not helped refineries –two at , onein , The inefficiency of the four state-owned oil swapsystem –doesnot inspire confidence. rent fuelsubsidysystem bereplaced byacrude Association of Nigeria (IPMAN) –that thecur- including theIndependent Petroleum Marketers The suggestion earlierthismonth bymarketers, announcements to that effect. companies were affected, makingpublic such asbanks,airlines,andtelecommunications vidual consumers butalsomajororganisations or increased refining capacity.Not onlyindi- ment, intheabsenceof more severe sanctions leverage of marketers inthecurrent environ- tion, wasmarked. Itleaves nodoubt aboutthe drawing both domestic andinternational atten - The effect of thefuelcrisisoneconomy, debts to pay. around Buhari’s inauguration, hisgovernment has fuel marketers priorto President Muhammadu Following prolonged negotiations withNigeria’s questions raises crisis Fuel 6 ₦ Nigerian National Petroleum 200 billion (or US$1 billion) in legacy 200 billion(orUS$1billion)inlegacy Economy & finance > >>> 10 5 www.menas.co.uk Nigeria Focus · June 2015 have surely not beenforgotten. tests duringGoodluckJonathan’s administration eliminating subsidiesaltogether. The2012pro- might follow through onhispreference for It isunclearwhether orat what point Buhari hoarders andrevoke licencesof wrongdoers. ment of Petroleum Resources (DPR)target such Buhari’s 28May inauguration –that theDepart - The Senate requested –ontheday preceding and distributors hasbeendisrupting themarket. Others claimthat fuelhoarding bymarketers masses. that itwillmake fueltoo expensive for the (Pengassan) warnagainst suchamove, fearing Natural GasSeniorStaff Association of Nigeria while unionssuchasthemilitant Petroleum and Several groups want theircomplete removal, fuel subsidies. downstream sector decision:theabolitionof a day onsubsidies,Buharifacesanimportant has beenspending₦ With recent statistics revealing that Nigeria billion (US$753.8million)onsuchmaintenance. emerged that theNNPChadspent around ₦ resume operations inJuly.Earlierthisyear it maintenance, thePort Harcourt refinery will week that following completion of turnaround Corporation ( Spotlight >>> Consulting Risk Social Political and

NNPC) officials claimedlast 2 billion (US$10 million) 2 billion(US$10million)

1 Energy industry 150 150 NIGER DELTA protection contracts. Niger Deltamatters, includingthat of pipeline prompted reconsideration of past andon-going The changeinfederal government has contracts protection Paying similar appealbackin2011. decision. TheSupreme Court ruledagainst a to reverse theallegedlycorrupt appealscourt that they would filesuit at theSupreme Court Earlier thismonth Ijawcommunity leaderssaid subsequently awarded inFebruary2006. 2002 andaPort Harcourt federal highcourt had House of Representatives hadresolved inMay US$1.5 billionfor environmental damage,asthe hopes that theoilcompany would distribute of theSPDC.The2007decisionquashedIjaw more significant appeals court decisioninfavour resumed protests against animmeasurably Now, Ijawcommunities inBayelsa State have State oilspillpollution. first handeddown against itin1997 for Delta ( the judgement. The court dismissed the objection of has beendecidedbya5JuneSupreme Court communities andinternational oilcompanies The latest round of disputesbetween local compensation disputes spill Oil SPDC) to a₦ Shell Petroleum Development Company 30 million(US$151,000)award

2 Niger Delta

or cuttingoutthe participation of what the with aview to broadening participation and/ Others want Buhari to review pipelinecontracts Warnings from militants immediately followed. plans to invest heavily incurrent programmes. – thoughheindicated that hisadministration amnesty wasscheduledto endinDecember emphasised inhisinaugural speechthat the Niger Deltaamnesty programme, Buhari himself the president’s commitment to continuing the ment of Petroleum Resources, told delegates of Vienna meeting, JamilaShu’ara of theDepart- protection. While hisrepresentative at theOPEC tory statements onamnesty andpipeline Buhari hassofarissuedseeminglycontradic - wegian warships(seeDecember2014issue). its acquisitionof several decommissioned Nor- polo), wasat thecentre of a2014scandalover militant back in2012.GlobalWest, owned byformer for over US$100million,to GlobalWest Vessel tract granted byGoodluckJonathan , allegedly Corruption hasurged Buharito cancelacon- By contrast, the CivilSociety Network against tions of non-payment at Buharilast week. Pastor Ogun, andOndostates. Andformer militant chief the contract covers Bayelsa, Delta,Rivers, , ‘violate thelawof theland.’ Asari-Dokuboclaims contract allegedlyawarded inMarch rather than on Buharito pay outonapipelineprotection militant leaderMujahidAsari-Dokubo called . Inmid-June,former NigerDelta east–west road closeto itsterminusat Warri, held aprotest over non-payment alongthe On 4June,large numbersof former militants Reuben Wilsondirected similaraccusa - Government Ekpemupolo(aka Tom 5 Politics & society -

Progressives Congress (APC). spike inaregion generally hostile to theAll may have to compromise to avoid avandalism gas supplyto Nigerianpower stations, Buhari down significant oil exports butalsoin affecting Given therole of vandalism not onlyinshutting head calls‘badeggs.’ National Coalition of NigerDeltaEx-Agitators fight against thieves and pirates. with another illustration of thedangersof the parade of recently captured oilthieves contrasts Staff ViceAdmiral UsmanJibrin.TheNavy’s ments against oiltheft underChief of Naval Badeh haslaudedtheNigerianNavy’s achieve- Chief of Defence Staff AirChief Marshal Alex Navy the for Praise mence thisweek. in petroleum products, withthetrialset to com- charges related to improper storage anddealing vessel on27March. Thelatter group facesfour of petroleum products aboard theMTAsteris illegal dealingof over 3,400metric tonnes The former group facescharges over alleged Ukraine. defendants from Japan,theUK,Russia,and prosecuting several foreign nationals, including high court andat another Lagoshighcourt is citizens andfive Filipinos at aLagos federal (EFCC) last week arraigned four Bangladeshi The Economic andFinancialCrimesCommission face charges Foreigners brief in theft Oil 6 Economy & finance >>> 10

6 www.menas.co.uk Nigeria Focus · June 2015 Nyesom Wike of the Peoples Democratic Party DC. Moreover, recently inaugurated governor fraud, most recently during a tripto Washington, denied theseandother allegations of electoral Commission (INEC)headAttahiru Jegahasflatly Departing Independent National Electoral repeats allegations of vote rigging. fraudulent, asformer governor Rotimi Amaechi leaders still characterise therecent electionsas spectrum. Local AllProgressives Congress (APC) of politicalpartycontroversies across the Rivers State continues to beat thecentre clash governors State Rivers Akassa waterway on13June. fatally wounded anaval officer at theBrass/ at theendof May, andsuspectedpirate gunmen ers inKogi State’s Okene localgovernment area reported killedat thehandsof illegaloilbunker- Three policeofficers andonecivilian were Spotlight impairment inanother 10cases. is alsoblamedfor various degrees of visual and saleof thistraditional drink.Thedrink ing to astate prohibition ontheproduction from ingesting contaminated alcohol, lead- June that 70ormore residents have died ogogoro. Reports emerged inthemiddleof with theproduction of localgin,known as In Rivers State, problems have emerged homebrew Bad

1 Energy industry

limited state resources. between thetwo menthat could furtherdivert in what isfast becoming apersonalvendetta Amaechi, inreturn, accusesWike of aset-up, official Rivers State governor’s residence. Wike accusedAmaechiof stealing from the insult to injury, just days after hisinauguration, Court justice AdolphusKaribi-Whyte . Adding tion of ahospitalnamedafter former Supreme MW, andasizeable payment for the construc- support generation capacityexceeding 700 tiny includefour gasturbines,whichintheory commission headJustice George Omerije ’s scru- Assets andfinancialdealsfacingscrutiny by place underAmaechi’swatch. investigate anumberof asset salesthat took (PDP) hascreated ajudicialcommission to Ny Sahara Focus esom Wike 2 >>> Niger Delta

POLITICS &SOCIETY at whichBuhariwas to be present, butthe They hadbeenside-tracked byanAPCmeeting while themajorityof APCsenators were absent. leadership House and Senate candidates negotiations –were defeated byPDP-supported straw poll after prolonged regional zoning an AbujaInternational Conference Centre (ICC) Ahmed Lawan andAliNdume–selectedat To make matters worse, APCSenate choices members anddissenting APCmembers. the combined forces of PDPNational Assembly and Houseleadershipwere roundly defeated by meeting inBerlin, theAPCchoicesfor Senate On 9June,theday Buharireturned from theG7 at work. National Assembly, hispoliticalfixers were not get involved inleadershipelections inthe Buhari announcedfrom thestart that hewould Buhari to imposehiswritontheparty.Although of theAPCcoalition andtheapparent failure of For theopposition,itshows thefractiousness shot across thebow of thenew administration. Peoples Democratic Party (PDP)asanimportant Representatives isregarded bytheopposition for theleadershipof theSenate andHouseof show. Theembarrassment inflictedbyelections sives Congress (APC)coalition are starting to tenure, thefirst signs of strain intheAllProgres - Just weeks into President MuhammaduBuhari’s Bukola Saraki andIke Ekweremadu 5 Politics & society

Reports of anAPC plot to oust oreven bills through theSenate. automatic –ornearautomatic –passageof its Lawan andNdumewasto guarantee theparty attempt to ensure theAPC’s preferred ticket of agenda at every turn.Thewholepoint of the are unlikely to supporttheAPC-leadership When actingtogether, Saraki andEkweremadu as defacto president duringSaraki’s absence. ate leadership:thePDP’sEkweremadu willact There are alsosuggestions of abipartisanSen- to keep dissenters inline. the defeated Lawanas Senate majorityleader impose somedisciplineanditsideaisto install inflict defeat. Theruling partyisnow trying to with dissenting APCsenators thePDPcan Even withaSenate minority, whencombined intending to vote for Saraki. effect of theirinfluenceon other APCsenators senators were present, not accounting for the have ensured hisvictory even iftheabsent APC Senate’s 109seats. That would mathematically ported bythePDP, wasableto winover halfthe Saraki, whoisaffiliated withtheAPCbutsup- return of aone-partysystem. system, given that many hadpredicted the That may begood for thecountry’s multiparty south–south/Niger Deltarump,still hasteeth. diminished PDP, whichcriticsderidedasa The results inTable 1demonstrate that the inevitably followed. who allegedlycalledtheill-timedmeeting, have tion of APCnational chairJohnOdigieOyegun , president failedto show. Callsfor theresigna- 6 Economy & finance > >>> 10 7 www.menas.co.uk Nigeria Focus · June 2015 Although Lasun hasdismissedreports that heis of APCpressure. not resign asHouse deputyspeaker inthe face deputy, a counterbalance to Dogara’s influence. His amila asHousemajorityleader, thusproviding attempt to install thepreferred Femi Gbajabi- Speaker In theHouseof Representatives, elected criticism against himfrom therulingparty. governor Neither canitremove Central Bankof Nigeria lacks asufficient Senate majority to doso. an angryPDPresponse. TheAPCinany event impeach Ekweremadu have surfaced,prompting Spotlight Table 1: votes House and Senate

House of Representatives Deputy President President Senate

y Deputy Speaker Speaker

Yusuf Lasun,inturninsists that hewill Yakubu Dogara opposesanAPC Godwin Emefieledespiteatideof Winner R Bukola Saraki Candidate

Y akubu Dogara usuf Lasun 1 Energy industry South East PDP, EnuguState North Central APC, Kwara State Party andregion South West APC, OsunState North East APC, BauchiState wants himto stand down. governor andAPCgrandee BolaAhmedTinubu under fire, others claimthat former Lagos State other partybarons. For example, Saraki failedto That doesn’talways godown well with the to some effect. relationship withVice-President Yemi Osinbajo fighting a rear-guard actionandusing hisclose has lost some influence withinthepartybutis course of actioniscarriedout.Thissuggests he lacks thepower to insist that hisown favoured certain decisionsbeingmade,althoughoften he tant: hecertainlyhasenoughpower to stop Tinubu’s positionwithintheAPCremains impor- Power broker politics 2 runner-up Ali Ndume Ahmed Lawan Candidate

Mohammed Mogunu Femi Gbajabiamila Niger Delta

North East APC, BornoState North East APC, Y Party andregion North East APC, BornoState South West APC, LagosState into both themainparties andillustrate the Olusegun Obasanjo , whosetentacles reach Now Saraki hascourted former president by localAPCleadershipinSaraki’s Kwara State. although hispositionwasinturn lambasted Mohammed publiclylamented Saraki’s victory APC national publicitysecretary AlhajiLai personal rancour between thetwo men. new Senate president, suggesting continuing under theconstitution, hehasyet to meet the ate andHousecontests were validly conducted Although Buharipubliclyclaimedthat theSen- invitation from Osinbajorather thanBuhari. June becausehewasannoyed at receiving the attend theAPCsummitmeeting inAbujaon9 obe State 5 Politics & society including PDPbloc 54 to 20, senators absent with most of 59APC 57, including49PDP, V 203 to 153 PDP members APC dissent and125 collaboration between 182 to 174,enabled otes

be away of life for Nigerianpoliticians. Rotimi Amaechi.Party defections canseemto the PDPsuchasformer Rivers State governor includes several high-profile defectors from Peoples Party (ANPP)amongothers, theAPC Congress of Nigeria(ACN) andtheAllNigeria Even whileincorporating theformer Action presidential candidacycontest. was oneof Buhari’srivals inthe2014APC to beafavourite of Atiku Abubakar , who parties. Itisalsonotable that Saraki isthought mainly bypower brokers rather thanbypolitical It alsosupportstheview that Nigeriaisrun continuing influence of former militaryleaders. budgets of the majority of the36 states. billion (US$653 million), isgreater thanthe budget of theNational Assembly, at ₦ Recent statistics indicate that theofficial 2015 coffers. matters suchasstate allocations from federal Commission, whichalsodealswithweighty sibility of theRevenue Mobilisation andFiscal National Assemblyallowances are the respon- national economic recovery, whilestating that Dogara hasurged Nigerians to assist the Industry Bill(PIB)willbehisfirst priority. suggested that the much-delayed Petroleum allowances to National Assemblymembersand growing controversy over thescaleof financial by theUKgovernment, hasboth downplayed a election. Saraki, whowaspromptly congratulated Saraki andDogara have beenvocal sincetheir Despite APCdispleasure at theirelection,both up speak New leaders 6 Economy & finance 130 130 >>> 10 8 www.menas.co.uk Nigeria Focus · June 2015 advisers, which the Senate promptly approved. the Senate to allow himto appoint 15unnamed At thebeginningof themonth, Buhariasked new older-but-wiserBuhari. while spokesperson Femi Adesinatalksupthe 40-year-old militaryheadof state inthe1980s, that at 72 hehas‘lesscapacity’thandidasa transmission of handover notes. Healsosays (PDP) transition teamdeliberately delayed the members of thePeoples Democratic Party Buhari himselfclaimsthat un-cooperative with theintensive lobbyingfor jobsinAbuja. his distaste for partisanpoliticsandfrustration bureaucratic reticence; others putitdown to lists’ have been circulating. Some talk of Buhari’s announcements speculation and‘alternative much debate, andintheabsenceof ministerial The delay inappointments hasprompted needed institutional andpolicyreforms. acquiescence ashetriesto pushthrough much- so that hecaninturncount ontheirsupportor satisfies hisparty’sfactionsand power brokers, Buhari facespractical constraints inensuringhe enjoy lessinfluencethanithad expected. the AllProgressives Congress (APC)willnow firmed bytheSenate, aninstitution over which announced them,they willstill have to becon- make hisministerial selections.Oncehehas failure of President MuhammaduBuharito The maininstitutional hold-upinJunewasthe nominations delays Buhari Spotlight 1 Energy industry former president UmaruYar’Adua . Kurfi, thePDP-affiliated economic adviser to governor Babatunde Fashola; former Ekiti State Rotimi Amaechi;former Lagos State governor Probable ministerial appointees are as follows: aftermath of theSenate andHousedefeats. the management of therulingpartyin the and APCnational chairJohnOyegun to discuss Obasanjo seriously.Buharihasmet withAtiku Tinubu, andeven former president Olusegun of power brokers Atiku Abubakar, Insiders claimthat Buhariistakingtheopinions Possible appointments likely to beamajorobstacle to policyreform. concern isthat bureaucratic dysfunctionality is agement andstructure of thecivilservice.His considering afar-reaching shake-up intheman- expected to remain, Buhariisapparently Furthermore, while19federal ministries are sent areduction from current levels. specified inits constitution. This would repre- sented intheFederal Executive Council as That meanseachof thestates willberepre- of states. a combined 36ministers –equalto thenumber ministers andafurther17ministers of state for 1979, hasrecommended that Buhariselect19 tee chairAhmedJoda,whoinserved thisrole in before theendof June.APCtransition commit - announce aslimmed-down list of appointments Current speculation isstill that Buhariwill new administration of the shape The Kayode Fayemi; andevenTanimu

2 Niger Delta Bola Ahmed Bola Ahmed well underway. propose theright deputyminister isalready decisions. Local andinternational lobbyingto on onlythebiggest policyandcontractual with thejobwhilehehimselfretains oversight to dealwiththemountain of detail that goes a very technicallysavvy deputyoilminister A possiblescenarioisthat Buhariwillappoint controversial minister. cated that thepresident studiously avoided the one bound BritishAirways flight on21May. Indeed, to Alison-Madueke whenthey met onaLondon- There wasnocertainlysignthat Buhariwarmed Diezani Alison-Madueke. revenues left bydepartingpetroleum minister legacy of disputeddealsandclaimsof missing have to dealwithmassesof detail, given the be consumed bydetail. Y and ethical character of thegovernment thanto dent, more concerned to set theparameters Buhari issaidbyallto bea‘bigpicture’ presi- The problem withthat interpretation isthat Petroleum Corporation ( agement structure at theNigerianNational institutional reforms inleaguewithanew man- realm, permittinghimto pushthrough the is that thiswilltake thejoboutof thepolitical himself aspetroleum minister. Hisjustification Insiders say that Buhariislikely to appoint Politics &Security East Africa Nigeria Focus source ontheaircraft indi - 5 Politics & society

et theoilminister will NNPC). >>>

the Code of Conduct Bureau (CCB). bajo’s declarations are beingkept confidential by versy over why hisandVice-President Yemi Osin- declare theirassets contrast with growing contro - inauguration suggestion that allministers publicly be harmedbycharges of hypocrisy. Hispre- for what could benumerous investigations could On corruption, Buhari’sprogress andhis support Introducing transparency suppliers. to satisfy electricitycompany debts to gas ments bytheCentral Bankof Nigeria(CBN) made to disgruntled fuelmarketers andpay - these claimswould exceed recent payments months, settlement of asubstantial amount of With somestates facingarrears of over six holding amere US$2billionorso. for example, theExcess CrudeAccount (ECA) calls to settle state salariesarrears despite, presidential villaon23June,where hefaced Buhari met withstate governors at theAbuja debts anddiminishedrevenues. and combined meetings to discussstate-level Democratic Party (PDP),whohave held separate influential governors, both APCand Peoples overshadowed byincreasing pressure from His broader economic plansare already being arrears state Settling Congress (APC). Muhammadu BuhariandtheAllProgressives Boko Haram remain key prioritiesfor President On thepolicyfront, corruption, theeconomy and priorities Policy 6 Economy & finance >>> 10 9 www.menas.co.uk Nigeria Focus · June 2015 indicated that hewilllook into thereport, itis of the Prosecutor. Although Buharihassince findings are taken seriously bytheICC Office would probably besupportedeven if Amnesty’s figures inthefight against Boko Haram and Air Chief MarshalAlex Badehare both key Lieutenant-General presidential inauguration. in Abuja’sDefence Housetheweek after the meeting with Buhariandother securitychiefs responsibility’ includeat least two of those should beinvestigated for ‘potential command Other namedindividualsAmnesty believes advances against Boko Haram inBornoState. Division, whichhasplayed amajorrole inrecent torture’ includecommanders of thearmy’s 7th crimes of ‘murder, enforced disappearance, and believes shouldfacedirect investigation for war Specifically namedindividualsthat Amnesty past decade. of 7,000ormore inmilitarycustody over the 1,200 extrajudicial executions andthedeaths were indirectly responsible for approximately that seniormilitaryofficers eitherdirected or Blood onTheirHands.TheJunereport alleges International’s agenda, given allegations contained inAmnesty The topic of warcrimesmay alsobeonBuhari’s Addressing war crimes they donot permittheirassets to bepublicised. vent furthercriticismof Buhari andOsinbajoif from releasing thisinformation. That will not pre - indicated that federal privacy lawsprevent it society group Stop ImpunityNigeria,theCCB In response to arequest on1Junefrom civil Spotlight Stars onTheirShoulders – Kenneth Minimah and 1 Energy industry of 2011allegations. Abubakar. Hedismissedthereport asa‘rehash’ allegations viaitsadministration chief, Adamu The militaryhasalsoresponded to Amnesty’s a teamtaken directly from themilitary. that protects thepresidency isto bereplaced by the Department of State Servicesstrike force State capitalMaiduguriwasaccepted. Aswell, move itscommand andcontrol centre to Borno by thespeedwithwhichhisrequest that it Buhari’s closenessto themilitaryisillustrated military officers. publicly acknowledge wrongdoing bysenior similarly unlikely that hisadministration will not obscure thebroader strategic significance in N’Djamena.This jockeying for position does in response to unprecedented suicidebombings bombed Boko Haram basesin Nigerianterritory these focused over whether Chadhadinfact ments between ChadandNigeria.Inmid-June, That acquiescencehasnot prevented disagree- regional allies. Nigerian, even ifhisdeputyalternates between task force (MJTF) bepermanently headedbya fully demandedthat thenew multinational joint eroon, Chad,andNigeron11Junehesuccess- meeting with hiscounterparts from Benin,Cam- shows of support. At thesametime,when and accepted international assistance and Muhammadu Buharihasincreasingly courted In theeffort to defeat Boko Haram , President Tackling Boko Haram 2 Niger Delta Further evidence of cooperation between and Nigeriaisseento beincreasing. operations innorthernAfrica, eastern Africa, IS influence over other terrorist andinsurgent fatalities causedduring2014.Thiscomes as Haram outdid theIslamicState ( of State terrorism report andrankings, Boko According to thejust-released USDepartment Nigerians deemedanembarrassing revelation. assistance might beneeded–in what many the World Economic Forum inAbujathat US Jonathan acknowledged around thetimeof This comes alittleover ayear after Goodluck welcomed. and intelligence assistance are likely to be advisers, andadditionalUKpledgesof training million to theMJTF, aUSpledgeof military recent Berlinsummit,aUSdonation of US$5 Pledges of supportfrom G7leadersduringthe to neighbouringcountries. of theexport of suicidebombingbyBoko Haram Buhari demandedthat thenewmultinational joint task force (MJTF) bepermanentl 5 Politics & society IS) group in bomber thought to beresponsible for a bangida, Y attacks, killedinsurgents at MaiduguriandBab- In return, Nigerian troops claimto have blocked Adamawa State. groups’ mediastrategy. although for now itappearsfocused onthe Boko Haram andIShasalsobecome apparent, Borno State; Potiskum inY guno, Alagarno,Gubio,Musari,andMaiduguriin attacks, generally leadingto fatalities, inMon- legion. They includebombingsandfirearms actors believed to beBoko Haram have been Attacks over the past month byBoko Haram or among other targets. Nigerian churches were attacked byinsurgents, operations. Duringlast year’s Ramadanseveral Ramadan isunlikely to affect Boko Haram’s worldwide shouldmaintain peaceduring publicity assistant GarbaShehu,that Muslims Buhari’s statement, issuedlast week byspecial violence in let-up No 6 Economy & finance obe State, andcaptured asuspected y headedb obe State; and Y y aNigerian > >>> ola in ola in 10 10 www.menas.co.uk Nigeria Focus · June 2015 gations, may presage additionalinvestigations state governors, alongwithoil industry investi- Financial CrimesCommission (EFCC) into former Persistent investigations bytheEconomic and political landscape–withlittleevident success. cratic Party (PDP)attempt to adjust to anew administration have seenthePeoples Demo- The first few weeks of MuhammaduBuhari’s PDP in opposition to fight. important, thantroops’ occasionalunwillingness onry, andcoordination are asimportant, ormore Buhari may soondetermine that training, weap- Given therelative successof Chadianforces, forces inSambisaforest. ence’ duringattempts to root out Boko Haram were dismissedfor alleged‘failure’ and‘disobedi- soldiers from ’s Rukubabarracks Ogun State’s Alamalabarracks andaround 200 days later, bycontrast, 40ormore soldiersfrom one week priorto Buhari’sinauguration. Just acquitted of allegedweapons supplynegligence Brigade commander Victor Ebhaleme was investigations into cowardice andmutiny. leadership willhave onon-goinginternal military It remains to beseenwhat impactBuhari’s mutiny and cowardice Investigating border. gents at towns closeto theNigeria–Cameroon forces claimto have killedhundreds of insur- major bombinginGombeState in2014.Chadian Spotlight 1 Energy industry for lobbyingonhisbehalf. ment abouthisappointment, thankingthe latter Okonjo-Iweala, andBuhariina31May state- gratitude to Jonathan, FinanceMinister Ngozi ( president of theAfrican Development Bank Development Minister Akinwumi Adesina,as one of hisappointees, Agriculture andRural Jonathan hasat least seentheelectionof that shedoesnot desire thetitleof First Lady. wife isheightened bythelatter’s insistence between herpublicprofile andthat of Buhari’s politics. Regardless of hyperbole, the contrast supporters to refrain from intervening instate Bayelsa State, to encourage his wife andher Elders, hasasked Jonathan, whooriginates from One group, callingitselfConcerned Bayelsa party divisions. lady president between Governor Seriake, former Dickson nated states, includingBayelsa, where tension national scene,tensionspersist inPDP-domi- Quite apartfrom theparty’sdeclineon into ministers of theprevious administration. Seriake Dickson AfDB). Adesina diplomatically meted out Patience Jonathan are reflected inlocal Goodluck Jonathan, andformer first 2 Niger Delta

ECONOMY &FINANCE policy news policy Central Bank expect the CBNto introduce amore flexible harmonised CRR unlikely for now. Somealso interest rate reductions orreductions inthe remain relatively tight intheshortterm,with Most now expect CBNmonetary policyto but alsoweaken thenaira. argues themeasure willreduce interest rates Lagos-based Bismarck Rewane , managingdirector of the increased domestic liquidity. hazard’ favouring private-sector depositsand harmonisation hasmerely removed a‘moral of private-sector deposits.Othersclaimthat and reduce therelative attractiveness to banks some suggesting that itcould harmthesector Reaction to theharmonisation hasbeenmixed, basis point corridor. policy interest rate at 13%withinthe+/–200 (MPC) meeting, they alsoagreed to maintain the At the18–19May Monetary Policy Committee 20%, respectively. 31%. Previously, theratios were set at 75%and private-sector cashreserve ratios (CRRs)at by theirdecisionto harmonisethepublic-and Emefiele andbankofficials surprisedmany Central Bankof Nigeria(CBN)governor Godwin C private and public Harmonising Financial Derivatives Company, 5 RR Politics & society s s

to supplyanddemand. the currency’s value to fluctuate more according – albeitnot fullyfloating –naira regime, allowing slow thedepletion of slightly over US$29 from accessing foreign exchange inorder to Nigerian importers(includingrice importers) this year. TheCBNmay yet, for example, block were introduced bytheCBN inlate 2014and exchange trading andnet forex holdingsthat include various restrictions onbankforeign relaxation of foreign exchange rules,which sions withNigerianbanksaboutthepotential At thetimeof writing,theCBNwasin discus- exchangeForeign rules confidence. policies, other developments could derail CBN madu Buhariconfirms hiseconomic teamand potentially reassured oncePresident Muham- will ensue.Whilemany willwaitandsee,being that capitalinflows from reassured investors the official market and the parallel market, and enjoying aperiodof relative stability inboth to bebacked bythebelief that thenaira is accompanying itsMPCpolicydecision–appears prospects –set forth intheCBNcommuniqué Confidence inNigeria’spost-election economic responsible for theuptick last month. of delayed rains onagricultural production were tors suchastherecent fuelcrisisandtheeffect although theNBSbelieves that reversible fac- monetary policy.Inflation may yet increase, target. Thisreduces thelikelihood of loosened top endof theCBN6–9% inflation corridor Bureau of Statistics (NBS)have hit9%–the May inflation figures releasedbythe National I nflation figures nflation 6 Economy & finance > >>> 10 11 www.menas.co.uk Nigeria Focus · June 2015 prosecution inthe IbadanFederal High Court by number of private-sector employees are facing suspended backinOctober 2014.They anda executives basedat Ibadan,Oyo State, were According to a1JuneCBNpress release, tion’ protocol. from circulation undertheCBN’s‘cashdestruc- billion (US$40.2million)that wasto beremoved alleged miscreants allegedly kept at least ₦ Ecobank, andFirst Bankof Nigeria( private-sector banks–includingSterling Bank, officials andthose at, ordealingwith, various growing scandalover currency fraud byCBN Proactive CBNactionisalsoreflecteda in fraud Currency avoid thisadverse eventuality. according to Emefiele,willdoitsutmost to government to become apparent. TheCBN, market implications of thechangeinNigerian approximately sixmonths, partlyto allow the JPMorgan appearsto bedelaying itsdecisionfor renewed downward pressure onthenaira. could leadto investment outflows –and even foreign exchange market doesnot improve and again warned,may occurifliquidityinNigeria’s Removal of Nigerianbonds,asJPMorgan has mark index purchase bondsaccordingly. as thosefollowing oreven tracking thebench- bolsters foreign portfolio investment inNigeria, market bondsindex. Inclusionof Nigerianbonds the influential JPMorgan GMI-EMemerging At stake istheinclusionof Nigerianbondsin and to bolster domestic riceproduction. billion inNigerianforeign exchange reserves Spotlight 1 ). The FBN). The Energy industry 8 being seento root outcorruption, especially CBN leadership may bemore concerned by been underminingmonetary policy. that more widespread currency fraud could have minor inthegrand scheme, analysts speculate While thesumsinvolved are sofarrelatively Ayo Emmanuel. (EFCC). Thecasesare presided over byJustice the Economic andFinancialCrimesCommission Lamido S and business people. and businesspeople. regional network of modernisingofficials allow Blackstone to tapinto hisextensive ibility andtechnicalcapability.Itwillalso to Blackstone given Sanusi’spoliticalcred - This move islikely to beof great benefit group to headitsAfrica infrastructure fund. the influential Blackstone private-equity Kano Former CBNgovernor andcurrent emirof fund infrastructure Africa Heading the Lamido Sanusihasbeenhired by anusi 2 Niger Delta from 1July. Nigerian bankscreate specialisedfraud desks corruption efforts isa12Junedirective that leadership change.Supplementing theseanti- Emefiele andhisteam to encourage aCBN (APC) could useany corruption engulfing given fears that theAllProgressives Congress These beneficiaries includePan Ocean and linked to thebank’s non-executive directors. companies, someof thebeneficiariesbeing indigenous billion) in2013and2014loans extended by These includethealmost ₦ mined for evidence of questionable exposures. and for thefull2014financial year, hasbeen cial releases inrecent months, for both 2015Q1 this perception. Moreover, a host of bankfinan- banks are inrudehealthhasdonelittleto alter ance Corporation ( A mid-Junestatement byNigeriaDepositInsur- the finances of theoilandgassector. both federal andstate accounts inNigeriaand oil production –continues to feed through into target amidprojections of increased USshale June, to lower its30millionb/doilproduction OPEC at its167thmeeting, inViennaon5 tained bytherefusal of theSaudi-dominated sistence of low international oilprices–main- sector inthewake of politicalchange.Theper- deepening asanalysts take afresh lookat the Debate aboutthehealthof Nigeria’sbanksis scrutiny grows sector Banking Skye Bankto oil, gas,andpower 5 NDIC) officials that Nigerian Politics & society 450 billion (US$2.3 450 billion(US$2.3

from aninstitution awarding nosuchdegree. master of businessadministration qualification revelations that shehadimproperly claimeda was dismissedinFebruary2014 following Nigeria aviation minister ,who lion) of improper vehicle purchases byformer loans allowing over ₦ a Lagoscourt to discloseinformation onalleged versial matter, FCNhasalsobeenrequested by On anunrelated matter butpotentially contro- lion) inoilandgasloansduring20132014. extended anadditional₦ cials, andaccording to itsfinancial statements it deemed ‘systematically important’ byCBNoffi- Unlike Skye Bank, FBNisamongthebanks among others. improperly transferred NNPCequityto Atlantic, year, theNNPCdeniedallegations that ithad be investigated byBuhari’sadministration. Last opment Company ( ( the dependent onanunreliable agreement with Atlantic Energy, according to RenCap, isoverly Energy asamajorbankingsector concern. of Skye BankandFBNto indigenousAtlantic lighted theaggregate US$500millionexposure Renaissance Capital( These includetheemerging markets bank assuage theconcerns of more forensic analysts. Ayeni to reassure investors have donelittleto The efforts of Skye BankchairOlatunde with two non-upstream operators. Newcross Exploration andProduction , along >>> NNPC) subsidiaryNigerianPetroleum Devel- 6 Nigerian National Petroleum Corporation Economy & finance NPDC), whichinturncould 250 million(US$1.3mil- RenCap), whichhashigh- 1.46 trillion(US$7.3bil- 10 12 www.menas.co.uk Nigeria Focus · June 2015 debts itacquired duringitspriorbailoutbutthat recovered orregained over halftheimpaired Chike-Obi claimsnot onlythat AMCON has they are unlikely to benefit from another bailout. Nigerian banksstart sinkinginstormy waters, Chike-Obi just priorto Buhari’sinauguration, if of Nigeria( According to Asset Management Corporation profitability. executive order could cutinto banking-sector tax exemptions granted byaDecember2011 like banktaxrates andthereversal of various VAT rate, butRenCap believes low-hanging fruit mended, for example, that Buharidoublethe minister, Former president GoodluckJonathan ’s finance changes seekingto increase federal revenues. Adding to thesepotential woes could bepolicy gone unpaid. disgruntled fuelmarketers that subsidieshave Buhari’s administration dismissestheclaimsof an increase indownstream NPLspossibleif partially protected byoilpricehedges,with appear likely even thoughmany banksare Both increased upstream andmidstream NPLs classification. restructure oil-sector loansto avoid official NPL reality that banksare restructuring andwill modest singledigits,doesnot reflect the loan (NPL)statistics, thepercentage inthe RenCap believes that official non-performing Spotlight Ngozi Okonjo-Iweala, hasrecom- AMCON) chief executive Mustafa 1 Energy industry by New Y which wassoldto Skye despite 2014claims bailed outbyAMCON, Mainstreet Bank, restructured successorof oneof thebanks Skye Bankisinany event still digesting the withstand asubsequent storm. Nigerian banksare asaresult better ableto Skye’s executives. would not escapeNigerianpolicymakers or restructured bankbeinginturnrestructured sums. Theirony of theacquirer of anAMCON- former shareholders were still owed significant the budget underfurtherpressure. royalties, and other revenue sources, thisplaces 2014. Withoutacompensating increase intaxes, 30% lessthanduringtheequivalent quarterin trillion (US$14billion).That isapproximately and liquefiedbutane,wasslightly over ₦ exports, suchasLNG,LPG, 2015Q1 revenue take from crudeoilandother tics (NBS)indicate that thefederal government’s Recent data from theNational Bureau of Statis- cratic Party (PDP)–affiliated state governors. gress (APC)andboth APCandPeoples Demo - find adherents amongtheAllProgressives Con- others have left theeconomy indire straits will Goodluck Jonathan, Buhari andVice-President Yemi Osinbajothat Recent claimsbyboth President Muhammadu Falling revenue oil ork fundIntangis that itandother Ngozi Okonjo-Iweala , and visit ourwebsite 2 Niger Delta 2.8 2.8

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that augmenting private-sector investment in held duringBuhari’sfirst week in office, stated annual meeting inCalabar, Cross Rivers State, Industries, Mines,andAgriculture (NACCIMA) Nigerian Association of Chambersof Commerce, diversification. His representative at the Already, Buhariischampioningeconomic der budget riches. improve onadownside story rather thansquan- APC economic teamwithanopportunityto Buhari, Osinbajo,andthestill-to-be-confirmed ruptive impactof thefuelcrisisat least presents Okonjo-Iweala’s diminishedlegacyandthedis- import inputs,isanother matter. smaller Nigerianbusinessesdependent on be thecasefor multinationals, andparticularly if beneficialinthelongerterm.Whether thiswill through, at timescausingshort-term woes even others –often takes several months to feed discussions withCitigroup economists, among The fulleffect of devaluations –according to local cost of imports. part exacerbated bythenaira’s declineandits experienced asignificant fallinnet income in claimed strong 2014full-year profits, thelatter While theformer remains optimistic andhas fering recent experiences. as ‘consumer’ story, international corporates such exports and,reflecting thehealth of Nigeria’s Other statistics show weakness onkey non-oil www.menas.co.uk PZ CussonsandUnilever have discloseddif- 5 Politics & society Nigerian growth andborrowing strategy. which willhave longer-termimplications for the reduced recurrent expenditures suchassalaries, capital expenditures rather thanmore modestly disproportionate impactof 2015budget cutson It alsonotes, asdoother analysts, the Nigeria’s ‘heavily exposed’ bankingsector. depreciation/devaluation andlow oilpriceson June report warnsof the effect of currency the World BankGlobalEconomic Prospects for sub-Saharan Africa overall. Like RenCap, will have ameasurable impacton2015growth example, believes lower Nigerian 2015 growth growth continue to fall.TheWorld Bank,for Nigeria’s debt ratio, estimates of 2015GDP While having minimalmathematical impacton government revenues. when servicingcosts are compared with modest portionof GDP–albeitmore significant Fortunately for NigeriaandBuhari,debt isstill a increasing cost of government debt. uncertainty appearto be thekey drivers of the although inflation fears andtheJPMorgan index that investors are demandingonNigerianbonds, is partlyreflected intheincreased interest rates ment’s abilityto meet Nigeria’sspendingneeds and Senate approval. Concerns over hisgovern- Jonathan inlate May following earlierHouse 2015 federal budget that wasapproved by In themeantime, histeamwillscrutinisethe the agriculture value chainisakey priority. 6 Economy & finance 10