Amalgamation Day in Lagos, 1914

Amalgamation Day in Lagos, 1914

28 October, 2010

The plot thins ....

Yesterday, I gave the SSS some credit for acting on a tipoff to search the contents of a shipping container at Apapa Port. The container turned out to be full of heavy weapons being smuggled into Nigeria.

Today, Business Day reports the container has been sitting at the Port since July 10, some 3.75 months ago.

Apparently the Nigerian Customs Service blocked clearance of the container because its paperwork was incomplete and rather obviously forged.

It has been there for nearly 4 months. Whatever evidence trail the authorities could have picked up has probably long gone cold. And while I know Nigerians are used to waiting forever for their containers to load, I am going to guess whoever "owned" these weapons has long since given up hope of getting them, and may even have imported a replacement batch through one of the other porous borders.

If there was even the slightest chance that the "owners" were still planning on coming back for it, the publicity surrounding the discovery has more or less killed it. It would have been interesting if we had had the sort of security agencies that could have given the "owners" the illusion that their container had been freed for clearance, only to then follow the goods back to whoever sent for them, before arresting a Big Fish whow can be leveraged to provide information on even bigger fish.

Alas, we have found some guns and rocket launchers that have been sitting at Apapa Port for four months ... and that is about all we will get out of it.

It does beg the question: Who tipped them off?

I don't want the person's identity revealed. I just wonder if it is someone with more information (and if so, is there any way we can get at that information without blowing the informant's cover) or if it was just a dock worker who had seen the container sitting for four months and thought to open it, perhaps to take a little of whatever was inside (in which case we are still stuck at Square One).

27 October, 2010

Man bites dog: Score one for the SSS



The State Security Service (SSS) is the successor agency to the old National Security Organization (NSO). Like its predecessor, the SSS has established a reputation for intimidating, suppressing and oppressing the public on behalf of whichever illegitimate, undemocratic or unconstitutional government happens to be in office at the time. Also like the NSO, the SSS has been a serial failure at its actual, constitutional function, that of using intelligence-gathering and investigation to forestall threats to public security.

As such, Nigerian citizens were surprised to discover earlier today that the SSS can actually do its job when it sets its mind to it. Working with other agencies, the SSS yesterday intercepted 13 containers laden with arms and ammunition including rocket launchers, catridges and hand grenades at the A P Moller Terminals in Apapa port.

No, the bust wasn't the result of an SSS investigation, or of SSS infiltration of the smuggling syndicates. The agency, according to the Vanguard report, was "acting on a tipoff".

I would like to thank whoever it was that gave them that tipoff. And I would like to thank the SSS for actually acting on the information.

This reminds me of an essay I wrote before the 2003 "Elections". I complained that there were too many armed groups in the country, and that the weaponry wielded by such groups was growing ever more sophisticated by the day. I wasn't talking strictly about "outlaw" organizations or the small private armies of various politicians; my fears applied just as much to the "vigilance" militia that were (at the time) sprouting up all over the country, supposedly to protect citizens from armed criminals in place of the ineffective police.

The "vigilante" groups were invariably mono-ethnic or mono-religious, some not extending beyond the local communities that could (and did) sometimes clash over land ownership and/or chieftaincy disputes. Among the larger outfits, the OPC and Hisbah clashed with resident citizens from other ethnicities or religions (if the OPC was set up to fight crime, why did it intervene in the Afonja vs Alimi chieftaincy dispute?). Then there were the militia that were mysteriously attached to particular politicians (including the Bakassi Boys and the groups that metamorphosed over time to become the so-called Niger Delta "militants).

Disturbingly, hundreds of citizens were executed without trial by these vigilantes, particularly by the Bakassi Boys and similar outfits in the Southeast. We Nigerians know all about the extra-judicial executions carried out by the Nigerian Police Force, and we are rightly suspicious of the excuses they routinely trot out after mysterious police-related killings. What is strange is so many commentators and citizens were will to believe the Bakassi Boys or OPC when they trotted out the same ridiculous excuses to explain away their own killings of citizens. As for the Hisbah, while I am a religious man, I tend to be suspicious of individuals and groups who insist their actions, whatever they do, and whoever the do it to, are on the instructions of the Almighty. Human beings are human beings, and every action of a human being is subject to question; it is blasphemous to try to shut down legitimate criticism by claiming anyone who disagrees with you is disagreeing with God. You are not God. You are man. And I can disagree with anything you do.

But I digress.

The point of my essay, written before 2003, was that we were on a path, and if we continued on that path, bad things would happen. I asked that people learn from history. I asked that they study every African country that collapsed into violent anarchy. It never happened all at once. It was always a slow, steady buildup. I asked them to look at what was happening in Nigeria, and to look at what had happened in other African countries, and see if they could not see the same disturbing signs that I did.

Just one commentator responded. He said I was a "nihilist". Which was amusing. People are funny that way. An ex-classmate once called me a "bleeding heart liberal". Another commentator responded to an essay of mine by calling me a "rabid neo-conservative". People who ignore what you wrote or said, and busy themselves with dismissing you by use of negative labels, are usually people with nothing of value to say.

There are still a lot of armed groups in Nigeria. There is still too much in the way of sophisticated weaponry floating around in the hands of these groups. As I type this, a mysterious group which may or may not be Boko Haram has been assassinating police officials in Borno, Bauchi and elsewhere in the Northeast. And just four weeks ago, Nigeria was shocked by the Independence Day bomb blasts; seriously, if someone had told you in 2003 that we would see terrorist-style car bombs at Eagle Square on Independence Day, would you have believe them?

Don't misunderstand me.

I am not predicting imminent doom.

My issue is there is a pattern, an environment that is slowly taking shape, and (as with most things) we seem to be ignoring it, in the hope that it will resolve itself and go away. Maybe we don't even see it around us.

Yesterday, the SSS (acting on a tipoff) came upon evidence that someone or some group is importing heavy weaponry. Whoever it is, this is likely not their first shipment. If Nigeria were a square, we'd have three porous land borders (subject to weapons smuggling among other ills) and one porous coastline (from which oil bunkerers have shipped crude from the Delta to ships waiting off the Nigerian coast for years, and we've all seen the pictures of heavily armed "militants" in the Delta).

It seems to me that at some point before 2003 (probably years before), and continuing till today, we've lost control of the amounts of weapons that get shipped illegally into Nigeria, and have watched unconcerned as the numbers of armed groups have multiplied. Today, our president insults us by talking about MEND as though there is a "good MEND" and a "bad MEND", when it is his job to ensure there is "no MEND".

Below is a pictorial sample of a few of the weapons surrendered to the government a year ago by the faction of MEND led by "General Boyloaf" (Victor Ben Ebikabowei). His was not the only faction of "MEND", and other factions did not participate in that particular amnesty. Even so, the BBC took one look at the quality (or lack thereof) of the "rusted" guns and "mildewed" camouflage turned in by "Boyloaf's" faction, and raised the question of whether they had just turned in their worn-out materiel, saving their still-functional arsenal in a hidden cache somewhere. There is no way to know; "Boyloaf" like most of the "militant" commanders, has connections to senior politicians in the Niger-Delta and Abuja.

Still, take a look at what kind of weapons people are smuggling into Nigeria.




PS: I do not own the copyright to these pictures. No infringement is intended.

26 October, 2010

Cholera spreads

Alarming report from NEXT on the spread of the cholera outbreak.

For background, see earlier posts from a month+ ago, here and here.

11 October, 2010

Interview with future AMCON boss

NEXT interviews Asset Management Company of Nigeria's Managing Director-designate Mustafa Chike Obi.

Not that I blame him (AMCON is still gestating and has yet to be born), but the interview is long on generalizations and short on specifics. I still support AMCON as a concept, while worring that the reality will turn into a blank cheque transfer for funds from the government treasury to the banks.

08 October, 2010

Today's News

A strong editorial from NEXT complains that the government and opposition are both being dishonest and disingenuous regarding the October 1 Abuja bomb blasts. NEXT regrets that both sides have politicized the issue (as indicated in this Daily Trust report, opposition politicians have demanded Jonathan's resignation, and asked the National Assembly to impeach him if he doesn't resign). NEXT's editorial demands honesty from the president, less flame-fanning from the opposition, and a credible investigation.

Business Day talks to sources about the on-going forensic audit of the Nigerian Stock Exchange. The audit may raise questions about the role of the NSE’s External Auditors, Messrs Akintola Williams Deloitte ... which is interesting, since the current, interim Director-General of the NSE was only recently the chairman and CEO of Akintola Williams Delloite, for West and Central Africa.

And This Day quotes the leader of the "Niger-Delta Peoples Volunteer Force" (another crude oil bunkering, election-rigging "militia") Mujahid Asari-Dokubo blaming Henry Okah exclusively for the October 1 bomb attack in Abuja, while accusing the Nigerian intelligence and security agencies of ignoring the warning he (Dokubo) gave them before the event. Asari-Dokubo further says Henry Okah hates Goodluck Jonathan, that Jonathan was the target of Henry Okah's attacks, and insists Okah is saying the Jonathan administration attempted to get him (Okah) to participate in a cover-up of MEND involvement in order to embarass the Jonathan administration because (again) Okah hates Jonathan.

Henry Okah is a criminal, and lacks credibility. With that said, Mujahid Asari-Dokubo is also a criminal, and also lacks credibility. The various militia groups in the Niger-Delta have frequently gone to war with each other on behalf of different politicians, and sometimes (like most organized crime syndicates) for control of lucrative territory for criminal enterprise (go to the Human Rights Watch website, they have many reports about the violence in the Niger-Delta). Asari-Dokubo indirectly admits in the article that he and Henry Okah are currently enemies, which makes his statements lose even more credibility; the fact that he is clearly currying favour with the government (something he also did under the preceding Obasanjo and Yar'Adua regimes) lowers the already nonexistent credibility even further.

The politicians and their underworld cronies are still playing silly games. Whatever "leads" investigators may have had have probably gone cold by now. The Nigerian Police Force is bad at preventing the contamination of crime scenes, bold-facedly lies to the public about how, why and when suspects in detention died, and has a tendency of arresting innocent people and locking them away for years claiming them to be guilty of a crime (or related by blood to someone they claim is guilty of a crime) with this conviction-by-police-fiat never adequately tested in any court. As for the "intelligence" agencies, the only thing they are good at is harassing the political opponents of whoever/whatever is the government of the day.

It is getting to a point where we may never know who carried out the Abuja Bombing. Like so many other such events (including the murder of Dele Giwa) it may become a thing that everyone spreads rumours and suspicions about, but no one knows for sure.

07 October, 2010

Incoherent lords of Spin

I don't know who perpetrated the Independence Day bomb blasts. Maybe MEND is not guilty as the president claims, but that has nothing to do with a president clearly foreclosing (i.e. blocking) any credible investigation of the mere possibility that MEND could in fact be guilty.

The Federal Executive continues to act as MEND's defender-in-chief while simultaneously insisting it is not doing so. In this article from NEXT, the presidential spokesman is quoted saying that rushing to convict MEND in the court of public opinion could compromise the investigation if the security agencies only focused on the MEND angle.

This actually makes sense, and if this was what the president said, I would not have criticized him. However, this is NOT what the president said. Goodluck Jonathan said MEND did not do it, and (worse) said he knew MEND did not do it because he is from the Niger-Delta and he knows the people of the Niger-Delta would not do it because they like the government and know that doing it would compromise the government's support of the Niger-Delta ...

... which makes absolutely no sense whatsoever. As I said in my initial reaction, it is both dangerous and stupid to equate the actions of a specific militia group, MEND, with the thoughts and actions of the millions of Nigerian citizens of Niger-Delta heritage.

The assumption that the actions of five army majors reflected the decisions of an entire ethnic group was the source of much bloodshed in the 1960s. Likewise, towns like Odi and Zaki-Biam have paid the penalty for similar assumptions of collective guilt. The British colonial regime was also a practitioner of collective punishment.

Jonathan showed himself to be much like his predecessors (in both the post-colonial and colonial eras) who had a tragic tendency to impute the actions of a few to their entire ethnic, religious or regional group.

Let me digress for a moment.

No one elected any of the organizations that claim to speak on behalf of Nigerian ethno-cultural communities. No one elected Ohaneze or Igboezue, Afenifere or the Yoruba Council of Elders, the Arewa Consultative Forum or the Northern Political Leaders Forum. No one voted for MASSOB, MEND, Boko Haram or the OPC.

These are all self-selected groups of like-minded individuals, who insist their private thoughts are the thoughts of entire regions of Nigeria.

Meanwhile, we can never hold a credible election because the political class (these pressure groups inclusive) is scared to put their ideas (or lack thereof) to free, fair, substantively democratic tests. Even the supposedly "free and fair" elections of June 1993 were manipulated from start to finish by the Babangida regime; the regime created the parties it wanted, and engineered the nominations of the candidates it wanted.

It is astonishing to see so many people claim to speak on behalf of groups of Nigerians when in fact Nigerians as a whole have never had the chance to express what we really think about issues.

Elections (in theory) are not simply about picking one man over another; if both men offer credible, but varying solutions to specific problems, our votes would be the indicator of which of the policy options we prefer. But aside from the lack of democracy, our politics are a policy vaccuum; no substantive issue is ever debated or decided. Heck, we are still struggling with issues that first reared their heads in the 1950s, and which we have made no effort to resolve till today. You cannot distinguish two politicians or two parties on issues like electricity and reform of the Nigerian Police Force; you do not even know what their position on the issues are, probably because they have no positions on the issues.

But back to the topic.

The presidential spokesman went on to say:

“(The president) thus considered it a gratuitous insult for anyone to claim that it was done by MEND, or had anything to do with the Niger Delta. This is even more so, he said, since government was in touch with the leadership of MEND (all of whom had renounced violence), and they all agree that the organisation had nothing to do with the blasts.


A"gratuitous insult"? to whom? To MEND? To the president? Or (worst of all) to the Niger-Delta?

MEND has been using explosives to blow up pipelines in the Niger-Delta for years. They have also attacked and killed soldiers, policemen and civilians (the Human Rights Watch website has copious information on their attacks).

MEND launched an explosive attack on the city of Lagos.

MEND planted explosive devices outside a Vanguard-sponsored post-Amnesty conference in Warri. And just like the Independence Day blasts, MEND issued a warning before the explosives went off. Again, just like in Abuja on the 1st of October, the authorities in Warri did not react to MEND's warning.

None of the above facts proves that MEND was behind the Independence Day blasts. But at the very least, it is not "a gratuitous insult" for anyone to suspect MEND ...

... and that is without even considering the fact that MEND gave warning of the Abuja Independence Day bomb blasts, and accepted responsibility immediately after the bombs went off (same as happened after the Warri and Lagos attacks).

So, why is it a "gratuitous insult" to suspect MEND?

Perhaps it is a "gratuitous insult" to the president? Why should it be? Why does he identify himself with MEND? Human Rights Watch has gathered a lot of data about the connections between local and national politicians and the various "militant" factions in the Niger-Delta. The presidential spokesman said the government had been in touch with various leaders of MEND, and Jonathan invited a group of them to Abuja as part of his campaign to assure the country MEND was not involved. On a different day, we can discuss the appropriateness of these connections, but even if we take it as it is, President Jonathan's remarks become even more unfortunate. All he did was draw the attention of everyone in Nigeria to the fact that he has a positive opinion of MEND ... which means, as I have said in previous blog posts, that any outcome to the investigation that exonerates MEND will be immediately subject to conspiracy theories, even if the outcome is factually correct.

You can't talk like this, and act like this, if you are the President of the Federal Republic of Nigeria. At least pretend.

For goodness sakes, there are enough people in Nigeria who blame entire religious, ethnic and regional groups for the actions of a few individuals. Our country has been wracked with "communal violence" for years, testament to the fact that our political leaders have failed to rally us past these self-defeating internal prejudices.

The first duty of a Nigerian president in the aftermath of an event like the Abuja blasts is to insist that all citizens focus their anger only on the guilty parties, and then assure the public that you will catch those guilty parties, whoever they are. I have no idea why President Jonathan thinks it is a good idea to continue tying MEND to the Niger-Delta, much less why he is acting as though he is their defence lawyer.

The president's spokesman say they were in contact with leaders of MEND, and the leaders of MEND said they didn't do it.

Wow.

Gee.

The leaders of MEND said "We didn't do it," so the government concludes there is no reason to investigate?

This is the stupidest thing they have said to date.

You are supposed to investigate, and come up with hard evidence to either confirm their protestations of innocence or to expose them for having perjured themselves!!!

Haba!

President Jonathan's position would not make sense even if ex-MEND leader Henry Okah's accusation had never been made or had been disproved instantly. Even so, you don't have to believe Okah (I don't believe any of them) to know Jonathan's exoneration of MEND has no evidentiary foundation.

Jonathan is exposing himself to the accusation he is conducting a politically-biased investigation designed to come to a politically favourable conclusion from the president's perspective. The government has cast a shadow of suspicion on Jonathan's poltical opponents, especially former dictator Ibrahim Babangida (who is the chief suspect in the 1980s bombing death of journalist Dele Giwa). Even if Babangida was guilty,the way the President has gone about things opens vast space for Babangida's campaign to accuse him of using the tragedy as a political tool.

I don't understand it. Who is advising the President? Or are these incoherent, self-defeating interventions all the president's ideas?

06 October, 2010

The Return of Regional Banking

In better news, Wema Bank has asked the Central Bank of Nigeria for, and received permission to, give up its "national" banking license and apply instead for a "regional" banking license.

Sanusi's predecessor as CBN Governor, Professor Charles Soludo, raised the minimum capital requirements of Nigerian banks from =N=2 billion to =N=25 billion in 2004, giving banks were given until the end of 2005 to comply. The consequent forced mergers-and-acquisitions have collectively come to be known as the "banking consolidation", which left the federal republic with 25 banks (now 24), down from an initial 89.

Soludo planned to raise the minimum capital requirements again, to force a second round of consolidation, aiming to create (via consolidation) Nigerian banks (plural) the size of South Africa's "Big Four" banks.

The consolidation process was a good idea, and in spite of the later collapse in the financial and equity markets under his watch (his closeness to President Obasanjo, and to the powerful banking barons and other plutocrats who supported the Obasanjo clouded his judgment), the consolidation alone guarantees Charles Soludo's tenure will be remembered mostly positively. I am not being sarcastic or snarky; the bad stuff will pass and be forgotten, while the positive effects of the consolidation will be with us for a long time, probably forever.

Mind you, too much of a good thing can be bad. I would love us to have banks as big as South Africa's Big Four, but I didn't think continued rounds of forced consolidation was the best way to achieve it.

The total assets of the biggest South African bank (which is also Africa's biggest bank) are equivalent to 80% of the assets of the entire Nigerian banking industry.

The total assets of the fourth largest South African bank is equivalent to 50% of the assets of the entire Nigerian banking industry.

In order to use consolidation to build Nigerian banks of similar size, we would have to consolidate everything together into two banks.

I don't know about that.

There are between 100 million and 150 million Nigerian citizens. For all the talk about the Big Four, South Africa, with a population of 50 million (between half and one-third of ours) has more than four banks ... way more than four banks.

It is like electricity. The South Africans produce 40,000 megawatts, and it is insufficient for them. Regardless of the magnitude of production, the Nigerian electrical distribution grid seems capable of carrying only 4,000 megawatts (one-tenth of the South African total) at any given time.

It is good to raise electricity tariffs (same as it is good to raise capital requirements for banks), but the goal should be to increase the number of firms generating and distributing electricity, not to lower demand (through price increases) until there is only 4,000 MW of demand, matching the 4,000 MW of supply.

We shouldn't be trying to live down to our too-small economy, but looking instead to expand each element, each unit of that economy.

If our economy grows X% a year, every year, and each of our banks also grows by X% a year (or better), then over a number of years, the biggest four (or eight) Nigerian banks will organically and sustainably reach the size of the Big Four South Africans. But they will not be the only Nigerian banks, much like the Big Four South Africans are not South Africa's only banks.

I know that is a colloquial explanation, lacking the "isms" and "misms" of economics textbooks ... but this is a blog, not a dissertation.

Early in his tenure, the current CBN Governor, Sanusi Lamido Sanusi, appeared to agree with Soludo, insofar as both men believed another round of consolidation was in order. Sanusi came into office suggesting 15 banks might survive a second round of consolidation, and hinted he thought 15 was an ideal number of banks for Nigeria. Interestingly, this Reuters article suggests 9 of 24 extant banks received bailout funding, and that these 9 banks will be the prime target of the Asset Management Company being set up to take over non-performing loans (a.k.a. "toxic assets") in the banking industry. The inference is 15 banks are healthy enough not to need substantial bailouts or AMCON relief.

Sanusi Lamido Sanusi has been accused of harbouring nefarious intentions by sections of the commentariat and of the population, usually by people who suspect nefarious intent from any indigene of certain parts of the country. The CBN boss is a veteran of the Nigerian banking industry. Did he know before taking office that 15 of 24 were healthy? Is that why he suggested 15 would be an appropriate number of banks for Nigeria? Or is there some other, unstated reason he prefers 15? Is he culling the 9 weakest to get to 15 because, well, because that is where he wants to go?

I don't think the banks are being culled.

The Central Bank has done a lot to prop them up, when they could have let them collapse. The CBN is also actively seeking suitors to buy up the ailing banks; in a sense AMCON exists to make the banks more attractive to potential buyers. Where Soludo introduced a rule to block foreign majority ownership of Nigerian banks, Sanusi seems keen on foreign partners taking over the weaker banks.

As with most things in Nigeria, we will have to wait to see what happens before we have any idea what the decision-makers are thinking. They don't tell us anything. When they do speak to us, they tell us what they want us to think, not what they think or what they will actually do. And our media lacks the necessary teeth to dig out the facts from underneath the subterfuge; besides, in the absence of credible media protection, they would be running to much of a financial or even life-and-death risk if they did.

In December, 2005, Charles Soludo set out his "MICROFINANCE POLICY, REGULATORY AND SUPERVISORY FRAMEWORK FOR NIGERIA". It included provisions to license and recognize two different types of micro-finance bank:

(a) The "unit" or "community" bank, which will be permitted to open branches in a single community, subject to capital requirements of =N=20 million for each branch opened.

(b) Micro-finance banks licensed to operate throughout a specific state, subject to paid-up capital requirements of =N=1 billion, as well as to meeting a separate set of requirements for each branch opened.

It appears Sanusi Lamido Sanusi is applying the same two-tier concept to "macro" finance banks. As part of his wide-ranging changes to Soludo-era regulations, Sanusi moved away from "one size fits all" capital requirements to create two tiers of macro finance banks:

(a) "National" banks, which are licensed to operate throughout the federal republic and must continue to meet Soludo's =N=25 billion threshold; and

(b) "Regional" banks, which must meet the lower threshold of =N=10 billion, and are limited to operating in a minimum of 6 contiguous states and a maximum of 12 contiguous state, the relevant states not to fall in more than 2 "geo-political zones" (i.e. regions).

Thus, when Wema Bank could not successfully recapitalize to the required =N=25 billion of a national bank, they asked the CBN for extra time to recapitalize at the level of a regional bank, becoming the first of the new regional banks.

Let me say here that I think this is, in a way, a continuation of the Soludo-era reforms. Sanusi is refining the reforms, working out the remaining kinks in the system ... at least I hope that is what he is doing.

I guess we now have a four-tier banking system, with each of the tiers likely to specialize in a particular set/type/form/scope/etc of economic activity. If only they start acting like banks and not like speculating money-changers, this could be a good thing.

Actually, we might have a five-tier banking system, as the biggest Nigerian banks and financial services firms are still expanding across Africa, most recently InterSwitch Ltd acquiring 60% of Uganda's Bankom. InterSwitch is Nigeria’s market leader in the electronic transaction switching and payment processing.

All this is normal, natural, organic.

I have expressed a lot of concern about our financial industry on this blog .... but I have high hopes for our future.

So how much toxic assets are our banks carrying?

Aliyu Belgore, the Chairman-designate of the Asset Management Company, has come up with a new estimate of the size of the toxic asset problem. He says 10 of the 24 post-consolidation Nigerian banks are carrying up to =N=3 trillion ($20 billion) in toxic assets on their books. This is double the previous $10 billion estimate of toxic assets for the entire industry (as opposed to just 10 of the 24).

With all due respect to Aliyu Belgore, Mustafa Chike- Obi (managing director-designate), Hewet Adegboyega Benson, Abbas Muhammed Jega and Mofoluke Benedicta Dosunmu (executive directors - designate), this is Nigeria, where contracts are inflated to many times the actual price. Add to this the worldwide practice of politicians, businessmen and bureaucrats who always overstate their budgetary needs for a variety of reasons including (a) the belief that you will get 40 if you ask for 60, so if you want 60 you should ask for 90; and
(b) the desire to create a cushion in case costs exceed expectation (which they always do), as well as to set yourself up to claim credit for finishing the task "under-budget", even though there was never a chance it would cost as much as you budgeted.

Either way, I would hate to see =N=3 trillion in public/government/citizens' funds transferred free of charge (i.e. as a "Christmas gift") to a privately-owned industry when =N1.5 trillion could do the job. Particularly when that industry's problems are self-inflicted wounds driven by greed, a lack of ethics and regulatory agencies' wilful dereliction of duty.

Belgore and the rest of the AMCON management need to be transparent. If we the people are going to pay to bail out the banks, we need to see what, where and why in concrete numbers that can be audited. The usual government practice of throwing numbers at us ("we will need $X billion to fix electricity") without ever explaining where these numbers come from, just simply won't work; indeed, in the example given, electricity, part of the reason for the continuing problem is the utter lack of rational and mathematic logic in anything we do -- we have spent lots of money over many decades without actually getting anywhere, because there isn't any rational logic to how we spend money. Someone just says, "give me this amount of money, it is what I need", we give it to him/her, the money gets spent, and the problem still remains!

Business Day is an excellent publication, and if their article contained no further information about where Belgore got his estimate from, it is likely he provided the Senate committee with no information about how he came up with the =N=3 trillion estimate. More worrying is the fact that the article contained no indication that any member of the Senate committee bothered to ask Belgore to clarify his numeric assertion.

Ach!

05 October, 2010

It has begun ...

Remember this post?

Well, more fuel to the fire.

By moving immediately direct the investigation of the Independence Day bomb blasts away from MEND before the investigation started, even though MEND issued a warning and took responsibility for the action, President Jonathan opened himself up to suspicion and guaranteed that any non-MEND outcome to the investigation would prompt rational doubts as to the veracity and credibility of the outcome. This is Nigeria; we the people don't trust the police and other security agencies to begin with. Heck, if Jonathan had never opened his mouth, and the investigation did in the end point to MEND, there would still be ample Nigerians willing to believe all manner of conspiracy theories about what really happened.

By saying what he said and doing what he did, Jonathan gave the conspiracy theorists a firmer basis for their suspicions than otherwise. Add to this the fact that every faction of the so-called Niger-Delta "militants" is aligned to a faction of the local and national PDP (helping their respective PDP factions "win" elections, and receiving political protection for their oil bunkering in return).

I don't understand why he said what he said.

Well, President Jonathan is already tasting the fruits of his words.

Henry Okah, leaders of one of the larger factions of MEND, was arrested in South Africa after the Independence Day blasts. It is uncertain at this time whether he was arrested on the initiative of the South Africans, or if his arrest was prompted by word to South Africa the Nigerian federal government. Presumably, Okah was living comfortably in South Africa courtesy of the (late) Yar'Adua regime amnesty.

Now comes this report from Al Jazeera which quotes Henry Okah claiming the Jonathan administration is punishing him because he refused to play along with a cover-up:

"On Saturday morning, just a day after the attack, a very close associate of President Jonathan called me and explained to me that there had been a bombing in Nigeria and that President Jonathan wanted me to reach out to the group, Mend, and get them to retract the earlier statement they had issued claiming the attacks," Okah said.

"They wanted to blame the attacks on northerners who are trying to fight against him [Jonathan] to come back as president and if this was done, I was not going to have any problems with the South African government.

"I declined to do this and a few hours later I was arrested. It was based on their belief that I was going to do that that Jonathan issued a statement saying that Mend did not carry out the attack
."


Henry Okah is a criminal, a violent criminal at that.

It is abundantly possible he is lying.

It is just as possible he is not.

Unfortunately no agency exists with the credibility and the capacity to investigate his claims and make a determination that we the people can trust.

Ironically, though, that is not the point of this post.

President Goodluck Jonathan has opened himself up to exactly these kind of accusations even if the allegations are not true. If Henry Okah is lying, it is because he knows that this lie, expressed in exactly the way he expressed it, will resonate with sections of the public because of what Jonathan said, and how quickly Jonathan said it. There is no logical way the president could have known for a fact who was or was not involved in the blasts, not then, not with our negligent intelligence-gathering and unimpressive investigative capacity. Even if Okah is lying, the president's actions were certainly in line with what Okah said, which the lie more effective than it would otherwise be (if it is a lie).

I don't know who advises President Jonathan. He, she or they probably got the job because of their skills at sycophancy and not out of any expertize in the art of governance or public relations.

Are you kidding me?

Does President Jonathan have advisors? Spin-doctors?

The man says some very strange things. He has just asked 1980s-era Minister of Education Babatunde "Babs" Fafunwa to apologize for the failure of the 6-3-3-4 educational system Prof. Fafunwa introduced.

Prof. Fafunwa's response? He says he has no reason to apologize.

What is interesting (and weird) about Jonathan's criticism is it isn't directed at Fafunwa's administrative or managerial skills. No, President Jonathan seems to be insisting that 6-3-3-4 failed because it is inherently a system that by its very nature is bound to fail. The President seems to be touting a new system, 9-3-4, which apparently, again by its inherent nature, will succeed (or so the President says).

For those of you in the rest of the world who have no idea what these numbers mean, 6-3-3-4 refers to 6 years of Primary School, 3 years of Junior Secondary, 3 years of Senior Secondary and 4 years of a tertiary/university first-degree (i.e. "Bachelor's") programme.

Presumably 9-3-4 will involve ... an extended Primary School period? Followed by 3 years of secondary, and you know the rest.

Lets talk like adults for a second.

Different countries in the world arrange the stages of their educational system, and the number of years assigned to each stage, differently. What makes a difference is the quality of education provided within those stages.

It is downright laughable to suggest 6-3-3-4 failed because it was 6-3-3-4, and that 9-3-4 will succeed because it is 9-3-4.

In fact, whatever it was in the administration of 6-3-3-4 that led to unsatisfactory outcomes will still be there in 9-3-4 if all you do is change around the numbers assigned to each stage, which is all the Jonathan Administration is proposing.

I personally like 6-3-3-4.

It makes sense.

We just have to make it work.

I am serious.

I am tired of this attitude.

They changed the name of the Organization of African Unity (OAU) to the African Union (AU).

They changed the name of the Federal Electoral Commission (FEDECO) to National Electoral Commission (NEC) to National Electoral Commission of Nigeria (NECON) to Independent National Electoral Commission (INEC). NEPA became PHCN. Green Eagles became Super Eagles.

But did anything substantive change?

No.

Can we just fix things, instead of renaming and/or rearranging the same exact thing, and then acting as if it is now different when it is still the same?

Keep 6-3-3-4.

There is NOTHING wrong with it. Just fix the education sector. That is all we are asking.

Haba.

Postscript: Professor Babatunde "Babs" Fafunwa died on the 11th of October, 2010. May his soul rest in perfect peace.

04 October, 2010

How not to investigate a terrorist act

Something terrible happened on the 1st of October. The proper response of the authorities should be to investigate thoroughly to determine the guilty party, then move aggresively to detain and prosecute whoever/whatever that may be to the fullest extent of the law.

President Goodluck Jonathan had other ideas. He felt the proper way to start the investigation was to completely exonerate the chief suspects, the Movement for the Emancipation of the Niger-Delta (MEND).

The various militias under the MEND umbrella have prevented the people of the Niger-Delta from exercising their constitutional rights to democracy, by helping PDP politicians rig elections. They have hired out their muscle to different political machine bosses who are fighting (literally) to control territories to use as bargaining chips during election time. If you control a patch of land (and the rigging process in that patch of land), you can offer the "votes" you control to federal or regional politicians in exchange for favours -- which is why the PDP has regularly "won" elections in Rivers and Bayelsa with over 90% of the "vote".

When there is no election imminent, the militia of MEND engage in the lucrative activities of oil bunkering and kidnapping. Indeed, oil bunkering activities by MEND and MEND-like militia have increased the amount of oil pollution in the Delta. It is interesting that a group that claims to be fighting against the despoilation of the Delta is now responsible for the majority of the environmental damage in the Delta.

But I digress.

Goodluck Jonathan's reasons for exempting MEND from suspicion are essentially the following:

(a)He is from the Niger-Delta.
(b) No one is more Niger-Deltan than him.
(c) His country home is near an oil well.
(d) His people like the government and appreciate the government's work on their behalf.
(e) His people would never blow up their chances of further enjoying the government's work.
(f) So therefore, he concludes MEND is not guilty of planting the car bombs.

First of all, when Jonathan made these statements, there had not been enough time for our admittedly poor investigative agencies to have come up with any evidence-backed theories about who was or wasn't responsible for the crime.

Second of all, Jonathan himself had no evidence-backed reason for including or excluding anybody or any entity.

Understand, I am not saying MEND are definitely guilty, nor am I saying MEND are definitely innocent. I am saying there was no evidentiary basis for the security agencies or President Jonathan to make a conclusive judgement one way or the other.

The only thing we knew was "MEND" had issued a warning beforehand, and had taken responsibility afterward ... which means at the very least that among the different potential theories the security agencies must look at is the theory that it was MEND. A good starting point would be to confirm or refute the authenticity of the warning and the message taking responsibility.

But Goodluck Jonathan stepped in before any investigation could be done, to declare MEND was innocent. Not because he had proof that the warning and message of responsibility were hoaxes. Not because he had proof that someone else had done it ....

... no, he exonerated MEND because he is from the Niger-Delta and he knows "his people" wouldn't plant car bombs.

This is a dangerous for someone in his position to say in a country that has long had a problem with an ideology of (in)justice that revolves around the assignation of collective responsibility, collective guilt and collective punishment on entire groups for the crimes of a few individuals who happen to share a common sociocultural origin as the members of that ethnic group.

The British imperial regime used the colonial army and police to punish entire communities for the crimes of individuals from those communities. It is a practice the post-colonial Nigerian governments have continued, using the post-colonial police and army in the same way. In recent years, the respective destruction of Odi and Zaki Biam by units of the Nigerian Armed Forces have taken hold in the people's minds as key examples of this phenomenon.

Most infamously, the pogroms of 1966 and 1967 were inspired largely by the belief that every Igbo in Nigeria was guilty of the actions of a handful of Igbo army majors. And the main reason the rebel Biafran enclave held out and refused to surrender long after victory ceased to be a possibility (and continued refusing to surrender even as deaths from blockade-related starvation mounted), was the belief that the entire population of Hausas and Fulanis in Nigeria shared the intent of the mobs that carried out the pogroms.

For the record, it took us 10 years to go from the peace of the 1950s to the wars of the 1960s, and many bad decisions by everyone happened along the way ... but I don't want to get off this point of our interminable problem with the ideology of collective responsibility, collective guilt and collective punishment. It is a phenomenon present in every incident of communal violence, with mobs that identify themselves as XYZ meting out punishment on anyone perceived to be ABC, because that person is by definition guilty of some perceived crime that all ABCs supposedly endorse merely by virtue of being ABCs.

What President Jonathan said was dangerous because he predicated his claim of MEND's innocence on a claim that "his people" the Niger-Deltans would not do this. In other words, Jonathan believes MEND's actions are an extension of "his people's" decision-making. If "his people" wouldn't do it, then MEND wouldn't do it .... which is an inversion of the same problematic argument made by the Obasanjo administration to defend its decision to destroy Odi as retaliation for the killing of 12 policemen.

President Jonathan has also cast doubt on the outcome of the investigation. If the investigation announces that anyone other than MEND committed the crime, Nigerians would be well within their rights to wonder if the finding was influenced by the president and not by the facts, even if MEND were innocent.

Postscript: The security agencies have improbably lined up two suspects, and have even more improbably cited vague "foreign-based entities" as the source of the funding for the attack. Rumours are flying that these "suspects" have implicated members of the Ibrahim Babangida presidential campaign. Who thinks it is just a coincidence that this will allow the government to dismantle the campaign of a man Goodluck Jonathan perceives to be his biggest rival for next year's to-be-rigged presidential poll? Maybe someone from Niger State to declare that Babangida is innocent because "he knows his people and knows his people will not be involved in this".

Nigeria and Ireland - Bailout Billions by way of comparison

The "toxic asset" problem in Nigeria's banking industry has been a frequent topic on this blog. I have maintained my support for using federal funds to "clean" up the books (if you want to know my reasons, you might as well read every post on this blog from the first one till this one) ... while at the same time expressing my belief that extensive and substantive reform is necessasry in our banking/finance/equity sectors.

Unfortunately, our political class will not carry out the necessary reform. As soon as the immediately pressing problem (i.e. the toxic assets) is resolved (using federal government money that technically belongs to all of us citizens), the impetus for even a pretense of going through a process of reform will dissipate.

We will have the facade of change (new bosses at the CBN, SEC and NSE; new bosses and owners at the five most-bailed-out banks; the unbundling of the formal bonds between the banks and insurance and equity brokerage industries) .... but the underlying nature of the business will remain the same, because Nigeria has not changed (not politically or economically), and the financial/economic philosophy underpinning the decision-making of the "Nigerian banker" has not changed either.

When the dust settles, after Nigerians have paid up to save the industry and the government from their self-inflicted wounds, it will be back to business as usual.

Nevertheless, I maintain that the industry is important enough that we simply have to do this, and (as I have said repeatedly) we can afford the $10 billion price tag for the bailout. Not because we are rich (we aren't), and not because there is spare money in the budget (there isn't ... in fact, our three tiers of government have drained the Excess Crude Account while running deficits and running up debt), but because .... because we can afford it.

By way of comparison, take a look at the Republic of Ireland. Like the United States and many countries in Europe, the Irish have had to bail out their banks too. Their bailout will ultimately cost the Irish people a whopping $69 billion, equivalent to an even more whopping 32% of GDP at nominal rates (closer to 40% at Purchasing Power Parity)! Ireland has a population of 4.4 million, so the burden of bailout spending is close to $15,700.00 per capita.

By contrast, Nigeria's $10 billion in bailout costs is 3% of GDP at PPP (6% at nominal rates). Per capita, it comes to $80.00 per citizen (using a population estimate of 125 million, which is halfway between the official-but-hard-to-believe 150 million and an arbitrary floor of 100 million which if we haven't reached yet we soon will).

You might say that the income levels of the average Irish citizen ($41,000.00 per capita at PPP) and of the average Nigerian ($2,300.00 at PPP) are different, so the Nigerian would feel the burden more. True, but the Irish burden is 38% of per capita income (in a country whose cost of living is high enough that their PPP GDP is smaller than their nominal GDP), as compared to Nigeria's burden of 3.5% of per capita income (in a country where PPP GDP is more than twice the size of nominal GDP).

I am not saying the bailout is cheap. I am not saying Nigeria is a rich country that can afford to save wealthy bankers and wealthier banks from their own greed and stupidity by using citizens' funds to cover their losses (rather than forcing them to absorb the loss themselves). Indeed, it is a travesty that each Nigerian citizen will in effect be handing over $80.00 to the banking industry.

However, we have to do it. Sometimes in life there are things you don't want to do, things you hate doing, but things you nevertheless have to do. Unsurprisingly, such things usually involve economic issues. Lets be honest, how many of us do things we don't want to do in order (for example) to keep our jobs?

The Central Bank of Nigeria and the Federal Government both seem to believe the Asset Management Company (AMCON) will be able to get back 50% of the value of the toxic assets its buys off the banks books.

I fear the truth will be nowhere near as favourable as 50%. When all is said and done, we may lose most if not all of the $10 billion. The authorities probably know it but don't want to admit it, preferring instead to "spin" the facts; for example, as I noted in this blog post, CBN boss Sanusi Lamido Sanusi (whom I actually like)touted the Asset Management Company thus:

A state-funded 'bad bank' being formed to buy non-performing loans held by rescued Nigerian lenders will free them up to repay by mid-year the capital injected in last year's bailout, the central bank said on Thursday.

"My sense is that certainly within the second quarter of this year the AMC will have purchased these assets and the banks will have paid back the central bank," the central bank governor Lamido Sanusi told CNBC Africa television.


He was speaking in the first quarter of 2010, presumably in the hope that the AMCON would be up and running by the second quarter, but that is not important.

What he said in effect is that the AMCON would pay $8 billion to the banks (in bonds), which would allow the banks to "repay" the $4 billion in bail out funds they had already received. On the books, it would be recorded as though the banks repaid a $4 billion loan, when in fact all that will happen in practice is the CBN will ultimately reclassify $4 billion alread in its accounts as "repayment" funds received from the banks, while in practice the banks get $4 billion in additional funds (bonds that have real value, unlike the worthless toxic assets) in addition to the $4 billion already received from the CBN, which will essentially have been written off by the CBN (i.e. what was once a "loan" to be repaid would now be a "gift").

This is the sort of language that all involved (banks, CBN, federal executive, federal legislature) use to avoid bluntly telling citizens that we the people of the Federal Republic of Nigeria are about to make a $10 billion gift to the Nigerian banking industry.

In Nigeria, everything is political, and when people start discussing politics, issues of bias and prejudice are not far behind. Much of the media coverage in the last year-and-half has centred on (a) the supposed political motives of the late former President Yar'Adua in appointing Sanusi Lamido Sanusi to the CBN Governorship; (b) the alleged political motives behind Sanusi's "tsunami" on the banking industry; and (c) the hagiographic portrayal of the Obasanjo administration's economic team ... never mind the fact that Obasanjo's economic team wilfully pumped air in a giant stock market bubble, and continued doing so (without making provisions for a soft landing) long past the point where it was clear to objective observers that Nigeria was on the path to a radical "correction" of the market that would have happened even if there had been no global credit crunch or stark drop in crude oil prices (margin loans given to provide air for the stock market bubble, and loans given to petroleum importers based on an expectation of high crude prices comprise large portions of the toxic assets).

It is difficult for a citizenry to hold government and industry to account when the country in question is not a real democracy, and citizens lack the democratic levers with which to pull the reins of government and the private sector. But with or without substantive democracy, an uninformed (and at times misinformed) public is in no position to hold anybody to optimal account, or even to know what condition is optimal to begin with. Indeed, the absence of real information to work with creates a void into which people place whatever biases and/or prejudices and/or preconceptions they already had.

01 October, 2010

100 years of "Nigeria"

It has been 50 years since "Independence".

I like to think of it as 50 years since the restoration of self-rule.

Some people like to think of us as a "young" country. When you wonder why we haven't done things that other countries did in less than 20 years in the 19th century, they remind you that we are only 50, while China is 5,000 and USA is 225 and the United Kingdom is ....

We are not young. We've been around as long as anyone else. In fact, to the extent that the "United States" was a new thing constructed after the political destruction of the aboriginal peoples of the Americas, we are older than the USA.

There are cities in Nigeria standing on locations that have been continously inhabited for at least more than a millennium (I say "at least", because our verifiable history only goes that far; for all we know, those areas, suited as they are to human settlement, were inhabited even longer than that).

We are the heirs of that history, the culmination of that history.

Borders change.

Borders change everywhere.

Study those parts of the world whose written, documented and (significantly) mapped history goes back thousands of years. You will see that borders changed frequently, incessantly. The 5,000-year-old "continuous" Chinese civilization has had more boundary-changes than it has had dynasties. The current borders of the Peoples Republic of China, which include Tibet but don't include Taiwan, date back only to the 1940s and 1950s. Come to think of it, the borders changed even later than that, with the reintegration of Hong-Kong.

Just because colonialism changed our borders, it doesn't mean that we stopped being who we are. Colonialism was a brief, 100-year interlude of foreign rule (Lagos Colony, 1860) amidst thousands of years of self-rule.

And if you think that "Nigeria" as a concept is something to celebrate ... then look instead to the 1st January, 1914 "Amalgamation" that created what became the Federal Republic. That event was far more influential to our present day than "Independence" in 1960.

No, no, no ... I am not a party-pooper.

If anything, I am quite pro-Nigeria.

I like the Federal Republic.

And I am looking forward (God willing) to the 100th anniversary of Amalgamation in 2014.

It is just 4 years away, and (like it or not) it is more important to me than celebrating the restoration of something (self-government) that we already had before the rude British interruption.

There was no "Nigeria" before Amalgamation.

I wonder if "Nigeria" will be around to celebrate 200 ....