In spite of the peace initiative, a number of travel agents told one of our correspondents that Nigerians were not buying tickets to South Africa, except for special reasons.

I haven’t sold tickets to Johannesburg for two weeks – Agent

“I have not booked a single ticket to Johannesburg in the last two weeks,” a travel agent, who did not want to be named revealed.

“Nobody is going there at the moment. It is as if there is a total boycott except it is extremely important. Since the problem between Nigeria and South Africa began, the only people travelling are those that had booked their flights long before now and students that need to return to school and have no choice but to resume,” the agent said.

Another Lagos-based agent said the situation had degenerated to the point that special travel packages that were put together for tourists to the country had either been cancelled or diverted to some other destinations as people were no longer interested.

Nigerian tourists changing destinations from SA to Dubai

According to the agent, Nigerian tourists are changing their vacation destinations to Dubai, Mauritius and other places.

“There are people with pending tickets that have requested change of airline or destination. Even people scheduled to travel; some have said they no longer want to travel to South Africa,” he said.

Findings show that South African Airways, which operates daily flights between Lagos and Johannesburg, has been affected.

South African Airways enjoys a near monopoly on the route being the only airline that offers direct flights from Lagos to Johannesburg; other airlines on that route such as Kenyan Airway and Rwandair have to get to Nairobi and Kigali respectively, before taking off to Johannesburg. The airline, when contacted, declined to comment on the issue.

I left SA when attacks became frequent – Mother of two

Meanwhile, a woman who was among those evacuated on Wednesday shared her experience, saying that she decided to leave South Africa when the attacks became frequent.

The single mother of two, Ololade Atere, from Oyo State, said her nail studio was destroyed in the recent xenophobic attacks.

Atere said, “My experience was bad. I was into fixing of nails and one day I got a call that my shop had been destroyed. I decided to come home because the violence became too much and I couldn’t keep running with my two kids.

“I lived in South Africa for five years, but I have no plans of going back. I am tired of the violence. I have to be safe. I am home now. I have to find a job or business.

“I left Nigeria when I was pregnant. The intention was to have my baby, have some travel experience and return. I wanted to come back after I had my first baby but people convinced me to stay. But now, I have had enough.”

S’Africa said my children were its citizens – Mother

Atere said she was supposed to be among the first batch of Nigerians to return, but was stopped at the airport.

“They said I couldn’t travel with my kids because I gave birth to them in South Africa and they are citizens,” she said.

She added that she was made to swear an affidavit before she was allowed to bring the children with her to Nigeria.

‘I left my child in S’Africa’

Another returnee, who identified himself as Uchenbi, told the News Agency of Nigeria that South Africans harboured hostility towards Nigerians.

He stated, “South Africans are angry at Nigerians for no reason and would blame them for whatever reason they deem fit.”

Uchenbi, who was in South Africa for 12 years before he returned to Nigeria on Wednesday, said he left his child in South Africa, while she was sleeping.

The man, who is married to a South African, said his wife would have suffered, if he had been killed in South Africa.

S’African police didn’t probe my husband killing – Woman

Another returnee, Blessing Chioma, accused the South African police of inaction when her husband was killed in 2012.

Chioma said, ”I’m coming from South Africa, Johannesburg; I was married to a Nigerian, but South Africans killed him during the xenophobic attacks. I reported the case to the police, they know about it; they look for the guys, but you won’t know them because they come in groups, so nothing was done; the case is closed,” she said.

”Since then I’ve been coping with the children, but I returned them to Nigeria because I was no more meeting up in training them. So they’re here now in Nigeria; I came back to take care of them, but we came with nothing because they burnt our shops.”

 

Source: Nigerian Eye

Nigeria’s biggest tomato plant is counting on the government’s restriction of food imports to sustain operations after going idle again six months after it resumed operations from an almost three-year shut down.

When Aliko Dangote, Africa’s richest man, decided to set up the plant, it was with the clear goal of supplanting imports of tomato paste mostly from China but that has suffered setbacks.

Currently, the 1,200-ton-a-day tomato-processing factory near the West African nation’s northern city of Kano is closed, unable to get its required feed stock as farmers have switched to other crops at the beginning of the rainy season in May.

The plant was idle for more than two years until March this year over a supply disruption partly caused by a price dispute with farmers. Even after the disagreement was resolved, the factory was unable to ramp up production beyond 20% of its capacity due to inadequate supply of tomatoes, as most of the farmers lacked the needed credit to expand production.

The company is losing at least 30 million naira every month with employees idle, according to the managing director of Dangote Farms, Abdulkareem Kaita.

Nigeria consume an average of 2.3 million tons of tomatoes a year and produce just about the same amount, according to a 2017 report by PriceWaterhouseCoopers. Without adequate storage facilities and an efficient means of transporting them to the markets, about 45% of harvested tomatoes go to waste. Africa’s most populous country imports about 1.3 million tons of the red vegetable to fill the gap, mostly from China and other parts of Asia. Nigeria is the third largest importer of the commodity in Africa.

“We knew tomato is a seasonal crop before we started as it’s the case in China and Europe,” Kaita said. “What we set out to do was reduce the post harvest loss yearly to feed the factory.”

Unfazed by the problems, Dangote Farms is pushing ahead with its original objective of replacing tomato-paste imports. With President Muhammadu Buhari making the reduction of food imports a key objective of his administration, the Nigerian central bank is implementing a new credit plan intended to help the farmers grow tomatoes all year round.

Dangote Farms has also acquired a 5,000-hectare farm to grow a high-yield variety of tomatoes to meet its factory’s requirements, while introducing the same strain to other farms to increase their productivity.

“With this, the output of the farmers would tremendously improve and the processing factory would record ample supply,” Kaita said.

Kaita also wants the government to enforce its decision to curtail tomato-paste imports to reduce incidents of dumping of subsidized paste on the Nigerian market.

“The effective implementation of the government’s policy in restricting tomato paste importation will guarantee more investment in the tomato value chain, which will eventually lead to self-sufficiency in few years to come,” Kaita said.

 

Credit: Bloomberg

The latest xenophobic attacks in South Africa have ignited the long-standing tensions between the country and Nigeria. These are captured in the retaliatory attacks on South African businesses in Nigeria and the diplomatic outrage by Nigerian authorities.

Nigeria also boycotted the recent World Economic Forum (WEF) meeting in Cape Town. More critical was the temporary closure of South African missions in Abuja and Lagos and Nigeria’s decision to recall its ambassador.

But in the larger scheme of things, xenophobia is a distraction from the leadership role that Nigeria and South Africa should play on the continent on fundamental issues of immigration and economic integration.

A constant irritant

Accurate figures are hard to get. But Statistics South Africa put the number of Nigerian migrants at about 30,000 in 2016, far below Zimbabweans and Mozambicans.

Xenophobia has remained a constant irritant in Nigeria-South Africa relations since the major attacks on African migrants in poor neighbourhoods in Cape Town, Durban and Johannesburg in 2008 and 2015. But, contrary to popular perception, xenophobic attacks do not disproportionately target Nigerians. Nigerians often exaggerate the effect of violence on their citizens. That is probably because Nigeria has a better organised, savvy, and loud diaspora constituency in South Africa.

Unfortunately, the loudness of the Nigerian diaspora transforms victimhood into foreign policy, generating the reactions that have been witnessed recently. It also plays into the naïve narrative of the “liberation dividend”. This entails Nigerians seeking to be treated uniquely because of their contribution to the struggle for majority rule in South Africa. There were no such expectations from the other countries that supported South Africa’s liberation struggle.

This narrative has taken on an equally economic tinge. South African companies are heavily invested in Nigeria. So, they often become targets of Nigerian ire in times of xenophobia.

The accurate picture is that xenophobia affects all African migrants. These are mostly migrants from Malawi, Zimbabwe, Mozambique and, increasingly Ethiopians, Kenyans and Somalis. Nigerians are affected. But they’re not on top of the list.

The Nigerian responses are understandable in light of the frequency of these attacks. But, it is important to probe the drivers of xenophobia to understand it more deeply.

What drives xenophobia?

First, some studies reveal that the intrusion of foreign migrants into vulnerable communities beset by joblessness and despair inevitability produces a tinderbox that sparks violence .

Migrants are easy targets. That’s because they are seen as being better off by the locals. They therefore become targets of people who feel their circumstances have not been addressed by government. It is no surprise that xenophobic attacks have typically occurred in poor neighbourhoods that have been affected by service delivery protests since the mid-2000s.

Second, xenophobia thrives on ineffective policing in South Africa. Barely two days after the Johannesburg attacks started, the national police spokesman admitted that the police were running out of resources to manage the violence. This prompted the Premier of Gauteng, the country’s economic hub, to threaten to also deploy the army if the violence continued.

Examples of the police’s inability to maintain order and respond to threats to property and livelihoods are legion. This, in part, forces people to take the law into their own hands.


Read more: How South Africa can turn the rising tide against vigilantism


But the police are sometimes complicit in stoking anti-foreign sentiments. The July 2019 raids on foreign-owned businesses in Johannesburg in apparent efforts to stamp out illicit goods added to the current climate of xenophobia. When some business owners retaliated against the police, some local leaders appropriated the language of “threats on South Africa’s sovereignty” to justify the police response.

Reforms are urgently needed to create a competent, less corrupt, better-resourced, and civic-minded police service.

Xenophobia is also an outcome of a rickety migration and border control regime. Efficient border controls are one of the hallmarks of sovereignty and the first line of defence against xenophobia. Broken borders breed criminality. These include human and drug trafficking. Human and drug trafficking feature prominently in the discourse on xenophobia in South Africa.

How, then, does xenophobia distract South Africa and Nigeria from what should be their leadership on core African issues?

Overreaction

The weighty issues of creating a humane and just society for South Africans and migrants alike will ultimately be led by the South African government. Outsiders can make some diplomatic noises and occasionally boycott South Africa. But these actions are unlikely to drive vital change.

In fact, the overreactions by Nigeria and other African countries simply undercut the South African constituencies that have a crucial stake in wide-ranging reforms that address the multiplicity of problems around xenophobia.

In the previous instances of xenophobic violence, Nigeria urged the African Union (AU) to force South Africa to take action. But such unhelpful statements only inflame passions and prevent civil diplomatic discourse.

Instead, the best policy would be for Nigeria to engage South Africa through their existing binational commission. Nigerian President Muhammadu Buhari is scheduled to visit South Africa next month.

Taking the lead

Rather than the perennial relapse into shouting matches and hardening of rhetoric, it is essential for Pretoria and Abuja to take decisive leadership at the continental level. The two nations must articulate immigration policies.

The newly-inaugurated AU Free Movement of Persons Protocol will not be implemented if South Africa and Nigeria do not join hands to make it a reality. More ominously, migration to South Africa as the premier African economy will only get worse in the coming years. This, as Europe and the United States tighten their borders against African migrants.

Also, without the leadership of its two major economies, Africa is not going to make any traction on the new treaty establishing the African Continental Free Trade Agreement. Ironically, the WEF meeting in Cape Town addressed ways to boost intra-African trade. Nigeria should not have boycotted it because of xenophobia.The Conversation

 

Gilbert M. Khadiagala, Jan Smuts Professor of International Relations and Director of the African Centre for the Study of the United States (ACSUS), University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Gaslighting

The oilfield fires of the Niger Delta burn day and night. Metal pipes snake through the swampland, spewing flames so vast they cast the sky in apocalyptic orange. Southern Nigeria sits atop a bubbling stew of oil and gas. Companies want only the former, so they incinerate the latter. The industry calls it “flaring.”

For millions of Nigerians, flaring is a curse. It fills the air with toxic fumes that cause respiratory disease and cancer and later fall as acid rain, which damages homes and crops. It also wastes vast amounts of energy in a region where many villages lack electricity and cities suffer daily blackouts.

In 2008 the Nigerian government said it would end flaring by using oilfield gas to generate electricity. The minister of petroleum resources acknowledged that the challenge would be “enormous.” Converting gas requires it to be captured, transported, refined, and piped back to power plants and onto the grid.

Officials struggled to persuade big multinationals to invest in the required infrastructure, so concessions were granted to 13 smaller companies, some virtually unknown. One was Process and Industrial Developments Ltd., or P&ID, which was registered in the British Virgin Islands but had no website or track record. Its chairman was Michael “Mick” Quinn, a 68-year-old Irishman with a rakish mustache and decades of experience in Nigeria, mostly as a military contractor.

Quinn knew powerful people, including the petroleum minister, who guaranteed P&ID a 20-year supply of “wet,” or unrefined, gas for a plant the company would build. The raw material would be supplied for free, to be treated and returned at no cost. P&ID would instead profit from the byproducts, butane and propane. Everyone stood to benefit, not least the villagers whose homes would be lit by electricity rather than the wan glow of flaming methane.

Then the plan fell apart. The government failed to secure any waste gas from oil companies, let alone link up the necessary pipeline, and the plant was never built. In 2012, P&ID notified the oil ministry that it was suing for breach of contract in a London arbitration forum. After a set of closed legal proceedings, judges awarded P&ID $6.6 billion, one of the biggest amounts a company has won from a sovereign state. When Nigeria dragged its feet on payment, P&ID teamed up with a hedge fund and moved the case to public courts, where it could ask judges to seize state assets, including bank accounts and cargo ships.

In the summer of 2018, a man who’d worked for Quinn contacted Joseph Pizzurro, a veteran New York lawyer hired by Nigeria to lead its defense in the U.S. The caller wanted to talk about the P&ID case. “I don’t think it’s genuine,” the man said, according to an account he gave Bloomberg Businessweek on condition of anonymity because he feared for his safety. He told Pizzurro that Quinn had conspired with officials to profit from government projects that were doomed from the start and that P&ID was one of at least three such lawsuits involving Quinn. The caller couldn’t provide enough evidence to substantiate his claims, though, and he didn’t contact Pizzurro again.

This August, P&ID won a ruling from a London judge allowing the firm to start seizing Nigerian assets. Hailed as a vindication by Quinn’s company, it caused an outcry in Nigeria. The country’s finance minister said at a press conference that the size of the award, which has risen above $9 billion with interest, meant all Nigerians would pay a price. The chair of the central bank said that the case has affected monetary policy. Toward the end of the month, the justice ministry opened a corruption investigation into how the gas plant deal was struck. “The contract was designed to fail right from inception,” attorney general Abubakar Malami told reporters. If the Nigerian government is right, P&ID was an audacious scheme that had made unwitting accomplices of legal professionals, financial institutions, and politicians around the world.

The company and its founders remain elusive. A Nigerian newspaper recently published a list of unanswered questions about the firm: Where are its offices? How many people does it employ? How did such a tiny company win such a large concession? Quinn isn’t around to answer them; he died of cancer in 2015. But a close examination of his career, drawn from public records, leaked documents, and interviews with friends and former associates, shows that P&ID wasn’t the only Quinn project to end in disappointment, lawsuits, and corruption allegations. It was just the largest—the one that was supposed to provide his biggest payday.

relates to Is One of the World’s Biggest Lawsuits Built on a Sham?

Man in Mohair

Quinn grew up in Drimnagh, a tough neighborhood in Dublin. After leaving school as a teenager in the 1950s, he trained as a mechanic. An ordinary blue-collar life might have beckoned had one of his neighbors not started a show band, the Royal Olympics. These groups were unique to ’60s and ’70s Ireland: shiny-suited young men playing rock ’n’ roll or jazz, perpetually touring church halls and farm sheds to earn shoeboxes full of cash.

The Olympics needed a manager, and soon Quinn had a new career as one of the natty, ruthless handlers a BBC documentary labeled “men in mohair suits.” He ran some top acts: Daddy Cool & the Lollipops, Twink, Dickie Rock. An old friend recalls that he’d approach a singer and say, “How much are you earning? One hundred pounds a gig? I can get you 1,000.”

Quinn stuck with the industry for a while after the show bands’ popularity declined—newspaper reports suggest he arranged an Irish tour by Diana Ross and the Supremes—but there was more money to be made elsewhere. At some point in the ’70s he started working in Nigeria, either as an oil trader or a financier of cement deals, depending on which of the scattered accounts of his life you believe. He began profiting from a construction boom taking place in Lagos, which was then expanding with such chaotic abandon that hundreds of cement-bearing cargo ships were lined up at port waiting to dock.

He kept working in Ireland, too. In 1979 he and a partner, Brendan Cahill, formed an umbrella company with the resolutely dull name Industrial Consultants (International) to oversee their interests. They began working with the government, for example getting a public grant worth $450,000 to start a videocassette factory near Dublin. The project went bust within two years.

Quinn’s business drew on some powerful allies dating to his show band days. One of the closest was Albert Reynolds, a former music hall impresario who was elected to Parliament in 1977 and became prime minister in 1992. Two years after being elected PM, Reynolds was promoting Kent Steel, one of Quinn’s companies, as a potential savior of Irish industry. Kent had recently won 3 million Irish pounds (about $4.3 million at the time) from the European Union to explore cleaner technology for making steel—potentially a huge boon. Instead, the project produced nothing but some sketches and a bunch of debris.

Joe McCartin, then a member of the European Parliament, says he raised concerns with an EU official that the deal was a scam and was told, “Don’t worry. Your prime minister, Albert Reynolds, knows all about the project.” The EU did eventually start a probe into the grant, and McCartin, who’s now retired, says its investigators showed him a letter from Irish prosecutors relaying that a fraud had been committed but that they couldn’t identify the perpetrators. The probe was eventually closed without penalty; the EU refused to fulfill a freedom of information request about the case, citing privacy rules. Reynolds passed away in 2014.

Quinn’s name came up again during a nationwide corruption inquiry in Ireland. The Mahon Tribunal, as it was eventually known, lasted for 14 years, compiling evidence of graft on an epic scale. Quinn was called as a witness in June 2007, one of the few times he ever spoke on the record. The tribunal wanted to know more about relationships Industrial Consultants had with Frank Dunlop, a shady lobbyist, and Liam Lawlor, a corrupt Republican MP who’d resigned in disgrace before being killed in a 2005 car crash outside Moscow.

Quinn denied knowledge of invoices that bore his company’s name—payments for golf fundraisers, he guessed—and said he thought his signature had been forged on checks. He had no recollection of many of his dealings with Dunlop. “You are a singularly unhelpful witness,” Alan Mahon, the presiding judge, told him. “What you are telling us is nothing, absolutely nothing.” The tribunal later found that tens of thousands of pounds had flowed from Quinn’s companies to Lawlor, but Quinn wasn’t recalled to the stand, and neither he nor Industrial Consultants faced any action.

By then, Quinn had developed a fearsome reputation. Several former associates told Businessweek they were scared to speak on the record about him, because they believed he had ties to Irish paramilitaries; one said Quinn told him his father had been in the original Irish Republican Army in the 1920s. Employees introduced him as “the chairman,” and he employed a man with a pugilist’s squashed nose to drive guests around Dublin, apparently without great regard for red lights. A former Quinn associate says that when Quinn’s daughter ended a brief marriage to David Boreanaz, an American actor best known for roles on Buffy the Vampire Slayer and Angel, Boreanaz called Quinn to make sure there was no bad blood between them. Boreanaz’s manager didn’t respond to requests for comment.

relates to Is One of the World’s Biggest Lawsuits Built on a Sham?

The Trouble With Nigeria

Throughout the 2000s, Quinn lived a kind of double life, divided between Nigeria and a comfortable suburban house near Dublin. At home he was Mick from Drimnagh, living with his wife, Anita, who’d been his childhood sweetheart, and their two Doberman pinschers. On Tuesday nights he’d drop Anita off at bingo, then pick up fish and chips for dinner.

Life in Nigeria was very different. The country’s freewheeling capitalism was fraught with risk and opportunity. The writer Chinua Achebe detailed the climate in his 1983 polemic The Trouble With Nigeria: Contracts with the military government were currency, doled out by senior politicians to allies and friends as the public bore the burden of hidden kickbacks, inflated prices, and stolen materials. Military rule ended in 1999, but democratic Nigeria was proving just as restive and complex. There were tribal uprisings in the Niger Delta and kidnappings and religious conflict elsewhere.

Quinn nevertheless thrived, befriending presidents and civil servants alike. He and Cahill used a company called Marshpearl to bid for lucrative military contracts, initially registering the name in Ireland, then in 1999 using the Panama-based law firm Mossack Fonseca & Co. to create Marshpearl Ltd. in the British Virgin Islands. To the outside world, the BVI company was practically untraceable. Mossack Fonseca documents leaked to the newspaper Süddeutsche Zeitung and made available to Businessweek by the International Consortium of Investigative Journalists show that Marshpearl Ltd.’s directors were nominees, paper executives whose sole job was to sign documents. (Reached by phone, one of them, Nigel John Carter, a Geneva-based trusts specialist who was also a director of another Quinn BVI vehicle called Kristholm Ltd., said, “I’ve never heard of those two companies.”)

Marshpearl sponsored a local polo team, giving Quinn an excuse to mix with the Nigerian ruling classes. His sons attended elite private schools with the sons of politicians and generals, who asked Quinn to help them acquire helicopters, Japanese motorcycles, and more. On the golf course back in Ireland, friends recall, Quinn would pick up the phone to talk to various officials or military leaders. “Did you get them guns?” one friend remembers him asking in his distinctive Drimnagh drawl. His golf buddies were never sure if he was joking. His contacts included Theophilus Danjuma, who’d risen to prominence in the ’60s by leading a bloody coup against Nigeria’s military ruler. Danjuma went on to become a general, then entered business and eventually politics, ascending to defense minister in 1999. He later sold a stake in a Nigerian oil field to a Chinese state company, helping make him a billionaire.

One of the few people who would speak on the record about Quinn’s life in Nigeria is Neil Murray, a friend of 30 years who was involved in several Quinn projects there. Sitting one night at the Abuja Hilton piano bar, a favorite haunt, Murray wasn’t hard to spot: a gray-haired figure so hunched over he was bent almost double, puffing cigarettes and chatting with businessmen and prostitutes, who called him Papa. After initially accusing a Businessweek reporter of being a spy for the Nigerian government, he agreed to talk. “Mick knew Obasanjo. He knew Yar’Adua,” Murray said, referring to former presidents Olusegun Obasanjo and Umaru Musa Yar’Adua. “He knew everyone.”

Among the projects Murray was involved in was a contract to repair and upgrade 36 British-made Scorpion tanks at an abandoned plant at Bauchi, in the dusty heart of Nigeria. It had all the hallmarks of Quinn’s deals in the country: complexity, misdirection, and a substantial payday for the middleman. “There was a subsequent contract, and a subsequent contract, and a subsequent contract,” Murray said. “It was an ongoing process.” Quinn personally recruited military experts to manage the work and find replacement parts. At one point, Danjuma visited the site.

Several people involved in the venture described each vehicle as an opportunity for profit. Petrol engines were replaced with diesel engines. New radios were installed. When faulty valves needed replacing, one former employee said, he found a British supplier for a few pounds a unit. “Too cheap,” he remembered Quinn telling him. They found costlier valves elsewhere. The more expensive the new part, the bigger Marshpearl’s cut.

A memo viewed by Businessweek that circulated among Quinn’s team noted that Marshpearl had charged the Nigerian army for undelivered tank parts, making his organization “vulnerable.” But the company kept winning contracts, in spite of this hitch and others. It’s not clear how many millions of dollars Nigeria spent on the Bauchi project, but the relationship likely made Quinn a fortune.

For one contract, a spinoff from the main deal, his company sought to supply about 4,000 rounds of tank ammunition made by Belgian defense company Mecar SA. A January 2005 memo outlining Marshpearl’s plan says Quinn’s staff told Mecar they would handle bidding, contracts, and billing. Mecar’s managers “do not want to know the details as they would be embarrassed with Belgian authorities and U.S. owners,” the memo said.

The blueprint called for Marshpearl to establish a company called Mecar SA, register it in Cyprus, and open a bank account for the new offshore entity to avoid Nigerian taxes on the income. The original Mecar would write up a bid for the contract and send it to Marshpearl, where the document would be scanned and altered to increase its value by 20%—commission for Quinn and his friends. Payment to the original Mecar would be routed through the offshore one. All documentation was to be delivered by hand.

The “paper trail” was Marshpearl’s greatest area of concern, the memo’s author wrote, without explaining why. Broadly speaking, while offshore companies have legitimate purposes, they’re also favored by those trying to avoid tax or government scrutiny or hide illicit income. In some jurisdictions, secrecy laws make it virtually impossible to find out who owns them. Registering a company with a virtually identical name to a separate, legitimate business would have the effect of further obscuring the real beneficiaries.

To a watchdog or another outside observer, the Mecar arrangement would look like a simple transaction between a respected manufacturer and the army, with the middleman getting its cut. A tender bid document sent by the offshore Mecar to the Ministry of Defense a few months after the memo’s date placed the contract’s ultimate value at €4.9 million ($5.6 million), meaning Marshpearl would have made almost a million euros.

Shown the memo at the Hilton bar, Murray said, “Very clever.” He didn’t see anything improper in the deal’s structure but added, “I wasn’t directly involved.” A spokesman for Mecar’s current owner, Nexter Group, said the Marshpearl deal took place before it acquired the company in 2014 and that it complies with rules and regulations.

The Art of the Failed Deal

It’s said that in Nigeria you can go from pauper to millionaire overnight and back again just as quickly. Even old hands could be caught out by a sudden shift in the political climate, as Quinn was in October 2006. That month, he was charged with espionage and handling secret military materials, alongside his son Adam, a close associate from Ireland named James Nolan, three Nigerian officials, and three individuals from Israel, Romania, and Russia.

Details are sketchy, but one of the Nigerian officials submitted an affidavit saying the indictment was over a “large scale of contract scam which involves very senior officers of the Ministry.” Nolan and Adam Quinn didn’t respond to requests from Businessweek for comment, but they denied the charges at the time. The prosecution appears to have been dropped within a year. A defense lawyer involved with the case recalls that the government intervened.”

That same year, Quinn formed P&ID and began exploring opportunities in gas power. He also branched out into medical technology. In 2006, more people were living with HIV/AIDS in Nigeria than in any country but South Africa or India. The Nigerian health ministry’s efforts to tackle the crisis included a multimillion-dollar partnership with Dublin-based Trinity Biotech Plc to supply HIV testing kits and help set up a factory at the Sheda Science & Technology Complex, which was being constructed outside Abuja. The contract for the factory went to an entity called Trinitron, which local media assumed was a subsidiary of the similarly named Irish company. In fact, it had no formal connection to Trinity Biotech of Dublin and was jointly owned by the health ministry and a group of Irish and Nigerian businessmen. Trinitron’s Irish directors included Adam Quinn and James Nolan, according to three people familiar with the deal. Quinn’s firm Industrial Consultants became a shareholder.

A few years into the contract, Trinity discovered that Trinitron had registered a company called Trinity Biotech Nigeria domestically and another called Trinity Biotech Joint Venture in the British Virgin Islands. Executives from the original Trinity were furious when they learned of the clones. In 2008 and 2009, they pulled out of the project entirely.

“Trinity Biotech had no ownership stake in Trinitron or the Sheda project or in any entity or assets within Nigeria,” the Dublin company said in a statement to Businessweek. “Our role in the project was the provision of HIV test kits, which we did, although we were left with a significant unpaid debt when the project ended.” Eventually, government funding dried up, and, according to two sources, Trinitron was reported to local police for allegedly misspending state funds, though no one was charged.

Gerry Nash, Trinitron’s former project director, said in a statement that test kit production at the factory in Nigeria hadn’t progressed because the health ministry wouldn’t buy the kits locally. “People in the Nigerian Ministries were more interested in picking up commissions on imported products,” he wrote. He said that Trinitron had succeeded in developing an IT system and in training HIV specialists, and he denied that the venture was a failure overall, even though the Sheda factory wound down after a few years.

Today, the Sheda site outside Abuja is overgrown with weeds. A pockmarked sign outside the front gate attests that Trinitron once operated there, but none of the buildings look functional. Gravel piles dot the parking lots. The handful of bored security guards and administrative staff on-site say only that Trinitron is no longer there.

When it wasn’t possible to squeeze profit directly from a floundering project, Quinn could enlist the law for the purpose. In 2010, Industrial Consultants brokered a $5 million deal with the Nigerian Air Force to repair ejector seats in six Alpha Jets, small fighter craft often used to train pilots. A British company called North Wales Military Aviation Services Ltd. would do the fixing.

A few months into the contract, the air force terminated it for no apparent reason. The ensuing dispute ended up before a Nigerian arbitration panel, which found that the military had pulled out for “flimsy, untenable, and unacceptable reasons.” It awarded NWMAS about $2.3 million for work allegedly done, plus interest, according to a copy of the private judgment seen by Businessweek.

The case was straightforward enough, apart from one detail: NWMAS didn’t know about any of it. In a statement, the company said its executives had hosted Nigerian officials but never got word it had won the job. Instead, a few months after the visit, it received a letter saying the air force was suing for nonperformance. NWMAS managers forwarded the letter to Quinn’s team and heard nothing further on the matter until being contacted by Businessweek earlier this year.

If NWMAS didn’t participate in the lawsuit, who did? Individuals from the Quinn organization. Long before the ejector seat contract was finalized, unbeknownst to the original company, Quinn’s team had registered a local entity called NWMAS Nigeria Ltd.—another clone.

Murray testified at the arbitration on behalf of NWMAS. “They never f---king paid,” he told Businessweek, referring to the Nigerian air force. He said the British NWMAS had been fully aware of the case and that NWMAS Nigeria had been created to comply with local regulations.

Quinn’s organization apparently had trouble collecting the award. In 2013, Cahill sent a message to colleagues about the struggle to enforce the judgment in Nigeria’s chaotic courts. “The moral of the story is that ideally the ‘seat’ of arbitration should be outside of Nigeria and preferably in London,” he wrote.

Quinn and Cahill already had a stake in at least two lawsuits against Nigeria before the British courts. One of the cases relates to IPCO (Nigeria) Ltd., formerly part of Singapore-based construction group IPCO International Ltd. The parent company sold most of its stake in 2003, leaving behind a shell company whose sole activity seems to have been to engage in lawsuits—notably a $150 million case against the Nigerian petroleum ministry over delays to the construction of an oil terminal.

There were familiar allegations of overcharging, and the suit went all the way to the U.K. Supreme Court before being settled on confidential terms last year. How much IPCO Nigeria’s owners received and who benefited remains a mystery. You won’t find Quinn’s or Cahill’s name in the countless claims, counterclaims, and rulings produced since the case began more than a decade ago, but according to three people familiar with Cahill’s role, he helped manage the U.K. lawsuit for IPCO Nigeria in return for a share of the proceeds. The company’s director, Olu Adewunmi, declined to comment on whether Cahill was involved in the lawsuit.

The Big One

The other case, of course, was P&ID. Nigeria’s desire to end flaring and provide power to the troubled Niger Delta had offered Quinn, almost 70 and in poor health, an opportunity to secure his legacy. “Mick was sick,” Murray said. “He wanted to go out on a big one.”

In 2012, once it had grown obvious the gas project wouldn’t come off, P&ID invoked its right to take Nigeria to arbitration in London. Three judges, two Brits and a Nigerian, oversaw the proceedings. From the start, Nigeria’s government seemed reluctant to participate. Its lawyers in Lagos didn’t provide a list of preliminary arguments until January 2014. Later that year, a few weeks before the first scheduled hearing, they told the tribunal they might not be able to set out the government’s case in writing or attend, “due to the inability of our client to provide us with complete instructions.”

P&ID’s submissions included a lengthy witness statement from Quinn, one of his last public declarations before he died. He described spending two years and an estimated $40 million on preparatory work for the gas plant, including a 3D digital model. “I cannot say with any certainty why the government failed to honour the GSPA,” Quinn wrote of the gas sale and purchase agreement.

He suspected pressure from international oil companies was to blame. “In any event, I very much regret that we were prevented from implementing the GSPA, which I firmly believe would have been of significant benefit to the nation.” In outlining his history in Nigeria, he didn’t mention any of his military deals, the espionage charge, or the two other lawsuits against the country.

On the basis of largely unchallenged evidence provided by P&ID, the judges dismissed Nigeria’s objections and proceeded to the next stage: damages. According to the Abuja-based Premium Times, Quinn’s company agreed to settle for $850 million, but the government of President Muhammadu Buhari, who’d taken office in May 2015, rejected the deal. When the tribunal convened a hearing on the matter, Nigeria called only one witness—a lawyer who, in the words of the judges, didn’t “claim firsthand knowledge of any of the relevant events.” In January 2017 they awarded P&ID the profits they calculated it had missed out on because the plant wasn’t built: $6.6 billion, more than three times its original estimate of losses.

A ruling in London didn’t guarantee payment, though. P&ID’s lawyers took the judgment to several hedge funds that specialize in wringing cash from bad debts, according to someone familiar with the conversations. Records show they found at least one taker: VR Capital Group Ltd., a fund manager with offices in London, New York, and Moscow.

VR acquired one quarter of P&ID—which really meant, because the only thing of value P&ID possesses is a favorable legal ruling, that it was buying a share of the suit’s proceeds, presumably in return for helping finance the legal action. (Reached by phone, VR Capital President Richard Deitz said, “No. Can’t talk. I’m busy,” then hung up. The company didn’t respond to an emailed request for comment.) The remainder of P&ID is held by Cayman Islands-based Lismore Capital Ltd., whose ultimate owners are unknown. If the Nigerian government ever pays up, it will be impossible to know who benefits.

Last October law firm Kobre & Kim and public-relations specialist DCI Group registered with the U.S. Senate to lobby on behalf of P&ID. Op-eds critical of Nigeria soon appeared in Forbes and the Daily Telegraph, urging its government to honor the judgment; another, authored in London’s City A.M. newspaper by Priti Patel, a former British secretary of state for international development, accused the country of flouting international law. Journalists also began receiving messages from a group called P&ID Facts, whose emails list the same address as that of DCI Group. “The founders of P&ID have a track record of delivering in Nigeria and for Nigerians,” the organization’s website says. “The P&ID project was to be their swan song project after over three decades of public works projects in the country.”

Nigeria’s president thus far appears unmoved. A former general who styles himself as a simple cattle farmer and anticorruption crusader, Buhari has a relatively clean reputation. He responded angrily to Patel, issuing a statement through his spokesman that echoed what Pizzurro’s whistleblower had said: The P&ID lawsuit wasn’t what it appeared to be. “Before the coming of the Buhari administration, there existed in the country a racket encompassing elements in the three arms of government, the executive, legislature, and the judiciary through the activities of which artificial, engineered, and factored breaches of contract are made, judgments are obtained, appeals are delayed, and the penalty imposed is paid and shared,” the statement read. “Nigerians need to pity their own country for the way things were done in the past.”

A spokeswoman for P&ID said the panel of arbitrators had heard evidence from both sides and ruled unanimously that Nigeria failed to uphold its contractual commitments and was liable to P&ID. “It is unfortunate that instead of accepting the tribunal judgment and engaging in good-faith discussions to bring about a solution, President Buhari’s government has resorted to spreading unfounded allegations,” she said. She described the justice department’s corruption probe as a “sham” and said the government’s allegations were “entirely fictional,” adding, “The Nigerian people would be better served if the government made a serious offer to resolve this dispute rather than only blaming others, which will not make the legal obligation to pay go away.”

The list of Nigerians skeptical of P&ID’s position includes Danjuma, the 81-year-old billionaire and former general. In an interview with Businessweek, he said the gas flaring project was originally his idea, and that one of his companies, Tita-Kuru Petrochemicals Ltd., had spent the $40 million preparing it, not Quinn. The Irishman had been a consultant, using Danjuma’s funds and office space, the general said. When Quinn applied for the contract himself, Danjuma was upset.

The realization dawned, he said, that “my consultant was going to steal my project.” He recalled being promised a share of P&ID in return for his initial investment, but added that he hadn’t heard from the company in years and that Cahill hadn’t replied to letters about the lawsuit. At one point, Danjuma dusted off his hands to emphasize the relationship’s end. P&ID’s spokesperson declined to comment on Danjuma’s involvement or any other matters raised in this story. Cahill didn’t respond to attempts to contact him directly.

Lights Out

At Quinn’s funeral in February 2015, they played The Lonesome Boatman, a flute ballad by the Fureys, one of the bands he’d managed in his youth. His obituary in the Irish Independent traced his love of Nigeria to those days, saying he’d found doing business there much like running show bands in the ’60s. “He was a clever guy, an honorable guy,” Murray said of his longtime friend. “He was trusted. How much money he made I don’t know. His house is a hell of a lot bigger than mine.”

In spite of Buhari’s comments and the criminal probe, Nigeria hasn’t made any formal allegations of misconduct, and it isn’t clear whether the country will challenge the deal’s legitimacy in court. Meanwhile, the $9 billion debt is growing by more than $1 million a day, because of interest. P&ID is now owed enough to fund Nigeria’s school system for seven years.

Or perhaps enough to eliminate flaring for good. In May an Abuja TV news program aired a segment about villagers who were using flames from the Niger Delta’s gas pipes to dry their fish, seemingly unaware of the health risks. “Communities don’t know the difference between day and night because they go to bed with active gas flare sites,” said Faith Nwadishi, a local activist. The show’s host was just beginning a sermon about electricity’s importance for economic development when a power outage struck, plunging central Abuja into darkness.

—With Tope Alake, Matthew Campbell, Gavin Finch, Daryna Krasnolutska, the International Consortium of Investigative Journalists, and Süddeutsche Zeitung

 

Read More: Bloomberg

 

Nigeria’s government stands accused of letting down its 201 million residents by failing to complete a gas supply and production agreement that would have transformed their lives. Instead, the country will now have to pay $9bn (£7.4bn) in penalties or risk having its assets seized.

The accusation is being levied at the federal republic by lawyers representing Process and Industrial Developments Ltd (P&ID), a gas supply and engineering company, following a UK court ruling that paves the way for the seizure of assets belonging to Africa’s richest country. The extraordinary figure represents one-fifth of the country’s declared foreign reserves of $45bn.

“Completely wrong and obviously unjustifiable”, were the words used by Nigerian government officials to describe the ruling by a judge in London last week.

But yesterday, lawyers for P&ID vigorously defended their client’s position. A spokesman said: “Nigeria failed to live up to its contractual commitments … The project would have generated 2,000 MW of power for the national grid and could have been transformative for millions of Nigerians. At present, the World Bank estimates that in 2017, only 59% of the country had access to a reliable supply of electricity.”

The decision, at the commercial court, converted a 2017 arbitration tribunal award into a high court judgment, and gives British Virgin Islands-registered P&ID the right to seize $9bn in assets, following the failed gas supply and processing agreement.

The Nigerian government continues to dispute the UK’s jurisdiction to hear the matter, Godwin Emefiele, governor of the country’s Central Bank (CBN), said in an interview with Africa’s Premium Times: “We know that the implication of that judgment has some impact on monetary policy and that is why the CBN is going to step forward and strongly defend the country and the reserves of the federal republic of Nigeria.”

But unless the Nigerian government can reach a last-minute agreement, its assets are at risk. P&ID’s barrister Andrew Stafford QC said: “P&ID is committed to vigorously enforcing its rights, and we intend to begin the process of seizing Nigerian assets in order to satisfy this award as soon as possible.”

The dispute arose in 2010. Brendan Cahill, founder of P&ID, and his late business partner, Michael Quinn, signed a contract with Nigerian ministry officials in which it was agreed that the government would install pipelines and supply the gas that would connect to P&ID’s “state-of-the-art gas processing plant” in Calabar, south-east Nigeria, to be built free of charge to the state.

The intention was to convert wet natural gas to dry gas to power the country’s national electric grid, improving supply. P&ID would sell 15% of the propane, ethane and butane by-products on the international market, with an expectation of generating “$5bn to $6bn in profit over a 20-year period”. In return, Nigeria would receive 85% of the gas at no cost for generating electricity.

In 2012, however, the deal fell through after the Nigerian government allegedly failed to install pipelines or supply the gas. At the heart of the matter, said the government, was the fact that the company did not build the promised processing plants. P&ID claimed it was the government’s conduct that prevented them from fulfilling their side of the agreement.

In a statement to the tribunal, Cahill explained that he had conceived the idea of processing gas from the Calabar region in 2006, after which P&ID “set about the necessary preparatory engineering work”. He alleges that over two years the company invested more than $40m on feasibility studies, licences, drawings and project management costs, before approaching the Nigerians.

Following several years of negotiations, the parties signed the contract in 2010, during the presidency of Umaru Yar’adua. Cahill alleges that the government failed to provide the necessary technical specifications for him to meet his contract and the parties fell into dispute after he discovered the government was engaging with a third party to process the gas.

During the 2015 tribunal, the Nigerian government argued that P&ID’s failure to build the gas processing plant was a fundamental breach of contract, as no gas could be delivered until this was done. The tribunal dismissed their arguments, finding them in breach of contract.

In January 2017, P&ID were awarded $6.6bn and claimed interest at the rate of $1.2m a day, which increased their claim to more than $9bn.

At the commercial court last week, P&ID sought to convert the tribunal’s award to a high court judgment. The Nigerian government contested the hearing, arguing that as the original contract had been signed in Nigeria, an English court had no jurisdiction, describing the tribunal’s award as “manifestly excessive”. Justice Christopher Butcher found in favour of P&ID, enforcing the $9bn award.

The Nigerian government is considering its next move. Emefiele said: “There are sufficient and strong grounds on the basis of which we could file a stay of execution and also an appeal against that judgment. There are certain anomalies in the process leading to the award of that contract which are currently being looked into by the economic and financial crimes commission.”

Responding to comments by Emefiele, lawyers for P&ID told the Guardian the high court judgment was “clear, decisive and consistent with prior legal findings”.

“It determined that compensation must be paid as it failed to uphold its contractual commitments. The tribunal, which included a former attorney-general of Nigeria, unanimously determined that the FRN was at fault for the project’s failure. Their arguments have been comprehensively rejected.”

The matter is still to be settled in the US, where P&ID are seeking permission to enforce the arbitration award. Nigeria’s defence in the US is the same as those just rejected by the English court.

 

Credit: The Guardian

It took President Muhammadu Buhari 54 days after his second term began to send a list of ministerial nominees to the Nigerian Senate for screening. This is a better record than his first term, which began in May 2015. Then Nigerians had to wait six months before the list of ministerial portfolios and offices was announced.

This time around the Senate took just a few days to approve the list, the vast majority of whom served in Buhari’s previous cabinet. Only 14 out of 43 were first-term cabinet members.

The big change was that Buhari elected to expand cabinet positions from 36 to 43. This is likely to mean an expansion of the ministries from the current 23 to accommodate all the appointees.

In Buhari’s first term there were 15 women. That number has more than halved to seven.

In 2015 the excuse for the lengthy delay was that the president needed time to make the selection. This was because he was seeking to appoint individuals untainted by the endemic corruption that has come to typify politics in Nigeria. Back then, Nigerians were open to giving the president a grace period. Several analysts agreed that the blatant corruption seen under Goodluck Jonathan’s administration played a major role in the goodwill towards Buhari.

But it soon became clear that Buhari’s administration would not be radically different. The first cabinet was made up of individuals who were known more for being the president’s political bedfellows than for their technocratic qualifications or achievements. That in itself is not out of the ordinary in almost any political dispensation across the globe. An easily agreeable cabinet makes for swifter and less contentious decision-making.

In Nigeria, however, it is viewed more like compensation for previous political support than selections made on merit.

Buhari’s new cabinet is just like the last. But his supporters are likely to argue that politics, especially in contemporary Nigeria, requires a heavy amount of pragmatism.

What, then, have we learned from Buhari’s appointments?

In my view, the second term cabinet make-up reflects the moribund state of political governance in Nigeria and the tone-deafness of Buhari’s government. Some of the names on the ministerial list are of politicians who have previously been charged with corruption. Others have been associated with corrupt practices while in political office .

And almost all the names on the list are politicians who have served in government in one form or another before – former governors, senators, and political office holders. This raises questions about the sincerity of the president’s pledge in 2015 to select incorruptible people as ministers.

Issues to be considered

There’s a lot that’s wrong with the cabinet.

Firstly, choosing a ministerial cabinet in Nigeria isn’t as simple as just selecting random individuals, even if they are the most qualified candidates. Nigeria has a complex political reality that has to be taken into consideration to fully appreciate the rationale that underlies the way governance looks within the country.

One factor that must be considered is Nigeria’s ethnic, linguistic and religious diversity. To ensure equal representation, the Nigerian Constitution stipulates that each of the country’s 36 states must be represented in the cabinet.

This was necessitated by the ethnic marginalisation that came about after the “forced” amalgamation of Northern and Southern Nigeria by the British, the Biafran Civil War, and several other difficult historical episodes. So, in choosing prospective ministers from each of the 36 states in the country, it could be argued that Buhari is simply following standard political precedent.

It’s also clear that Buhari has again found it prudent to reward political allies with positions. In truth, this is normal practice in most countries. One must ask, then, why the expectations were different where Buhari’s cabinet was concerned. The answer is that he has been a self-declared anti-corruption reformer since his first term. Going against the political grain by choosing merit over kinship might have alienated some of his allies. But it would have gained him goodwill among the Nigerian people.

The gender imbalance of Buhari’s cabinet also serves to advance a common refrain that his government is tone-deaf. The president was criticised during his first term for not appointing enough women ministers. Buhari made a promise to address this during his second term. But the opposite has happened.

This gives the impression of a government that is resistant to progressive ideas and change and makes no pretence about it.

What now?

For cynical observers of the current administration, the adverse effect the drawn-out wait for the ministerial list has had on Nigeria’s economy has not been worth it. If anything, it is a reminder of the snailspeed approach that the current administration has adopted in managing the nation’s affairs.

The nation’s security sector is in poor shape; abductions and terror attacks are becoming commonplace. There seems to be no end in sight to the Fulani herdsmen crisis either. The economy is still being supported by foreign loans, and there have been grim prognostications from the likes of the International Monetary Fund. There is a very real risk of recession.

Adding to that, the early criticisms of Buhari’s government for its lack of a coherent fiscal policy still have currency.

In conclusion, if there is a recurring theme to be picked up from Buhari’s cabinet, it is that things are set to remain the same for the next four years in terms of the political governance, and the administration’s poor management of the Nigerian economy.The Conversation

 

Ini Dele-Adedeji, Research Associate, Politics & Development Studies, University of York

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Nigerian central bank held a treasury auction on Wednesday to try to lure foreign investors, traders said, hours after it was announced that the president told the bank to ban access to dollars for food imports to curb demand.

Pressure has been building on the naira currency as oil prices drop and foreign investors book profits on local bonds in response to falling yields. Crude sales account for 90% of foreign exchange earnings and two-thirds of government revenues in Nigeria, Africa's top oil producer.

Banking stocks fell 1.26% on Wednesday, to help drag the main share index to a more than two-year low as negative sentiment persisted on the stock market.

Traders said the central bank asked them to increase their rates at a bills auction on Wednesday compared with rates that the bank paid at the last sale in July.

The move led to a spike in yields on the one-year treasury bill which rose to 12% on Wednesday from around 10% on Friday after the bank told dealers to bid higher rates at its auction, traders said.

Traders said the central bank wanted to offer bills at higher rates to attract foreign investors to boost liquidity on the currency market, which would help support the naira.

On Friday, the naira eased to 364 per dollar, from a quote of 363.50 as falling oil prices tightened liquidity on the currency market.

A dollar shortage was initially caused by a slowdown of foreign inflows after local debt market yields declined.

UNCERTAINTY

"As the naira came under increasing pressure ... stepping up demand management policies in the foreign exchange market furthermore suggests that the central bank faces increasing problems propping up the currency through open market operations," said Malte Liewerscheidt, vice president of Teneo Intelligence.

Nigerian President Muhammadu Buhari on Tuesday told the central bank to stop providing funding for food imports, his spokesman said, in a further sign of pressure on the currency.

A spokesman for the central bank, which is an independent body, has not responded to text messages and phone calls seeking a comment on whether or not the request will be heeded.

Traders said the market was waiting for more information on how such a ban would be implemented, especially for importers with existing lines of credit.

"This adds to the level of uncertainty in the market. How the central bank would implement this remains unclear," one trader said. "Some of the items may already be included in the earlier ban."

The central bank in 2015 banned access to foreign exchange for 43 items in a bid to curb dollar demand, though it continued to sell dollars to offshore investors to boost confidence.

Nigeria, which has Africa's biggest economy, operates a multiple exchange rate regime, which it has used to manage pressure on the currency.

The official rate of 306.90 is supported by the central bank but the traded rate of 364 is widely quoted by foreign investors and exporters.

 

In an effort to boost economic growth in Africa’s most-populous country, Nigeria is giving its banks a choice: lend more money, or hand it over to the central bank and earn nothing on it.

Banks should use at least 60% of their deposits for loans by the end of September, the central bank said on July 3, according to a circular viewed by Bloomberg. Those that don’t will have their cash-reserve requirements increased, meaning they’ll be forced to park more money at the central bank.

Nigeria’s banks are some of the most reluctant lenders in major emerging markets, with an average loan-to-deposit ratio below 60%. That compares with 78% across Africa, according to data compiled by Bloomberg. It’s above 90% in South Africa and about 76% in Kenya.

Guaranty Trust Bank Plc, the nation’s biggest lender by market value, fell 1.9% in Thursday trading, contributing the most to the Nigerian Stock Exchange All Share Index’s decline. Its loan-to-deposit ratio was 53% at the end of March. United Bank for Africa Plc also dropped, while Zenith Bank Plc rose.

The decision was taken “to ramp up growth of the Nigerian economy through investment in the real sector,” Ahmad Abdullahi, director of banking supervision, said in the letter to banks. “To encourage lending to small businesses and consumers and more mortgages, these sectors shall be assigned a weight of 150%” when computing the loan-to-deposits ratio.

The Nigerian economy is struggling to recover from a full-year contraction in 2016 and will expand 2.1% this year, according to the International Monetary Fund. The central bank cut its key lending rate in March to help boost growth.

Risk Aversion
There was previously no rule on minimum loan-to-deposit ratios, and many Nigerian lenders have ratios of about 40%, Abdullahi said by phone from Abuja, the capital.

The order came after Central Bank Governor Godwin Emefiele urged banks to boost lending or have access to risk-free assets restricted. Speaking at the most recent Monetary Policy Committee meeting in May, he said he would create “a mechanism” to limit banks’ purchases of government securities.

Risk-averse Nigerian banks have resisted lending to businesses and consumers and instead piled their cash into naira bonds, which yield 14.3% on average, one of the highest rates globally. Lenders worry that with inflation at more than 11%, extending more credit could endanger the financial system through an increase in non-performing loans, or NPLs.

That makes some analysts skeptical of whether the new measures will work.

“Forcing banks to lend under the current macro-economic situation will only result in a buildup in NPLs,” analysts at Lagos-based CSL Research, including Gloria Fadipe, said in a note to clients. “This could pose a risk to financial stability.”

CSL estimates it could result in an additional 1.4 trillion naira ($3.9 billion) of lending if the central bank gets its way.

Bad Loans
Non-performing loans as a percentage of total credit in the Nigerian banking industry declined to 11% in the first quarter from 14% a year ago, according to the National Bureau of Statistics.

Past experience with such measures isn’t encouraging. The central bank last year allowed banks to use their statutory cash reserves to fund manufacturers on the condition that such loans were at a maximum interest rate of 9% and a minimum maturity of seven years. The lenders didn’t take advantage of the policy due to credit risk and high returns on government bonds, according to Michael Famoroti, an economist and partner at Stears Business.

“I don’t expect much change,’’ Famoroti said by phone from Lagos. “We just came out from a period of high NPLs and banks are very cautious of credit growth at this time.”

 

Credit: Bloomberg

Nigeria’s Otigba Computer Village is arguably the biggest information, communications technology (ICT) market in Africa.

It started off as a one-man business on a street called “Otigba” in Ikeja, the capital of Lagos State. Within a short time it grew to a few thousand businesses occupying a vast area in the state. It represents an ICT solution centre for Nigeria as well as West Africa.

Three years ago Nigeria’s National Bureau of Statistics estimated that the informal sector had accounted for as much as 41% of the country’s economy in 2015. The informal sector in Nigeria continues to grow for numerous reasons. These include:

  • limited ability of the formal economy to absorb surplus labour (largely dominated by people aged between 15 and 50 years);

  • barriers to entry into the formal economy by young entrepreneurs who have ideas but little capital to compete with large firms in the formal sector;

  • weak government institutions (regulatory bodies); and

  • poor economic conditions which are forcing many consumers to demand cheap goods and services.

The Otigba cluster is no exception. It remains largely informal despite its size, the volume of economic transactions being done daily and the technical knowledge put to use in the market. Numerous studies have been done to evaluate the size and capacity of the cluster, its evolution, mode of operation, performance, sustainability and constraints.

But before my research there had been no studies on how businesses within the cluster identified new and useful knowledge and how they applied that knowledge to innovation to increase their performance and profitability by scaling-up their operations.

Research across the world shows that when businesses cluster together there is bound to be an exchange of knowledge. This can be through spillovers or conscious transfers. With more than 4000 businesses, Otigba should be no exception. So, I set out to test this by surveying 200 business units, representing about 5% of the size of the cluster. I wanted to understand how knowledge is being identified, acquired, developed, used and diffused in the cluster.

The study also sought to understand how the spread of knowledge within the cluster led to innovation and the scaling of business operations. Innovation here refers to significant technical changes in the product, services, production processes or delivery method.

To measure the scaling up of businesses, the study examined:

  • inputs (access to more finances, number of employees),

  • activities (sub-contracting, outsourcing and collaborations),

  • outputs (turnover, quality, quantity) and

  • impacts (compliance to international standard, technology upgrading and net export).

The study used these indicators because they are yardsticks for measuring growth in firms in the formal sector.

Some interesting findings

When businesses operate in close proximity, as they do in clusters, knowledge sharing is inevitable. I found this to be true in Otigba. This is mainly because the daily routine of the businesses involves: rotation of tasks and the regular training of employees (mainly apprentices) by highly skilled technical personnel, usually the owner of the business or someone appointed as senior manager.

Most businesses didn’t give preference to employees with relevant experience when hiring. Instead, they used the expertise of qualified technicians to train new employees. As a result apprentices learnt on the job.

By and large, it took new employees less than two years to acquire all the necessary knowledge they needed to do the jobs they were hired for. The result is that apprenticeship has become one of the major channels for skills acquisition and knowledge diffusion within the cluster. Apprenticeship involves on-the-job learning by young employees under the supervision of experts. During this period, tacit knowledge is passed on to the apprentices until they become experts themselves. These apprentices thus graduate, ready to start their own businesses or secure employment as technicians in the formal sector.

The other channel for diffusion of knowledge within the clusters is the trade association and the unions. These have enabled collaborative innovation in the cluster which has made it possible for firms to compete as a cluster against international players. This is because of the monitoring role played by trade association and unions such as the Computer and Allied Product Dealers Association of Nigeria. The union ensures that new knowledge about new technologies (product and process) are made known to all it members. The union facilitates collective importation of expensive equipment as well as sharing to tools and technicians among its members.

Because of knowledge sharing in the cluster, the majority of new businesses were able to scale up their operations within the first three years of operation. This is remarkable given that research shows that a third of new small business die within two years, and half within five years of starting up. Thus knowledge sharing through clustering is organic incubation – one viable way to survive the first three years as a start-up.

Knowledge sharing also enabled most of the enterprises to increase their capital resources within three years of start-up. They did this either through their own generated resources or through loans. The main source of loans came from commercial banks followed by co-operative societies, business angels and micro-credit organisations.

Most enterprises increased their work force to run their businesses because of good business performance. During the scaling-up period, there was lots of collaboration between firms within the cluster as well as with other businesses, organisations and institutions outside of the cluster. This facilitated the transfer of knowledge among cooperating firms.

Finally, the effects of scaling-up enhanced the ability of businesses to:

  • satisfy customers’ demands;

  • comply with Nigerian regulations and standards;

  • develop more environmentally friendly products/processes; and

  • improve product quality.

Also, knowledge sharing that happened during the scaling up enabled businesses to extend their product range, deal successfully with new competitors abroad, and lower their production costs.

Conclusion

My research found that openness and proximity increased access to information, customers, new domestic markets, tools and technology, suppliers of raw materials and inputs. In addition, all the enterprises that benefited from proximity in the cluster were involved in at least one form of innovation.

In conclusion, the study posits that knowledge need not be protected in clusters or in the informal sector generally. Instead, it should be shared widely so that other businesses can adopt, or adapt, it. This in turn spurs further innovation and the rapid development of the sector. Openness will also aid the development of other sectors through knowledge spill overs. This, in turn, will create healthy competition among businesses.The Conversation

 

Oluseye Jegede, Senior Researcher, SARCHI Industrial Development Unit, University of Johannesburg

This article is republished from The Conversation under a Creative Commons license. Read the original article.

On Wednesday the 29th of May 2019, the Federal Republic of Nigeria again swore in President Muhammadu Buhari for a second term in office. For many Nigerians, the administration’s return to power presents an opportunity for it to consolidate many of its reform agenda.

Muhammadu Buhari GCFR is a Nigerian politician currently serving as the President of Nigeria, in office since 2015. He is a retired major general in the Nigerian Army and previously served as the nation's head of state from 31 December 1983 to 27 August 1985, after taking power in a military coup d'état.

Muhammadu Buhari GCFR is a Nigerian politician currently serving as the President of Nigeria, in office since 2015. He is a retired major general in the Nigerian Army and previously served as the nation's head of state from 31 December 1983 to 27 August 1985, after taking power in a military coup d'état.

This piece argues that given the multifarious challenges that the new Nigerian Federal Competition and Consumer Protection Commission (FCCPC) already faces, i.e, from Nigeria’s status as a developing country, the commission can take advantage of the institutional openings presented by the new Nigerian regime, to advance its objectives.

Importantly, beyond the technical issues of the necessity of a competition culture, and resources, for the efficacy of the new Nigerian competition law, the broader administrative law context of Nigeria is also relevant. Here, the newly re-inaugurated Nigerian administration presents some key opportunities, the Nigerian agency can utilize.

Specifically, the generally accepted denominators of a successful competition law are the relevant social norms of competition; the requisite resources to sustain or galvanise the framework, when it is introduced, and the appropriate legal structures to interface with the enacted law to actualise the law’s objectives.

For example, concerning the social norms, the relevant social practices that priorities the acceptability of ‘competition’, as a market value, and necessitates its inclusion in the relevant markets, contribute highly to the success of a competition law. In the key jurisdictions where the law has flourished, the broad-based social acceptance of ‘competition’, as a desirable social value, and the norm by which the market ought to be regulated, greatly advances the purposes of the jurisdictions.

In the US, for example, the country’s anti-trust law was originally inaugurated on, and continues to be sustained by, a social acceptance of competition over the grip of ‘cartels’. Similarly, in other jurisdictions, the success of the regimes draws from the broad-based social acceptance of ‘competition’, i.e., over other forms of monopolistic tendencies, especially, by the relevant societal actors.

Concerning resources, the availability of the requisite human and financial resources, for the enforcement of a competition law, forms the bedrock of the efficacy of the law. Similarly, the appropriate legal framework refers to the complimentary ancillary rules and procedures that will assist the enforcer of a country’s competition law achieve its aim. A good example is the existence of plea bargaining in the US. However, beyond the above ‘technical’ requirements, for a competition law, other societal components are also relevant. They include the overall, broader, societal ‘space’ within which the adopted law of a country will operate, and the absence of corruption to ensure that the introduced law will be free of hijack and distortion.

The relevant broader social space or ‘culture’ refers to the broader social perceptions that guide the general attitudes of citizens towards the laws of a state (or how the citizens perceive the overall legitimacy of a state’s laws to be), and the absence of corruption refers to the bedrock or institutional ‘normalcy’, of a state, that guarantees the long-term success of its laws or frameworks.

In Nigeria, the condition of the above parameters, before the ascension of the current government, is documented. Especially, within previous regimes, a pervasive and institutionalised dissatisfaction, with the government, and the process of governing, existed in Nigeria.

A 2012 report submitted to the United States Congress by the Secretary of State John Kerry has alleged massive corruption at all levels of the Nigerian government.

A 2012 report submitted to the United States Congress by the Secretary of State John Kerry has alleged massive corruption at all levels of the Nigerian government.

Also, a concretised and largely unchallenged, grand, form of corruption was also the norm. The first (disaffection) flowed from the absence of genuine and targeted pro-poor programs, in the previous administrations (or the failures of the same where they existed), and the latter (corruption) arose from the complicity of the governments, in the vice of corruption, coupled with the manifest lack of punishment for corrupt figures where they were discovered.

However, with the current administration (while by no means perfect), a huge chunk of the regime’s popularity has arisen from its demonstrated willingness to interrogate the above status quo. Specifically, two areas where the government has been successful, include its pro-poor social agenda and the regime’s war on corruption.

In the first case, for example, following the regime’s inauguration, in 2015, the administration introduced various social measures to combat the almost institutionalised sense of inequality in Nigeria. Examples of measures introduced by the regime include the Nigerian Social Investment Program (N-SIP), consisting of the N-Power program; the Home-Grown School Feeding program, and the Conditional Cash Transfer scheme meant to assist petty traders, university graduates, NCE holders and less-privileged Nigerians.

Other schemes also include the Nigerian Industrial Revolution Plan—that established the Nigerian Industrial Policy and Competitiveness Advisory Council, constituted of the government and key private sector representatives at the highest levels of the country; agriculture sectoral initiatives—including the Nigerian Anchor Borrower’s program, operated by the Central Bank of Nigeria and kicked off to assist subsistent and industrial farmers improve their quality of living and reduce Nigeria’s dependency on imports, and the Special Presidential Committee on key commodities, set up to effectively strategise the Nigerian government’s efforts in the area. The government has also embarked on a wide range of infrastructural developments to foster a sense of inclusion amongst Nigerians and improve their lots.

In addition to the above, the current administration has also been aggressive against corruption; with the country’s anti-corruption agency recording at least nine hundred and forty-three anti-corruption cases between 2015- 2018. Particularly, during the period, erstwhile ‘powerful’ and ‘untouchable’ entities in Nigeria have been arrested, with some currently serving jail terms. The list includes serving senators of the federal republic of Nigeria; past governors of states and federal ministers; a serving chief justice of the federation; different judges; the chairman of the Nigerian Bar Association (NBA), and the heads of various governmental parastatals.

Other measures that have been also put in place by the administration to combat the menace of corruption in Nigeria include, the implementation of a Treasury Single Account (TSA); a whistleblowing policy; an Efficiency Unit of the government, and an Integrated Payroll Personnel System (IPPIS), implemented across the various governmental MDAs, to enhance the efficiency of the government and remove unjustified payroll entries from the government’s fiscal registers. 

Admittedly, the above measures by the current Nigerian administration hardly touch directly on the technical prerequisites for the success of a competition law. But they open up significant opportunities which the new Nigerian competition law commission can utilise to advance its objectives.

Especially, the success of a competition law is informed by the political, social, cultural and institutional fertility of the forum into which the law is introduced. Furthermore, in Nigeria, owing from the nation’s ostentatious status as a developing country, the country already faces significant drawbacks, in its ability to operationalise a competition law. Therefore, both facts make the above ‘successes’ of the current Nigerian administration relevant.

The Nigerian agency can adopt the following measures to advance its objectives.

First, the agency can take advantage of the current good will of many Nigerians, to advance the formative message of the importance of a competition law for Nigeria. Particularly, the current Nigeran administration’s social programs have reduced (not eliminated) the previous, characteristic, suspicion of many Nigerians towards the government. This reality presents a distinct opportunity for the competition agency to position itself as a socially inclusive organisation, working in line with the Nigerian Federal Government, to better the welfare of Nigerians. A successful utilisation of the strategy, by the commission, will reduce its resource burdens.

For example, in the face of the current widespread social acceptance by Nigerians, more Nigerians will be willing to voluntarily obey the competition law, as espoused by the agency, and Nigerians will also be willing to distribute the information of the commission, thereby reducing its overall costs. Here, the agency can achieve the objective by recruiting popular Nigerian (entertainment) figures and community leaders to share the message of social and economic inclusion, through competition, and the commission can also take advantage of the prime role religion plays in the Nigerian society.

Second, the Nigerian competition commission can also utilise the current federal government’s ‘war’ on corruption to advances its mission. Specifically, the commission can couch anti-competitive practices as a form of corruption that disadvantages Nigerians.

Further still, the commission can also carefully select cases to prosecute, relying on the currently reduced chances of ‘hijack’ by corrupt judges on appeal, in Nigeria, to get its message out. (A similar strategy has been successfully adopted by the Nigerian EFCC, a comparable law enforcement agency). The competition commission can also take advantage of the anti-corruption policies of the current federal government and lobby for the extension of the same to anti-competitive practices. One such key policy is the Nigerian whistleblowers’ policy, set up by the Nigerian Federal Ministry of Finance (FMF), in December 2016. A key component of the whistleblowers’ policy is the Nigerian federal government’s attempt to undermine the secrecy that ordinarily advantages corruption in Nigeria, including by providing financial rewards (parts of the recovered booty) to informants.

Therefore, by relying on the already functioning Federal Government of Nigeria’s policy on whistleblowing, and especially its provision for financial rewards to whistleblowers, the Nigerian competition commission can integrate an otherwise problematically developed competition law tool, and leapfrog certain advanced jurisdictions (including the United States of America).

Competition law reform is a complicated form of legal engineering and the analyses typically focus on the existence of technical prerequisites for the success of regimes. However, in developing countries, issues beyond the above technical analyses are also relevant. In the contexts, interrogating broader questions of the overall societal and institutional ‘space’ of a competition law is crucial. This piece has highlighted specific opportunities that currently exist under the present Nigerian administration. The opportunities are non-traditional, but they are significant, and the Nigerian agency will be better off if it utilises them.

The writer Dr Bob Enofe is an international researcher in International and Comparative Competition Law

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