Wednesday, March 30, 2011

Profiteers of Nigeria’s 2011 Elections

It is countdown to Nigeria’s April 2011 general elections. In a matter of days, Nigerians will once again file out to exercise their franchise which, hopefully, will bring about a peaceful change of government. While the electoral activities unfold, particularly since the November 23, 2010 release of election timetable by the Independent National Electoral Commission (INEC), some segments of Nigeria’s society have been reaping bountifully from the electioneering season, particularly from the political parties, aspirants and candidates. Major beneficiaries include the hospitality, media, banking, automobile, entertainment and textile industries; real estate and security sectors as well as law firms.

Starting with the hospitality industry, since the beginning of this season, hotels, catering services, event planning agencies have been experiencing boost in their service demand. As politicians gallivant about, canvassing for votes, they hire event planning companies to organise their political rallies; they accommodate their supporters in hotels while also engaging caterers to provide sumptuous meals and snacks for their teeming followers. The media houses too have been smiling to the banks as, in spite of the hike in the advert rates, politicians and their parties still find them indispensable. Electronic media are being engaged to provide live transmission of the political rallies both on radio and television. Electronic and print media organisations are also engaged to provide political communication through jingle productions and airing as well as newspaper advertorials. Many public relation firms are also engaged to brand candidates who can afford it. Many advertising agencies have similarly been engaged to design and mount bill-board adverts for candidates and their political parties while the printers too have been having a field day producing posters, handbills, flyers, stickers’ etcetera for politicians.

It has also been harvest of honey for Nigeria’s popular comedians, musicians, actors and actresses as their services are now in hot demand to add glamour to campaign rallies. Some musicians are actually paid to wax special records to sing praises of some of the politicians contesting in the forthcoming elections. This is the fad among incumbents gunning for second term in office. Nigerian banks have also been making nice profits from many of the politicians banking transactions, the profits are fees charged as Commission on Transaction (CoT) and other sundry administrative charges.

The automobile industry has been experiencing fillip during this campaign season as political office contestants buy and hire vehicles for their campaign rallies. Bullet proof cars are in high demands. The simple reason for this is due to high level of election related violence which in actual fact has escalated during this campaign season. As for the real estate sector, many political parties, aspirants and candidates hire the services of estate agents to shop for party and campaign offices.
There has also been high demand for the services of private security firms as politicians use them as guards for protection during this volatile period of campaigns. There has been noticeable increased patronage of textile industries by politicians who for the purpose of branding often place orders for customised clothing materials which they share out to their supporters.

Law firms rank among the greatest beneficiary of political season in Nigeria. For instance, there have been over 300 petitions filed by lawyers for their clients who were aggrieved contestants’ aftermath of the contentious party primaries held between November 26, 2010 and January 15, 2011. This list of beneficiaries is by no means exhaustive as mention can also be made that as a result of the adoption of broom as the logo of Action Congress of Nigeria (one of the 63 registered political parties in Nigeria) the price of broom often increase sharply wherever the party goes for campaign as it is in the character of their supporters to brandish broom as a means of demonstrating support and solidarity to the candidates and the party.
As highlighted, the sudden boost in the demand for these goods and services is seasonal and associated with electioneering period. So for the beneficiaries, enjoy it while it lasts.

Wednesday, March 23, 2011

Of businessmen and politics

I FIND Dr. Reuben Abati’s commentary in The Guardian of March 20, 2011 very interesting and didactic. The article titled “Businessmen and the 2011 Elections” was his reaction to the editorial of Bussinessday of March 18, 2011 titled ‘Bankers’ Romance with Politicians’. The newspaper had in its editorial warned of the backlash of the unholy romance currently going on between the bankers and the politicians who are candidates in the forthcoming elections. Businessday cited the recent appointment of the movers and shakers of Nigeria’s economy particularly former and serving bankers as members of the People’s Democratic Party’s Finance and Fundraising Committee.

The newspaper alerted that this is against the directive from the Central Bank of Nigeria which in its regulation of the banking scope of Activities & Ancillary Matters, No 3, released last November said: "from the date hereof, no bank shall grant or permit to subsist, any loan, donation, gifts or any form of financial accommodation to any political funds, political party, or for political purposes whether directly or indirectly; incur any political expenditure".

The gist of Dr. Abati’s argument is that this is a needless controversy as according to him, “In Nigeria, businessmen cannot be blamed for seeking golden protection through involvement with politicians. That will be all too na├»ve! The Nigerian business environment is too volatile, and with government so powerful and omnipresent, it pays the investor community to establish access, influence and leverage with the government of the day. This however presents for each individual, a test of moral and corporate values to conduct himself or herself in ways that minimize or eliminate reputational challenges and this is best done through etiquette, compliance with electoral regulations and observance of industry/sector engagement rules.”

Dr. Abati went on to cite examples of how businessmen play leading role in United States of America, United Kingdom, Italy, Armenia and Ukraine. He says the involvement of businessmen is a non-issue at best and at worst, a moral burden on the businessmen. I disagree with these submissions. Undue involvement of businessmen in politics goes beyond moral burden; it is unconstitutional, illegal and unfair.
Yes, there is no law that says a banker or a businessman cannot belong to a political party, vote or be voted for at elections. This is a fundamental human right. However, the 1999 Constitution as amended, the Electoral Act 2010 as well as the Companies and Allied Matters Act (Laws of the Federal Republic of Nigeria 1990) all frown against undue involvement of businessmen in politics.

Starting with the 1999 Constitution as amended, section 221 says: “No association, other than a political party, shall canvass for votes for any candidate at any election or contribute to the funds of any political party, or to the election expenses of any candidate at an election.” This constitutional provision is much in sync with the provision of section 38 (2) of the Companies and Allied Matters Act (CAMA) which says: “A company shall not have or exercise power either directly or indirectly to make a donation or gift of any of its property or funds to a political party or political association, or for any political purpose; and if any company, in breach of this subsection makes any donations or gift of its property to a political party or association, or for any political purpose, the officers in default and any member who voted for the breach shall be jointly and severally liable to refund to the company the sum or value of the donation or gift and in addition, the company and every such officer or member shall be guilty of an offence and liable to a fine equal to the amount or value of the donation or gift.”

Even though the 1999 Constitution as amended and CAMA forbid companies or businesses from donating to campaign fund of a political party or candidate, it allows individuals within those companies to make a personal donation to the campaign fund. It is and should however not be a blank cheque. Electoral Act 2010 in Section 91 (9) says: “An individual or other entity shall not donate more than 1, 000,000 to any candidate”. Even if a candidate is very rich and could single-handedly funds his or her campaign, section 91 sub-section 2 – 7 of Electoral Act 2010 places a cap on the amount such candidates can spend on their campaigns.

The issue here is that it is both legally and morally reprehensible for businessmen or corporate organisation to use depositors or shareholders fund to finance political campaign. As Bussinessday editorial rightly observed, “political activities, by their nature, are purely speculative with no realistic measure of returns”. There is no gainsaying the fact that the crises that rock the Nigerian financial sector particularly the Nigerian Stock Exchange and the banking industry are largely precipitated by politically exposed persons both within and outside of the industry. When the private sector under the pseudonym of Corporate Nigeria used depositors and shareholders fund to bankroll the campaigns of presidents and some Governors in 1999, 2003 and 2007 in order to obtain what Dr. Abati referred to as golden protection, when the bubble burst in August 2009 and ‘Hurricane Sanusi’ blew away a total of eight bank Managing Directors and subsequently the Director General of Nigeria Stock Exchange was removed by Security and Exchange Commission did those presidents and governors offer them protection against prosecutions?

If operators of corporate organisations wanted to actively participate in politics, he or she should resign his or her appointment to do so. Otherwise, personal donation within approved legal limit to a political cause will be in order, however, to lend or give depositor or shareholder’s money to politicians to contest election is criminal, illegal and unconstitutional. Moreover, goading corporate sector players to be actively involved in politics as Dr. Abati encourages in his commentary creates uneven playing field for political contest. If it were to be the opposition party(ies) that announced those ‘business octopuses’ as members of their fundraising and finance committee, their business interest would have suffered cataclysmic consequences but because they were appointed by the government in power, they can expect huge returns on investment in the form of waivers, concessions, patronages and favourable business policies.

They get all of these at the expense of the suffering masses whose interest the business elite will never protect in their quest for super-profit. It is high time the Central Bank of Nigeria, Security and Exchange Commission and indeed the Independent National Electoral Commission took up the gauntlet and enforce the codes on party financing in Nigeria.

Sunday, March 13, 2011

Review of Nigeria’s 2011 Budget

The president and Commander in Chief of Nigeria’s Armed Forces, Dr Goodluck Ebele Jonathan on Wednesday, 15 December 2010 presented the 2011 Appropriation Bill to the joint sitting of National Assembly. According to the President, the 2011 Appropriation is a budget of fiscal consolidation, inclusive economic growth and employment generation. The president went further to say that the “Budget proposal is underpinned by four pillars that are drawn from our Economic Growth Strategy. These are to foster inclusive growth and job creation; optimise capital spending by rationalising recurrent expenditure and maximising Government’s revenues; accelerate the implementation of reforms to enhance the quality and efficiency of public expenditure; and reinstate greater prudence in the management of the nation’s financial resources.”

While giving account of happenings in 2010, the president said “Despite global challenges, Nigeria’s economy has remained resilient as a result of this administration’s efforts to maintain macroeconomic stability and promote socio-economic development. Real GDP growth is robust, increasing from 7.36 per cent in the first quarter of the year to 7.86 per cent in the third quarter. While the non-oil sector remains the key driver of our economic growth, the oil sector has recovered significantly in recent times, with oil production rising due to the favourable investment environment fostered by the Niger Delta Amnesty programme. Overall GDP growth for 2010 is projected at 7.85 per cent. Inflation has fallen from 13.9 per cent in December 2009 to 13.4 per cent in October 2010. External reserves at US$33.13 billion as at the end of November remain comfortable and the foreign exchange markets have been relatively stable in recent times.” This is old story. How has these figures impacted on the standard of living of Nigerians? Negatively, I would say.

The President presented a budget estimate of N4.2 trillion as total expenditure for the year 2011 out of which N1.005 trillion is for capital expenditure, while N2.481 trillion is projected for recurrent (non-debt) expenditure, debt service is to get N542 billion with N196 billion for statutory transfers. Key economic assumptions in the budget provide for an oil production of 2.3 million barrels per day at a benchmark oil price of $65 per barrel. Exchange rate is put at N150 per USD$ while Joint Venture Cash Calls is $5.4 billion with a projected growth rate of 7 percent. Projected budget deficit is 3.62 percent of GDP.

My take on the 2011 budget is that giving the experience of the past, it stands the risk of low implementation. My pessimism is derived from the fact that the budget was submitted late to the National Assembly, even though the 2010 budget has been extended till March 2011. The other challenge is that it’s a budget being presented in an election year when high wired politicking has taken the centre stage. Concomitant to this is also that in the event of a new government being voted in during the April 2011 elections, the new government’s focus might change. This was experienced when late President Yar’Adua took over from Chief Olusegun’s Obasanjo’s government on 29 May 2007. This happened despite the fact that the two administrations are rooted in the same political party. Even as it were, immediately after the demise of President Musa Yar’Adua in May 2010, we have ceased to hear 7 point agenda as well as the promise of 6, 000 megawatts of electricity.

The 2011 budget is not inspiring; it’s full of rhetoric which Nigerians have been fed over the years. There is still poor implementation of 2010 budget akin to what was experienced in 2009 and previous years. As earlier observed, the major distraction for the consideration and implementation of the 2011 budget will be politics, as it will be a year of trade off and payment of political IOUs by whoever wins the 2011 elections, even if the incumbent wins.

The new budget has N1.005 trillion set aside as a capital vote out of a total of N4.2 trillion budget, this is still unhealthy given the deplorable state of many of our social infrastructures. Nigeria is still largely import dependent and mono-culture having to depend on crude oil. Why can’t government do something strategic and substantial with our solid minerals? All the stolen wealth recovered from the looters as well as huge recovery from the $180 million Halliburton bribe scandal, how are these monies being expended? How much of this budget is coming from taxes and other internally generated revenue sources? I fully support the demand by the national assembly for the budget of all the 31 government agencies to be attached to this year’s budget. The impunity of having government agencies running independent budget without legislative appropriation must stop forthwith. As it has been pointed out, it is against section 21(1) of 2007 Fiscal Responsibility Act. I wonder why the parliamentarians have condoned this infraction for this long, only to start barking after the Central Bank Governor accused them of consuming 25 percent of the recurrent expenditure of government.

I concur with the Senate President in his submission for the downward review of the recurrent expenditure. It is clearly an albatross on the fragile economy. Perennial running of deficit budget is also very uncomplimentary. The 2011 projected budget deficit is 3.62 percent of the Gross Domestic Product (GDP). Government must find a creative way of cutting down on budget deficit. One of such is to diversify the economy by grooming the non-oil sector such as the manufacturing, agricultural and solid-mineral sectors. To effectively do this, there must be enabling environment for private sector participation in these sectors. There is need for the provision of good policy framework, moratorium, abolition of multiple taxation and availability of basic infrastructures such as adequate and affordable electricity, good road network, revival of rail system, provision of potable water as well as adequate security of lives and property. These are the major attraction to foreign direct investment (FDI). With the provisions of all the aforementioned, the small and medium scale enterprises will flourish and as such help to reduce unemployment and concomitantly poverty.

Policy inconsistency on the part of government is also unhealthy for the economy. The recent lifting of ban on some non-essential products such as toothpicks, furniture, cassava, vehicles that are 15 year old and below, matches, energy and health drinks as well as textile materials will do more harm than good to the economy. Even though government intends to make money on the importation of these merchandises through custom duty etc, yet since these goods can largely be produced locally, efforts should have been geared towards protecting the local manufacturers of the products rather than exposing them to unhealthy competitions from outside. Moreover, it will lead to the depletion of our foreign reserves as there will be overwhelming demands for foreign exchange for the imports.

The initiative of establishing National Job Creation Scheme (NJCS) with seed funding of N50 billion in the 2011 Budget is commendable even if the focus is largely on the unskilled workforce. At least, a faithful implementation of this scheme will take away the teeming army of unemployed workforce from the street and pre-empt their being used as hooligans during the forthcoming elections.

All said, even though this is a period of high level politicking arising from the forthcoming elections, I urge our parliamentarians to be very professional and patriotic in the consideration of the 2011 budget. It also behoves the executive arm to move beyond the annual ritual of lamentation of poor budget implementation and demonstrate serious commitment to fully execute the budget not only for national growth but for national development. In the event of a new party or another person rather than the incumbent winning the April 2011 polls, effort must be made by the new administration to see to faithful implementation of the 2011 budget so that the long-suffering compatriots of this blessed nation called Nigeria will have something to cheer.

Nigeria’s April Elections and Consolidation of Democracy

The success or otherwise of the coming fourth successive election under the Fourth Republic (1999 to date) in Nigeria depends largely on how actors and stakeholders decide to engage the political system. There is no gainsaying the fact that election is a process and not an event. Hence, the way and manner operators and regulators of the electoral system play their assigned responsibilities will largely determine if the old order will give way to democratic consolidation or the status quo of flawed elections will abide.

Nigeria’s democratic institutions which have critical roles to play in the electoral process are: the political parties, the executive, the legislature, the judiciary, the media, the civil society including the electorates, the security agencies and indeed the electoral management body. These major players in the electoral process have been performing their roles; some noble, some ignoble.

Aftermath of the last general elections in April 2007 which local and international observers adjudged as being significantly flawed, the late President Umaru Musa Yar’Ardua set up a 22 member Electoral Reform Committee led by former Chief Justice of Nigeria, Muhammadu Lawal Uwais. The ERC submitted its report on December 11, 2008. The report contains about 83 recommendations which could have put paid to Nigeria’s electoral debacle. However, some of the far reaching recommendations were rejected by the presidency. On November 20, 2008 the President of Nigeria’s Senate, David Mark inaugurated the 88 member Joint Committee on Constitutional Reform (JCCR). However, the internal wrangling between the House of Representatives and Senate over status, protocol and seniority stalled the work of the committee. In spite of the delay in the passage of the amended constitution, it is heart-warming to note that for the first time under a civilian administration, the legislature successfully concluded the alteration of the Constitution.

The flip side to that however is that the late completion of the electoral reform agenda has affected the preparation for the elections this year. Work on the amended 1999 Constitution and Electoral Act 2010 was concluded in January 2011 and this has impacted negatively on voters’ education on the new legal regime. The Independent National Electoral Commission’s (INEC) board was also inaugurated late as the chairman and many of the national and State electoral commissioners were inaugurated on June 30, 2010. The good thing is that the new board of the electoral commission is enjoying tremendous goodwill from Nigerians. The parliament have had to amend the 1999 Constitution and the Electoral Act 2010 twice to give the Commission more time to prepare for the April 2011 polls. The National Assembly and the presidency have also treated budget requests from INEC expeditiously and ensured prompt release of funds to the Commission. This has enabled INEC to conduct a fresh Voters Registration exercise between January 15 and February 7, 2011. Over 73.5 million eligible voters were registered in the exercise.

Most worrisome however is the ignominious role some of the 63 registered political parties and some judges have been playing in the prelude to the elections. As a result of the rancorous candidate nomination exercise by the parties between November 26, 2010 – January 15, 2011, many of the aggrieved aspirants have approached the courts to get injunctions and judgements against their political parties and by extension, the electoral commission. This situation has prompted the chair of INEC, Professor Attahiru Jega to officially write a letter of complaints to the Chief Justice of Nigeria that his Commission had been served notice of about 150 cases, 70 of which are ex-parte orders from the courts.

Another potent challenge to the forthcoming general elections in Nigeria is the high incidences of election related conflicts. There have been many recorded wilful and malicious destruction of lives and property with the security agencies appearing overwhelmed by the situation. In spite of these enormous challenges, Nigeria’s media, civil society and indeed the electorates are determined to give unalloyed support to the electoral commission to make it succeed in the onerous task of breaking the jinx of electoral debacle on Nigeria. A lot of voters sensitization is ongoing while the massive turn-out of electorates during the just concluded voters registration exercise and their determination to exercise their franchise in April gives hope that 2011 polls will bring about democratic consolidation in Nigeria.