Why tribalism in Nigeria should die a peaceful death


The first step for Nigeria to really succeed in the 21st century is to put an end to tribalism and unite. No country can truly progress if the people are suspicious of each other based on tired stereotypes and historical resentment.

There is NO point in being tribalist in this day and age. Maybe there were historical reasons for xenophobia, but nowadays none of the problems in Nigeria exist because of one particular ethnic group. Nigerian political parties are made up of governors and presidents from all the main ethnic groups and only a handful have had benevolent intentions for the country.

To understand why such a diverse group of people are part of one country, we have to look at the history. Nigeria as we know it, is relatively new and it was the British who drew the borders of the country during their colonial rule in the early 20th century. When they created Nigeria, they threw many different ethnic groups together  – each with their own culture, languages and beliefs.

Since then Nigeria inter-ethnic relations have been turbulent to say the least, with civil war and power struggles between ethnic groups causing violence and frustration among the people. Stereotypes about different tribes persist and are handed down through generations. I’ve been warned by some relatives to not marry outside my ethnic group. I’ve heard negative generalisations about the Yoruba, Igbo people and the Hausas.

This has to stop.

The real enemy in Nigeria is the (often corrupt) elite. We know that there is an inexcusable divide between the wealthy and poor, with not much of a grey area in between. The infrastructure is limping along, but should be in a much better state for a country with so much potential. The services are all but non-existent. This isn’t the fault of your Igbo neighbour or those Hausas – it’s the fault of the people who feel that they can rob the country and get away with it.

I would say that tribalism should be treated as gravely as racism. But of course that would be naive to expect that just yet, in a country like Nigeria. What we can do, however, is to stop spreading lies and venom about fellow countrymen based on their ethnicity. We need to remember that we are all human, and all have the same wants and needs.

This is important because tribalism is the reason why we have the zoning system in place, which many would argue is ineffective at producing the best leaders for Nigeria. Tribalism is at the very core of the country’s politics and it will be a hinderance as long as it is allowed to continue.

It’s time for Nigeria to become a nation and have a shared Nigerian culture.

Muslims set to become the majority in Nigeria


Muslims will be the majority in Nigeria in the next 20 years, according to a study by the Pew Research Centre.  The population is set to more than double, to 117 million, by 2030.

This will mean that Nigeria will become a predominantly muslim country, with 51.5% of Nigerians being of the muslim faith. In a country that has religious tension between christians and muslims (especially in certain parts of the country) I wonder what this ‘takeover’ will mean for peace and stability in the future.

Nigeria is roughly divided, in terms of religion, as a muslim north and christian south – with the centre of the country being a mix of the two faiths.  Jos, is located in the central part of Nigeria. The region has rarely been out of Nigerian and African news recently because of the (suggested) religious motivated clashes. 2010 and this year have been a particularly bad time for the city which has become synonymous with violence.

Location of Jos city

Blame for this has been thrown both ways. People are quick to blame to muslims in the most general of ways. Understandably, perhaps, as most of the people killed in last year’s riots were Christian. But looking underneath the surface of religion, it’s quite clear to see that the typical causes for unrest have more to do with these clashes.

Professor Kabiru Mato of the University of Abuja played down the role of religion in the riots: “I don’t see anything religious. Wherein religion could be the difference between the two warring factions, fundamentally it’s a manifestation of economic alienation. So social apathy, political frustration, economic deprivation and so many factors are responsible.”

Devastation from an explosion on Christmas day 2010

A worrying aspect of the data collated by Pew Research is the high number of illiterate muslim Nigerian women. “According to a Pew Forum analysis of the 2008 Nigerian Demographic and Health Survey, the percentage of women of childbearing age who cannot read is three times as high among Muslims (71.9%) as among non-Muslim Nigerians (23.9%).

Some more alarming data from the study – “Muslim women of childbearing age are also much less likely to have received a formal education than are other women in the country; 66.0% of Muslim women have no formal education, compared with 11.2% of non-Muslims. Only about 3% of Muslim women in Nigeria have attended college or university, compared with roughly 14% of non-Muslim women.”

It’s imperative to think about how this vast inequality between the people of the two main religions have an effect on the turbulent nature of central Nigeria, where the two groups mix and interact the most.

The ‘takeover’ of the muslims in Nigeria is by a slight majority, and in itself should not cause any alarm. The percentage divide will still be roughly equal. What must be fixed, however, is the education and prosperity levels between the two groups. Economic deprivation in one group leads to frustration and resentment, which in turn leads to instability and in Nigeria’s case, violence. The government of Nigeria need to turn their focus on not only punishing tose responsible for the clashes, but also to solving these underlying problems.


Occupy Nigeria 2 – A weak compromise?


The protests have all but stopped in Lagos. And reports of  protests dying down in the rest of the country have divided the public. Some are happy to return to normality, but many in the country are bitterly unhappy with the compromise the  labour unions have made with the government.

The removal of the oil subsidy, on January 1, made oil prices more than double at the petrol stations from 0.40$ to 0.90$ per litre. A side-effect of this was a hike in the cost of food and public transport.  On Monday, Jonathan partially reversed the removal, cutting the prices from 0.90$ to o.60$ per litre. And in return, the key labour unions  -the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) – called for an end to the strike.

Unfortunately, the inflated prices of food and transport have not fallen in line with the petrol concession. The consequence for most of the country, already living on the breadline, will be a deeper fall into poverty.

For many who sought a return to the original pre-2012 price of 0.40$ per litre, the cut is not deep enough. NLC President Abdulwahed Omar, and  TUC President Peter Esele, have been accused of receiving bribes from the government, although there has been no evidence to back up these claims.

Earlier in the week, reports from protesters seemed to paint a picture of a growing campaign – both in strength and numbers. Tosin Agbetusin, 33, an account manager, was protesting at one of the main sites in Lagos. Describing the turnout he said: “as the days went by, the numbers of protesters increased. By Friday we had thousands out on the streets. People from all walks of life were out here.”

The government is yet to provide clear, detailed and public plans for how they intend to use the saved subsidy revenue to improve desperately lacking infrastructure in the country. Tosin would rather  have the subsidy: “we don’t want any promises about what they will use the money for. Nobody believes it anyway. Just give us our subsidy back.”

The government has argued that some of Nigeria’s neighbours, like Cameroon, have previously benefited from the low-cost petrol by smuggling the oil across the borders and selling it on for profit. Debo Ogunwo, 28, a petroleum geophysicist, says that this is a security issue. “Why must the public suffer because of that? The government are failing to protect life and property, even across the border. Why can’t they make the borders more secure?”

As the country tries to get back on its feet after a week-long standstill, people are still asking questions like these. People are asking why the government spends so much on government officials’ salaries and expenses. Many are wondering why the refineries are not being brought up to standard;  and some would like to ask why the subsidy removal was not implemented gradually, over a defined period of time. Why the rush?

One thing’s for sure – the protest made some impact. It may have not been the victory that some were hoping for, but it did send a clear message to the rulers and the elite.  With the dubbed ‘year of the protester’ just behind us, a growing population savvy with social media, and possessing an increasing political consciousness, the message seems to be that there are certain lines not to be crossed.

Occupy Nigeria – Nigerians take action against a corrupt political system


The oil subsidy removal may have been the catalyst for this protest, but the people of Nigeria are protesting about more than one policy change. A nationwide strike began yesterday, and protests are taking place across the country.

A deep unease in how the country is being run has finally made Nigerians take action against a party that does not appear to have the country’s best interests at heart. During a “tweet-meet” session on Twitter, tweeters were invited to ask the Minister of Information, Labaran Maku, questions about the removal. I asked who would benefit the most from removing the subsidy. This was the reply:

Twitter "Tweet Meeting"

Nigerians are saying enough to this kind of logic, which will not only leave millions worse off than they were before, but will also prevent a real middle class from developing in the country.

I have addressed the removal in a previous post but what’s important about this protest is the power of the people. Their voices are what matters.  Al Jazeera have uploaded a video on the protest, which not only explains the situation, but includes views from average Nigerians.

Enjoy – and listen out for the jaw-dropping salaries government officials are being paid!

Also read:- Nigerian oil subsidy removal

Which came first – the corrupt citizen or the corrupt government?

You’ll be fine as long as you have money in Nigeria!

WikiLeaks: Nigerian Oil: Bribes and piracy part 1

WikiLeaks: Nigerian Oil: Bribes and piracy part 2

WikiLeaks: Cable discuss possibly electoral reform

Nigerian Oil Subsidy Removal


The federal government has once again teamed up with an enemy of the Nigerian state – the IMF – by calling for one of the most controversial bills of the last decade.

Our bright sparks in office are planning to remove the oil subsidy that keeps the oil (that we produce) at a reasonable price when we buy it back – refined and ready for use. Why do we need to buy our own oil? Because we have 4 oil refineries that barely work, due to a lack of maintenance and sabotage by militant groups. These problems could have been overcome by an injection of revenue from the government. But buying back the oil from abroad has worked out in favour of profit-skimming officials.

Oil refinery in Port Harcourt - works at just 60% capacity

This policy change has upset a lot of people. For many it feels like another blow to the head in an unfair boxing match of The Elite v The proletariat (normal folk). But if this must go ahead then there could be some benefits to saving money from the subsidy.

How much money is to be saved? Approx 1.5 trillion naira per annum (9.4 billion dollars).

The money saved from the deregulation of oil could be used to implement and actually SEE-THROUGH effective structural programmes to help improve poverty across the country. This is fair, as the very poor can’t afford to enjoy the benefits of petrol, even at the subsidised prices. If the government have good intentions with this deregulation, it could change countless lives in a country where 60% live below the poverty line.

The extra money could also be used to build new, efficient, refineries which the country is seriously in need of. The four refineries that exist today are creaking along and working at less than full capacity. The money saved on the charges accrued from shipping the oil to foreign refineries, paying for the production and then buying back the refined oil from oil giants would save the economy a vast amount of money.

Development organisation, SUPA Nigeria, calculated the component costs involved in getting the crude oil into Nigerian petrol stations using NATIONAL refineries. These costs included exploration, development, operation,refining, distribution and marketing costs. See the full report here but I’ll simplify it for this blog. Let’s do some maths:

Here were the results (NB the exploration, development and operations costs have been combined in the first figure of ‘0.04’).

TOTAL COST

 The total cost can then be determined as the summation of all relevant cost components previously estimated viz., Exploration, Development, Production Operations, Refining, Distribution and Marketing.

Total Cost = (0.04 + 0.11 + 0.02 + 0.04) USD/Litre.

= 0.21USD/Litre

Therefore, we can conclude that the Average cost of the Petrol dispensed at retail Fuel Stations in Nigeria is, 0.21USD/Litre.

 Given that the cost of petrol at the station for Nigerians is 0.41USD/Litre, you can understand why some question the existence of an oil subsidy at all, but the government would argue that the extra cost comes from the exported oil rather the home-refined.

The point is that refining all of the oil within the country makes economic sense. This could spillover into social benefits too, like job creation. If money meant for projects like new refineries were being appropriately allocated, and if corruption wasn’t as rife, then this could all be done without removing the subsidy. But, if they must, then clear, transparent plans on using this extra money on long-term investments like refineries should be provided for the public.

What is most likely to happen though? Petrol prices rocket and no major changes are seen in terms of improved education, healthcare or infrastructure. People will find themselves with less money to spend on other necessities and as for the IMF – well they can sit easy knowing that some parts of the developing world are still well and truly under their thumb.

Also read:- Which came first – the corrupt citizen or the corrupt government?

WikiLeaks: Chinese oil companies not welcome in Nigeria

WikiLeaks: Nigerian Oil: Bribes and piracy part 1

WikiLeaks: Nigerian Oil: Bribes and piracy part 2

‘You will be fine as long as you have money in Nigeria!’

Islamic extremism in Nigeria – are we concerned?


Well yes. According to pewresearch.org a whopping 76% Nigerians are worried about national Islamic extremism.

When one thinks of Islamic extremism in an international context, Nigeria is not one of the first countries that comes to mind. But with roughly half the nation’s population being muslim, it’s not absurd to postulate that there may be some problems with extremism within the country.

First, let’s examine this term that gets thrown about so often – what does Islamic extremism actually mean? Islamic extremism is, in essence, aggressive ideology in which violence is often used to solve the perceived problem. Suicide, bombings and assassinations are tactics often used by this small section of the Muslim religion. Extremists have long been berated for giving Islam a bad name and there are many muslims who do believe in a peaceful coexistence with members of other religious faiths.

Extremists at their worst

One aspect of Islam that strikes fear into many is Sharia Law. Yes the law that advocates stoning a woman to death if she has been found cheating. By 2009, 9 states in  Nigeria had instituted Sharia Law, and 3 more states have implemented Sharia law in areas where there is a high muslim population. Scary stuff eh?

Well, I guess I should also explain what Sharia Law is all about, in a neutral, non-scaremongering way.  Sharia Law, is according to muslims, a combination  of the principles set in the Quran and the sayings and living habits of Prophet Muhammad. Contrary to popular belief, Sharia Law has many peaceful aspects. Sharia Law dictates that Muslims must pray 5 times a day, go on a pilgrimage to Mecca, fast and even pay an annual tax to the poor of their countries.

Then there are the more shocking laws such as amputation of the hands as punishment of thievery and yes, the stoning of an adulterer – although this should apparently apply to both sexes and not just the woman.

The problem with Sharia Law and elements of Islamic extremism is that ideas are open to interpretation and perversion – and in most interpretations the punishments are extreme and women fare the worst. Jihad is another Islamic term the world has become all too familiar with in the 21st century. Jihad is an Arabic word that can be translated in many ways including ‘struggle’, ‘to strive’ or ‘to fight’ – it all depends on the context. It also means spiritual self-discipline but many of us know it as a holy war on behalf of Islam.

In 2009, a 23 yr old Nigerian muslim, Umar Farouk Abdulmutallab, attempted to detonate explosives hidden in his underwear as the plane descended in to the USA.  Many Nigerians shrugged this off as a unique event and it was argued that he was radicalised outside of Nigeria.  Jos, in the center of Nigeria, experiences frequent clashes between the Muslims and Christians that reside in the city – and this is usually violence against Christians. However, I have discussed in another post how the violence in Jos should not be merely looked at from a religious perspective.

Umar Farouk Abdulmutallab - the 'Underwear Bomber'

A public workshop hosted by the U.S. Institute of Peace explored whether Nigeria is becoming ‘a hot-bed of Islamic terrorism’.  John Paden, an international studies professor claimed that the country is certainly not. Instead he said: “If anything, Nigeria is a hotbed of Islamic moderation”. Interesting turn of phrase, but what does this actually mean?

Well Paden goes on to argue that “Islam has a long history in Nigeria and has largely maintained a decidedly “West African” character, and less dependent on outside influences from the Arab world.” I agree.

My father is a Nigerian and Muslim. And I would have to describe him as a moderate muslim – one who lives in harmony with a Christian wife. He seems to separate his religion from his national identity and culture. but Islam and culture are bound and tied together in many parts of the Arab world. Let’s take the clothing of Muslim women as an example. The Quran does not instruct women to wear the burqa. However some Islamic cultures like that of the Taliban, insist on women wearing this attire. More ‘moderate’ Islamic cultures such as those in Turkey do not insist on women completely covering themselves up. It is a rare sighting to see a muslim woman in Nigeria wearing the full Burqa too.

3 women wearing burqas

To conclude I’d say that Nigeria doesn’t need to be on high alert of Islamic extremism at this point in time. But one thing I would throw out there is that if certain Islamic groups were to focus on turning Nigeria into a ‘hotbed of Islamic terrorism’ it certainly wouldn’t be that hard. The lack of strict rule of law and rife corruption will make it fairly easy for these groups to set up camp in the country if they learn how to play the Nigerian game of back-handers and turning a blind-eye. So in that case, we can all breathe a sigh of relief –  but at the same time we’d do well to keep one eye open.

Also read:- Muslims set to become the majority in Nigeria

Why tribalism in Nigeria should die a peaceful death

 

Which came first – the corrupt citizen or the corrupt government?


The past few governments have truly had their work cut out for them, after all, swindling the country’s money is hard-work and time-consuming. So much so that they haven’t had the time to pay attention to industries other than oil, or run a general election without it becoming an absolute joke.

With the elections that were meant to take place last Saturday being postponed for a whole week, the world has been reminded of what a corrupt country Nigeria is.  Not only does the whole registration/election process highlight severe corruption, it also highlights the disorganisation that Nigeria seems cursed with in all political and social affairs.

It’s easy to blame the people sitting in power. Of course they are certainly the ones making immoral and moronic decisions that impact negatively on the people they are meant to serve. The government should be responsible for infrastructure, education, nourishing and protecting home industries and making sure international trade is as beneficial as can be.

But Goodluck Jonathan, Namadi Sambo, and those under and around them did not arrive on a spaceship from planet Corruption. They are, after all, former ordinary citizens.

I came across a Nigerian forum awhile ago in which the issue of tax was being debated. One poster claimed that it was probably for the best that Nigeria wasn’t fully developed because perks of evading tax made life, for him, a lot more comfortable. He went on to tell an anecdote about how his brother was taken to court in the United Kingdom over refusing to pay a TV licensing fee, and described how systems such as these were “a nuisance”. I remember watching a news programme years ago asking young Nigerians what they would do if they were in power. One boy, aged around 10yrs, said “chop [steal] money.”

Heritage.org had this to say about Nigeria’s corruption rankings (notice the word I have highlighted in bold):

“Corruption is perceived as pervasive. Nigeria ranks 130th out of 180 countries in Transparency International’s Corruption Perceptions Index for 2009, a drop from 2008. Corruption is endemic at all levels of government and society, and the president, vice president, governors, and deputy governors are constitutionally immune from civil and criminal prosecution. Domestic and foreign observers” recognize corruption as a serious obstacle to economic growth and poverty reduction.

In Nigeria, it’s normal to play ‘the game’. From bribing airport staff when one enters the country to paying 20N to policemen at so-called ‘checkpoints’ dotted along the main roads to allow you to get on with your journey.

Travelling to my father’s house in Ibadan from abroad we were stopped by policemen, armed with guns, who demanded a search of our car. In the glove compartment was a sum of money given to my father, by friends, to pass on to their relatives. Of course the policemen demanded a large portion of that money. Money that had entered the country legally and money that was not theirs to take. After much pleading, they finally accepted a smaller proportion of the money and went on their way.

Corruption, like any virus, has spread throughout all sectors of society. From politics, to education, from the top to the bottom. No one seems to be immune. But Nigeria is going to need some sort of cure – some sort of revolutionary change in mindset to change the status-quo. It’s easy to blame ‘them’ but what ‘you’?

WikiLeaks: Foreign investors turn away from sub-saharan Africa


Selected WikiLeaks extracts detailing the problems sub-saharan Africa faces with the cautiousness of foreign investors due to the economic downturn and persistent instability:

LONDON 00001886 001.2 OF 004 1. (SBU) Summary. London-based bank and development analysts are seeing positive signs emerging in sub-Saharan Africa’s (SSA’s) economies, after months of negative news, but remain cautious in their near-term outlook for the region. While prospects for the global economy are improving and there is some renewed investor interest in SSA, private sector analysts note that the economic situation in the region remains volatile and could worsen, rather than improve, in the coming months. There is evidence that foreign direct investment (FDI) and remittances are now weakening, and analysts note that the region remains highly vulnerable to decreases in NGO assistance and foreign bank lending. Private sector analysts assess a deterioration in FDI and cross-border bank lending would have a disproportionately negative impact on long-term growth, and cite potential cuts in public funding for education and infrastructure programs as particularly harmful to SSA’s long-term economic prospects. End Summary.

Crisis in the Region Still Unfolding ————————————

2. (SBU) Econoff met with London-based bank analysts and think tank researchers during the period from mid-July through early August 2009 to discuss the impact of the economic crisis on SSA and their assessment of the region’s key vulnerabilities in the months ahead. Bank analysts at HSBC and Goldman Sachs have been monitoring the situation in SSA closely for their international investors, while researchers at the Overseas Development Institute (ODI), a leading British think tank, are tracking the impact of the crisis on African countries’ poverty and development.

3. (SBU) Experts agreed that the economic downturn began to noticeably affect SSA during the fourth quarter of 2008, dispelling hopes that Africa’s lack of exposure to the global subprime market would spare it from the financial crisis. HSBC sub-Saharan equity analysts Marcel Mball-Ekobena and Umulingua Karangwa told Econoff that while leaders in SSA “were in denial in 2008,” the banks knew there was a problem on the horizon. By the first quarter of 2009 data showed the recession had already affected trade and portfolio investment in the region. The IMF estimates SSA experienced portfolio outflows of nearly $20 billion in late 2008 and no growth in the volume of exports.

4. (SBU) While bank and development analysts have begun to see positive signs emerging, they remain extremely cautious in their near-term outlook and told Econoff that the situation is volatile and could worsen in the coming months. Javier Perez de Azpillaga, Director of Economic Research at Goldman Sachs, noted that while there has been an uptick in the global economy, it is unclear whether it will be sustained; moreover, improvements to the global economy have not yet been transmitted to SSA. Similarly HSBC analysts told Econoff that portfolio investor interest in SSA is picking up, but has not materialized into new investments.

Trade and Portfolio Investment Hit First —————————————-

6. (SBU) Analysts agreed that the first effects of the global downturn on SSA came through the trade and portfolio investment channels. The downturn in trade affected LONDON 00001886 002.2 OF 004 virtually all the countries in the region, but some countries, such as Nigeria and Zambia, were particularly vulnerable due to their disproportionate reliance on raw material exports and commodity prices. While Goldman Sachs’ Perez de Azpillaga noted ongoing problems with trade financing, he and HSBC analysts were fairly upbeat on the near-term prospects for recovery in these channels. They assess an uptick in global demand and commodity prices should have a positive effect on the region this year,

7. (SBU) Like trade, portfolio investment flows to the region also suffered a significant decline early on. HSBC analysts explained that foreign investors, who had put capital primarily into banking, telecommunications, cement, and brewing companies, withdrew large amounts of funding when the crisis hit. Both HSBC analysts and Isabella Massa, a research fellow at ODI, said that their research showed that Nigeria, where HSBC estimates banking makes up about 80 percent of the stock market, and Kenya were the most affected by foreign redemptions. According to HSBC analysts, IPOs in most SSA countries, “virtually stopped.”

8. (SBU) While banking contacts told Econoff that they are seeing renewed interest in SSA from investors, they cautioned that this has not yet translated into anything tangible. Perez de Azpillaga told Econoff that SSA markets continue to be affected by a “return to vanilla products,” whereby investors are willing to accept lower returns in exchange for lower risk. In South Africa, Perez de Azpillaga explained, there have been some positive private capital inflows in recent months, but not enough to offset the outflows. Massa told Econoff that ODI assesses that in the coming months those countries with a still high degree of foreign presence in the market, such as Kenya and Zambia, will be the most vulnerable to a further drop in portfolio investment.

FDI and Remittances Weakening —————————–

9. (SBU) London-based analysts are seeing the first signs of problems with FDI in some SSA countries. HSBC contacts told Econoff that FDI is slowing, and pointed to a recent IMF study that estimates FDI in SSA will drop by roughly 18 percent in 2009. ODI’s Massa told Econoff that Zambia has experienced a holding back and scaling down on investment projects, especially in the mining sector. In Nigeria, evidence indicates that most of the proposed new investments have been stopped and investors have adopted a “wait and see,” approach. According to Massa, ODI’s economic modeling completed this spring found that a 10 percent drop in FDI inflows would lead to a 0.5 percent decrease in SSA’s income per capita over the long-term.

10. (SBU) Remittance inflows, typically more resilient than other forms of private capital flows, are also declining, according to analysts. Massa told Econoff that ODI research found that Lesotho, Sierra Leone, and Kenya are being disproportionately affected due to their reliance on these funds. Backing up these findings, the World Bank in April forecast that worker remittances to SSA would fall by between 4.4 percent and 7.9 percent in 2009.

Growing Concern over Aid and Cross-Border Lending ——————————————— —-

11. (SBU) So far there has been little evidence of a pullout of official aid, but both bank and development analysts expressed concern about decreases in NGO assistance to the region. According to Massa, ODI research does not have hard data that NGO’s are cutting assistance, but they have anecdotal information that this is occurring. She added that while the global focus has been on official aid commitments, development experts with whom she has spoken are much more concerned about a drop in NGO support. HSBC analysts also pointed to decreased NGO aid as the key problem, but added that they believe even official aid may be at risk, as there is a big difference between committing funds and sending funds.

12. (SBU) Similarly, while there has been no evidence of a LONDON 00001886 003.2 OF 004 contraction in international bank lending to SSA, analysts see some countries in the region as vulnerable should foreign-owned banks withdraw capital from, or close subsidiaries to make up for domestic losses. British and French banks are the largest foreign players in the region, according to Massa, making up 27 percent and 17 percent of the foreign bank market, respectively. South African banks are the largest regional players, and Goldman’s Perez de Azpillaga told Econoff that these banks are reducing domestic credit availability by setting more demanding terms, such as higher collateral, and are less willing to lend regionally. He added, however, that this is more the result of risk aversion, than protectionism. According to Massa, Uganda and Kenya would be most affected by a contraction in cross-border lending, as they have the highest share of foreign owned banks. She added that the think tank’s modeling shows a 10 percent decrease in cross-border lending would affect long-term SSA growth by about 0.7 percent annually.

Potential Long-Term Effects —————————

16. (SBU) ODI’s modeling shows that of all private capital flows, FDI and cross-border lending have the greatest impact on the region’s long-term growth. Should these flows experience a significant slowdown in the coming months, the impact would be far more detrimental to SSA than the downturn in trade and portfolio investment has been, according to Massa. Massa also expressed concern that the economic crisis will result in African governments’ inability to provide adequate social safety nets and will push more Africans into poverty, reversing gains made in education and health. In particular, she sees lack of investment in education as creating long-term problems for regional growth.

17. (SBU) HSBC analysts, too, noted that a reduced ability of African governments to fund infrastructure programs will have long-term implications. They told Econoff that most SSA governments are now scaling back infrastructure projects, and “spending is down to a trickle.” Should the situation LONDON 00001886 004.2 OF 004 continue, they are concerned that low investment will impact electricity and roads, creating a negative cycle whereby poor infrastructure reduces the attractiveness of the area to foreign investors. On the positive side, they noted that there are very few real “emerging markets” left in the world, so investors will eventually return to SSA. Africa’s comparative advantage is that its one of the few areas in the world that still has a largely untapped market and significant natural resources. Visit London’s Classified Website

WikiLeaks: UK government’s initiative for Nigerian business


Below are selected WikiLeaks extracts on the UK government’s plans for ‘responsible’ Nigerian business

SUBJECT: NIGERIA: UK INITIATIVE TO OFFER CLEAN DEVELOPMENT

MECHANISMS

1. Summary. Following numerous consultations with senior Nigerian political and industry leaders, the UK government is moving forward with an initiative to facilitate responsible business development in Nigeria. Implemented by the Department of Energy and Climate Change (DECC), the program aims to provide training and high-level coordination to Nigerian policy-makers and corporate leaders, to improve Nigerian companies’ capacity in policy development, regulatory control and communication and to help develop Nigerian industry, especially the energy sector, in an environmentally friendly manner. The program is currently vetting potential participants and will begin training in March 2010. End summary.

Clean Development Mechanisms —————————-

2. The UK’s Department of Energy and Climate Change’s new program will partner Nigerian policy-makers and industry leaders with senior UK officials to share best practices and offer practical support for the clean development of Nigerian industries, particularly the energy sector. The UK Department for Business will assist in partnering UK corporations with Nigerian counterparts and oversee the advancement of clean development projects.

3. The program plans to partner up to fifty senior Nigerian corporate managers with senior UK government and regulatory department officials to impart best practices in policy development, regulatory practices, commercial contracts, communication and technical skills. Nigerian Business leaders participating in the program will also work with experienced UK-based corporations, especially in the UK oil and gas sector.

Training Goals ————–

4. DECC-provided policy development training will include stakeholder relationship management, principles of transparency, effective consultation procedures and public relations management in an effort to bolster the efficacy of the processes which Nigerian managers use to develop corporate policy.

5. Regulatory Best Practices training will include regulation and pricing workshops, technical standards workshops and systems design and management. This aspect is designed to educate prospective regulatory managers in industry about the core concepts and skills they will need to ensure an effective relationship with regulatory agencies. 6. DECC hopes to establish a Nigerian body with a clear policy framework to provide local assistance and coordination for the program, for which funding has been approved. Program managers have already held a number of high-level consultations on the project with Nigerian counterparts in London and Abuja. The program is currently vetting potential participants with the help of Nigerian regulatory agencies and seeks to begin implementation in early 2010. The program includes the possibility of a UK trade mission to Nigeria by Summer 2010. Visit London’s Classified Website: XXXXXXXXXXXX

WikiLeaks: Chinese oil companies not welcome in Nigeria


Extract from a Wikileaks cable on the lack of trust in Chinese oil companies presence in Nigeria. Statements about corruption and alleged difficulties in working for Chinese companies:

“Two xxxxxxxxxxxx officials recently volunteered that Chinese oil companies had made a lot of mistakes in Nigeria and neither official welcomed their presence. Nigeria National Petroleum Company (NNPC) xxxxxxxxxxx said on xxxxxxxxxxxx the NNPC is aware of how the Chinese have behaved in the Sudan and Chad and that the Chinese do not know how to deal with a democratic government. xxxxxxxxxxxx complained on November 11 that there is no recourse when dealing with the Chinese and that the Chinese do not respect local laws. The poor image of the Chinese helps to explain why they were never a serious threat to the renewal of the international oil companies’ (IOCs) oil mining licenses (OMLs).

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ruffled feathers…

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2. (C) Nigeria National Petroleum Company (NNPC) xxxxxxxxxxxx discussed the Chinese oil companies’ recent attempts to obtain deep water oil mining leases (OMLs) with Economic Counselor and Trade and Investment Specialist on November 13. xxxxxxxxxxxx said that Shell Nigeria had opened the door for the Chinese by resisting GON efforts to pass the proposed Petroleum Industry Bill (PIB) and telling the National Assembly that the “Nigerian oil industry would be dead” if the PIB passed. “So they brought in the Chinese,” xxxxxxxxxxxx said.

3. (C) Asked about how the Chinese handled themselves in Nigeria, xxxxxxxxxxxx said, “the Chinese are very aggressive because they need the oil.” “They came in with big money,” he said, “and they were ready with large loans with low interest rates.” But the Chinese also made some mistakes. First, xxxxxxxxxxxx said, “We know what had happened in the Sudan and Chad and we know enough about them to know where we want them and where we don’t.” At the same time, xxxxxxxxxxxx said, “No one really desires to see the IOCs go when we have worked with them so long. Long-term friendships develop, a lot is learned from them, and we know how they do business.”

4. (C) Second, xxxxxxxxxxxx said, “Their oil companies are run by the Chinese government and they do not know how to deal with the Chinese government and they do not know how to deal with a democratic government. For example, the Chinese told the NNPC officials which fields they wanted and the NNPC officials had to say, ‘No, this field is operated by someone.'” The Chinese acted dumbfounded and said, “You mean we can’t have it?” “The PIB did not come from nowhere,” xxxxxxxxxxxx explained. Much consultation occurred before the GON presented the PIB to the National Assembly and all that was not going to be undone because of a Chinese official. “The Chinese caused the problem,” he summarized, “and they ruffled a lot of feathers.” xxxxxxxxxxxxadded that Gazprom of Russia had used a similar approach. “We are lucky we have a democratic government” he said, “Under the military, the Chinese and Russians would be here.”

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…and no forwarding address

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5. (C) xxxxxxxxxxxx colleagues also told visiting Coordinator for International Energy Affairs (S/CIEA) David Goldwyn and his delegation on November 11 that he and his union colleagues did not want the Chinese in the Nigerian oil sector. Goldwyn was asking about the problems faced by xxxxxxxxxxxx said, “The Chinese are here and that is a huge problem!” “xxxxxxxxxxxx have a list of the worst five countries to work for,” xxxxxxxxxxxx said, “and they are on that list.” xxxxxxxxxxxx explained that xxxxxxxxxxxx had experienced a problem with ExxonMobil when they “wrongfully fired a worker.” xxxxxxxxxxxx applied pressure through the U.S. steel workers and the worker in question was given a choice of being re-hired or compensated and xxxxxxxxxxxx chose the latter. “If xxxxxxxxxxxx a problem with a Chinese company,” xxxxxxxxxxxx complained, “who can xxxxxxxxxxxx to?” (COMMENT: Nigerian xxxxxxxxxxxx have complained to Labor Officer that the Chinese do not have industrial relations representatives or any formal human resources process other than the immediate supervisor who does the hiring and firing. Dealing with non-English-speaking Chinese officials also hinders constructive interaction. END COMMENT).

6. (C) xxxxxxxxxxxx later elaborated by alleging that Chinese labor practices were not good so no one wants to be part of it. “Look at the Chinese mining companies in Zambia,” xxxxxxxxxxxx said, “the labor unions there had to chase them out.” xxxxxxxxxxxx noted that corrupt people in China were put to death, but overseas they quickly adapt to the local environment, including adopting corrupt practices. “The Chinese have no respect for local laws,” xxxxxxxxxxxx said, “and they compromise a lot of things, including safety.”

7. (C) Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) xxxxxxxxxxxx said the Chinese were the first to bribe local officials to win contracts and get around local laws. By contrast, xxxxxxxxxxxx said xxxxxxxxxxxx played by the rules and was above-board. “xxxxxxxxxxxx proud of xxxxxxxxxxxx company in that respect,” xxxxxxxxxxxx said. (See reftel for additional background on Goldwyn’s meeting with the xxxxxxxxxxxx).

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comment

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8. (C) The poor image of the Chinese helps to explain why they never seriously threatened renewal of the IOCs’ oil mining licenses (OMLs), the first of which the GON signed with ExxonMobil on November 20. Most of the remainder will be signed in the coming weeks. Minister of State for Petroleum Resources Odein Ajumogobia told the joint GON-ExxonMobil press conference on the same day that, “There was never any consideration of selling or trading one firm for another.” But he also said that, “NNPC has a right to relinquish any part of its equity to any third party that expresses interest and it is in that regard that the discussions with the Chinese have been carrying on.” The GON owns 60 percent of all the joint ventures with the IOCs (55 percent in the case of Shell). So, the NNPC and the IOCs could still end up having minority Chinese partners –whether they like it or not.

9. (U) Embassy coordinated this telegram with ConGen Lagos.Sanders”