I got a funny stare when I suggested to a group that Nigeria created five forex-earning opportunities in 2022. Policy successes. My friends thought I had gone bonkers because I went further to say that building on the policy successes will earn Nigeria more foreign exchange.
So, what did we achieve and where, someone asked with a hint of disdain.
We are always quick to write the country off, as we constantly promote our doomsday predictions. To appreciate the policy successes of 2021, one must go beyond the gloomy headlines and see the opportunities in the areas of world trade, local exports, aviation, fintech, and taxation of offshore transactions. They began to pay attention when I said that opportunities stand to boost the earnings of the average Nigerian.
Before we examine where Nigeria created forex-earning opportunities, however, let me offer a caveat. The possibility of exploiting the opportunities is quite low, given that 2022 is a pre-election year. It is therefore not out of place to project that our leaders may likely not focus on sustaining these gains. It does not matter that this would have been a good way to prepare for their various dates with history. All we can at this moment is to emphasize the opportunities, before they launch into political gamesmanship.
The WTO opportunity
Nigeria created one of her first forex-earning opportunitied with Ngozi Okonjo-Iweala at the World Trade Organization (WTO). We should be grateful to US President Joe Biden for giving an executive nod to the candidacy of Dr. Ngozi Okonjo-Iweala. Without it, her fate would have been in the balance, or sealed in favour of a non-African candidate. However, President Muhammadu Buhari and gets the credit for making her become a factor in US presidential decision-making.
On 1 March 2020, Okonjo-Iweala took office as first black, African and woman to head the World Trade Organisation. What’s the opportunity that her election presents? She has promised to support Nigeria’s export promotion efforts with WTO technical assistance and capacity building. The goal is to improve on quality of our export products. Quality is a major reason why Nigeria fails to export enough to break our near-total dependence on a single product. Who will engage with the WTO to ensure Nigeria erases this quality gap to broaden access to international markets? And ultimately improve our export earnings?
There’s another thing that improves the potential to build on this 2021 diplomatic success. Her WTO seat completes a triangle of technical and financial opportunity for Nigeria in three key organisations. With Dr. Okonjo-Iweala, Nigeria should exploit the opportunity to improve on the quality of her export goods. With Dr. Akinwumi Adesina, she stands to benefit from opportunities to boost local agriculture and manufacturing efforts, including for export. With Prof. Benedict Oramah, she will get a listening ear at the Afreximbank for export of goods and services.
The second area where Nigeria created forex-earning opportunities is also in the area of exports. This is an opportunity uncovered by the current Covid-19 pandemic. The pandemic exposed how countries in vaccine research and production boost foreign exchange earnings. In 2020, the global vaccine export market was valued at $187 billion. COVID-19 vaccines accounted for 73 percent of the total haul. Nigeria joined other vaccine consumption nations to foot this $187b bill through vaccine imports. We didn’t have the money to finance it and so once again went borrowing. Today, the country draws down on a $400 million World Bank facility to purchase, ship and locally distribute Covid-19 vaccines. This, in addition to the $92.5 million government withdrew from her reserves to fund the first imports.
The way to reduce this prohibitive cost is for Nigeria to become a production hub for vaccines, following the lead of the African Union on the matter. Have we lost the opportunity? It is hard to tell. The European Union is working with South Africa, Rwanda and Senegal to set up regional vaccine manufacturing hubs in Africa while Nigeria “remains in consideration.” Let’s just leave it said that if care is not taken, Nigeria will miss out on an opportunity.
This is a subject I shall return to, next week.
The Aviation opportunity
The third area where Nigeria created forex-earning opportunities is in aviation diplomacy. However, to exploit the opportunity will tax the creativity and ingenuity of hardworking Aviation Minister, Hadi Sirika, and his team. Will they sustain and consolidate on diplomatic successes recorded in 2021 to improve foreign exchange earnings?
To consolidate on the gains requires that they understand and interpret the numbers that gave us those fiplomatic victories. As I argued in Behind Our Recent Diplomatic Victories (16 December), the numbers are an eye-opener. They show that, within first six months of 2021, an average of 7,500 passengers patronized our five international airports daily. “This number is big enough to fill 21 jets every day, an incredible 147 flights per week…”
The numbers however do not work for Nigeria. Nigerian carriers account for less than a dozen of this number, less than 10 percent. We try to make up, to get a piece of the passenger traffic pie, through exorbitant airport charges. But this is of no concern to foreign airlines. They simply pass on the cost to our local travelers in form of premium fares on regular routes. It’s a case of heads we lose and tails they win.
Senator Sirika and his team therefore need to work out the cost-benefit of three policy options. They can continue to promote high local service charges as is the practice. They can also continue push the idea of floating a national flag carrier. And they can equally support local airline to upgrade to first-class flight services to compete with foreign airlines. The best policy option is one that saves foreign exchange and simultaneously attracts taxable international passenger dollars to Nigeria.
The fourth area where Nigeria created forex-earning opportunities is in FinTech. While policymakers shuttled the globe hunting for loans to finance our capital expenditure, something big was happening behind their backs. Foreign investors came in and poured huge investment funds into local fintech startups and going concerns. Last year, Nigerian tech companies including Opay Nigeria ($400m), PayStack ($200m), Flutterwave ($170m) pursued and secured almost $1.0 billion in funding. The funds were to expand their operations in Nigeria and to the rest of Africa. This was in addition to extra investment dollars introduced by older telecom companies such as MTN. Innovation and creativity in the sector have not gone to sleep and many more are getting set to go on fund-raising rounds.
Vice President Yemi Osinbajo believes the sector can be further expanded when the fintech are coupled to the Nigerian exchange (NGEX). And I agree. It will be a win-win for local investors to benefit from the profits in the sector. It will encourage more funding for local startups. And it will result in more tax harvests for government. So what policy is being pursued to help the sector grow?
Off-shore tax opportunity
Speaking of tax, the fifth opportunity is particularly heartwarming for this column. Three days after our suggestion to government on how to approach the Twitter ban matter (The Tax that Twitter Owes, 24 June 2020), the office of the vice president ran with the ideas in our essay. The office released a statement on 27 June promising that Nigeria was going to collect “taxes on the Nigerian income of global tech giants with significant economic presence here, even if they have not established an office or permanent establishment and are currently not paying taxes in Nigeria.” Subsequently, the widely promoted meeting between Government and Twitter managers was aborted. In its place, we now have in place a policy that improves Nigeria’s foreign earning potential this year.
Our country stands in a unique position to build on 2021 policy successes by harnessing potential African and world resources to break the oil-dependency syndrome. Year 2021 created this opportunity. How do we harness these opportunities in a pre-election year? One way is for President Buhari, to constitute and empower within the next two months a number of public-private sector teams of committed experts and policy analysts to attend to each opportunity while politicians engage in their electioneering gamesmanship. Otherwise the momentum may be lost in 2024 when a new set of policy makers will see their way through to engage in serious governance.
Happy New Year.
Big Man Impunity
There is a great debate over whether a police commissioner has the right to arrest and detain private security officials in a private estate who asked that his host permit them to admit the top cop.
Some of the arguments are self-serving, quoting non-existent laws that allow the police unrestricted access to private property. But this is simply nonsense. Even when someone is suspected to have committed a crime, police cannot enter the house or search it WITHOUT a warrant.
How then can we suggest that a Commissioner of Police can forcibly enter a gated community where no crime is being committed without conforming to the rules of entry in that estate? And that the Commissioner can arrest and detain those manning the gates for daring to ask (whether rudely or courteously) that he follows the rules that his prospective host and his neighbors agreed on?
As someone has suggested, the community or the people he detained can sue the police boss so that we will know exactly what our laws say about “big man impunity” in Nigeria.
Igbos are Stingy with Tithes?
Igbos are stingy with their tithes, according to the lead pastor of the Commonwealth of Zion Assembly (COZA) in Abuja.
“The Igbo believe in God. It takes God for an Igbo guy to give. They have a large heart, but they believe you shouldn’t work their mind. Igbos are 90 percent Christians but no megachurch. You need to tear backgrounds to enter some testimonies. No Church with a Yoruba pastor takes more Igbo songs than COZA. Hustle is a curse! Are you a hustler? Some people find it hard to give because they hustled to get that money. In the name of Jesus, the hustle has ceased in your life”.
What should we make of this? It’s clear that Pastor Biodun wants to trend, if this statement credited to him is true. He’s been in the shadows for some time now. Well for your information, man of god, it’s not only Igbos that recognize a scam when they see one. All discerning Nigerians do.