Archive | May, 2012

#OccupyNigeria: What Now?

30 May

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Attempts to fully deregulate the subsidized petroleum industry failed in January as a result of mass nationwide protests, with demonstrations, marchers, and strikes under the hash tag #OccupyNigeria, which begun over the hike in the price of fuel and the removal of the state subsidy at the beginning of January 2012. Protesters took issue with the subsidy removal that more than doubled the price of petroleum and caused the cost of basic goods to skyrocket, yet was promoted as a necessary austerity measure for the country. The government produced estimates that 8 billion USD would be saved in the budget by removing the subsidy. All the while high ranking state officials continued their exorbitant expenditures, including the presidency, members of the national assembly, and cabinet. The expenditures were for salaries, allowances, and other budgeted items that were clearly not in the spirit of saving given that the state indicated in needed to save and cut costs. The prevailing view was that the president was out of touch and did not care about the plight of average Nigerians.

To defend the programme the administration released statements that the 8 billion would be used to invest in health care, infrastructure, education, improving the downstream refining capacity to reduce oil imports that would all help ordinary Nigerians. Members of the cabinet came forward to defend the administration and support the programme. The minister of Finance also reiterated the administrations claims that the 8 billion would be used to improve the standard of living for average Nigerians in various programmes but offered no specifics or itemized figures or estimates as to where the money would go. No official provided any detailed account as to precisely where the money saved from ending the subsidy would go. Protesters were not convinced by these vague statements, neither were they moved by the administrations attempts to pacify criticism by announcing a slight reduction in salaries of those in the executive. Strikes and protests continued until the government agreed to restore the subsidy at a higher level of NGN 97 per litre. The standoff undermined the administration and caused many in the cabinet to lose credibility including the President, the information minister, the petroleum minister, and the minister of finance.

Decades of corruption in government and a lack of transparency was a major concern of protestors who used the Occupy name to identify with other protests movements throughout the world. The administration did not understand the distrust that people understandably have for government in Nigeria. The fact that they tried to sell the programme without providing any specific account, even from the ministry of finance, as to where the money was going was a tactic that was rejected by the masses. Going forward the lack of transparency surrounding the subsidy removal is not likely to work in the future. Nigeria is no stranger to nationwide strikes and protests. Long before the Occupy movements all over the world and the mass protests that occurred in Tunisia and Egypt, Nigerians have held nationwide strikes that have brought the country to a standstill and forced the government to back down on removing the oil subsidy. The administration has stated that it intends to phase-out the subsidy and has not given up completely on deregulating petroleum prices. If the administration moves again to completely remove the subsidy on petroleum it is likely that more civil action will take place. Labour remains adamantly against any increases in fuel and the masses, which started the protest without ever being prompted by labour unions appear to be in full support.

Since the protests, an investigation by the legislature has unveiled a 7 billion USD fraud in the subsidy program between 2009-2011, calling the program “fraught with endemic corruption and entrenched inefficiency.” Implicated are bureaucrats in the Nigerian National Petroleum Corporation (NNPC) and ministry of petroleum resources. The still ongoing problems of mismanagement in the NNPC regarding the subsidy program has led to a long awaited probe by the Economic and Financial Crimes Commission (EFCC) into the NNPC. A number of groups behind the #OccupyNigeria protests have indicated that if those responsible are not brought to book they will once again resume protests. The issue with the subsidy program is the single greatest issue that has undermined the administration of President Goodluck Jonathan and many of his key reformers in his cabinet. If it cannot be resolved in the coming months in a way that pacifies the growing outrage over the outright theft by business and government officials associated with the subsidy program, the administration will not be able to regain the credibility it lost in the January #OccupyNigeria protests. What is clear is that if not for the protests, the legislature and the Federal Executive Council (FEC) would not have taken the rampant corruption seriously and would not have taken steps to redress it. The threat and perhaps execution of further civic action may indeed be necessary to ensure a higher standard of governance including greater accountability and transparency.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/          http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Is the PDP Era Coming to an End?

29 May

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

In Nigeria, the ruling party, the Peoples Democratic Party (PDP) remains in control of the apparatus of the state. They are expected to continue an agenda of deregulation and privatization. Politically there are few challenges to the PDP’s hold on power over the next few years. However the gains made by the opposition in the 2011 election should still be considered troubling. If they are able to consolidate these gains in yet another electoral cycle they may be able to unseat the PDP from power for the first time since 1999. While the national flag bearer and presidential candidate for the main opposition coalition the Action Congress of Nigeria (ACN), Mallam Nuhu Ribadu, did not fear well in the 2011 presidential election their prospects for 2015 are much brighter. It is expected that the popular ACN Governor of Lagos State, Babatunde Fashola, will make a run for the presidency. Lagos is the largest city and the most populous state in Nigera. In addition to Fashola, former labour union leader and current ACN Governor of Edo State, Adams Oshiomhole, may also run or perhaps team with Fashola to defeat the PDP in 2015.

Fashola is credited with revitalizing Lagos State with infrastructure, security, investment, sanitation facilities, and urban renewal projects not seen throughout much of the country. He is one the few political bright spots, running a state that is seen largely as accountable and progressive with lower levels of corruption than in much of the country. Oshiomhole won his first term as governor after contesting his initial loss due to rigging by the ruling party in his state. In a judicial review of the election he was declared winner and hailed nationally as an opposition leader ready to stand firm in the face of corruption from the ruling party. Oshiomhole already had national recognition as head of the umbrella National Labour Congress (NLC) of Nigeria. As head, he led several successful national strikes to prevent hikes in the price of fuel that crippled the economy and brought the country to a standstill forcing political leaders to cave. A union of these two nationally recognized and widely popular opposition leaders will be the biggest test of the strength and ability of the ruling party to hold on to the presidency.

With Fashola currently in is second and final term as governor of Lagos it is very possible, if not likely that this faceoff between the ruling party and the most popular leaders in the opposition is on the horizon. While it is unlikely that the PDP will be dislodged from power at the local levels or within the national assembly as a whole, it is a strong possibility that the party will lose the presidency in 2015. Currently there are no PDP leaders with the same stature and popularity as these two main opposition governors. It is not clear if President Jonathan will run again. With the debate over zoning in the ruling party that surrounded his selection as the party’s candidate in 2011, based on an unwritten agreement among party leaders was that the presidency would rotate between the north and the south. With the selection of Jonathan, a former governor from the south, sources within the party reveal that it was decided that a northern candidate will be selected in 2015 to contest the presidency for the ruling party. Internal fighting within the party and leaders jostling to become the chosen candidate of the ruling party, may further work to undermine whoever is eventually selected. Given this reality, it is not advisable to assume that PDP will continue to rule in Nigeria beyond 2015. Depending on the performance of the current administration, the long era of PDP rule in Nigeria may be in its final days.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/            http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Nigeria Catches Up With South Africa

29 May

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Nigeria is currently on record as Africa’s second-largest economy, and one of the fastest growing economies on the continent and in the world. However, it is only a matter of a year or two before Nigeria becomes Africa’s largest economy. Presently it is roughly equal to South Africa. Nigeria is expected to rebase its economy in 2012 in order to provide an accurate measure of its actual size. When neighbouring Ghana rebased its economy in 2010 it was found to be 60% larger than had previously estimated jumping from USD 18 to USD 31 billion. Nigeria is expected to have a similar jump once the rebase is completed this year. Rebasing adds different weighting on sectors that have changed over the last 30 years. In Nigeria the telecommunications industry, banking industry, and real estate and infrastructure sectors will receive different weights due to the growth in these sectors over the last few decades. According to Renaissance Capital, Nigeria could eclipse South Africa by 2014 and is presently likely to be roughly equal in size already at over USD 400 billion. According to projections by Price Waterhouse Coopers, Nigeria not only will be the largest African Economy in the next few years but will also eclipse major European Economies like Italy and Spain by 2050 and become one of the top 20 largest economies in the world.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/             http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Mali: Interim President Flown to France for Medical Treatment

24 May

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Shortly after the ECOWAS mediators negotiated a settlement between the military junta in Mali and civilian leaders that would see the national assembly leader stay-on as interim president, protesters were allowed to entire the presidential palace in Bamako and beat the interim leader till he was unconscious. After being treated and released from a hospital in the capital, the 70-year-old leader, Dioncounda Traore was flown to France yesterday for further treatment. He has suffered from a heart condition and is believed to be receiving additional treatments there. The incident clearly shows is that the military and security forces have no desire to actually uphold the agreement brokered by ECOWAS with civilian authorities. As it appears the military orchestrated the attack on the interim president using civilian supporters to carry-out the final blow so as to appear as bystanders. Reporters that were present have indicated that the military ushered “protesters” into the the presidential compound and even showed them where the president was staying inside the building.

As I have indicated in previous articles on this, even as the interim president is outside the country receiving medical treatment, the military junta will not return to power in Mali as it is not in-line with the ECOWAS zero tolerance policy of for military seizures of power. Military leaders in Mali had two choices, they could have chosen to cooperate with ECOWAS and maintain their seat at the table, or be coerced and forced to comply. As it seems from the recent developments, they chose the latter. ECOWAS leaders have already begun to investigate military leaders in Mali and have pledged to place sanctions on anybody found to be involved in the incident. The road to normalcy in Mali will be windy and bumpy, yet still the outcome and core elements of the process towards the outcome is not in question. Further details on this can be found in my book, The Power of Interdependence, now available for order.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/              http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

PDP Chairman Quoted as Saying Islamic Sect “Boko Haram is fighting for justice.”

24 May

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

In a recent article I stated that northern leaders in Nigeria may indeed be sponsoring the Islamic extremist group Boko Haram for political reasons. Recently the national chairman of the ruling Peoples Democratic Party (PDP), Alhaji Bamanga Tukur a prominent norther leader said that “Boko Haram is fighting for justice” in a meeting with the Governor and party officials from Gombe State. The statement has already enraged the Christian Association of Nigeria (CAN) prompting CAN President, Pastor Ayo Oritesejafor to call for the ruling party’s national chairman to explain himself. Some say that Tukur may have indeed been referring to the youth in the north of the country that have been recruited by the group and not the group or its leaders, but his soft stance against the sect echoes many northern leaders who have been making calls for dialogue and negotiations between the group and the government to address the group’s “grievances”.

What is clear from the exchange between Christian Leaders and their northern Muslim counterparts is that there is a wide difference of opinion on the group and how it should be handled. The claims that the group is fighting injustice is problematic since many of the same injustices are prevalent throughout the country. Further, prominently among the list of past corrupt officials are Muslim political elite from the nations north. Thus the tactics of the group does not seem to promote any broad-based social agenda like the relatively peaceful #OccupyNigeria protests that took place in January of 2012. The only real explanation for the stark differences among political and religious elite across geographic lines is that perhaps as a result of the supposed dialogue that is set to occur between the government and the Islamic extremist sect, Muslim political elite may indeed gain in representation and status once all is said and done. Indeed there is great suspicion within the country for the way many norther political elite have responded to the  group, particularly as of recent. Whether or not these differences and suspicions will escalate further remains to be seen.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/                http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Nigeria: Looming Prospect of Sectarian Conflict

23 May

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Beyond residual security risks in Nigeria, a well-financed Islamic fundamentalist group, Boko Haram could trigger nation-wide conflict. There is no indication that the group has popular support and it does not appear Muslims in the country support the group itself either. In fact many of their members come from neighboring countries. Still violence has claimed the lives of several thousand, with bombs and gunmen assaulting civilians in churches and launching strikes on security forces in the north. In their recent calls for dialogue the group has now focused on President Jonathan as their primary political target. Despite their lack of popular support, there may be political elite, especially from the nation’s north, who directly benefit from the group’s violent campaign.

Northern Elite

The power-sharing practiced within the Nigerian constitution and within the ruling party is that top positions in government are to be spread relatively equally across all 6 geographic regions. Further, the highest positions are to be rotated from north to south with roughly equal representation from both regions. After former President Yar’Adua, a northern Muslim, died in office, incumbent President Jonathan, a southern Christian became president. He also secured another term in office in the subsequent election to the dismay of many northern elite who view that their region should field the next president. There is also concern that President Jonathan will try to remain in office past 2015 despite pledging he would not seek another term during his campaign. Upon securing victory in the 2011 presidential poll, he immediately began to promote adjusting the tenure of President from 4 years to a single 7-year term.

Some northern political elite that may be seeking the presidency in 2015 or supporting a candidate would likely want to see the President vacate office as scheduled. With this, it is logical to question whether some political elite from the north may be helping finance the insurgent group in order to put a thorn in the side of the president’s administration. Already a serving Senator from the north was indicted on charges of being a key financier of the group. According to statements by the national security adviser and additional statements made by well placed officials, there may be other political elite from the northern region involved.

One of the key reasons that current President Jonathan was nominated by the ruling party to become vice president under President Yar’Adua was because he was from the Niger Delta, a region that was home to similar violent groups that launched similar attacks and kidnappings, hindering the national economy by destroying oil infrastructure and limiting exports. Their tactics still won them a generous amnesty program and paved the way for their own, Goodluck Jonathan, to become vice president and eventually president. Given this recent history it is plausible that some northern political elite have orchestrated a parallel campaign under the guise of Boko Haram aimed at regaining influence for their region. Recently several political leaders particularly from the north including Vice President Sambo called the group to dialogue with the government. Still many northern political, religious, and traditional leaders have not mobilized themselves to come out forcefully against the group leading Christian groups to accuse northern elders, and political and religious leaders of at least tacitly supporting the group for their political ends.

Security Risk

The increase in violence has already led to a reduction in investment in Nigeria. Still the greatest security risk for the country is not Boko Haram itself but rather the potential that their violent campaign could cause a downward spiral into sectarian violence. After the group bombed Christian churches in the north Christian leaders have become vocally critical. There is potential that if the violence against Christians in the north continues, Muslims living in the south will also become targets of vigilantes. A scenario with escalating ‘tit for tat’ strikes on mosques and churches is entirely possible if people lose confidence in the national government and if they feel northern political, religious, and traditional leaders are not doing enough to reign in the group and its financiers. The outcome of the calls for dialogue and the ability of authorities to eschew vigilantism will determine whether this security issue will remain contained or escalate nation-wide.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/

http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Mali Gold Tax

18 May

As I indicated as a substantial residual political risk in the previous two articles I wrote on Mali dating back to April 5th and the morning of May 17; See:

https://kurangaandassociates.wordpress.com/2012/05/17/the-political-risk-in-mali-moving-forward/

https://kurangaandassociates.wordpress.com/2012/04/05/investing-in-mali-security-and-political-risk-management-in-west-africa/

Mali instituted a new gold tax of 2% yesterday. In both articles I refer readers to a recent speaking engagement I had in New York City on March 2nd. See:

http://webcast.murdockcapital.com/InvestOp010NovaCapital.htm

These residual risks in Mali will remain for years to come. However, there is still money on the table, provided that firms operating in the country increase their political risk management capacity, the country is just as profitable today as it was in 2011. All major firms that have invested in the country can still move forward with all their plans, provided that they increase their political risk management capabilities.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/

http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

The Political Risk in Mali: Moving Forward

17 May

As I predicted in an earlier article the military junta in Mali stepped down to allow for the restoration of constitutional order. As the May 22nd deadline for elections emerges there is continued concern that the military will step back into power. I have received yet again more queries from investors and decision-makers at some of the firms exposed to the country as to what will happen next. I have done extensive research that utilizes detailed accounts from the last decade of regional intervention in Africa. The accounts, which include minutes from the closed door meetings similar to the ones that are occurring now behind the scenes of the Mali crisis, can be found in my book The Power of Interdependence. I strongly recommend investors, scholars, and political advisers for the African region to read this text as it provides detailed insight behind the multi-lateral interventions in the region and could answer many questions surrounding issues like the Mali crisis.

What Next?

The West African regional block, ECOWAS, does not want the military to return to power in Mali. They have numerous resources at their disposal to exert their wishes and they will not hesitate to use them should it become necessary. For this reason the military will not return to power in Mali. Any attempts they make will be short-lived and will greatly reduce the ability of military leaders in the country to have any say in the future course of the country. Thus all the investors and firms that are concerned of this scenario, need not be. While the road ahead will be filled with bumps and winds, the dooms day scenario that many have been inquiring about is not a significant possibility at this time. This does not however mean that there are no major political risks in Mali or in several other countries in the region.

Investor Related Risks

What is most alarming to me about all the inquiries that I am getting on Mali is the short-term risk focus that many decision-makers have adopted with respect to the current state of their investments in the country. The greatest political risk in Mali is residual and thus will remain long after this immediate crisis passes. It is imperative that the investors and firms that are exposed to the country change their risk-management strategy towards a long-term approach. I once again urge everyone reading this to listen to my brief discussion I gave in March available on video. In this discussion I talk about the case of Chad and how energy investors were subject to hostile fees and taxes from the government after being in the country for a few years. At the time the Government of Chad was facing a security threat along their border with Sudan, not at all dissimilar from the security threat that Mali is facing today. Regardless of whether the principal investment officers at some of the major mining and infrastructure firms invested in Mali today realize it, there will eventually be an election in Mali that will bring about a greater risk than what we see today. Along the road leading to the election there will be political shifts. Further the need for greater resources to face the pressing need to secure the state has already been felt by civilian leaders. Once the election has taken place the risk for even greater political shifts will actually increase and the residual risk for investors will remain for years to come.

I urge those who have contacted me and who have been reading my articles to shift towards a long-term risk management strategy, one that safeguards investments and ensures sustainable returns. I shun those who seek to acquire my services for short-term political advice in situations like these because what the situation requires is long-term political risk management. The short-term crisis that has caught our attention will pass but the real risk for investors will remain. The good news is these political risks can be managed in such a way that will limit the risk exposure that many investors and firms will face in the years to come.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Global Consultancy
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/

http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga