Nigeria

Politics:

• Analysis

  Nigeria politics: Quick View - Mother of finance minister is kidnapped

  Event

  The mother of the finance minister, Ngozi Okonjo-Iweala, has been kidnapped. The kidnappers have reportedly demanded the resignation of Ms Okonjo-Iweala in return for the release of her mother.

  Analysis

  Kidnapping is relatively common in Nigeria, especially in the oil-producing Niger Delta region. Most kidnappings are resolved without harm to the victim after a ransom is paid. It is the financial aspect that usually drives the kidnappings of wealthy Nigerians in a part of the country where access to firearms is easy and where the police struggle to maintain security. However, the kidnapping of Kamene Okonjo on December 9th may have more to it than a purely financial element. According to a report by This Day, a Nigerian newspaper, on December 12th, the kidnappers have stated as one of their conditions for release the resignation of Ms Okonjo-Iweala, as well as payment of a large cash sum. This has not been verified, but if true it would mark a worrying new aspect to the political scene in Nigeria.

  Ms Okonjo-Iweala has been a determined reformer since taking on the finance portfolio in 2011 (her second time in the position after a previous stint in 2003-06). Such reforming zeal has earned her enemies. Recently she has been at the forefront of attempts to reduce the amount of oil stolen in Nigeria and to root out corruption in the payment of fuel subsidies. These two illicit activities were estimated by Ms Okonjo-Iweala to have cost Nigeria US$14bn in 2011. Many shady characters have become rich via these schemes, and the suspicion that they could be connected to the kidnapping has worrying implications for political stability and economic policymaking. The government cannot be seen to accede to the political demands of kidnappers, but this is another example of the many ways in which an already slow reform process-despite Ms Okonjo-Iweala's best efforts-could be slowed further as the government struggles to deal with another line of attack.

  December 12, 2012

• Background

  Nigeria: Key figures

  Goodluck Jonathan

  Mr Jonathan is the first person from the Niger Delta to become president. However, the fact that he is a southern Christian was not popular with many in the mainly Muslim north who felt that it was the turn of one of their politicians to contest the presidency for the ruling People's Democratic Party (PDP) in 2011. This has caused ructions within the PDP as well as resentment in the less-developed north, where people fear that they will be ignored by another southern president.

  Olusegun Obasanjo

  A former military ruler (1976-79) before being elected president (1999-2007), Mr Obasanjo is gradually receding from the local domestic arena but remains a powerful player behind the scenes. He resigned his position as chairman of the board of trustees of the PDP in April 2012, ostensibly to concentrate on his international commitments, but he is understood to still be active within the party.

  Muhammadu Buhari

  Another former military head of state (1983-85), as leader of the opposition Congress for Progressive Change (CPC) Mr Buhari was the runner-up in the 2011 presidential election, winning a majority of the vote in the mainly Muslim north of the country. This was his third failed attempt to win the presidency, each time blaming his defeat on chronic fraud and manipulation. He could become a rallying point for disaffected elements angry at the lack of progress on electoral reform.

  Ibrahim Babangida

  Yet another former military ruler, Mr Babangida is now a PDP northern heavyweight but lost out to Mr Jonathan when he sought to win the party's presidential nomination in 2011. Mr Babangida, a wealthy and charismatic politician, remains a controversial figure because of his decision to annul the 1993 presidential elections, which led to the collapse of the Third Republic. Although his presidential aspirations may be over, he will remain a powerful figure in the PDP's northern caucus and will not be afraid to criticise Mr Jonathan when he sees fit.

  Bola Tinubu

  A former Lagos State governor and founder member of the Action Congress of Nigeria (ACN), Mr Tinubu is a powerful political figure in the now ACN-dominated south-west of Nigeria. He has worked before to bring the opposition together to provide a united front against the PDP and, although unsuccessful so far, has shown himself to be a shrewd political operator behind the scenes.

  Babatunde Fashola

  The Lagos State governor was returned to the position with a landslide victory in the 2011 governorship election. Mr Fashola has won plaudits both locally and internationally for his efforts to develop one of the world's largest and most chaotic cities. He is a potential presidential candidate for the future, but will have to negotiate a fractious relationship with his one-time mentor, Mr Tinubu.

  Ngozi Okonjo-Iweala

  Mr Jonathan appointed Ms Okonjo-Iweala not only as minister of finance but also as co-ordinating minister for the economy, giving her broad powers over economic management. However, while Ms Okonjo-Iweala is internationally well respected (she has served as managing director at the World Bank), she has found it difficult to move the economic policy agenda forward domestically, where she is less popular for trying to force through some painful reforms.

  August 06, 2012

• Structure

  Nigeria: Political structure

  Official name

  Federal Republic of Nigeria

  Form of state

  Federal republic, comprising 36 states and the Federal Capital Territory (FCT, Abuja)

  Legal system

  Based on English common law

  National legislature

  National Assembly, comprising the 109-seat Senate and the 360-seat House of Representatives; both are elected by universal suffrage for four-year terms

  National elections

  Most recent legislative and presidential elections, April 2011; Goodluck Jonathan was elected to the presidency, and his party, the People's Democratic Party, won a majority of seats in both houses of the National Assembly; next national elections are scheduled for 2015

  Head of state

  President, elected by universal suffrage to serve a four-year term

  State government

  State governors and state houses of assembly

  National government

  The Federal Executive Council, which is chaired by the president; appointed July 26th 2007; extensive reshuffle carried out in April 2010

  Main political parties

  People's Democratic Party (PDP); Action Congress (AC); All Nigeria People's Party (ANPP); Progressive Peoples Alliance (PPA); All Progressive Grand Alliance (APGA); Congress for Progressive Change (CPC); more than 30 political parties are currently registered

  Key ministers

  President: Goodluck Jonathan

  Vice-president: Namadi Sambo

  Agriculture & natural resources: Akinwunmi Adesina

  Defence: Bello Mohammed

  Education: Ruqayyatu Rufai

  Finance: Ngozi Okonjo-Iweala

  Foreign affairs: Olugbenga Ashiru

  Health: Christian Otu Onyebuchi

  Information: Labaran Maku

  Interior: Abba Moro

  Justice & attorney-general of the federation: Mohammed Bello Adoke

  Labour: Emeka Wogu

  Mines & steel: Musa Mohammed Sada

  National planning: Shamsudeen Usman

  Niger Delta affairs: Godsday Orubebe

  Petroleum: Diezani Alison-Madueke

  Power: Bart Nnaji

  Trade & investment: Olusegun Aganga

  Transport: Idris Umar

  Works: Mike Onolememen

  Youth development: Mallam Bolaji Abdullahi

  Central Bank governor

  Lamido Sanusi

  December 03, 2012

• Outlook

  Nigeria: Key developments

  Outlook for 2013-17

  • Despite the tense political scene the president, Goodluck Jonathan, and his People's Democratic Party (PDP) will remain in power at least until the next elections in 2015, and probably beyond.
  • The main threat to political stability is the militant Islamist grouping Boko Haram, in the north of Nigeria. However, there are also various social tensions that frequently provoke violent unrest in other parts of the country.
  • The government is targeting a more prudent fiscal policy, and the generally favourable oil price environment will make this possible. However, expenditure, especially current expenditure, will prove difficult to cut.
  • Economic expansion will be buoyed by the robust performance of the non-oil sector, although 2013 will be a difficult year given unfavourable global prospects. Real GDP growth is then expected to average above 7% in 2014-17.
  • Tighter monetary and fiscal policy should allow inflation to come down in the first half of the forecast period, before stronger growth and higher commodity prices see it increase in the second half of the forecast horizon.
  • The current-account surplus will narrow in 2013-14, as oil export growth is outpaced by import growth, before widening in 2015-17, as oil prices increase at a faster rate amid stronger global growth.

  Review

  • No realistic solution is in sight to halt the cycle of violence in the north of the country. Islamic terrorism is provoking a heavy-handed response by the authorities, with the civilian population caught in the crossfire.
  • The French oil firm Total has sold some of its Nigerian assets to a Chinese company. This does not signal a pull-out by Total from Nigeria, but is part of a wider story of a shift in Nigeria's export markets, especially towards Asia.
  • The reform of the woefully inefficient power sector has been thrown into confusion by the cancellation and subsequent reinstatement of a contract to run the transmission network.
  • Widespread flooding has displaced over 2m Nigerians and is affecting the overall performance of the economy. It has pushed up inflation and caused a fall in oil production, which is likely to impact on growth prospects.
  • The monetary policy interest rate was held at 12% despite sluggish third-quarter growth. The central bank remains concerned about high inflation.
  • The government has increased its planned external borrowing for the period 2012-14. This does not affect debt sustainability at present, but the concern is that significant amounts will be lost through corruption and mismanagement.

  December 03, 2012

Economy:

• Background

  Nigeria: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	165.8	Population growth	2.6
  GDP (US$ bn; market exchange rate)	244.5b	Real GDP growth	0.1
  GDP (US$ bn; purchasing power parity)	301.1	Real domestic demand growth	-0.5
  GDP per head (US$; market exchange rate)	1,474	Inflation	10.6
  GDP per head (US$; purchasing power parity)	1,816	Current-account balance (% of GDP)	9.8
  Exchange rate (av) N:US$	154.7b	FDI inflows (% of GDP)	3.9
  a Economist Intelligence Unit estimates. b Actual.

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  Background: Nigeria gained independence in 1960 and the army soon became the dominant political player. Multiparty democracy was restored in 1999. That presidential poll and the next one, in 2003, were both won by a respected former military ruler turned civilian politician, Olusegun Obasanjo. Although the conduct of the April 2007 elections was widely condemned, the victory of Umaru Yar'Adua marked the first time in post-independence Nigeria that political power had been transferred from one civilian government to another. Mr Yar'Adua's death in May 2010 saw his vice-president, Goodluck Jonathan, ascend to the presidency and go on to win the 2011 presidential election. While not perfect, the conduct of the 2011 elections was considered another important step forwards for democracy in Nigeria.

  Political structure: Under the new constitution, adopted in May 1999, a strong executive presidency appoints a Federal Executive Council, comprising government ministers and ministers of state from each of Nigeria's 36 states. The executive is accountable to the bicameral National Assembly. There are currently 56 political parties registered with the Independent National Electoral Commission, but most have no clear ideology; in practice, personal and ethnic ties dominate the political process. The People's Democratic Party (PDP; Mr Jonathan's party) is one of the few political parties to attract nationwide support. Although the 36 state governments enjoy greater autonomy than under the former military administration, they remain dependent on the centre for funding.

  Policy issues: Successive governments have sought to boost non-oil sector growth, improve macroeconomic stability and develop the nation's dire infrastructure, with mixed results. Tackling corruption has also become a priority. Meanwhile the government is struggling to end insecurity in the key oil-producing region, as well as parts of the middle and north of the country. These tensions are stoked by the underlying problems of poverty and unemployment. Mr Jonathan will maintain good relations on the global scene and will continue to promote Nigeria as a leading international and regional power.

  Taxation: Corporate profits in most non-oil sectors are taxed at 30%. The tax system in the oil and gas sector is set to change with the implementation of the petroleum industry bill during 2012 or 2013. Most other taxes are fairly low-a reflection of the fact that most revenue comes from the oil sector. However, tax compliance is a time-consuming process.

  Foreign trade: Exports are dominated by oil: although falling prices in 2009 presented a significant challenge, Nigeria weathered the storm and will benefit from stronger prices in the forecast period; it will maintain a large trade surplus.

  Major exports 2010	% of total	Major imports 2010	% of total
  Petroleum	85.1	Manufactured goods	19.4
  LNG	8.6	Machinery & transport equipment	13.1
  		Chemicals	9.6
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  US	26.2	China	17.5
  India	10.9	US	9.1
  Brazil	7.0	Netherlands	4.9
  Spain	6.4	India	4.7

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  December 01, 2012

• Structure

  Nigeria: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 03, 2012

• Outlook

  Nigeria: Country outlook

  Nigeria: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The president, Goodluck Jonathan, and his People's Democratic Party (PDP) are expected to remain in office at least until the end of their current term in 2015. Nonetheless, Mr Jonathan faces a variety of challenges that threaten to distract him from the reform agenda required to propel Nigeria's development. Perhaps the greatest single threat to political stability comes from the Boko Haram group of Islamist fundamentalists, which operates mainly in the north of the country and has carried out increasingly daring and widespread violent attacks against the authorities. Dealing with Boko Haram, which is ostensibly seeking to overthrow the state and impose Islamic rule on Nigeria, has been complicated by the group's evolution in recent years from a band of zealous, anti-establishment Islamists into a more sophisticated and loosely formed movement containing different elements, including jihadis, political activists and criminals. There are also political aspects; for example, it appears that Boko Haram has sympathisers within the northern caucus of the PDP, who view the Islamist militants as a means of weakening Mr Jonathan, a southern Christian, and increasing the chances of one of their own ascending to the presidency. It also appears that some of the attacks that have been blamed by the authorities and the media on Boko Haram may have been carried out by individuals and groups with little or no direct connection with it; this supports the Economist Intelligence Unit's view that the violence in the north reflects a more general malaise in the region.

  ELECTION WATCH: The next national and state-level elections are due in 2015. The issue likely to dominate the elections is whether Mr Jonathan will seek another term in office. This would almost certainly provoke an upsurge of political tensions in the north of the country. Were Mr Jonathan to stand down, the competition to succeed him within the PDP would be fierce. Meanwhile, the opposition will attempt to build on the gains made at the 2011 elections, painting the PDP as underachieving and corrupt. There are indications that at least some sections of the opposition will attempt to co-operate to defeat the PDP in 2015. This is the opposition's best hope, but key issues, such as agreeing on a single presidential candidate, will prove difficult. Strong powers of incumbency mean that the PDP and its presidential candidate will be the favourites at the 2015 elections, but the party's domination of Nigerian politics is expected to be eroded again, especially if the opposition parties work together.

  INTERNATIONAL RELATIONS: Although Mr Jonathan is less active on the international scene than some of his African peers owing to the large domestic challenges that he faces, Nigeria will remain a leading power on the continent given its sheer size and resource base. The country is a large supplier of oil to the US, although the growing exploitation of unconventional oil and gas supplies in North America will mean that Nigeria will need to look for alternative markets over the longer term. Western oil companies are likely to maintain their dominance of the oil sector, given how well established they are, but they will face challenges as China increases its competitive bids for Nigerian hydrocarbons. The French oil major Total recently agreed to sell some of its assets to the China Petrochemical Corporation, lending support to this forecast.

  POLICY TRENDS: Policy will be shaped largely by the government's Medium-Term Expenditure Framework, with a focus on infrastructure development and encouraging private-sector-led economic growth. However, political indecisiveness and bureaucratic inefficiencies will hinder policy reform. Furthermore, poor relations between the presidency and the senior economic team, on the one side, and the legislature on the other have historically restricted policy progress; this is expected to remain the case during the forecast period. Therefore, although Mr Jonathan is expected to try to speed up the pace of policymaking, progress will be slow. Certain crucial reforms--including the implementation of the petroleum industry bill and the restructuring of the power sector--will continue to be delayed as a result. Even if policy can be pushed through the National Assembly, there is often further conflict with the powerful state governors. Indeed, a new sovereign wealth fund has become bogged down over precisely how oil revenue is saved. Oil savings will be built up, but at a much slower pace than envisioned.

  ECONOMIC GROWTH: Real GDP growth of 6.5% is forecast for 2013-below the average for the past decade of 7% given wider global uncertainty, the damages caused by the severe flooding in late 2012, and constraints in infrastructure and the business environment. The remainder of the forecast period will gradually see a more favourable global and domestic picture emerge, which will allow real GDP growth to average a little over 7% a year in 2014-17 (with a slight dip in the election year of 2015). However, this is still below the double-digit levels required if the country is to see any real large-scale improvement in the population's living standards. This is primarily the result of the dire state of Nigeria's infrastructure, notably the electricity supply. Furthermore, continuing flare-ups of political unrest will constrain growth particularly in the north, while violence in the Niger Delta will periodically affect oil and gas production. There will, however, be some increases in oil and gas production as new deepwater oilfields open or expand. These are less susceptible than the onshore fields to action by militias, although they are not immune to it.

  INFLATION: Inflation should come down in the first half of the forecast period, but this is largely because of the high base set in 2012, when a reduction in fuel and electricity subsidies contributed to a spike in prices. The fall in 2013 will also be limited by the likely impact of flooding on food prices in the first quarter. Although government expenditure growth will slow, it will remain robust--especially at state level, where fiscal laxity remains a problem. Meanwhile, strong consumer demand will also put pressure on prices. Generally lower commodity prices and currency stability will provide some respite. Overall, the rate of inflation is expected to decline from a peak of 12.2% in 2012 to 9.6% in 2014. However, robust growth domestically and increasing commodity prices externally are expected to see inflation pick up in 2016-17, ending the forecast period at an annual average of 10.8%.

  EXCHANGE RATES: The Central Bank of Nigeria is expected to continue to favour maintaining the value of the local currency, the naira, within a narrow band--to restrict imported inflation--with periodic adjustments to avoid a further significant running-down of foreign-exchange reserves. With oil prices remaining strong and investment inflows continuing (assuming no major deterioration in political stability), the naira should remain relatively stable in 2013-17. Downward pressure will come from structurally high domestic inflation and periodic global jitters that will put pressure on emerging-market currencies such as the naira from time to time. Overall, occasional downward adjustments to the currency are expected, although the frequency of these adjustments will lessen as the forecast period progresses, in line with greater global stability and higher oil prices boosting the reserve situation. We expect the naira to weaken to an average of N174:US$1 in 2017, from N162:US$1 in 2013. This is equivalent to an annual average depreciation of just 2%, which, given robust inflation, represents a marked real appreciation.

  EXTERNAL SECTOR: Oil prices will remain the single largest determinant of the health of Nigeria's external position, as diversification during the forecast period is expected to be subdued. Therefore the expectation of continued high oil prices in 2013-17 bodes well for exports. Less encouraging is our expectation of only a gradual increase in oil production, as investment levels fail to reach potential amid policy uncertainty and insecurity. Against this, imports will continue to grow at a robust pace, as infrastructure spending increases and strong economic growth draws in higher levels of consumer imports. The services and income accounts will remain firmly in deficit, related as they are to trade and oil-sector profit repatriation, respectively. Private transfers from the large Nigerian diaspora will remain sizeable, but growth will largely depend on the impact of global economic uncertainty on Nigerians working in the West. Overall, after recording a surplus equivalent to an estimated 2.2% of GDP in 2012, the current account is expected to approach balance in 2013-15, as import growth exceeds oil export growth. A pick-up in oil prices in 2016-17 will see the surplus widen to 1.9% of GDP by the end of the forecast period.

  December 01, 2012

• Forecast

  Nigeria: Country forecast summary

  Country forecast overview: Highlights

  • Despite periodic violent outbreaks, the central scenario is that the president, Goodluck Jonathan, and his the People's Democratic Party (PDP) will remain in power until the next elections in 2015.
  • The issue over whether or not Mr Jonathan will stand again in 2015 will increase tensions within the PDP, as he is not universally popular. Whoever is chosen by the party is expected to win the presidency in 2015, given the PDP's power of incumbency.
  • High levels of poverty and the country's ethnic and religious divisions will create a potent mixture that will spill over into outbreaks of violence.
  • One particular risk is that Islamist fundamentalists may expand their violent campaign into the south of the country. An attack on the commercial capital, Lagos, would send an alarming signal which, although unlikely to unseat the government, would dent investor interest and harm economic prospects.
  • An important test for the administration will be the way in which it handles the complicated issues of increasingly violent Islamist fundamentalism and the ongoing unrest in the troubled Niger Delta.
  • Although economic policy pronouncements are likely to be ambitious, actual policy reform will be slow, as the country stands at a crossroads between the implementation of tough, unpopular market reforms and pandering to nationalistic and pro-subsidy interest groups.
  • Fiscal policy should improve slowly after recent expansionary budgets. However, a fiscal deficit is expected throughout the forecast period, as the government remains committed to ambitious development expenditure.
  • There will be robust levels of growth in 2013-17, led by the non-oil sector. However, growth will remain a long way below potential as Nigeria is held back by its crippling infrastructure deficit.
  • Inflation is expected to moderate in 2013-14 as fiscal policy is tightened, before increasing again in 2015-17 as economic growth remains robust and international commodity prices head upwards again.
  • The current account is expected to post surpluses as global oil prices remain elevated in 2013-17. However, the size of the surplus will be contained by continued strong import demand for infrastructure development.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	6.2	6.5	7.2	6.9	7.3	7.1
  Consumer price inflation (av; %)	12.2	10.9	9.6	9.9	10.2	10.8
  Budget balance (% of GDP)	-3.0	-2.3	-2.0	-2.3	-2.0	-1.8
  Current-account balance (% of GDP)	2.2	0.6	0.2	0.6	1.5	1.9
  Commercial banks' prime rate (av; %)	16.0	14.5	13.0	13.5	13.8	13.8
  Exchange rate N:US$ (av)	157	162	168	171	173	174

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  December 01, 2012

View detailed map

Country Briefing

Land area

923,773 sq km

Population

158.3m (2010, IMF mid-year estimate)

Main towns

Population in millions (2010, World Gazetteer estimates)

Lagos: 10.0 (a)

Ibadan: 5.2 

Benin: 2.4 

Abuja: 1.4 

Climate

Tropical; with a long wet season in the south, particularly the south-east, and a shorter wet season in the north

Weather in Lagos (altitude 3 metres)

Hottest month, March, 26-32°C; coolest month, August, 23-28°C; driest month, December, 25 mm average rainfall; wettest month, June, 460 mm average rainfall

Languages

English (official), Hausa, Yoruba and Ibo; many other local languages are widely spoken

Measures

Metric system

Currency

Naira (N) = 100 kobo

Time

One hour ahead of GMT

Public holidays

January 1st; February 14th (b) (Mawlid al-Nabi); April 22nd-25th (Easter); May 1st (Workers' Day); May 29th (Democracy Day); August 19th (b) (Eid al-Fitr); October 1st (Independence Day); October 26th (b) (Eid al-Adha); December 25th-26th (Christmas)

(a) There are large variations in estimates of the size of Lagos and other cities in Nigeria, reflecting the weakness of population statistics in general and failure to agree over city boundaries.

(b) The dates of official public holidays, to be confirmed by the government, may differ from those of the Muslim festivals given here.

March 29, 2012