Nigeria

Politics:

• Analysis

  Nigeria politics: Quick View - Muslim leader urges amnesty for Boko Haram

  Event

  The spiritual leader of Nigerian Muslims, the Sultan of Sokoto, has called on the president, Goodluck Jonathan, to offer an amnesty to the Boko Haram Islamic militants in an effort to reduce violence in northern Nigeria.

  Analysis

  The use of an amnesty to encourage rebels to lay down their weapons has precedence in Nigeria, with such a scheme used in 2009 to try to calm the turbulent oil-producing Niger Delta region, with mixed results. The idea of an amnesty for Boko Haram was also previously mooted in 2011, but failed to gain much traction. The idea of the government, in effect, forgiving a group that had been linked to thousands of deaths during its mission to turn Nigeria into an Islamic state infuriated many in a country that is roughly evenly split between Muslims and Christians. There were also practical issues-little was known about the group at the time, including about its leadership, and so agreeing the terms of an amnesty would have been extremely difficult.

  The situation is a little different in 2013. Boko Haram is still a shady and secretive organisation, but more is known about its leadership, including that some of its senior figures are prepared to contemplate a peace agreement. Indeed, one senior member, Sheik Abu Mohammed Ibn Abdulazeez, announced a ceasefire in late January. Little came of the ceasefire-widespread violence continues, including a large-scale attack on a military barracks on March 2nd-and a video emerged in early March that appeared to show the Boko Haram leader, Abubakar Shekau, denying the agreement to a ceasefire or negotiations with the government. Although this lack of clarity and continued violence does not bode well for a peaceful solution to the situation, it does imply that there are splits within Boko Haram that could be exploited. Even if not fully taken up, an amnesty targeting the less zealous members of the group could weaken the remainder.

  Nevertheless, the experience of the Niger Delta shows that even if an amnesty is relatively successful to start with, those who take up the offer could easily slip back into violent ways if a plan is not in place to maintain peace through initiatives to boost development or provide employment opportunities. The government has yet to find a credible solution to the chronic poverty and unemployment that is driving young Nigerians towards groups like Boko Haram.

  March 06, 2013

• 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); the opposition Action Congress of Nigeria (ACN), All Nigeria People's Party (ANPP), All Progressive Grand Alliance (APGA) and Congress for Progressive Change (CPC) in February 2013 announced they would merge to form the All Progressive Congress (APC)

  President: Goodluck Jonathan

  Vice-president: Namadi Sambo

  Key ministers

  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

  March 04, 2013

• Outlook

  Nigeria: Key developments

  Outlook for 2013-17

  • The main threat to political stability is the militant Islamist attacks in the north of Nigeria. However, there are also various social tensions that frequently provoke violent unrest in other parts of the country.
  • Despite instability in the north, the president, Goodluck Jonathan, and his People's Democratic Party (PDP) will remain in power at least until the next elections in 2015. Greater opposition unity could mean close elections in 2015.
  • Fiscal expenditure, especially current expenditure, will prove difficult to cut given political considerations. Instead, it will be the favourable oil price environment that allows for lower fiscal deficits.
  • 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.
  • 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.
  • 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

  • Four leading opposition parties have announced that they will merge in order to present a concerted challenge to the ruling party in 2015, although agreeing a single presidential candidate will test their unity.
  • A ceasefire declared by a leader of the Boko Haram militant group has not translated into a fall in attacks. However, it suggests that the group is divided over whether to make peace, something the government could exploit.
  • New incidents of kidnapping in northern Nigeria highlights the dire situation there. Underdevelopment, unemployment and poverty are underlying factors.
  • Economic growth was disappointing in 2012, with the oil sector stagnant. Legislation to improve this vital sector remains mired in disputes over the tax regime and revenue-sharing.
  • Other recent economic data has been more encouraging. Food output in 2012 was strong, while tax revenue and external reserves have increased robustly. Inflation fell significantly in January.
  • Efforts to rebase and improve GDP data have been postponed until later in 2013. It is likely that when the exercise has been completed, Nigeria's economy will be found to be close in size to that of South Africa.

  March 04, 2013

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. After Mr Yar'Adua's death in May 2010 his vice-president, Goodluck Jonathan, ascended to the presidency and went on to win the 2011 presidential election. Although 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. The merger of four large opposition parties in early 2013 could pose a tough challenge for the PDP at the next elections in 2013.

  Policy issues: Successive governments have sought to improve macroeconomic stability and develop the nation's dire infrastructure, with mixed results. Meanwhile the government is struggling to end insecurity in various parts 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 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 2011	% of total	Major imports 2011	% of total
  Petroleum	83.5	Manufactured goods	17.5
  LNG	7.8	Machinery & transport equipment	11.6
  		Chemicals	8.4
  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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  March 04, 2013

• Structure

  Nigeria: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 04, 2013

• 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 Boko Haram, a group of Islamist fundamentalists active in the north of the country. Dealing with Boko Haram 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. This supports the Economist Intelligence Unit's view that the violence in the north reflects a more general malaise in the region. 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.

  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. In recent weeks he has defended his eligibility to stand for re-election in the courts following a case brought by a northern member of his party. The fact that Mr Jonathan has defended his eligibility has given rise to the belief that he is preparing to stand again. This would almost certainly provoke an upsurge of political tensions in the north of the country. However, even if Mr Jonathan were to stand down, the competition to succeed him within the PDP would be fierce.

  INTERNATIONAL RELATIONS: 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, particularly in Asia. 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 (MTEF), with a focus on infrastructure development and encouraging private-sector-led economic growth. However, political indecisiveness and bureaucratic inefficiencies will hinder policy reform. There are also serious question marks over the government's political will to face down widespread opposition to market-led reforms. 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 annual average of 7% over the past decade given global uncertainty, the damage 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, and violence in the Niger Delta will periodically affect oil and gas production.

  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 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 in these 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 2.3% 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 1.8% of GDP by the end of the forecast period.

  January 01, 2013

• Forecast

  Nigeria: Country forecast summary

  Country forecast overview: Highlights

  • Despite periodic outbreaks of violence, the central scenario is that the president, Goodluck Jonathan, and his 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 be unlikely to unseat the government but 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 Islamic 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 implementing tough, unpopular market reforms and pandering to nationalistic and pro-subsidy interest groups.
  • Fiscal expenditure will remain dominated by recurrent spending despite efforts to increase capital investment. A fiscal deficit is expected throughout the forecast period despite high oil revenue owing to spending pressures.
  • 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.
  • We expect inflation to moderate in 2013-14 as fiscal policy is tightened, but it will increase 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 (%)	6.6	6.8	7.2	6.9	7.1	7.0
  Consumer price inflation (av; %)	12.2	10.2	9.5	9.9	10.2	10.8
  Budget balance (% of GDP)	-2.6	-2.4	-2.0	-2.5	-2.2	-2.1
  Current-account balance (% of GDP)	5.2	3.1	2.7	2.8	3.0	3.2
  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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  March 04, 2013

View detailed map

Country Briefing

Land area

923,773 sq km

Population

170.1m (2012 US Census Bureau mid-year estimate)

Main towns

Population in millions (2012 World Gazetteer estimates)

Lagos: 10.4a

Ibadan: 5.5

Benin: 2.6

Kano: 2.4

Port Harcourt: 2.3

Abuja: 1.6

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 4thb (Mawlid al-Nabi); April 6th-9th (Easter); May 1st (Workers' Day); May 29th (Democracy Day); August 19thb (Eid al-Fitr); October 1st (Independence Day); October 26thb (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.

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

January 01, 2013