NewsWest AfricaNigeria: Battling insurgents, markets and taxes

Sat,18Nov2017

Posted on Tuesday, 05 April 2016 15:20

Nigeria: Battling insurgents, markets and taxes

President Buhari’s message for Europe: get behind the Joint Task Force. Photo©Manish Swarup/AP/SIPABuhari faces security and economic crises a year after the landmark election.

As President Muhammadu Buhari addressed the European parliament, currently obsessed with the tide of refugees sailing across the Mediterranean, he may have been tempted to add: "And you think you've got problems?"

Buhari used his stopover in Strasbourg, France on 2 February to explain that his country's battle against the Boko Haram insurgents – now formally affiliated to the Syria-based Islamic State rebels – would need stronger international backing.

$3.5bn Buhari's government is planning on a large borrowing programme to finance the budget and new investment

Specifically, Buhari is looking for $700m to fund the 8,700-strong Multinational Joint Task Force, which groups armies from Cameroon, Chad, Niger and Nigeria. So far, some $250m has been raised in contributions from Nigeria, France and Switzerland. An international conference is due in May between the main troop-providing countries, France and other European powers to bolster the N'Djamena-based force.

The multinational force's results have so far been very limited, one of Buhari's security advisers tells The Africa Report: "After losing most of its territory, Boko Haram has changed tactics to hit-and-run attacks and suicide bombings, particularly in Cameroon and Chad [...]. We need more troops on the ground and air power to deal with this."

After the Strasbourg meeting, Buhari spoke at a conference in London on the Syrian war and its regional effects, pointing out the linkages between Boko Haram and the more than 5,000 Islamic State fighters in Libya.

On 5 February, Buhari and his advisers had a closed-door meeting with Alex Younger, the director of Britain's Secret Intelligence Service. Next on Buhari's itinerary was North Africa and the Middle East, and meetings with the heads of state of Egypt, Qatar and Saudi Arabia.

Under Buhari's tutelage Nigeria has greatly strengthened its credibility and diplomatic ties, but progress on all fronts is stymied by the country's worst economic crisis for two decades. On economic strategy, the Buhari government is far more selective about the advice to which it will listen.

A chorus of economic analysts are calling for a sharp devaluation of the naira, which has been trading on the parallel market for less than a third of its official rate of N197 to the dollar.

For now, Buhari's government is holding firm in his resistance to a devaluation, which he fears would drive up prices, further hurting his main constituency, the majority of the country's 175 million people who eke out a living on about $2 a day.

Yet as new capital controls and foreign-exchange restrictions bite, importers and manufacturers are already raising prices. At the heart of this is an argument about bearing the pain of the economic meltdown.

Government officials say most of the burden should fall on the 'less than one per cent' who benefited from Nigeria's boom in the past decade when the price of oil went as high as $135 per barrel.

Then foreign exchange was shovelled out of the country: tens of billions of dollars in overpriced contracts and tax evasion schemes, as well as more than $50bn that was used by crooked politicians and business people to launder their cash.

Now it is payback time, says finance minister Kemi Adeosun. She says the government's target of N4.9trn ($24.6bn) in tax revenue for 2106 – almost 80% of it from corporate tax and value added tax – is "non-negotiable".

Oil companies could owe as much as $10bn in tax from payment shortfalls and wrongly applied tax waiver schemes, according to analysts at the state oil company. And with hefty fines for companies such as South Africa's MTN and a raft of local banks that have fallen foul of regulations, the government has parked its tanks on the corporate lawn.

This test of wills could prove as important for Nigeria's future as the ground war in the north-east. ●

Patrick Smith in Lagos



Patrick Smith

Patrick Smith

Patrick Smith is Editor-in-Chief of The Africa Report. He has edited the political and economic insider newsletter Africa Confidential since 1992 and was associate producer on a documentary about the 2004 coup attempt in Equatorial Guinea commissioned by Britain's Channel 4 television.

 

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