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Boko Haram

Tolu Ogunlesi NewAfrican

Africa’s most populous country appears to be experiencing both its best and worst times – being crowned as Africa’s largest economy, amidst a mounting brutal terrorist insurgency which is entering its sixth year, with no signs of letting up. 

ON a Tuesday morning early in February a group of investors gathered at the new Inter-Continental Hotel in Lagos, for Renaissance Capital’s Investment Conference.  Among the event’s highlights were the duo of Bob Diamond, ex-CEO of Barclays Bank, and Ashish Thakkar, a 32-year-old Indian-Ugandan billionaire.

At that time there was speculation that the two men were seriously looking at investment opportunities in Nigeria, through their new joint investment vehicle, Atlas Mara. In April confirmation arrived, with the news of Atlas Mara’s acquisition of a sizeable stake in Nigeria’s Union Bank.

Two months after the Renaissance Capital conference, in the Inter-Continental Hotel Hall, another investment meeting – this time a two-day Nigeria Summit – was held by the Economist magazine.

The second day of that summit coincided with an investment conference by the Africa Finance Corporation (AFC), highlighting the possibilities of investing in infrastructure in Nigeria.

Earlier this month, Nigeria played host to the World Economic Forum on Africa, seen by the government as “an unprecedented opportunity for Nigeria to showcase its vast economic opportunities to the world”. It was the first time Nigeria hosted the event; South Africa has hosted it 17 times out of 24.

Welcome to Nigeria Rising – the slowly but steadily changing story of Africa’s most populous country, rich in oil and gas, hobbled for years by bad governance, but now emerging as an investor’s delight; welcoming a never-ending stream of individuals and businesses drawn by its promises of unprecedented financial return.

The influx of opportunity-seekers is reflected in the boom in Lagos’ hotel business. In the last decade, the number of upmarket hotel rooms in Lagos has tripled, according to W. Hospitality Group, a consultancy.  And yet there’s still plenty of room for growth.

The numbers that support the Nigeria Rising here are bold – the most dramatic being the emergence of Nigeria, in April, as Africa’s largest economy.  In the last three years, more than US$20 billion has flowed into the country in direct foreign investment; making it the second largest recipient of FDI on the continent, after South Africa. By the end of 2013, foreign investors held US$5,4 billion in Nigerian bonds, up almost five-fold from 2012.  The Nigerian Stock Exchange, headquartered in Lagos, has recovered remarkably well from the 2008 global economic slump; its 2013 results earning it a place among the 10 best-performing stock markets in the world.

And a wave of reforms in the last decade are slowly opening up opportunities long locked away by government ineptitude and corruption, translating into scenarios like the one that has seen Nigeria emerge from being the world’s second biggest importer of cement, to a net exporter, in less than a decade.

The foreign attention appears to be driving local players to prove themselves.  Most of the US$3,3 billion that investors spent purchasing more than a dozen government-owned power plants in 2013 came from local banks; now much bigger than they used to be after a round of government-enforced mergers and recapitalisation that started in 2004.  And there’s also now a Sovereign Wealth Fund (launched in 2011, with US$ 1billion) that is keen to invest its funds locally.

All that glitters  . . .
However, travel another 500 kilometres north from Abuja, to Borno State, and the story changes remarkably, for the worse.  Here hope and optimism are endangered species. Poverty pales into insignificance beside the presence of Boko Haram, an Islamist terrorist group that has laid siege to Nigeria’s northeastern corner since 2009.
The group, believed to exist in as many as six factions, all operating independently, says it wants to establish Sharia rule across Nigeria. Its actions, however, reveal a group that seems bent on causing maximum havoc, by whatever means possible.

The heavily armed militants – now strongly believed to be linked to Al-Qaeda – have established bases in the region’s remote mountains and forest, on and around Nigeria’s borders with Chad, Niger and Cameroon, from where they keep up a barrage of deadly attacks on north-eastern Nigeria and beyond.

Not even Abuja, the seat of power, has been spared Boko Haram’s bloody fury. A series of high-profile attacks between 2010 and 2012 hit the United Nations Headquarters in Nigeria, the Nigeria Police Force Headquarters, and two newspaper offices. After a year-long lull the terrorists again managed to strike a busy bus park on the city’s outskirts in April, killing 71 people, wounding hundreds.

Nigerians are now used to wondering – where next?
Of Nigeria’s problems – and there are many – Boko Haram is the most alarming. Lai Mohammed, spokesperson of the main opposition party the All Progressives Congress (APC) describes it as the “most serious threat” to Nigeria since a 30-month civil war that ended more than forty years ago.

Indeed, Boko Haram manages to dampen the Nigeria Rising story, again and again.  The Nyanya bus park bombing immediately cast doubt on Nigeria’s suitability for the WEF, prompting the government to hurriedly issue a statement assuring that it would mobilise 6 000 soldiers and policemen for the three-day conference.

Analysts link the emergence of Boko Haram to the dire economic conditions in the northeast of Nigeria.  Poverty rates there are double those in the southwest and it is believed this and other social deprivations have combined to create the conditions for Boko Haram to thrive.

Whatever the reasons for the emergence of Boko Haram might be, its impact is not in doubt. Thousands lie dead — this year alone, 1500 victims, according to Amnesty International.  The UN says 300 000 people have been displaced since May 2013. The threat of extremist groups is not Nigeria’s only security concern. Travel advisories to Nigeria also regularly warn of the likelihood of kidnappings.

Africa’s new giant
Combining effective government regulation with the natural efficiency of the private sector is the key to unlocking Nigeria’s immense potential, analysts say. The last decade has seen an increase – hyped, some believe – in the size of the Nigerian middle class, the segment of the population that holds the most interest for businesses focused on retail opportunities.

Nigeria is one of the Top 5 markets for French cement maker Lafarge, says Guillaume Roux, executive vice president.  Roux says he now spends the “majority” of his time in Nigeria, “despite having global responsibility.”

In 2007 Nigeria overtook Ireland to become Guinness’ second largest market in the world, for its Stout brand, after Great Britain. Nigeria is also the biggest market for the London based global consumer goods brand, PZ Cussons.

“Nigeria is very, very important. You’ve got a vibrant and growing middle class, a big consumer population, a young population that will be consuming more and more,” emerging and frontier markets investor Mark Mobius told Bloomberg in January.

Mobius has put his money where his mouth is; the $2.3 billion Templeton Frontier Markets Fund has about a tenth of its holdings in Nigeria. Getting electricity right could push Nigeria’s economic growth rates – already consistently one of the highest in the world – into double digits, economists have said. A double-digit growth rate “would double the size of (Nigeria’s) economy in six or seven years, “says Jim O’Neill, the ex-Goldman Sachs economist famous for coining the ‘Bric Epithet.

That, going by newly revised GDP numbers, suggests a trillion dollar economy by the beginning of the next decade.

Facing the future
Being confirmed as the biggest economy in Africa is rightly being celebrated in the country.
But, unless it wins the World Cup, the two other important  events on the country’s  calendar in the next months will be the ongoing constitutional conference, and campaigns leading up to the presidential elections due early in 2015.

Those elections will be the fourth since the military handed over to a civilian government in 1999.
Nigeria’s elections have always been hotly contested, generally marked by high levels of rigging, and violence is not infrequent.

A series of bloody riots in the Western region during the 1964 elections helped trigger the military coup that brought an end to the First Republic. Most e recently was the violence that followed the 2011 elections, in which tens of people died in Northern Nigeria.

The fears about the 2015 elections are heightened by the antics of Boko Haram.  The governors of the three states most affected by Boko Haram are from the opposition party. If the federal government’s state of emergency persists, and somehow precludes the opportunity for elections to be held in those states, the APC will be the losers.

At the moment none of the parties  has announced its candidates,  but it is assumed  that President Jonathan will take the People’s  Democratic Party (PDP) ticket without a struggle,  especially as most of those likely to challenge him left the ruling party for the APC in  a much talked  about mass defection in 2013. The APC will have a much more colourful struggle for its presidential ticket, in a an election year widely viewed as the opposition’s  closest shot at displacing the PDP, which has held federal power since 1999.

For now the focus appears to be on a national conference that President Jonathan inaugurated in March, with a vague mandate to “engage in intense introspection about the political and socio-economic challenges confronting our nation and to chart the best and most acceptable way for the resolution of such challenges in the collective interest of all the constituent parts of our fatherland.”

It is hoped that the outcome of the Conference will help strengthen the Constitution handed over by the departing military dictatorship in 1999, and give a stronger sense of belonging to Nigeria’s hundreds of ethnic nationalities, caught up as they are in a never ending game of suspicion and recrimination.

However the National Conference plays out, the biggest challenge facing Nigeria’s leadership – apart from taming Boko Haram – will be demonstrating that it can undermine the country’s reputation for unpredictability; its penchant for, as the title of a 2011 book by a former American Ambassador to Nigeria John Campbell put it, “dancing on the brink”.

For now, the air of uncertainty surrounding the 2015 elections means that many investors will be choosing to watch warily from the sidelines, unsure if 2015 will be the tipping point into complete disarray.

Even then there are those who will choose to err on the side of their ambitions, realising that reports of Nigeria’s  demise are often exaggerated. In the  run- up to the 2011 presidential elections, as fears of unrest heightened, Mark Mobius was quoted as saying: “of course there will be volatility as a result of the elections, but from a longer range point of view we are quite bullish”.

It does seem likely that four years on, those sentiments – combining heady amounts of risk and of optimism – will still be in place, strong as ever.
However, both gloom and bloom are tied to the same fact:  Nigeria’s population – which can produce one of the largest pools of talent and middle class on earth. But if Nigeria fell apart, no country or aid organization would be able to manage a potential burden of tens of millions of refugees.

And Boko Haram is merely the most alarming of a litany of issues.
To realise its potential its government will have to show the world they are capable of rising boldly to the terrorist threat, as well as breaking the jinx that makes Nigeria seem like a country that achieves in spite of, and not because of, its leadership. What will it be a Nigeria rising to fulfil its great potential in the global economy, or one that will not for the first time since Independence in 1960, trundle down the path of broken promise? – New African

Due to circumstances beyond our control, we are unable to carry Wafawarova on Thursday today. Any inconvenience caused is sincerely regretted. — Editor