Nigeria’s economy has bucked a global trend and has successfully exited recession in the fourth quarter of 2020.

According to data from the country’s National Bureau of Statistics, GDP increased by 0.11% in the period October-December, supported primarily by growth in agriculture and telecommunications, which expanded by 3.4% and 17.6% respectively.

While increased global oil prices contributed to the growth, the figures also demonstrate the increasing importance of the non-crude sector for Africa’s most populous nation and the diversification of the country’s economy. Analysts note that the figures may indicate a sustained period of faster growth, as the world watches on to see which countries achieve a V-shaped recovery following the pandemic.

Growth in domestic product was also supported by the country’s Economic Sustainability Plan, an ambitious set of policies announced by President Buhari’s administration in June 2020 to address the immediate challenge of the COVID-19 pandemic.

Already, the focus on infrastructure and job creation in the agricultural and other labour-intensive sectors have borne fruit, and the Economic Sustainability Plan is soon to enter a new phase, with the installation of solar power in 5 million homes further boosting employment opportunities and access to power.

Femi Adesina, Special Advisor to President Buhari on Media, said “Infrastructure is where Buhari will leave his biggest footprints. Bridges. Rail. Airports. AKK gas pipeline. All to be delivered before the administration exits in 2023.”

In parallel, a new job creation initiative aimed at the country’s youth was launched in January, providing placements for over 700,000 unemployed young people.

Nigeria’s GDP numbers at the end of 2020 challenged the expectations of international organisations as well as global trends. Countries with larger stimulus packages, such as the USA and Japan, saw lower quarter on quarter growth than Nigeria over the period. In Europe, Spain and Germany also experienced unexpected increases of 0.4% and 0.1% respectively, while France’s GDP fell less than was forecast but remained negative.

This week also saw reports that corruption in Nigeria has fallen dramatically, with BudgIT, a civic advocacy organisation focused on budget and public finance issues, reporting the payment of public funds into personal accounts has declined by 94.75 percent.

While the trend in Nigeria is no doubt positive, risks of further waves of infection and a slow vaccine roll-out threaten the country’s sustained recovery, and are difficult to mitigate. Nigeria’s National Agency for Food and Drug Administration and Control (NADFAC) recently approved the AztraZeneca vaccine for the country and has requested 10million doses from the World Health Organisation’s Covax programme. However, it is unclear when these vaccines will arrive and be rolled-out across Nigeria.

 

Credit: EU Reporter

In countries with weak governance institutions, natural resource wealth tends to be a curse instead of a blessing. Where citizens are relatively powerless to hold ruling elites to account, resource wealth undermines development prospects.

On the contrary, where citizens are able to exert constraints on executive power, resource wealth can generate development that benefits ordinary citizens.

Development scholar Richard Auty first coined the term ‘resource curse’ in the early 1990s. He used the phrase to describe the puzzling phenomenon of resource wealthy countries failing to industrialise. Manifestations of the ‘curse’ now range from widespread corruption to civil war to deepening authoritarian rule.

Literature on the resource curse has done an adequate job of describing the general nature of the relationship between resource dependence and underdevelopment. It now needs to focus on understanding specific manifestations.

In my latest book, I detail what these are in relation to oil in Nigeria and Angola, sub-Saharan Africa’s two largest oil producers.

My book shows that the resource curse manifests differently in different contexts.

Why does this matter?

If governance interventions are to be useful, it’s important to understand the context. Otherwise, policy interventions won’t gain traction. If political dynamics play a determinative role in long-run economic outcomes, we must understand them better.

Two countries, two stories

In 2018, Angola’s fuel exports constituted 92.4% of the country’s total exports. Oil rents – the difference between the price of oil and the average cost of producing – accounted for 25.6% of the country’s Gross Domestic Product (GDP). In 2019 the country ranked 148th out of 189 countries in the UN’s Human Development Index.

Nigeria’s oil exports in 2018 were 94.1% of total exports, oil rents amounted to 9% of GDP. In 2019 it ranked 161st on the human development index . As is clear from the graph above, sub-Saharan Africa’s major oil producers are clustered around the lower end of the human development spectrum and are mostly autocratic.

Both Nigeria and Angola have been characterised by one form or another of autocratic rule for most of their post-independence histories. Autocracy invariably undermines a country’s development prospects.

Angola was plunged into a civil war shortly after independence in November 1975. It then suffered an unsuccessful coup attempt in 1977.

In Nigeria, the balance of power at independence in 1960 was just as precarious as Angola’s. Nigeria suffered two military coups in 1966, and a civil war from 1967-1970.

But why does oil fuel the consolidation of autocratic rule in one context, but not necessarily in another?

It all comes down to how the leader of the ruling coalition extracts and distributes the oil rents. In my book, I employ a game theory model developed by Princeton political scientist Milan Svolik to explain these divergent political outcomes.

Angola

Jose Eduardo dos Santos came to power in 1979 as served as president until 2017, grabbing power early and repeatedly. Svolik’s model predicts that rulers who can do this at the same time as limiting the probability of a coup being against them manage to entrench their rule.

Within six years, dos Santos had consolidated power. He eliminated internal threats by subverting power sharing institutions and purging key individuals. For instance, in 1984 the central committee of the ruling Movimento Popular de Libertação de Angola (MPLA) – created a ‘defence and security council’, chaired by dos Santos. As I note in the book, it became an inner cabinet, “effectively eclipsing the Political Bureau as the country’s top decision-making body”.

A year later, dos Santos dropped Lúcio Lara, the party’s stalwart intellectual, from the Political Bureau, thus removing the last potential threat to his rule. Simultaneously, he used the extensive oil rents at his disposal – and the cover of civil war – to either co-opt or eliminate opposition.

He did so by ensuring that the state oil firm, Sonangol, was proficiently run. It soon became Angola’s shadow state through its vast web of subsidiaries. After the civil war - 1975 to 2002 - Sonangol became the driver of (limited) development, but also the key distributor of patronage to cement dos Santos’s power. He not only bled it to enrich his family dynasty; he also used it to appease his inner circle.

Dos Santos ended up ruling for 38 years. But, his key strategic mistake was placing his children in plum Sonangol positions ahead of loyalists.

In 2017, João Lourenço, a former Defence Minister, became the new Angolan president. Dos Santos was to remain head of the MPLA until 2022. But, he was ousted through what was essentially a bloodless coup in 2018, engineered by his former loyalists like Manuel Vicente, the long-standing former head of Sonangol.

The Politburo appointed Lourenço president of the MPLA. He has since purged the dos Santos children from plum positions. Angola is still heavily dominated by the ruling MPLA, though. Prospects for a more competitive political settlement appear limited.

The case of Nigeria

Within six years of independence from Britain on 1 October 1960, the military launched a coup. This initiated a long period of military rule. Seven coups occurred between 1966 and 1993. Military rule was largely uninterrupted from 1966 to 1999.

But neither the coups nor the civil war were driven by oil.

Oil wealth only became a major factor in Nigeria’s political economy in the early 1970s, when the price rocketed as a result of the global supply crisis. Windfall oil wealth exacerbated the preexisting fragility. The state run oil firm, the Nigerian National Petroleum Company, was inefficient compared to Sonangol. Nonetheless, it served as the country’s cash cow, milked to extend patronage.

But, unlike in Angola, no aspirant Nigerian autocrat was able to monopolise personal control over the national oil company. As I detail in the book, oil exacerbated fragility in Nigeria. While Angola’s dos Santos maintained a stable bargain among elites, Nigeria’s balance of power remained precarious.

In 1975, another military coup toppled Yakubu Gowon who had ruled Nigeria through the civil war. Murtala Muhammed came to power but was assassinated in a coup attempt six months later, which brought Olusegun Obasanjo to power in 1976. Obasanjo guided a transition to civilian rule in 1979 but this only lasted four years.

A 1983 coup brought current President Muhammadu Buhari to power and another ousted him two years later. Ibrahim Babangida then ruled until 1993. After a brief attempt at civilian rule, Sani Abacha came to power through yet another coup that same year. He died in office in 1998. His successor, Abdulsalami Abubakar, returned the country to civilian rule a year later.

Former military ruler Obasanjo – who had been imprisoned by Abacha – won the 1999 elections but attempted to grab a third term as president in 2006. Despite alleged oil-funded bribery to lobby party members to support his cause, they held fast to the constitution’s term limits.

The importance of that moment cannot be overstated. It has resulted in a more open and competitive political settlement in Nigeria. Maintaining constitutional term limits can stop autocratic entrenchment in its tracks. Unfortunately, this has not guaranteed stability in Nigeria. Post-2015 fragility has deepened considerably.

Where to from here?

As my book shows, oil rents grease the wheels of political dynamics very differently in Angola and Nigeria.

Existing explanations for different manifestations range from ethnic fragmentation, inherited colonial structures, the role of foreign actors and how lootable the oil is.

More attention now needs to be paid to how aspirant autocrats use natural resource rents to accumulate power for themselves. This can lead to policy practitioners developing an early warning system that may help citizens to nip power-grabs in the bud.

This may serve, in conjunction with other policy interventions, to ultimately reverse the curse.The Conversation

 

Ross Harvey, Senior Research Associate, Institute for the Future of Knowledge, University of Johannesburg

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Nigeria’s President Muhammadu Buhari cleared the way for the launch of an infrastructure company with initial seed capital of a trillion naira ($2.4 billion) as Africa’s largest oil producer attempts to steer itself out of a likely economic contraction.

The company, named Infraco, which is being set up in partnership with the private sector, is expected to grow its capital and assets to 15 trillion naira over time to fund public projects like roads, rails and power, Laolu Akande, the vice president’s spokesman, said in a statement on Friday.

The government of Africa’s most populous country is seeking to expand investments to stimulate recovery in an economy facing its second recession in four years. Nigeria requires at least $3 trillion over 30 years to close its infrastructure deficit, Moody’s Investors Service said in a November report.

The start-up funding will come from the Central Bank of Nigeria, the Nigerian Sovereign Investment Authority, and the Africa Finance Corporation.

Vice President Yemi Osinbajo will head a committee charged with getting the company started, while central bank Governor Godwin Emefiele will chair Infraco. The managing director of the NSIA, the president of the AFC, representatives of the Nigerian Governors Forum, and the ministry of finance will also help form the board, along with three independent directors from the private sector.

The Securities and Exchange Commission (SEC) has joined the Central Bank of Nigeria (CBN) to ban crypto trading.

SEC has stopped admittance of affected persons into its Regulatory Incubation Framework for Fintech firms.

In a statement on Thursday, SEC said it received inquiries on a perceived policy conflict between its September 11 statement on Digital Assets, Classification and Treatment and the February 5 CBN circular.

The commission stressed that there were no contradictions or inconsistencies.

It clarified that last year’s statement was to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows.

SEC said as the regulator of the banking system, the CBN has identified certain risks that threaten investors’ protection.

The commission disclosed that it engaged with the CBN and agreed to work together to further analyse and better understand the risks.

“For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system”, it announced.

It said planned implementation of the Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.

SEC added that it would keep monitoring developments in the digital asset space to create a regulatory structure that enhances economic development and promotes a safe and transparent capital market.

The path has been cleared for Nigeria's Ngozi Okonjo-Iweala to become the first woman and the first African to lead the World Trade Organization after South Korea's candidate pulled out of the race for the job.

Yoo Myung-hee, the South Korean trade minister, announced her decision to withdraw in a televised briefing on Friday.

Okonjo-Iweala, an economist and former finance minister of Nigeria, already enjoyed broad support from WTO members, including the European Union, China, Japan and Australia.

However, the United States, under the Trump administration, had favored Yoo, complicating the decision-making process since the selection of a new leader requires all WTO members to agree. Okonjo-Iweala's formal selection may have to wait until after the United States appoints a new trade representative.

Yoo said that her decision had been reached after "close consultation" with the United States. The WTO had been without a leader for too long, she added.

The Geneva-based body, tasked with promoting free trade, has been without a permanent director general since Roberto Azevêdo stepped down a year earlier than planned at the end of August after the WTO was caught in the middle of an escalating trade fight between the United States and China.

The Trump administration was highly critical of the WTO and undermined its standing by imposing tariffs on Canada, Mexico, China and the European Union. Okonjo-Iweala will thus assume control of an organization that has struggled to prevent trade spats between its members.

While US President Joe Biden has already taken steps to restore support for multilateral institutions, he is expected to proceed with caution when it comes to signing any new trade deals.

In a speech to the State Department Thursday, Biden pledged to put diplomacy back at the center of US foreign policy, but was also careful to emphasize that foreign policy should benefit middle-class Americans.

Okonjo-Iweala, who hails from one of the few parts of the world where free trade is ascendent, told CNN in August that trade would play an important role in the recovery from the coronavirus pandemic.

"The WTO needs a leader at this time. It needs a fresh look, a fresh face, an outsider, someone with the capability to implement reforms and to work with members to make sure the WTO comes out of the partial paralysis that it's in," she said in an interview.

Okonjo-Iweala spent 25 years at the World Bank as a development economist, rising to the position of managing director. She also chaired the board of Gavi, which is helping to distribute coronavirus vaccines globally, stepping down at the end of her term in December.

 

Credit: CNN

When Nigeria's then-head of state Sani Abacha stole billions of dollars and died before spending his loot, it prompted an international treasure hunt spread over decades. The man hired to get the money back tells the BBC's Clare Spencer how the search took over his life.

In September 1999, Swiss lawyer Enrico Monfrini answered a phone call that would change his next 20 years.

"He called me in the middle of the night, he asked me if I could come to his hotel, he had something of importance. I said: 'It's a bit late but OK.'"

The voice on the end of the line was that of a high-ranking member of the Nigerian government.

'Can you find the money?'

Mr Monfrini says the official was sent to Geneva by the Nigerian president at the time, Olusegun Obasanjo, to recruit him to get hold of the money stolen by Abacha, who ruled from 1993 until his death in 1998.

As a lawyer, Mr Monfrini had built up a Nigerian client base since the 1980s, working in coffee, cocoa and other commodities.

He suspects those clients recommended him.

"He asked me: 'Can you find the money and can you block the money? Can you arrange that this money be returned to Nigeria?'

"I said: 'Yes.' But in fact I didn't know much about the work at that time. And I had to learn very quickly, so I did."

Sani Abacha2 AFP

o get started, the Nigerian police handed him the details of a few closed Swiss bank accounts, which appeared to be holding some of the money Abacha and his associates had stolen, Mr Monfrini wrote in the book Recovering Stolen Assets.

He said that a preliminary investigation published by the police in November 1998 found that more than $1.5bn (£1.1bn) was stolen by Abacha and his associates.

'Dollars by the truckload'

One of the methods used for accumulating such a colossal sum was particularly brazen.

Abacha would tell an adviser to make a request to him for money for a vague security issue.

He then signed off the request which the adviser would then take to the central bank, which would hand out the money, often in cash.

The adviser would then take most of that money to Abacha's house.

Some was even taken in dollar notes "by the truckload", Mr Monfrini wrote.

This was just one way Abacha and his associates stole huge amounts of money. Other methods ranged from awarding state contracts to friends at highly inflated prices and then pocketing the difference and demanding foreign companies pay huge kickbacks to operate in the country.

This went on for around three years until everything changed when Abacha died suddenly, aged 54, on 8 June 1998.

It is unclear whether he had had a heart attack or was poisoned because there was no post-mortem, his personal doctor told the BBC.

Abacha died before spending the stolen billions and a few bank details served as clues as to where that money was stashed.

"The documents showing the history of the accounts gave me a few links to other accounts," said Mr Monfrini.

Armed with this information he took the issue to the Swiss attorney general.

And then came a breakthrough.

Mr Monfrini successfully argued that the Abacha family and their associates formed a criminal organisation.

This was key because it opened up more options for how the authorities could deal with their bank accounts.

The attorney general issued a general alert to all the banks in Switzerland demanding that they disclose the existence of any accounts opened under the Abachas' names and aliases.

"In 48 hours, 95% of the banks and other financial institutions declared what they had which seemed to belong to the family."

This would uncover a web of bank accounts all over the world.

"Banks would deliver documents to the prosecutor in Geneva and I would do the job of the prosecutor because he didn't have time to do it," Mr Monfrini told the BBC.

'Bank accounts talk a lot'

"We would find out on each account exactly where the money came from and/or where the money went to.

"Showing the ins and outs on these bank accounts gave me further information regarding other payments received from other countries and sent to other countries.

"So it was like a snowball. It started with a few accounts, and then a large amount of accounts, which in turn created a snowball effect indicating a huge international operation.

"Bank accounts and the documents that go with them talk a lot.

"We had so much proof of different money being sent here and there, Bahamas, Nassau, Cayman Islands - you name it."

The size of the Abacha network meant a huge effort for Mr Monfrini.

"Nobody seems to understand how much work it entails. I have to pay so many people, so many accountants, so many other lawyers in different countries."

Mr Monfrini had agreed a commission of 4% on the money sent back to Nigeria. A rate he insists was comparably "very cheap".

Finding the money turned out to be relatively quick in comparison to getting it returned to Nigeria.

"The Abachas were fighting like dogs. They were appealing about everything we did. This delayed the process for a very long time."

Further delays came as Swiss politicians argued over whether the money would just be stolen again if it was returned.

Some money was returned from Switzerland after five years.

Mr Monfrini wrote in 2008 that $508m found in the Abacha family's many Swiss bank accounts was sent from Switzerland to Nigeria between 2005 and 2007.

By 2018, the amount Switzerland had returned to Nigeria had reached more than $1bn.

Sani Abacha3 AFP

Other countries were slower to return the cash.

"Liechtenstein, for instance, was a catastrophe. It was a nightmare."

In June 2014, Liechtenstein did eventually send Nigeria $277m.

Six years later, in May 2020, $308m held in accounts based in the Channel Island of Jersey was also returned to Nigeria. This only came after the Nigerian authorities agreed that the money would be used, specifically, to help finance the construction of the Second Niger Bridge, the Lagos-Ibadan expressway and the Abuja-Kano road.

Some countries are yet to return the loot.

Mr Monfrini is still expecting $30m he says is sitting in the UK to be returned, along with $144m in France and a further $18m in Jersey.

That should be it, "but you never know", he says.

In total, he says his work secured the restitution of just more than $2.4bn.

"At the beginning people said Abacha stole at least $4-$5bn. I don't believe it was the case. I believe we more or less took the most, took a very large chunk, of what they had."

He has heard rumours that the Abacha family are not so wealthy any more.

Or, as he puts it: "They are not swimming in money like they used to do in the past."

When he looks back, he seems satisfied with his work.

"When I speak to my very many children about this case, I tell them I found money and I blocked the money, I persuaded the authorities to go after these people and get the money back to the country for the good of the Nigerian people.

"We did the job."

 

Source: BBC

Nigeria and Jamaica completed a direct flight from Nigeria’s largest city Lagos to Montego Bay on Monday as the two nations attempt to pave way for a regular direct airline route between the two destinations.

“As part of the activities to commemorate 50 years of good bilateral relations between the Federal Republic of Nigeria and the Republic of Jamaica, an inaugural direct flight, Air Peace, departed from Lagos and has landed in Montego Bay, on Monday 21 December 2020,” the ministry said in a statement.

Nigerian Minister of Foreign Affairs Geoffrey Onyeama was on board the flight, accompanied by a delegation of government officials and members of the private sector.

The delegation was received at Sangster International Airport in Montego Bay by Jamaica’s Minister of Transport Robert Montague and other leading state officials.

According to the statement, the event will strengthen relations between the two countries in several areas, among them tourism, education and economic activities.

 

Source: Ministry of Foreign Affairs Nigeria/Xinhua

Global streaming service Netflix set its eyes a few years ago on Nigeria’s film industry, better known as Nollywood.

Distribution of Nigerian movies on Netflix started around 2015. At the time the American giant bought the rights of blockbusters such as Kunle Afolayan’s October 1st, Biyi Bandele’s Fifty and several others, after they had already been distributed in Nigerian cinemas.

During the Toronto International Film Festival 2018, Netflix announced the acquisition of worldwide exclusive distribution rights for Nollywood star Genevieve Nnaji’s debut film as director, the comedy Lionheart. The film marked the first Netflix original film from Nigeria. Many saw this as the beginning of a new era in the relationship between one of the world largest streaming platforms and Africa’s most prolific film industry.

But, is this actually true? Is Netflix going to transform Nollywood? And how significant will its impact on the Nigerian film industry be?

Difficult questions

These are not easy questions to answer. Nollywood’s economy and modes of production are unlike those of most other film industries. Over the past 20 years Nigerian films have circulated mostly on videotapes and Video Compact Discs (VCDs).

This distribution system made the industry widely popular across Africa and its diaspora. But it prevented Nollywood from consolidating its economy and raising the quality of film production. Piracy dramatically eroded distribution revenues and producers had trouble monetising the distribution of their films. Nollywood prioritised straight-to-video distribution because cinema theatres had almost disappeared in the country (as in most other parts of Africa) as a result of the catastrophic economic crisis that affected Nigeria in the 1980s.

New multiplexes have emerged since the beginning of the 2000s. However, today there are only about 150 widescreens for a population of almost two hundred million people. The cinemas that exist are often too expensive for most of the population that used to buy and watch Nollywood films when they were distributed on tapes.

Within this context, many in the industry thought that streaming could be the best solution to the industry’s problems with distribution. However, a closer look to the history of what has been labelled the “Nigerian Netflix” (iROKO.tv, the leading streaming platform for Nigerian contents) shows that the reality is more complicated.

When the company decided to move its headquarters from Manhattan to Lagos it encountered countless difficulties. They were mainly connected to the costs of infrastructure development in Nigeria and to the hostility of local distributors who controlled Nollywood’s economy since its creation.

Weak Internet

Internet connection in Nigeria is still too weak and expensive to guarantee easy access to streaming platforms. As a result, Nollywood content distributed by iROKO.tv and Netflix circulates mostly in the diaspora. Netflix is aware of this problem and is investing in infrastructures to secure a better connection for its Nigerian audiences.

But larger investments seem to be necessary to produce a significant impact on audiences’ behaviour. Accessing Nollywood films via piracy or local screening venues will continue to be, at least in my view, the key strategy adopted by the largest percentage of Nigerian viewers.

Netflix could have better chances in penetrating the country’s elite market, as richer people in Nigeria and across Africa have easier access to reliable power supply and internet.

This might be the reason why MultiChoice, the South African telecommunication giant controlling much of Nollywood distribution across Africa through its Africa Magic channels, has reacted nervously to Netflix’s increased interest in African markets. MultiChoice wants Netflix to be more closely regulated.

These two aren’t the only telecommunication “superpowers” in the field. France’s Canal Plus and the Chinese StarTimes have also made a few investments in Nollywood over the past few years. The competition among all these actors will probably have a positive impact for viewers across Nigeria and the continent. It could bring lower subscription fees for streaming and TV content packages.

There are also likely to be new investments in content production and infrastructures. And there’s larger continental and global exposure for Nollywood films in the offing.

Foreign investments

It remains to be seen how good these developments will be for Nollywood producers. Until now, foreign investments in Nollywood have mostly translated into “more of the same” content. Working conditions for crews and actors have remained the same – basically, low budgets and quick shooting schedules.

In fact, big investors seem to be mainly interested in Nollywood’s already established popularity with African audiences. Making Nollywood more palatable for international audiences doesn’t seem to feature.

This means that in most cases they are not ready to invest bigger money in production budgets. Rather, they invest in better structuring distribution networks to extract as much profit as possible from the Nigerian industry.

And most African audiences are indeed happy with how Nollywood is, even if they tend to complain regularly about the low quality and the repetition of film contents and aesthetics. The fact that Nollywood as it is keeps on attracting audiences makes investors reluctant to change the scale of their production budgets.

There are a few bigger productions, with higher production standards, that have emerged over the past few years in Nollywood. But they have hardly been the result of investments made by foreign firms like Netflix, Canal Plus or MultiChoice.

Nigerian producers are those who are mostly concerned about raising the quality of Nollywood films. They want to give better content to their audiences and reach global screens. In most cases, the people investing money in these kinds of projects have been independent producers or groups of investors related to the new business of multiplexes in Nigeria.

In my view, the question is: will these people benefit from Netflix, so as to continue investing in higher quality content? Or will Netflix and other international companies end up taking over the industry to make it only a bit more of the same?The Conversation

 

Alessandro Jedlowski, Collaborateur scientifique FNRS, Université Libre de Bruxelles (ULB)

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Every year an increasing number of Nigerians flee poverty and unrest at home. Now, rich Nigerians are planning their escape too. And they’re taking their money with them.

Dapo has spent too long at home in Lagos, Nigeria. Back in October, protests against the SARS police unit kept him from going to his office. “First, we were told to stay at home because of the coronavirus. Then this,” he says.

A wealthy Nigerian, Dapo, who is in his late 30s, does not want to make himself identifiable by giving his surname and age, lest it draw unwanted attention.

He has had a “backup plan” for getting out of Nigeria for some time, he says. “I have Maltese citizenship. I can leave for there any time.” With one small obstacle – a 14-day quarantine upon arrival – Dapo could be permanently in Malta any time he pleases. He is not planning to go imminently, but describes it as his “plan b’’.

Dapo is one of a rapidly growing number of Nigerians who have bought so-called “golden visas” or foreign citizenships-by-investment this year. In his case it was Malta, the Mediterranean island where citizenship can be acquired for a minimum investment of 800,000 euros ($947,180) through the Malta Citizenship by Investment Programme.

An aerial view over Malta Freeport in Valletta, in March 2018 [File:Getty Images]

Not that he has any special love for Malta. A record 92 countries around the world now allow wealthy individuals to become residents or citizens in return for a fee, sometimes as low as $100,000 but often several million dollars. It is billed as a “win-win”: The country gets much-needed foreign investment and, in return, the new citizens have new passports that open up more of the world to travel or live in.

 

Golden visas are the lesser-reported side of the Nigerian migration story. Every year thousands of Nigerians make their way to Europe via perilous crossings over the Sahara and Mediterranean. Now their wealthier counterparts are also making their way to Europe but via a different route.

A record year for golden visas

Whether rich or poor, the reasons for leaving one’s home country are often the same. Fear of political uncertainty at home and hope for better opportunities elsewhere. But 2020 has been exceptional.

Like Dapo, Folajimi Kuti, 50, was watching the #EndSARS protests from his home in Lagos in October. “I have children, they’re teenagers, and they’re asking me questions like, ‘How did we get here?’” he says, referring to the violence that accompanied demonstrations against the controversial Special Anti-Robbery Squad (SARS).

Kuti says he has believed for some time that social unrest would boil over in Nigeria, because of issues of poverty and police brutality. “It had been clear for the past two or three years that something was going to happen. It’s happened now in 2020 but, frankly, we’ve been expecting this outburst for a while so it wasn’t a matter of ‘if’. It was a matter of ‘when’.”

An aerial view shows the central business district in Nigeria’s commercial capital, Lagos in 2009 [File: Reuters]
Citizenship or residency abroad has become appealing, he adds. As a financial adviser to the wealthy, Kuti knows the process of applying for one having walked clients through it before. Most of his work involves advising Nigeria’s growing number of millionaires about investments and wealth planning. But now they are asking about foreign citizenships and Kuti himself is tempted by the idea. “Just knowing that if you need to go you certainly could and move without any restriction.”

The rush for golden visas among rich Nigerians started before October’s SARS protests. At London-based Henley & Partners, one of the world’s largest citizenship advisory firms, applications by Nigerians increased by 185 percent during the eight months to September 2020, making them the second-largest nationality to apply for such schemes after Indians.

More than 1,000 Nigerians have enquired about the citizenship of another country through Henley & Partners this year alone, which Paddy Blewer, head of marketing, says “is unheard of. We’ve never had this many people contacting us”.

Many, like Kuti, saw political problems ahead and wanted an escape plan. Others were focused on coronavirus: What if the pandemic overwhelms Nigeria?

“There is a lack of primary healthcare capacity that would be able to manage with either a second wave or whatever happens in, say, 2025,” says Blewer. “Let’s say there is COVID-21 still going on in 2025 that is of an order or magnitude worse. It’s, ‘Do I want to be based here and only based here, or do I want an alternative base of operations where I believe I will be safer and I will be able to run my global businesses’.

“And, I think, that’s what COVID has driven.”

The Victoria Island waterfront is seen from the affluent Ikoyi neighbourhood in Lagos, in June 2014 [File: Reuters]
It was in July, when the number of COVID-19 cases in Nigeria escalated, that wealthy Nigerians started looking more seriously at citizenship abroad, experts say. “Those with medical conditions that could not fly out – a lot of them are buying passports just because if there is any problem they can fly out,” says Olusegun Paul Andrew, 56, a Nigerian entrepreneur and investor who spends much of the year in the Netherlands.

“Flying out” of Nigeria is hard and not just because of the coronavirus pandemic. Just 26 countries allow Nigerian passport holders visa-free entry, many of them part of West Africa’s ECOWAS arrangement. Both the United Kingdom and Europe’s Schengen zone require Nigerians to obtain visas ahead of travelling.

For the wealthy, this is too much hassle. “They don’t want to be queueing for visas for any EU country or whatever,” says Andrew. Instead, why not purchase the citizenship of a country with visa-free access to Europe?

To Europe, via the Caribbean

Bimpe, a wealthy Nigerian who also does not wish to give her full name, has three passports. One Nigerian, which she says she never uses, and two from Caribbean nations: St Kitts and Nevis; and Grenada.

The St Kitts and Nevis passport, which cost her $400,000 via a real estate investment programme, was useful when she travelled between London and New York on business as it allows for visa-free travel to the UK and Europe. But now that she has retired in Abuja, Bimpe, whose husband has passed away, wants her three adult sons to have the same opportunities to travel and live abroad.

“My kids were interested in visa-free travel. They are young graduates, wanting to explore the world. So that was the reason for my investment,” she explains.

A general view of Grenada taken in March, 2019 [File: Getty Images]

Her investment to gain a Grenada passport for herself and her sons took the form of a $300,000 stake in the Six Senses La Sagesse hotel on the Caribbean island, which she bought in 2015 through a property development group called Range Developments. Like most countries offering their citizenship for sale, Grenada allows real estate investments to qualify for a passport.

Bimpe’s family has lived overseas before – spending nine years in the UK between 2006 and 2015. Of her three sons, she says: “One, for sure now, is never going to leave Nigeria. He loves it here. The second one lives in England. He’s been in England long enough to get British residency. My youngest – for him, living abroad is a very, very attractive option. He’s not very happy [in Nigeria]. He went to England very young – at age 12 – and he’s had a problem adjusting since. He’s been back in Nigeria five years and he’s still not settled.”

Now aged 26, Bimpe’s youngest son is looking at settling in the UK or in the US where, thanks to his Grenada citizenship, he qualifies for an E-2 visa, something not available to his fellow Nigerians since President Donald Trump’s ban on immigrant visa applications in February. Bimpe believes his career opportunities in acting – he studied Drama in the UK – are better abroad, and therefore considers the Grenada citizenship to be a worthwhile investment.

Neither Bimpe nor her sons have ever been to Grenada even though their investment allows them to stay on the Caribbean island, once known as The Spice Island. “I intend to go. I would like to go,” she says. “Just when I did [the investment], it was soon after my husband died and I wasn’t in the mood for travel and then I got my passport but there was no good reason for travel due to the pandemic.”

The Six Senses La Sagesse is being constructed by Range Developments, whose founder and managing director, Mohammed Asaria, says it is not unusual for investors never to visit. In fact, since there is no obligation for citizenship investors to visit Grenada, interest in the scheme has ballooned among Nigerians.

An aerial view of the Six Senses Grenada [Photo courtesy of Range Developments]

“We have between high single figures and low double-digit sales of hotel units on a monthly basis to Nigerians. The average investment is just under $300,000,” says Asaria. “It’s a big market for us. And it’s going to get bigger. There are 300 million people [in Nigeria].” Of these, more than 40,000 are millionaires and, therefore, potential customers for golden visas, according to the Knight Frank Wealth Report.

It is a similar story across the Caribbean. Arton Capital, a citizenship advisory group, says demand from Nigerian families for Antigua and Barbuda citizenship is up 15 percent this year compared with the last.

St Lucia has also seen a record number of Nigerians applying in 2020. “It’s more than it’s ever been over the past four years,” says Nestor Alfred, CEO of the St Lucia Citizenship-by-Investment Unit.

The citizenship market is not exclusive to the Caribbean, but these are the cheapest and they maintain that all-important visa-free access to Europe that their clients are hankering after.

Tax incentives

“I’m rich but I’m not a Donald Trump. I wasn’t looking for a tax escape,” says Bimpe.

Investing in a foreign citizenship is not illegal for Nigerians, but the issue of wealthy citizens moving their assets overseas is a thorny one in Nigeria, where about $15bn is lost to tax evasion every year, according to the country’s Federal Inland Revenue Service. Much of that money finds its way to the Caribbean, as was highlighted in the leaked documents that formed part of the Panama Papers in 2016.

The tax benefits of an overseas citizenship are undoubtedly attractive. Citizens can become tax residents of countries like Dominica, where there is no wealth or inheritance tax, or Grenada which offers “corporate tax incentives”. In Europe, Malta has long been courting hedge funds with its light-touch regulations.

Tourists take photographs down a typical street in Valletta, Malta in 2018 [File:Getty Images]

Being a citizen of a country with a more stable currency is also appealing to the wealthy. “Second citizenship helps with capital mobility. Pull up a graph of the Naira. If you look at the Naira for the last 10 years it’s been a horrible journey,” says Asaria. Better, therefore, in the minds of the wealthy, to own assets in euros or even East Caribbean dollars which are pegged to the US dollar.

“Businesses are struggling, inflation on the rise, insecurity, and a host of other issues. These issues have prompted an increase in citizenship or residency-by-investment from wealthy Nigerians in a bid to secure a better future for their families in developed countries,” says Evans Ahanaonu, a Lagos-based representative for High Net Worth Immigration, a citizenship advisory firm. Grenada and Turkey are popular for clients wanting quick access to Europe, he adds, while some go straight for the UK Innovator Visa which means setting up a business in the UK.

Given the number of applications processed by the citizenship advisory firms interviewed just for this article, a conservative estimate would put the amount invested by Nigerians into citizenship schemes at more than $1bn this year alone.

Where rich and poor migrants meet

The loss of wealth from Nigeria has severe implications for levels of employment in the country. With wealthy businesspeople investing their capital outside Nigeria rather than in it, there is less funding for local businesses or government projects which might otherwise generate employment. This, in turn is causing more poorer Nigerians to want to move overseas as well, in search of better work opportunities, a trend backed up by the findings of a 2018 survey by Afrobarometer, the data analysis group.

Just before the pandemic struck, Kingsley Aneoklloude, 35, was able to make his way to Europe, but via a very different route.

He was working as a mechanic in his village in Edo State, one of the country’s poorer provinces which have been untouched by oil wealth, where he earned 1,500 naira ($3.95) a week.

The salary was poor but the final straw was police brutality. Aneoklloude was briefly employed as a local election monitor during the 2015 presidential elections. He says he was pressured by representatives of a political party to manipulate ballot papers, but refused, after which he became afraid for his safety. “I left because they were chasing me. Honestly, they come and chase me,” he says.

In a photo from 2019, migrants fleeing from Libya on an overcrowded wooden boat wait to be rescued in the Mediterranean Sea [File: AP]

First, he went to Kano State in the north of Nigeria. Then, in December 2019, Aneoklloude made the dangerous journey to Europe via Niger, then Libya, “where there was a heavy war in Tripoli”, before crossing the Mediterranean.

While adrift on the Mediterranean Sea, his small boat was rescued by Open Arms, an NGO which helps refugees and migrants crossing the Mediterranean. Their ship docked in Lampedusa, one of the Italian Pelagie Islands, where Aneoklloude’s asylum application for Germany was processed.

Now in Potsdam, Germany, he is waiting to hear the outcome of his application for new citizenship and a job. “I have a nine-month contract for work, but they need the immigration officer to sign the contract before I start,” he explains.

At 35, Aneoklloude is just a few years younger than Dapo. Both have witnessed police brutality from different angles, and both saw the Mediterranean as their way out.

But now, with Nigeria’s economy officially in another recession, more will likely follow. It is a dangerous spiral: The more wealth taken out of Nigeria, the fewer jobs available to its poorest.

 

Smartphone shipments into Nigeria increased 13.7% quarter on quarter (QoQ) in Q3 2020 to almost 3 million units, according to the latest figures from global technology and consulting services firm International Data Corporation (IDC).

The firm's newly published Quarterly Global Mobile Phone Tracker shows that Nigeria's smartphone market remained healthy in the third quarter as vendors shifted their model portfolios to entry-level and mid-range devices.

Transsion's Tecno, Itel, and Infinix brands dominated smartphone shipments in Q3 2020 with a combined 76.4% share. Samsung placed second with 7.0% share and Xiaomi placed third with 5.3%. Chinese brands continue to invest in the country as they attempt to penetrate the market and gain a foothold.

The average street prices of smartphones declined marginally (0.3%) as the dollar exchange rate remained high. The increase in VAT by 2.5 percentage points also had a negative impact on prices. With the relaxation of COVID-19 measures, the majority of consumers returned to the physical retail channel in Q3 2020, leading to a 21.5% QoQ increase in retail sales.

Feature phone shipments rebounded strongly in Q3 2020, with shipments increasing 21.2% QoQ to account for 56.0% of the country's overall mobile phone market. Feature phones remained resilient as they continue to be the preferred secondary phone in an environment of declining consumer purchasing power and rising unemployment. The major players in the feature phones space in Q3 2020 were Tecno with 49.7% share, Itel with 34.8%, and Nokia with 8.2%.

"In light of the economic hardships caused by the COVID-19 pandemic, vendors continued to ship more affordable devices priced below $200 as they sought to address demand for cheaper models and penetrate consumer segments with lower purchasing power," says George Mbuthia, a research analyst at IDC. "This strategy of offering more devices in the entry-level and mid-range price bands (<$200) ensured a faster market recovery from the weak performance seen in Q2 2020, which was heavily impacted by COVID-19."

IDC expects Nigeria's overall mobile phone market to grow 3.1% QoQ in Q4 2020, with feature phone shipments increasing 1.9% and smartphone shipments growing 4.7%. "Promotions from the end of November through the festive month of December will support the market's growth in Q4 2020," says Ramazan Yavuz, a senior research manager at IDC. "COVID-19 will continue to pose a threat to the overall economy and, in particular, to mobile phone markets. However, smartphone shipments will remain resilient in 2021, with customers moving from feature phones to smartphones and data usage increasing in the medium term."

  1. Opinions and Analysis

Calender

« February 2021 »
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28