President Buhari's Visit to Washington

The newly elected President of the Federal Republic of Nigeria, Muhammadu Buhari, will be visiting President Obama at the White House today. Buhari deserves this honor because his election may very well mark the start of a favorable new era in Nigerian politics and economic development.

Nigeria’s presidential election this past May has received high praise for transparency and honesty, in sharp contrast to all of the previous rigged elections since civilian rule was re-established in 1999. The election was conducted so efficiently that the incumbent President Goodluck Jonathan conceded defeat even before the final ballots were counted. 

President Buhari is a retired army general who is known for his modest lifestyle. He lives on his military pension in a simple middle class home without luxury. This is all the more astounding because he was the military ruler of Nigeria from January 1984 to August 1985 when he could have enriched himself as all the other military heads of state had done. During his short time as President, he made a strong effort to combat corruption.

President Buhari has just been swept into power on a wave of change demanded by the voters who are tired of seeing high oil revenues disappearing into the pockets of special interests, while poverty rates in the rural areas continue to increase. The former ruling, and very corrupt, PDP party is now in the minority. Buhari’s APC party has captured most of the state governorships and holds a majority in both houses of parliament. 

Buhari now has five years to clean up government revenues and install modern management that can solve the nation’s major problems. He is off to a good start with the dismissal of the board of the Nigerian National Petroleum Corporation, the state entity that collects all of the oil revenue. His challenges are enormous. I hope that President Obama will offer as much support as possible.

Buhari’s most immediate challenge is the Islamic insurgency in northeastern Nigeria known as Boko Haram. This group has pledged allegiance to the “Islamic State”, and has turned the northeast region into a killing field. The previous administration was unable to cope with this threat because the security services have been suffering from low pay, low morale and high corruption. Buhari has to reform the services and eliminate corruption within them. The provision of regular and higher pay to the ranks would be a good place to start.

The second serious challenge is the major electric power deficit. Nigeria produces a miserable 4,000 MW of electricity for a country of 150,000 million people. The country is running on expensive diesel fuel that makes industry non-competitive and deprives over 70% of the population of electricity. None of the previous governments since 1999 has been able to solve this problem. 

Thirdly, Nigeria can become the agricultural powerhouse it used to be in the 1950s and 1960s. With the discovery of oil, and the infestation of corruption that came with oil, rural infrastructure was neglected and agriculture declined to dangerous low levels.

President Obama’s Africa policies are right in line with President Buhari’s immediate needs. 

Military cooperation via the US Africa Command in the fight against Boko Haram has already started. This can be strengthened as the Nigerian military begins to reform and shape up.

The Obama administration’s “Power Africa” project that was featured at the August 2014 White House Africa Summit should be able to encourage US private companies to invest in power generation in Nigeria while assisting in the rationalization of the decrepit power sector.

In agriculture, the Administration’s “Feed the Future” project is designed to bring modern methods to rural Africa in order to increase yields, farm incomes, and diminish food imports to the cities. Nigerian farmers are already starting to produce greater volumes of cassava and rice. US farm technology could bring back Nigeria’s former agricultural greatness.

My Nigerian friends are telling me that Nigerian traffic police have stopped asking for handouts because they know that President Buhari is watching. If Buhari can succeed in channeling Nigeria’s oil resources into productive enterprises, especially vital infrastructure, education and agriculture, his nation can achieve the greatness that was predicted at the time of independence in 1960. 

The United States is with you, President Muhammadu Buhari. Your five-year term begins with our warmest best wishes.

The Way Forward for Buhari

Nigerian President-elect Buhari will be inaugurated at the end of May 2015.  He has constituted a transitional task force to develop priorities for his first year in office. One of his top priorities is to diminish corruption.  One of the most significant sources of diverted revenue is the Nigerian National Petroleum Corporation (NNPC).

The NNPC is the government’s own oil and gas entity.  It receives all of the revenue from oil, gas and LNG sales, as well as oil, gas and LNG royalties. It is from these revenues that money belonging to the people of Nigeria is diverted from the rightful owner.  What is to be done?

Here are some ideas regarding oil and gas revenues.

Until 1985, all new hydrocarbon development investments in Nigeria were joint ventures  (JV).  The NNPC was a partner of the oil companies as co-investors.  In a typical exploration investment of one hundred million dollars, the NNPC contracted to invest as much as 45%, or forty-five million dollars.  Such risk sharing is typical in the oil industry. 

Because the oil exploration business is such a great devourer of money, the NNPC switched its policy in 1985 from joint ventures to production sharing agreements (PSA).  The PSA gives the NNPC a share of the revenue earned by the oil company, or a share of the crude oil that the NNPC sells on the world market.  The NNPC takes a share of the crude oil produced, and sells it on the world market. At the present time, the Government of Nigeria is suffering because of low oil prices.  President-elect Buhari will find that his government’s cash flow will be greatly reduced because of the current depressed state of the world oil market.

Here are my recommendations for President-elect Buhari:

• Sell the NNPC’s share of all of its joint ventures. This should bring in at least 50 billion dollars, and probably closer to 100 billion dollars.  In addition to the money coming in from the sale, the NNPC will no longer be required to disgorge money for the co-financing of exploration or ongoing operations.
• Set up a system of publishing daily reports of crude oil sold and revenue received from the sale of the crude oil.  This act of transparency will make it difficult, if not impossible, for the NNPC to “leak” revenue from crude oil sales.
• Set up an equivalent of the US “Government Accountability Office”  (GAO).  This is an independent agency that audits all government accounts at the Federal level.  The Nigerian Government should set up such an agency that would cover both Federal accounts and state government accounts.  The latter is particularly important because Nigerian state governors have, for the most part, not been held accountable for their management of state revenues, most of which come from their shares of Federal oil revenues.
• Do whatever is necessary to stop the illegal practice of “bunkering”---the tapping into crude oil gathering pipelines onshore and the removal of as much as 100,000 barrels per day for sale to rogue tankers lingering offshore at the mouth of the various bayous flowing out of the Niger delta. There are many high-powered vested interests that will fight to keep this illegal practice.

All of the above recommendations could be implemented within the first six months, resulting in the release of significant funds to help reform the military and policy, as well as to contribute to the augmenting of electric power generation and transmission.

The Aftermath of the Nigerian Presidential Election

AND NOW THE HARD PART

Most Nigerians are euphoric over the results of the presidential election that took place on Saturday, March 28, 2015.  The election was conducted honestly.  The state-by-state count was free and fair.  And most surprising of all, the incumbent, President Goodluck Jonathan, conceded defeat even before the final count was completed.  In a country where every election since 1999 was rigged, the May 28 event constituted nothing short of a revolution.

Civilian rule returned in 1999 after two decades of military dictatorship. It is impossible to say that the return of civilian rule, within democratic institutions, resulted in good governance.  On the contrary, Nigerian politicians in power reached new heights of corruption and dysfunctional government between 1999 and 2015.  The new President-elect, Muhammadu Buhari, is facing an overwhelming challenge to clean things up and reform the entire governmental and military management system.

Here are the priorities:

1.  Make the oil accounts transparent:  Right now, Nigeria’s share of the daily production of about 2.5 million barrels of crude oil goes to the Nigerian National Petroleum Company (NNPC). Only part of the revenue passes through the NNPC into the Central Bank.  The rest goes to the presidency for distribution to political supporters.  Buhari should abolish the NNPC and have all oil sales done by an independent authority that would be working for the Central Bank. All transactions, of course, have to be made available to the press on a daily basis.

2.  Institute an auditing system for payments to the 36 states: Right now, the 36 states are entitled to 52% of the oil revenue, with distribution based on population.  When the revenue reaches the states, the governors have complete control.  In many states, the revenue does not get into the state budget.  An auditing system controlled by the Central Bank should be instituted to require full transparency in the use of the revenue by each of the 36 states.

3.  Institute a plan to expand electricity production, transmission and distribution to reach 20,000 megawatts within four years.  Polls indicate that the need to be connected to mainline electricity is the highest priority for the majority of Nigerians.  Right now, this country of over 150 million people is generating only 5,000 megawatts.  This is a national scandal for such a wealthy country. The new President needs to bring in power managers who can develop a plan and implement it.

4.  Reform the military and police services:  Civilian rule has caused the morale and efficiency of the military and police services to deteriorate to low levels. The Nigerian army was unable to cope with the “Boko Haram” Islamist insurgency in the northeast that has killed over 10,000 innocent civilians.  The armies of Niger, Cameroon and Chad were required to come in and start the defeat of Boko Haram.  As a former military officer himself, Buhari should know what to do.

5.  Rebuild the Civil Service:  Under military rule, the once excellent Nigerian civil service has virtually been destroyed. There has to be a new salary structure and a system installed that will guarantee reliable payments to both active civil service and retirees.

Many of the special interests will fight back against reform efforts.  These are the highly placed people who steal large amounts of crude oil from pipelines in the middle of the night; the smugglers of refined oil products who receive unjustified government subsidies for imported products that are then exported to neighboring countries at higher prices; the police and army that stop people in cars at roadblocks and demand bribes; and the phantom payrolls in the civil service and security forces.

Nigeria has many highly qualified university graduates with high skills who need to be empowered to make Nigeria right again, and open the doors to prosperity for the Nigerian people who have waited too long. In addition to a monstrous power deficit, Nigeria is suffering from a monstrous management deficit. These two deficits constitute President-elect’s greatest challenge.  He deserves international support.

Nigerian Elections

Nigeria’s presidential election in February 2015 will be of historic significance.

Nigeria’s next presidential election will be held during February 2015.  It is essential for political and public order that all Nigerians see the election as being “free and fair.”

After many years of dictatorial military rule, Nigeria entered a new era of multiparty democracy in 1999.  The “Peoples Democratic Party” emerged from the 1999 election as the dominant political power throughout Nigeria.  Subsequent elections in 2003, 2007, and 2011 were all viewed as being deeply flawed by both international and domestic observers. The PDP party utilized its control over national resources to bribe the voters and rig the elections in a variety of ways. While the PDP party was popular in all regions of Nigeria, except the southwest, rigging was considered necessary in order to make sure the party continued to control power. Control over power, of course, means control over the oil resource.

After President Olusegun Obasanjo completed his second and final presidential term in 2007, he used his power and influence to make Governor Musa Yar’Adua the candidate of the PDP. Obasanjo is from the south of Nigeria. (There is an informal gentleman’s agreement that the presidency will be rotated between the Christian south and the Moslem north. The PDP, therefore, needed to identify a northerner to be the party’s candidate in 2007.)  Yar’Aduwa was a northerner, and had a good reputation as a state governor.  (The gentleman’s agreement also stipulates that the vice presidential candidate should be from the other region.)  The natural progression is that the Vice President, from the opposite region, will be the PDP candidate after two presidential terms are completed.

Obasanjo had a falling out with his northern Vice President, Abubakar Atiku, who refused to support Obasanjo’s effort to change the constitution to eliminate the two-term maximum so that he could run for a third term. That effort failed. Obasanjo selected Yar’Aduwa to be the northern PDP candidate who became Nigeria’s next president.

Unfortunately, Yar’Aduwa was suffering from a terminal kidney disease that caused him to die only 18 months into his term. His southern Vice President, Goodluck Jonathan, became president after Yar’Aduwa’s death.  In 2011, Jonathan ran for re-election after promising not to run again in 2015.  The constitution considers Jonathan to have served only one term, 2011-2015, even though he finished out Yar’Aduwa’s term, 2007-2011.  On that basis, Jonathan has changed his mind, and has decided to run for re-election in 2015.  The PDP board of trustees has already selected Jonathan to be their candidate in 2015 without having a competitive national convention.

If Jonathan is re-elected in 2015, northern Nigeria will have seen only one of their political leaders in the presidency for a short period of only eighteen months between 1999 and 2019, a period of twenty years. Needless to say, northern Nigerians will feel cheated if Jonathan wins the 2015 election against a northern opponent selected by an opposition party.

Northern Nigeria is already in a sullen mood because poverty levels in the northern states are increasing, and the Islamic terrorist group Boko Haram is killing northerners in vast numbers, regardless of religion. President Jonathan’s security services appear to be powerless to stop them. If, as in previous presidential elections, neutral observers discover deep flaws and obvious rigging that result in President Jonathan’s re-election, the northern states could see significant unrest, disaffection and possible violence.

Because of the potentially dangerous situation that could develop after the 2015 election, it is important that friends of Nigeria, especially the United States, utilize their diplomacy to press for a truly free and fair election in 2015. 

Boko Haram

Have you seen the most recent U-Tube videos uploaded by Boko Haram? Correct me if I am fantasizing, but they appear to have military tanks and armored personnel carriers. When I did my US Army service, I was in the 2nd Armored Division.  I commanded both armored infantry and tank platoons.  Operating those machines require training.  My questions are: “Where did these rag tag terrorists obtain their equipment?  Who trained them to use it?

I do not have hard facts, but my feeling is, considering Boko Haram’s physical location in northeastern Nigeria, that the equipment must have come from the Nigerian Army.  Their training must have come from the same source. 

This must explain why a four hundred-man unit of the Nigerian army recently ran away across the border into Cameroon rather than fight it out with an attacking Boko Haram force.  Boko Haram has better equipment than the Nigerian Army.

I must return to my basic rule of Nigerian instability.  Wherever there is instability, there are powerful political personalities behind it.