Policies, criticism & more changes across the continent

Welcome back to the Vault. Here’s our bulletin on recent policy developments.

Nigeria

• President Tinubu’s tax waiver plan to tackle food crisis attracts criticism

• Nigeria seeks lasting solution to decades-long conflict between herders and farmers

• Reforms planned for Nigeria’s telecoms sector
• Data Vault: Nigeria’s inflation rate rises for the 5th consecutive month

Ghana:

• More groups oppose plastics tax

• Tourism Ministry validates first sector-led tourism policy

In other news:

• Nigeria advances with local government financial autonomy

• President Ruto assents to the Independent Electoral and Boundaries Commission Amendment Bill, 2024.

• President Tinubu approves N70,000 as new monthly minimum wage

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NIGERIA

President Tinubu tackles food crisis with temporary import tax waiver but criticism follows

In a bid to stem the seemingly intractable food crisis in Nigeria largely caused by rampant insecurity, challenging inflation and resultant high food prices, the President of Nigeria, Bola Ahmed Tinubu, has approved a proposal for importation of some food commodities duty-free within a 150-day window. Affected items are maize, husked brown rice, wheat and cowpeas.

The Agriculture Minister disclosed that the waiver is part of recommendations from the Presidential Accelerated and Stabilisation Planand is expected to improve the food security situation in the country.

In March 2024, President Tinubu expressed unwillingness to import food items to combat high food prices but has now been forced to commit to removing the customs duties, taxes and tariffs on the specified food items and importation of 250,000 metric tonnes of wheat and maize to fill the depleted strategic grain reserve. This change in policy stance is likely driven by the need to avoid a complete breakdown of law and order that could arise from the overbearing hunger in most parts of the country. Violent activities, linked to people’s inability to rise above stinging inflation and food prices have been linked with increased cases of kidnappings, theft, robbery and general criminal activities.

To ensure that the citizenry benefits from the policy action, the government says that a recommended retail price will be applied to the imported food commodities, but it is unclear how it intends to carry on enforcement of the proposal or, on the other hand, monitoring or evaluation of the tax waiver. According to the Minister of Agriculture, the Ministry is working with the Presidential Food Systems Coordinating Unit and the Economic Management Team to finalize the implementation framework for the policy initiatives.

On a related note, the President of the AfDB, Akinwumi Adesina, has criticized the government’s decision and advised against reliance on food imports to manage short-term price hikes. Instead, he advocates for increased domestic food production to stabilize prices, create employment and strengthen the national economy.

Nigeria attempts new measures to address decades-long herder–farmer conflicts

The Nigerian government has created a Ministry of Livestock Development, tasked with the primary objective of addressing recurring conflicts between herders and farmers. This dedicated ministry will focus on developing sustainable livestock management practices, promoting dialogue and cooperation between herders and farmers, and ensuring the equitable use of arable land.

By fostering better relations and reducing conflicts, the government aims to enhance agricultural productivity and stability in rural areas, thereby contributing to overall national food security. The creation of a separate ministry, in addition to the existing ministry of agriculture, is inconsistent with the present administration’s plan to reduce the number of ministries, departments, and agencies of government, in a bid to cut the cost of governance. The move could, however, cause more efforts to be deployed to find a lasting solution to the herders/farmers conflict.

Nigeria’s telecoms sector rakes in US$191 FDI in Q1’ 2024 and Govt promises reforms

The Nigerian Minister of Communications and Digital Economy, Mr Bosun Tijani, has disclosed plans by the government to conduct reforms in the telecoms sector to stimulate inclusive growth in the digital economy (and the broader economy) in Nigeria.

The statement by the Minister was against the backdrop of a report from the National Bureau of Statistics (“NBS”) that Nigeria recorded a remarkable investment of US$191 million in foreign direct investment in only the first quarter of 2024. This is significant because, according to the NBS, Nigeria only recorded a total of US$134.75 million throughout 2023.

Despite the successes over the past 20 years, the telecoms sector in Nigeria is still plagued by multiple challenges, especially infrastructural deficit, multiple taxation and, in the past year, severe instability in the foreign exchange market. The currency devaluation last year has also come at a cost, forcing two of the biggest players (by subscriber base) to declare losses in 2023. In addition, the prevailing economic downturn has considerably reduced the purchasing power of subscribers, resulting in a reduction in the volume of telecom activity.

Nigeria makes first shipment to five countries under the AfCFTA

On Tuesday, Nigeria began trading under AfCFTA preferential rules, officially shipping its first set of exports to Cameroon, Kenya, Algeria, Uganda, and Egypt. The exported exports include bags, ceramics, textiles, cables, native starch, and shea butter. This milestone marks progress – from years of planning under the agreement, to actively joining other countries to participate under the Guided Trade Initiative.

Among the numerous benefits, Nigeria’s participation offers local companies expanded market access and benefit from AfCFTA’s $50 billion export potential. It also presents opportunities for economic diversification and job creation across various sectors of Nigeria.

GHANA

Opposition grows against new plastics excise tax

The newly implemented proposed 5% excise tax on locally manufactured plastics is facing growing opposition. The Ghana Union of Trade Associations (GUTA) has joined the Ghana Plastic Manufacturers Association (GPMA) in voicing their concerns about the tax’s potential negative impact.

Economic Concerns:The GPMA warns of severe economic consequences, including:

• Price Increases:The tax could lead to higher prices for essential goods packaged in plastic, impacting consumers.

• Job Losses:Manufacturers may be forced to lay off workers due to decreased production.

• Business Exodus:Companies might relocate to neighboring countries with lower tax burdens, leading to a loss of corporate tax revenue and social security contributions (SSNIT) for Ghana.

Earlier this month, the GPMA urged the government to withdraw the tax, warning of potential shutdowns and protests. They also raised concerns about the lack of transparency regarding the use of the collected tax revenue for plastic waste management initiatives.

Tourism Ministry validates first sector-led tourism policy

Ghana’s Ministry of Tourism, Arts and Culture has announced the development of the first-ever comprehensive sector-led tourism policy in the country.

According to the Ministry, the policy, developed after extensive consultation with stakeholders, seeks to provide a framework for enhancement of tourism, preservation of cultural heritage and ensuring environmental sustainability. The Ministry also disclosed that Ghana’s tourism sector is said to be the 4th highest foreign exchange earner in Ghana and the sector employs two in ten persons.

The release from the Ministry states further that the policy introduces innovative measures to support local communities, foster adventure and eco-tourism, collaborate with relevant institutions to mainstream and institutionalize the diaspora and migrants in Ghana, and promote the country as a year-round destination.  The draft policy also emphasizes the importance of digital transformation in tourism, encouraging the adoption of new technologies for improved visitor experience.

WEST AFRICA

Burkina Faso, Mali, and Niger push forward with Confederation Treaty amidst ECOWAS single currency plan

Military leaders of Mali, Burkina Faso, and Niger Republic have signed a confederation treaty to strengthen their mutual defense pact and advocate for an independent security bloc. This new alliance builds on the mutual defense pact established last year under the Alliance of Sahel States (AES) and follows the countries’ withdrawal from the Economic Community of West African States (ECOWAS). It also signifies the three nations’ commitment to greater integration and self-reliance in addressing their security challenges together.

The withdrawal of the three countries from ECOWAS presents a direct challenge to the regional bloc, particularly affecting its ability to address the region’s trade and economic issues. This move also undermines ECOWAS’s efforts to maintain a unified front against regional threats such as terrorism and other security challenges. The absence of these countries from ECOWAS may complicate collective security measures and may lead to a fragmented approach in tackling issues in the long term.

This development also poses a significant setback to ECOWAS’s long-standing plans for improved regional trade and integration, including the bloc’s long-standing goal of establishing a single currency – although Lack of full participation and economic alignment among member states raises concerns about the feasibility and stability of the proposed single currency. On the other hand, with an aim to move away from western influence and ensure survival, these three countries may move closer to countries like Russia, as they seek alternative security and economic partnerships. This development could impact regional trade patterns and investment flows, potentially introducing new dynamics into the ECOWAS economic landscape.

Data Vault: Nigeria’s inflation rate hits new peak at 34% in June 2024

Nigeria’s inflation rate surged from 33.95% in May to 34.19% in June 2024, the highest since 1996. This latest rate is 11.40% points higher than in June 2023 (at 22.79%), driven by the removal of fuel subsidies and a weakening naira. Food inflation, which dominates Nigeria’s inflation basket, reached a record high of 40.87% in June, up from 40.66% in May, with significant price increases in bread, cereal, potatoes, and fish.

Other News

We’re also tracking some events in the news.

Nigeria| Nigeria advances with local government financial autonomy

On Thursday, the Supreme Court of Nigeria declared it unconstitutional for state governors to withhold funds allocated for local government administrations. The court ruled that the 774 local government councils in the country should manage their own funds. The court emphasized that the power of governance is divided into the federal, state, and local governments, and a state government has no authority to appoint caretaker committees for local councils, which must be democratically elected.

The court also stated that using caretaker committees violates the 1999 Constitution, as it allows state governments to control local governments. The judgment mandated that local government funds be paid directly to democratically elected local councils to prevent state governments from retaining these funds.

Kenya| President Ruto assents to the Independent Electoral and Boundaries Commission Amendment Bill, 2024

President Ruto has signed the Independent Electoral and Boundaries Commission Amendment Bill, 2024 into law. The law was passed by Parliament based on recommendations from the National Dialogue Committee (NADCO) report. The Independent Electoral and Boundaries Commission (IEBC) Amendment Bill 2024 restructures the IEBC by changing the succession protocol, requiring the vice chairperson not to automatically become chairperson. It sets stricter qualification criteria for commissioners, mandating 10 years of experience in their areas of study, including Information Technology. It outlines a transparent selection process with public interviews and sets a timeline for appointing commissioners. This new law is expected to enhance the credibility and effectiveness of Kenya’s electoral processes through improved leadership and selection qualifications by the commission.

Nigeria| President Tinubu approves N70,000 as new monthly minimum wage

After months of negotiations, the Federal Government of Nigeria and Organised Labour reached an agreement to implement a new monthly minimum wage of N70,000 ($43). The agreement, approved by President Tinubu on Thursday, includes a commitment to review the national minimum wage law every three years and to support private sectors and sub-national entities in meeting wage demands, including addressing unpaid salaries in universities.

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