Amidst a brooding political environment ahead of the presidential elections on March 28, Nigerians received some good news this past week. After some notable military victories, President Goodluck Jonathan told Nigerians that the “tide has turned” against Boko Haram. His office issued a statement in response to terror attacks on Tuesday, February 24, in which at least 27 people were killed in two suicide bombings in Kano (Kano State) and Potiskum (Yobe), both targeting bus stations. The statement assured Nigerians that “the days of mourning victims of incessant terrorist attacks in the country will soon be over as the tide has now definitely turned against Boko Haram.”
It is true that the military offensive against the jihadist insurgency has delivered some important victories. On Saturday, February 21, the Nigerian army said it had recaptured Baga on Lake Chad, the site of a huge Boko Haram massacre in early January. Lieutenant General Kenneth Minimah, the chief of army staff, visited the recaptured town for a photo opportunity, and promised that the next step was to retake Boko Haram’s main stronghold, Gwoza in Borno. “With this,” he said, “there is going to be no more Boko Haram.”
It is certainly clear that there is a new urgency in the fight. The Nigerian air force is conducting air strikes against Gwoza, and the Sambisa forest in the same state where Boko Haram has had a long presence. The army also recaptured Monguno and Marte in Borno, two other towns that Boko Haram had been holding. A Cameroonian officer, Captain Mbene Matute, was killed on Wednesday, February 25, when his vehicle ran over a landmine in Borno. He is rapidly becoming a symbol of the multilateral fight against Boko Haram, with Nigerians saluting his sacrifice and sharing his photo on social networks.
We are optimistic that the current re-energised military effort against Boko Haram, assisted by the Cameroonians and the Chadians, will make a meaningful difference in the insurgency. The terror threat will persist for years, but we think that Boko Haram will be driven out of the main towns, and will be beaten back into a guerrilla movement, rather than the rich and well-armed rebel army it is now.
Sources have told us that many Boko Haram fighters from Chad have abandoned the group and returned to their home country – these fighters contributed much to the strength of the jihadist brigades in Borno, so we agree with Lt.-Gen. Minimah’s assessment that Gwoza will be retaken soon (but we are sure that there will still be a Boko Haram even if it has been driven out of the towns). All of this is good news for stability, and will probably be to Mr Jonathan’s electoral advantage on March 28.
Regarding the health of Africa’s largest economy, the Nigerian National Bureau of Statistics (NBS) released gross domestic product (GDP) data for the fourth quarter of 2014, reporting real economic growth at 5.94% y-o-y. While this is down from a figure of 6.23% y-o-y seen in Q3, the important oil industry managed to make a positive contribution to GDP growth for only the second time in 2014 – during Q2 and Q4. The NBS highlighted that average oil production increased from 2.15 million bpd in Q3 of last year to 2.18 million bpd in the fourth quarter.
Looking ahead, the Nigerian economy will certainly face several headwinds this year, and the transmission mechanism of markedly lower crude oil prices to the real side of the economy will stem predominantly from current account pressures. A depreciating naira will hold implications for both the productive and consumer sides of the Nigerian economy. In relation to the former, higher input costs will squeeze profit margins which could result in a decline in reinvestment and expansion.
Meanwhile, higher inflation will adversely impact consumer purchasing power, and demand will further be stifled by tight monetary policy. Although the effect thereof will not be as pronounced as in certain other oil producing nations – the size of government relative to the economy is comparatively small – a decline in government spending will also adversely impact economic growth in Nigeria, especially when considering the sharp decline in capital expenditure envisaged in the 2015 fiscal budget. We forecast real GDP growth will decline to 5.26% in 2015 from a figure of 6.3% last year.
Francois Conradie (Political Analyst) & Cobus de Hart (Economist)