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BRIEFING PAPER

Number 7897, 10 July 2018

Nigeria: July 2018 update By Jon Lunn and Dan Harari

Contents: 1. Domestic politics in the run-

up to the 2019 elections 2. Security and anti-corruption 3. Economy

2 Nigeria: July 2018 update

Contents Summary 3

1. Domestic politics in the run-up to the 2019 elections 5 1.1 The main parties manoeuvre for advantage 5 1.2 Buhari and the APC are on the back foot – but all is still to play for 6

2. Security and anti-corruption 8 2.1 Security 8

Boko Haram 8 Other flashpoints 9

2.2 Anti-corruption efforts 11

3. Economy 13 3.1 2016 recession 13 3.2 Recovery in 2017 and 2018 14 3.3 Structural reforms and long-term challenges 15 3.4 UK-Nigeria trade 16

Cover page image copyright: Image 17298450615_b0a6606b81_o – Donaciones de MasLibres.org HazteOir.org para comprar alimentos a las víctimas de Boko Haram Nigeria Maidiguri Borno (translation: Donations from MasLibres.org HazteOir.org to buy food for victims of Boko Haram Nigeria Maidiguri Borno) by HazteOir.org – Flickr.com page. Licensed by Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0)/ image cropped.

3 Commons Library Briefing, 10 July 2018

Summary Political manoeuvring intensifies as the 2019 elections approach President Muhammadu Buhari is now into the final year of his four-year term as president of Nigeria. Presidential and parliamentary elections must be held in 2019. Despite concerns in many quarters about his health, Buhari is standing again.

During the 2015 election campaign, Buhari and the ruling All Progressives Congress (APC) positioned themselves as a ‘movement for change’, promising to bring the Boko Haram insurgency to a rapid end, tackle corruption and promote more ‘inclusive’ economic growth. While they have been some achievements to their name on the first two counts, most observers feel that they have barely got off first base on the last.

The APC has been plagued by internal divisions since taking office. On 4 July, a faction calling itself ‘Reformed-APC’ (R-APC) announced that it no longer supported President Buhari. Experts suspect that powerful interests lie behind the new faction and that there could be more high-profile defections to come.

Meanwhile, the PDP has been talking with over 30 of the country’s 68 registered parties about forming an electoral alliance. On 9 July, its efforts bore fruit. It, the R-APC and 37 other parties agreed an electoral alliance, under which they will field a joint presidential candidate next year.

All this means Buhari could have his work cut-out to win the 2019 elections. But there is still everything to play for.

Buhari’s mixed record on security and combating corruption There have been some successes on the security front since 2015, but Buhari and the APC government have found themselves fighting on at least as many fronts as their predecessors. Boko Haram has been pushed out of most of the territory which it controlled in Northeast Nigeria since President Buhari took office. Foreign countries, including the UK, have scaled up their assistance to the Nigerian army.

in December 2015, Buhari went so far as to announce that Boko Haram had been “technically defeated”. While it was certainly “on the back foot”, Buhari’s claim was widely viewed at the time as an over-statement. This is an assessment that has been borne out by developments over the last three years.

The northeast is far from the only part of Nigeria experiencing high levels of insecurity. As at March 2018 the Nigerian army was reportedly active in 30 of Nigeria’s 36 states. In the ‘Middle Belt’ of the country, inter-communal violence, which has been a permanent fixture of Nigerian life for many years, has again been escalating alarmingly. In the Southeast, following Buhari’s election victory in 2015 there was a revival of Igbo agitation for a separate Biafran state. Heavy state repression and internal divisions amongst activists have led to a reduction in levels of unrest during the last year.

The authorities continue to face challenges in maintaining peace and security in the oil-rich Niger Delta, where attacks on oil pipelines by a new generation of militants have been largely in abeyance since 2016. But there is perpetual anxiety that violence could flare up again at any time.

On anti-corruption, action has been taken against former office-holders from the presidency of Buhari’s predecessor, Goodluck Jonathan. However, critics argue that some the steps taken on anti-corruption have been politically-motivated, rather than ‘without

4 Nigeria: July 2018 update

fear or favour’. As is often the case in Nigeria, investigations have proceeded at a snail’s pace. There have also been accusations that an arms deal with the US to purchase 12 A-9 Super Tucano aircraft for $500 million has been badly mismanaged by the current

In 2017, Transparency International rated Nigeria 148th in its annual ‘Corruption Perceptions Index’, down from 136th in 2016.

Not much to celebrate on the economic front Nigeria returned to growth in 2017, following a 2016 recession driven by previous steep falls in international oil prices. A recovery in oil prices and production were the main factors in the return to (modest) growth. The economy is forecast to grow by around 2% in 2018. The government’s structural reform agenda appears to have led to some improvements in business conditions, but the economy’s long-term challenges – corruption, oil dependence, poor infrastructure, rapid population growth to name a few – remain sizeable.

For deeper historical, political and economic background, see the Library’s January 2015 briefing, Nigeria 2015: analysis of election issues and future prospects

5 Commons Library Briefing, 10 July 2018

1. Domestic politics in the run-up to the 2019 elections

President Muhammadu Buhari is now into the final year of his four-year term as president of Nigeria, which began in May 2015 when he won a decisive victory over his main opponent, Goodluck Jonathan. This triumph was shared by his political party, the All Progressives Congress (APC), which dominates parliament.

During the 2015 election campaign, Buhari and the APC positioned themselves as a ‘movement for change’, promising to bring the Boko Haram insurgency to a rapid end, tackle corruption and promote more ‘inclusive’ economic growth. While they have been some achievements to their name on the first two counts, most observers feel that they have barely got off first base on the last.

The APC is a coalition of pre-existing political parties which came together in 2015 to defeat Goodluck Jonathan and the People’s Democratic Party (PDP), which had been in power continuously since the country returned to democracy in 1999.

The APC has included in its ranks a significant number of powerful defectors from the PDP. Whatever their differences, both parties are fractious, unstable coalitions – and never more so than when elections are coming up.

1.1 The main parties manoeuvre for advantage

Almost as soon as the APC was in office in 2015, factionalism erupted. The man who had stitched the APC together behind Buhari, Bola Tinubu, the former governor of Lagos State, found himself relatively marginalised. In 2017 he announced that he planned to stand for the presidency in 2019. Former Vice-President Atiku Abubakar, who defected from the PDP to the APC during the run-up to 2015, quickly defected back once it became clear that he was unlikely to have a prominent role in the new dispensation.

Internal divisions reached the point where different APC factions held rival party congresses in at least nine of Nigeria’s states in May. 1 The ruling party managed to maintain a façade of unity at the national convention which followed soon after. But it was not to last.

For some time, analysts had been expecting a grouping within the APC which abandoned the PDP before 2015 to return to the ranks of the PDP ahead of next year’s elections. This grouping included former state governors who felt that they did not get the rewards they’d hoped for when they defected.2

1 “Cracks spread in APC alliance”, Africa Confidential, 1 June 2018 2 “Cracks spread in APC alliance”, Africa Confidential, 1 June 2018

6 Nigeria: July 2018 update

These expectations have begun to play out over recent days. On 4 July, a faction calling itself ‘Reformed-APC’ (R-APC) announced that it no longer supported President Buhari. The APC has downplayed the move, arguing that the defectors, led by a former Buhari ally, Buba Galadima, are a small and unimportant clique. However, experts suspect that powerful interests lie behind the new faction and that there could be more high-profile defections to come.

Meanwhile, the PDP has been talking with over 30 of the country’s 68 registered parties about forming an electoral alliance. These efforts had the backing of ex-president Olusegun Obasanjo (1999-2007), who fell out with the PDP after he left office. But he is strongly opposed to any idea of Abubakar, his former deputy, being the PDP’s presidential candidate in 2019.3

On 9 July, the PDP’s efforts bore fruit. It, the R-APC and 37 other parties agreed an electoral alliance, under which they will field a joint presidential candidate next year. Various names are being discussed, Abubakar among them, despite Obasanjo’s opposition. Also mentioned are Senate President, Bukola Saraki, against whom corruption charges have recently been dismissed by the Supreme Court (see below), Sokoto State governor Aminu Tambuwal and Senator Rabiu Kwankwaso. Saraki defected to the APC from the PDP before the 2015 elections but, having fallen out with Buhari long ago, many believe he will return to the PDP fold.

1.2 Buhari and the APC are on the back foot – but all is still to play for

The APC’s split means Buhari could have his work cut-out to win the 2019 elections. Looking back to the impact of the PDP’s split ahead of the 2015 elections, Africa Confidential has said: “History could well repeat itself.” 4

However, it is too early to write Buhari and the APC off. There are signs that Tinubu and Buhari are edging back towards each other again. Tinubu is working to hold as much of the APC together as possible. Their renewed convergence could help Buhari hold onto at least some support in the populous south-west next year, although the region was hit hard by recession during 2016 and many big business interests there strongly opposed Buhari’s response to the country’s sharp economic downturn in that year (see section 3).5

Despite talk of a new ‘third force’ emerging in Nigerian politics, for now the 2019 elections look like a straightforward fight between the APC and the PDP, with both having allies from other political parties behind them. Although it faces growing criticism of its record in office, the APC believes that it has a plausible story to tell about how it has begun to

3 “Friends with benefits”, Africa Confidential, 18 May 2018 4 “Return of the Jagaban”, Africa Confidential, 6 April 2018; “Cracks spread in APC

alliance”, Africa Confidential, 1 June 2018 5 “Return of the Jagaban”, Africa Confidential, 6 April 2018; “Cracks spread in APC

alliance”, Africa Confidential, 1 June 2018

7 Commons Library Briefing, 10 July 2018

turn the country around. As we have seen, the PDP continues to suffer from internal tensions too. With a year to go until new presidential and parliamentary elections, there is everything still to play for.

8 Nigeria: July 2018 update

2. Security and anti-corruption

2.1 Security There have been some successes on the security front since 2015, but President Buhari and the APC government have found themselves fighting on at least as many fronts as their predecessors.

They have been criticised (as, to be fair, were those predecessors too) for failing to get to grips with the interlocking ‘root causes’ of violence – poverty, inequality, marginalisation and corruption – in Nigeria, whether in the north or elsewhere, and for often appearing to favour military responses over political ones.6

The APC government has acknowledged that a crucial element in tackling the root causes of violence is the promotion of more ‘inclusive’ economic growth. On this count it has not been inactive since 2015. For example, a World Bank-supported welfare programme aimed at the poorest five million Nigerians, involving a monthly transfer of $16 a month into a bank account set up specifically for this purpose, began in 2017.7 The government has also launched other initiatives, such as the ‘N-Power Programme’, which is intended to help combat youth unemployment.

The upcoming elections heighten the risk of politically-motivated violence over the coming year. Nigeria has a long track-record of politicians deploying armed groups as an adjunct to their campaigns.

While it has often worked to enhance democratic accountability, the country’s vibrant social media scene sometimes acts as a powerful conduit for rumour and false news, dangerously raising the political temperature. The PDP has reportedly had dealings with Cambridge Analytica in the past, raising concerns about whether the 2019 elections could be vulnerable to undue manipulation.

Boko Haram Boko Haram has been pushed out of virtually all of the territory which it controlled in northeast Nigeria since President Buhari took office.

Buhari has revamped the military high command and begun a programme of military retraining and expansion. Foreign countries, including the UK, have scaled up their assistance to the Nigerian army.8 Cooperation between Nigeria and regional neighbours Niger, Chad and Cameroon against Boko Haram has improved.

Nonetheless, there was considerable surprise when, in December 2015, Buhari went so far as to announce that Boko Haram had been

6 “Partisan politics runs riot”, Africa Confidential, 6 January 2017 7 “Nigeria casts its first social safety net”, Agence France Presse, 26 January 2017 8 In May 2016, not long after the former Prime Minister David Cameron had described

the country as “fantastically corrupt”, the British government said that it was giving Nigeria £40 million over the next four years to help in the fight against Boko Haram and was planning to train almost 1,000 Nigerian military personnel for deployment in counter-insurgency operations. For information about UK aid to Nigeria, see the government’s ‘Development Tracker’ website.

9 Commons Library Briefing, 10 July 2018

“technically defeated”. While it was certainly “on the back foot”, Buhari’s claim was widely viewed at the time as an over-statement. This is an assessment that has been borne out by developments over the last three years. Critics complain that Buhari remains over-optimistic. A few days ago he described northeast Nigeria as “post-conflict”.

There are now two main factions (with different leaders) within the group – one of which is affiliated with Islamic State/Daesh, the other with Al-Qaida.

Today, Boko Haram’s attacks, while still causing significant numbers of casualties, tend to use guerrilla tactics rather than the ‘semi-conventional’ ones witnessed during 2012-14. The main method of operation has become suicide bombing attacks, sometimes using children and often against civilian targets such as markets.9 Boko Haram fighters continue to carry out attacks in Chad and Cameroon too.

During 2016 22 of the Chibok schoolgirls were freed by Boko Haram. In 2017, another 82 were released, raising hopes that the remaining girls might soon be free too. But this has not yet happened. 112 of the girls are still missing. Some of the missing girls are reported to have died – but nobody knows for sure.

The releases of some of the Chibok girls have been universally welcomed across Nigeria. But criticisms of the Nigerian government’s efforts continue; many hundreds of girls are believed still to be in the hands of Boko Haram and kidnappings continue.10

Other flashpoints As at March 2018 the Nigerian army was reportedly active in 30 of Nigeria’s 36 states.11

In the ‘Middle Belt’, inter-communal violence, which has been a permanent fixture of Nigerian life for many years, has again been escalating alarmingly. More than 1000 people have reportedly been killed since the start of the year. At present more people are dying in the Middle Belt than in the northeast.

Most of this violence derives from competition between mainly Muslim pastoralists and largely Christian farmers over land and natural

9 “Two bomb attacks hit Nigeria as officials blame Boko Haram”, Press TV, 31 January

2017 10 “Who goes first?”, Africa Confidential, 8 March 2018 11 “Who goes first?”, Africa Confidential, 8 March 2018

10 Nigeria: July 2018 update

resources. Some of this violence has been described as ‘banditry’ by experts. There are concerns that inter-communal violence is beginning to spread both southwards and northwards.12

Worst-affected have been Benue, Taraba, Kogi, Nasarawa, Kaduna and Niger States. Last week, over 200 people died in clashes in Plateau State (the police put the figure at 86). President Buhari accused politicians of stirring up tensions in the state. 17 people have been arrested regarding the clashes. Police and army reinforcements have been sent there and a curfew imposed.

Some Christian leaders have gone so far as to accuse President Buhari of being complicit in the violence and of sympathising with the mainly Muslim pastoralist groups that have been involved. He has angrily denied such accusations.

In the Southeast, following Buhari’s election victory in 2015 there was a revival of Igbo agitation for a separate Biafran state. Heavy state repression and internal divisions amongst activists led to a reduction in levels of unrest during the last year. The whereabouts of one of the agitation’s most prominent leaders, Nnamdi Kanu, is currently unknown. His family allege that he has been killed by the Nigerian army. The Nigerian authorities have said that this claim is false.

The authorities continue to face challenges in maintaining peace and security in the oil-rich Niger Delta, where attacks on oil pipelines by a new generation of militants have been largely in abeyance since 2016. In this context, the authorities have been willing to try negotiations, working with local leaders, and putting forward plans to develop the region.

A presidential amnesty programme, under which ex-militants are paid money in returning for demobilising, remains in effect, but there have been complaints that leaders have benefitted much more than the rank-and-file and that funds have been misappropriated. There is perpetual anxiety that violence could flare up again at any time.13 Oil theft is again reportedly on the rise. There has also been an influx of refugees from English-speaking Cameroon into the region, some of whom may be affiliated with groups that are fighting for independence back home.

There have been criticisms of the performance of the federal authorities in response to the humanitarian crisis in northeast Nigeria, which remains one of the most serious in the world. 1.7 million have been displaced by the violence and conditions in the camps have been strongly condemned by human rights groups.

In mid-January 2016, the Nigerian Air Force bombed an IDP camp in Borno State, reportedly killing at least 50 people (some sources say over 200 people were killed), after mistaking it for a Boko Haram base. The authorities admitted the error, offering financial support to the victims.

In 2017 the Nigerian government was given a large World Bank loan to help rebuild the Northeast of the country. But there continue to be 12 “Who goes first?”, Africa Confidential, 8 March 2018 13 “Militants pick their party”, Africa Confidential, 15 June 2018

11 Commons Library Briefing, 10 July 2018

criticisms that the federal authorities are devoting too few resources of their own to rebuilding the northeast of the country.14

The Nigerian security forces continue to commit human rights abuses with impunity when carrying out their operations. For example, in December 2015 the Nigerian security forces clashed in Zaria with supporters of the Islamic Movement of Nigeria (IMN), a Shi’a group with close links to Iran, resulting in around 300 deaths according to Human Rights Watch, which called the killings “unjustified”. Little has happened in recent years to reduce tensions on this front. The IMN’s leader, Ibrahim el-Zakzaky, has been in detention since then. He (along with his wife) was charged with murder in April 2018.

2.2 Anti-corruption efforts Action has been taken against former office-holders during the presidency of President Buhari’s predecessor, Goodluck Jonathan. For example, his National Security Advisor Sambo Dasuki is on trial regarding an arms deal. He remains in detention despite several court orders granting him bail.

Jonathan’s former Petroleum Minister, Diezani Allison-Madueke, is also under investigation and has had assets confiscated (she is living in London, where the UK police are also carrying out investigations).

There have also been efforts to weed ghost workers from the public sector, with at least 80,000 removed from the payrolls in 2016.15

However, critics claim that there have also been blots on the government’s copybook on the anti-corruption front. They argue that some the steps taken on anti-corruption have been politically-motivated, rather than ‘without fear or favour’. This was the view of Senate President Bukola Saraki, who for three years faced charges of corruption, including failing to declare his assets, until the Supreme Court dismissed them last week.

The day before the charges against Saraki were dismissed, President Buhari signed Executive Order 6, aimed at preventing the dispersal of ‘suspicious assets’ that are the subject of a criminal or judicial investigation. While the Order was officially portrayed as reinforcing ongoing anti-corruption efforts, critics described it as illegal and unconstitutional – a revival of executive abuses during previous periods of military rule in the country.

As is often the case in Nigeria, all the investigations have proceeded at a snail’s pace.

There have been accusations that an arms deal with the US to purchase 12 A-9 Super Tucano aircraft for $500 million has been badly mismanaged by the current government. For a while, there was talk of an impeachment motion against President Buhari in parliament over the deal.16

14 “FG to spend N121bn on North-East”, Sunday Trust, 29 January 2017 15 “Anti-graft crackdown creates Abuja gridlock”, Financial Times, 28 November 2016 16 “An election on autopilot”, Africa Confidential, 4 May 2018

12 Nigeria: July 2018 update

In 2017, Transparency International rated Nigeria 148th in its annual ‘Corruption Perceptions Index’, down from 136th in 2016.

Meanwhile, oil companies Eni and Shell are facing trial in Italy over allegations that they made illegal payments to Nigerian government officials in 2011 to secure a potentially valuable offshore exploration and production block.

13 Commons Library Briefing, 10 July 2018

3. Economy Nigeria returned to growth in 2017, following a 2016 recession driven by previous steep falls in international oil prices. A recovery in oil prices and production were the main factors in the return to (modest) growth. The economy is forecast to grow by around 2% in 2018. The government’s structural reform agenda appears to have led to some improvements in business conditions, but the economy’s long-term challenges – corruption, oil dependence, poor infrastructure, rapid population growth to name a few – remain sizeable.

3.1 2016 recession As a large producer and exporter of oil, Nigeria’s economy in recent years has been badly hit by the sharp fall in the price of oil that began in 2014. From over $100 per barrel in mid-2014 prices fell to $50 by the end of the year, with further declines in 2015. This led to government revenues falling, resulting in cuts to government expenditure, while the value of exports fell significantly given that oil and gas make up around 90% of Nigeria’s exports.17

One consequence was a shortage of foreign currency (dollars in particular) which caused serious problems given Nigeria’s dependency on imports (including petrol and food). Another was that the government was forced to abandon its currency peg which fixed the local currency, the naira, to the dollar. The naira fell in value, making imports more expensive and pushing up inflation (peaking at 18.7% in January 2017).18

These factors led to the economy falling into recession in 2016: GDP for the year declined by 1.6%, its first annual decline since 1991.19

17 IMF, Nigeria: 2018 Article IV Consultation staff report, March 2018, table 2 and

National Bureau of Statistics, “Foreign Trade in Goods Statistics Q1 2018” 18 National Bureau of Statistics, “CPI and Inflation Report May 2018”, June 2018 19 National Bureau of Statistics, “Nigerian Gross Domestic Product Report (Q1 2018 )”,

May 2018

0

20

40

60

80

100

120

2014 2015 2016 2017 2018

Oil price (Brent crude) US$ per barrel, daily data (up to 6 July 2018)

Source: FT

14 Nigeria: July 2018 update

3.2 Recovery in 2017 and 2018 In 2017, Nigeria’s economy exited recession supported by higher oil prices and agricultural production. GDP growth was 0.8% over the year.20

The rebound in oil prices was a key factor in the economic recovery: from a low of around $35 per barrel at the begging of 2016, prices doubled by the end of 2017 and as of early July 2018 are around $75. This was supported by an increase in oil production in 2017, helped by an improved security situation in the key production region of the Niger delta.21 Overall there was growth of 4.7% in the oil sector in 2017.22

Meanwhile, the non-oil sector grew by only 0.5% in 2017. The agricultural sector – which makes up around 20% of GDP – saw growth of 3.5%, while the services sector – accounting for just over half of GDP – performed poorly as output declined by 0.9%.23

GDP growth in the last quarter of 2017 and first quarter of 2018 has been around 2% compared with a year before.24 IMF forecasts for 2018 as a whole, and for future years, are also for growth of around 2%.25 It’s worth noting that as population growth is projected to exceed this rate of economic growth, the IMF forecasts GDP per capita levels to decline.26

The IMF in a March 2018 assessment of the Nigerian economy noted that government actions in the foreign exchange markets had improved the ability for firms to access foreign currency. This included the introduction of a new “investor and exporter foreign exchange

20 Ibid. 21 National Bureau of Statistics, “Nigerian Gross Domestic Product Report (Q1 2018 )”,

May 2018, and 2018 African Economic Outlook: Nigeria, January 2018 22 National Bureau of Statistics, “Nigerian Gross Domestic Product Report (Q1 2018 )”,

May 2018, Appendix table 9 23 Ibid. 24 Ibid. 25 IMF, World Economic Outlook database, April 2018 26 “Nigeria’s GDP per head to fall for 8 straight years, says IMF”, Financial Times,

24 May 2018

-2

0

2

4

6

8

10

12

2005 2007 2009 2011 2013 2015 2017 2019

GDP growth%, annual data

Source: IMF World Economic Outlook April 2018 database

IMF Apr'18forecasts

15 Commons Library Briefing, 10 July 2018

window” (IEFX) which narrowed the gap between the official exchange rate and the higher parallel market rate.27

Interest rates have been kept relatively high at 14% since July 2016, in order to try and contain inflation. Inflation rates have come down from over 18% in early 2017 to 11.6% in May 2018, the lowest they have been since early 2016.28

Despite the improved economic performance, the government’s budget deficit widened in 2017 as spending increased. The IMF estimates a budget deficit of 5.8% of GDP in 2017, compared with 3.9% in 2016.29 Due to an improvement in international investor sentiment the government has issued bonds aimed at foreign investors, lowering the proportion of debt held domestically.30

After a protracted period of toing and froing since it was originally introduced in November 2017, the 2018 Budget was signed into law by President Buhari in June 2018.31 Parliament had increased the government spending plans that were in the original draft budget introduced by the President.

3.3 Structural reforms and long-term challenges

The government has pursued a structural reform agenda via its Economic Recovery and Growth Plan 2017-2020 in an attempt to improve the country’s business climate and governance. The IMF has highlighted what it considers some early successes from the plan including the changes to the foreign exchange policy mentioned above, improved tax administration, and a reduction in red tape for importing and exporting.32 As a result, Nigeria rose in the annual Doing Business rankings compiled by the World Bank, up from 169th to 145th.

One key priority of the Economic Recovery and Growth Plan is to diversify the economy away from the oil and gas sector, including increasing the share of non-oil revenue the government receives. Nigeria’s tax base is extremely narrow, with government revenues equivalent to only 6% of GDP in 2017, one of the lowest rates in the world.

Other long-term challenges facing Nigeria’s economy remain sizeable. Despite some efforts by the Buhari administration to clamp down on corruption, it remains a big problem. In addition, despite recent improvements, broader conditions for conducting business remain poor. The poor quality of infrastructure (including access to electricity), low education levels, security worries, and high poverty levels are additional barriers to faster growth in the long-term. There is also a large 27 IMF, World Economic Outlook database, April 2018 28 National Bureau of Statistics, “CPI and Inflation Report May 2018”, June 2018 29 IMF, World Economic Outlook database, April 2018 30 IMF, Nigeria: 2018 Article IV Consultation staff report, March 2018, p6 and p26 31 “Nigeria's Buhari to sign 2018 budget on Wednesday: presidency spokesman”,

Reuters, 19 June 2018 and “2018 budget: Buhari govt gives breakdown of allocations”, Daily Post, 21 June 2018

32 IMF, Nigeria: 2018 Article IV Consultation staff report, March 2018, pages 1,4,24-6

16 Nigeria: July 2018 update

demographic challenge to face, with over half the population aged under 20.33 Further information on these issues are contained in the 2015 Library briefing paper Nigeria 2015: analysis of election issues and future prospects.34

3.4 UK-Nigeria trade In 2016, the value of UK exports of goods and services to Nigeria was £2.1 billion, somewhat lower than in previous years.35 One possible factor for the decline was the recession in Nigeria which reduced Nigerian’s demand for foreign goods. There is no dominant product that the UK exports to Nigeria; exports range from machinery and transportation vehicles, chemicals, manufactured goods, and petroleum products.36

UK imports from Nigeria were worth £1.2 billion in 2016, the lowest they have been since 2009. The vast majority of imports are petroleum products, so trends in the value of Nigerian imports to the UK tends to move with the price of oil.

While the UK remains in the EU, trade policy is a competency of the EU. Many of Nigeria’s exports to the EU are subject to reduced tariffs under the EU’s Generalised System of Preferences (GSP) scheme for developing countries – Nigeria is subject to the general scheme, which reduces EU import duties for about 66% of all product tariff lines.37

Nigeria was due to be a part of the EU-West Africa Economic Partnership Agreement,38 which has been agreed by negotiators but is on hold waiting for signatures from a couple of countries – including Nigeria – ahead of ratification.39

33 IMF, Nigeria: Out of Recession and Looking Beyond Oil, 15 March 2018 34 Commons Library, Nigeria 2015: analysis of election issues and future prospects, Jan

2015 35 Trade data in this section comes from ONS, Additional country data for trade in

goods and services between 1999 and 2016, 8 November 2017 36 Department for International Trade, Guidance: Overseas Business Risk - Nigeria , 29

January 2018 37 European Commission, Trade helpdesk – Standard GDP [accessed 10 July 2018] 38 European Commission, Trade policy – West Africa 39 See the European Parliament’s page on the agreement for further details

0

1

2

3

4

5

2000 2002 2004 2006 2008 2010 2012 2014 2016

UK trade with Nigeria, 2000-2016£ billion, annual data, goods and services

Source: ONS, Pink Book, Additional country data

UK exportsto Nigeria

UK importsfrom Nigeria

17 Commons Library Briefing, 10 July 2018

The Department for International Trade has sought to expand trade links with Commonwealth countries post-Brexit.40 The Secretary of State for International Trade, Liam Fox, has also talked of expanding trade links with Africa.41

In a move to foster additional trade, UK Export Finance added the Nigerian currency, the naira, to its list of “pre-approved currencies” in February 2018.42 This means that Nigerian businesses can get take out a loan in Nigeria in naira to buy British goods (so long as UK content of those products is at least 20%) and the loan can be guaranteed by the British Government.43

40 “Trade opportunities for Commonwealth post-Brexit”, The Commonwealth

Secretariat, 10 January 2017 41 See for example, Liam Fox speech, Britain’s Trading Future, 27 February 2018 42 “Britain to add Nigeria's naira to list of accepted trade currencies”, Reuters,

9 February 2018 43 Speech by Paul Arkwright, British High Commissioner to Nigeria, UK and Nigeria will

continue to be long-term partners: speech by Paul Arkwright , 19 April 2018 and “A post-Brexit pivot to Africa? UK moves to increase trade with Nigeria”, CNN, 16 February 2016

BRIEFING PAPER Number 7897 10 July 2018

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