The makeover may give the country financial bragging rights, but will change little for the millions trapped in poverty.
From around July or August this year, Nigeria will change the base year for its GDP calculation to 2009, from its current 1990, the source said yesterday, applying the new base from Q2 onwards.
Analysts said a recalculation along those lines would bring Nigeria's economy up from a current IMF estimate of $270 billion for 2012 to about $375 billion — just behind South Africa's, expected to be around $390 billion by the end of 2012.
The source said the calculations had "taken into consideration fluctuations, availability and consistency in the data in choosing the new base year, which will be 2009," and that it will be applied from the second quarter of 2012.
Most governments overhaul gross domestic product calculations every few years to reflect changes in output and consumption, such as mobile phones and the Internet. Since Nigeria has not done so since 1990, analysts had expected a large jump. Nobody had put a number on it until now.
Nigeria's markets were largely unmoved on Wednesday, with the stock exchange index trading marginally up 0.34 per cent. The move was flagged late last year.
With growth 7 per cent a year, compared with 3 per cent in South Africa, Nigeria looks set to overtake its rival to seize the top spot, an event that would most likely boost interest in local consumer goods companies seeking to unlock the potential of Africa's most populous country and its 160 million consumers.
"Perhaps the upside for Nigeria is that it will become too important to ignore as a frontier market and investment destination," said Standard Bank's Samir Gadio, but he added that the change was largely "a symbolic turnaround" that will have little impact on Nigeria's actual diplomatic clout. Nigeria's GDP may be roaring ahead, but a glance look at its huge and fast growing population and poor record on governance makes them look less impressive, analysts said.
Poverty in Africa's top oil producer is rising. A decade of breakneck economic growth has failed to lift 100 million people living on less than $1 a day out of dire poverty.
The percentage of Nigerians living in absolute poverty — those who can afford only the bare essentials of food, shelter and clothing — has risen to around 60 per cent, thanks largely to kleptocratic governance hampering basic services.
"Nigeria remains significantly underdeveloped in terms of basic infrastructure (electricity, roads etc) and faces high income inequality. Output per capita in Nigeria will continue to trail that of South Africa over the next decades," said Gadio.
Washington, DC — Opening statement of U.S. Senator Chris Coons, as prepared for delivery on March 29, 2012:
I am pleased to chair this hearing of the African Affairs Subcommittee, which will focus on Nigeria and issues of security, governance, and trade. I would like to welcome our distinguished witnesses - Ambassador Johnnie Carson, Assistant Secretary of State for African Affairs; Sharon Cromer, Senior Deputy Assistant Administrator for Africa at USAID; and Paul Marin, Regional Director for Sub-Saharan Africa at the U.S. Trade and Development Agency - and thank them for joining us today. Our witnesses have extensive experience and expertise in a range of issues relevant to Nigeria, and I look forward to their testimony.
I am especially pleased to be joined by my good friend and Ranking Member, Senator Isakson, with whom I traveled to Nigeria last June. Our trip came on the heels of last year's elections and President Goodluck Jonathan's inauguration. It was a time defined by uncertainty about Nigeria's future and cautious optimism about President Jonathan's leadership. The elections - while far from perfect - marked a dramatic improvement from the violence and lack of transparency that marred past elections. At the same time, there was post-election violence that killed hundreds and demonstrated lingering communal tensions that continues to this day. During our visit, we were particularly impressed with the Commissioner of the Independent National Electoral Commission, Professor Attahiru Jega, for his leadership and commitment to electoral reform, which allowed Nigeria to hold the most transparent elections in its history.
One year later, Nigeria today faces serious challenges, including an increasingly sophisticated and deadly wave of extremism, pervasive corruption, and growing levels of income inequality and poverty. With more than 155 million people, Nigeria is Africa's most populous nation and its second-largest economy after South Africa. As Africa's largest producer of oil and one of the top five suppliers of oil to the United States, Nigeria plays an important role in the global economy. The maps that I will refer to illustrate the underdevelopment of the North and the growing need for President Jonathan to bridge persistent geographic, sectarian, and economic divides between North and South.
The wealth in Nigeria is largely concentrated in the South, as demonstrated by the first map, which also indicates the southern concentration of oil resources. Nigeria's economy continues to rely disproportionately on oil, which accounts for 80 percent of government revenues and 95 percent of export earnings. Poverty levels are rising, with more than 60 percent of the population living on less than a dollar a day, and indicators such as income distribution, health, and literacy indicate a sharp North-South divide.
The second map demonstrates the clear distinction between northern states, where less than 10% of children are typically vaccinated and southern states, where the percentage is significantly higher, often 30% or more. And this map demonstrates a clear distinction between North and South when it comes to female literacy rates, which is less than 20% in a majority of northern states and more than 50% in a majority of southern states.
Nigeria also faces nationwide problems including corruption, instability, and economic mismanagement which have hampered economic opportunity. With its growing population and significant resources, Nigeria holds enormous economic potential and I believe the U.S. can play a critical role in helping to diversify the Nigerian economy beyond oil and gas, expand its power system infrastructure, address widespread transparency problems, and strengthen rule of law.
In this regard, I was pleased that the State Department recently led a trade mission to Abuja and Lagos focused on expanding U.S. investment in Nigeria's energy sector. I look forward to hearing from our witnesses about prospects for deepening U.S. economic engagement in Nigeria and partnering with the public and private sectors to address problems with the electric grid, which remains one of the biggest obstacles to Nigeria's economic expansion.
Nigeria's growing population represents an important market for U.S. goods, but rising security concerns have hampered investment. In the past two years, Boko Haram, a violent northern-based Islamic extremist group, has launched increasingly sophisticated attacks on civilians, government and police installations, and the United Nations headquarters building in Abuja. In fact, only six months after Senator Isakson and I met with the Archbishop and Imam of Abuja, Boko Haram launched attacks on Catholic churches in and around Abuja, killing dozens of people after the celebration of Christmas mass.
This last graph demonstrates the sharp rise in the number of attacks perpetrated by Boko Haram in the past year. As you can see, between 2003 and 2009, the number of attacks was minimal, averaging one or two annually. In 2010, however, the number of attacks rose to 30. Alarmingly, the number increased more than five-fold in the past year, with more than 150 attacks in 2011 alone, and this does not include the multiple coordinated bombings that led to hundreds of deaths in Kano in January of this year.
The Nigerian security services and police have faced significant challenges addressing the growing threat posed by Boko Haram, elements of which may be affiliated with Al Qaeda in the Islamic Maghreb (AQIM) and other transnational terrorist organizations. The bulk of its followers, however, appear to be focused on domestic issues, primarily the lack of jobs and growing economic inequities that have disproportionately impacted northern states.
The essential component to addressing economic and security challenges is governance, and we have seen clear examples of the importance of democracy and good governance in West Africa just in the past week with developments in Mali and Senegal. It is clear that Nigeria plays a critical role in the region, and there is more that could be done by President Jonathan to encourage meaningful reform to root out endemic corruption and strengthen transparency.
We are pleased to have with us three Administration witnesses who will consider these issues and assess the difficult questions surrounding governance, economics, and security in Nigeria and how they are interrelated. We look forward to hearing from each of you, but first, let me turn to Senator Isakson for his opening remarks.
History was made when the highly indebted Greece received 53.5 percent write down restructuring on her initial debt deal from its sovereign bondholders. The struggling southern European nation "Greece implemented the biggest debt write-down in history ... swapping the bulk of its privately-held bonds with new ones worth less than half their original value. Although the exchange will keep Greece solvent and at the receiving end of billions in international rescue loans, markets were underwhelmed amid fears that the country's debt load still remains far too heavy,” Associated Press reported.
To enforce the debt swap the application of collective action clauses was utilized to approach the rate of 95.7 percent as was confirmed by Greece finance department. The Greece bond holders will be losing 53.5 percent of the face value of the original bonds. As this deal went through it will lower Greece debt by $190 billion and prepare the country for the second round European bail-out.
Bloomberg stated that "Holders of at least 60 percent of the Greek bonds eligible for the deal, including Greece’s largest banks, most of the country’s pension funds and more than 30 European banks and insurers including BNP Paribas SA and Commerzbank AG (CBK), have agreed to the offer. That brings the total to at least 125 billion euros ($166 billion), based on data compiled by Bloomberg from company reports and government statements."
Associated Press further reported that the scope and dimension of the deal was made known by statement issued by Greece Finance Ministry that the “bonds issued under Greek law with a total face value of €177.2 billion ($232.5 billion) were exchanged. A smaller batch worth €28.5 billion, issued under foreign law or by state enterprises, will be swapped in coming weeks."
Nigeria during her exit from 2006 Paris Club of Creditors was granted a merely 18 percent write down for her $36 billion she owned to mostly European creditors. At the end of the deal Nigeria paid almost $(15-20) billion to pay off the debt. The international media made sure that every person and hamlet heard about the 'wonderful and generous’ news on how Nigeria has been offered a great helping hand from the Paris club of Creditors. The only one thing that was missing on the news report was the original principal amount Nigeria owned and the subsequent higher interest rates and arrears that made it possible to transfer such an enormous wealth to the foreign syndicates.
Greece is not by any means a third world nation, it has modern infrastructures and her people are relatively secured. Greece has 24 hours electricity, clean and treated drinking water gushing out from the water pumps, paved roads together with well paid, trained and equipped police force that maintained peace and order. Greece has political stability and security that made it possible to attract investors. All things being equal, why was Greece given this enormous write down and Nigeria a relatively poor and third world country was not given a quantifiable break that will make a difference in the lives of average Nigerians?
At the time Nigeria was convinced to transfer almost $20 billion to first world and developed nations mostly in the continental Europe, seventy percent of Nigerians were living in penury poverty and depravity surviving with less than $1 per day. The ugly head of AIDS/HIV virus was enveloping the nation and the healthcare facility was in dire straits. Nigeria's high infant mortality rate was among the highest in the world averaging 200-300 per 1000 live births. Nigerian educational system was in shambles and teachers' salaries in most cases were insufficient and were rarely paid on time. There was and still poor security, the protection of lives and property were minimal. Yet with all these wellbeing abysmal indices Nigeria received only 18 percent write-down even with the ever and continuous servicing of the debt from time immemorial.
Many of these nations in southern hemisphere especially in Africa have to qualify as a Heavily Poor indebted countries (HPIC) before they can receive debt relief and write down. Many African nations that were struggling to pay their debts were saddle with austerity measures before they qualifying for HPIC and these stringent conditions and criteria are back breaking. The prescriptions have become more deadly than the disease - those conditional ties leave them poorer with infant industries porous to protection, less productive, weaken currencies and in financial shambles. But Greece has not even implement its own austerity measures before she received 53.5 percent write down on its first debt deal.
To further compensate Greece for mustering the courage to make debt deal, IMF just approved euro28 billion ($36.56 billion) for Greece. The European Investment Bank (EIB) will soon be putting a finishing touch to disburse $1.31 billion to Greece.
The goodies are still flowing into Greece, Reuters reported, “Greece averted the immediate threat of an uncontrolled default on Friday, winning strong acceptance from its private creditors for a bond swap deal which will eat into its mountainous public debt and clear the way for a new bailout” and now "With euro zone ministers set to approve the 130 billion euro ($172 billion) rescue."
International Monetary Fund (IMF) was quite impressed with the just concluded deal made by Greece that was why it approved euro28 billion ($36.56 billion) in the absence of austerity measures that suppose to come when Greece will make its second debt deal. IMF is now logical even patient and benevolent to Greece. But IMF did not have any qualms counseling Nigeria to remove fuel subsidy for a nation that barely provide any social program to its masses. IMF did not see anything wrong for a poor country with over 170 million population to make a payment that was too perplexing for a nation struggling on how to feed its bulging poor population.
There was a back drop that probably made it possible for Greece to successfully complete the debt deal. Last December the energetic and trail blazer Mario Draghi, the head of Europen Central Bank (ECB) lower the interest rate to 1 percent and pumped in 500 billion euros into the euro zone monetary base. With the interest rate of 1 percent, Europen Central Bank (ECB) has just started to play a vital role in eurozone's monetary policy and this is a gutsy role for once a low key and timid ECB. With problem of liquidity solved, the solvent banks and private financial institutions were ebullient and energetic to participate in adjusting the economic wellbeing of eurozone.
This is how Reuters put it: "Mario Draghi, 64, has taken the helm of the euro zone's most important institution in the midst of Europe's deepest financial crisis since World War Two. He faces a seemingly impossible mission: satisfying German demands to focus on the ECB's main mandate of ensuring price stability, while at the same time dealing with market and political pressure from other countries to steer Europe out of a debt crisis that has engulfed Greece, Portugal, Ireland, Spain and even his native Italy. The back-to-back rate cuts took the euro zone's interest rate to a record low of 1.0 percent. But they also sent a clear message that Draghi's ECB would be decisive, pragmatic and prepared to ignore its powerful German contingent."
The point must be succinctly made that no one is suggesting that Nigeria and African nations should not deleverage their debts and fulfill their financial obligations. Greece has shown that the private sector and international financial institutions could be logical when they deem it necessary. Africa also deserves same treatment.
Nigeria ranks among the top countries with high number of malnourished children in Africa, surpassing Ethiopia, Managing Director of the United States Agency for International Development, Tim Prewitt, has said.
He said this yesterday in Abuja at a forum of USAID/Maximizing Revenue and Key Enterprises in Targeted Sites (MARKETS) family nutritional support programme which started in 2008.
The MARKETS was to address food insecurity and malnutrition in orphans and vulnerable children households through direct distribution of food supplements and enterprise nutrition and homestead skills for care givers.
Prewitt said more than one billion people, nearly one-sixth of the World's population, suffer from chronic hunger, with 3.5 million children dying every year. He said the number of stunted children in the world will be 450 million in the next 15 years.
Speaking, the Programme Manager of the project, Bassey Archibong said that malnutrition in Nigeria is a growing problem which is strongly linked to social and economic issues.
Archibong said: "Nigeria has more malnourished children than Ethiopia. States in northern Nigeria have the highest numbers of malnourished children in the country. Also, orphans and vulnerable children whose families have been infected or affected by HIV/AIDS are particularly vulnerable to food insecurity and malnutrition.
Waraka, 30, feeds her newborn baby, Rokia, at home, in Northern Nigeria. At the time of giving birth she was malnourished and couldn't produce enough breast milk to feed Rokia and her twin properly. The babies started to show signs of malnutrition. Rokia's twin died from malnutrition only 13 days after being born. Nigeria has one of the highest numbers of hungry children in all of Africa. (Telegraph UK) Picture: PEP BONET / NOOR
"Nearly 1.2 million children in Nigeria are orphaned as a result of AIDS, and more others are vulnerable because their families are affected by HIV/AIDS."
He said that over 70,000 malnourished orphans and vulnerable children have been reached.
He said that care givers from orphans and malnourished children households who participated in the training, gained practical cross cutting skills in micro enterprise nutrition and homestead farming.
"As a result, participants now understand the relationship between income and nutrition, which is critical to ending the cycle of poverty and malnutrition. Sixty percent of participants reported savings for the first time while 77 percent of care givers now have homestead farms up by 24 percent from what it was before training," he said.
Source: DAILY TRUST
The project, which is contained in Vision 20:2020 economic plan, they argued might not be achieved because the measures needed to address the forces hindering the growth of the business sector were still lacking.
In separate interview with The Guardian on the vision, the industry players listed the threats to the initiative as high cost of funds and dearth of long-term funds; influx of finished goods from abroad, particularly Asia; weak linkages between small and large enterprises; weak research and development support and dearth of strategic industries such as the steel and the petrochemicals.
Others, according to them, are unstable power supply, poor road network, absence of a master-plan for railway development, rising cost of automotive oil and gas, as well as uncoordinated tax administration.
The operators said Nigerian manufacturers, small-scale businesses and families spend over N3.504.800 trillion yearly on diesel and petrol generating sets yearly due to unstable supply of electricity, which has remained unaddressed by past and even the present government.
The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, stressed the need for the government to address the gap in infrastructural development, using the country’s untapped human and natural resources.
Other industry leaders argued that for the Vision 20:2020 to be attainable, the manufacturing sector must contribute not less than 25 per cent yearly for a set period against the three per cent, which the sector now contribute to the Gross Domestic Product (GDP).
Yusuf urged the government to declare a state of emergency in the power sector if it is serious about the 20:2020 dream.
“It is expected that the government will urgently take drastic steps to ensure the efficient performance of the power sector, as most manufacturing firms have relocated to other West African nations because of the power sector crisis.
“The government should focus on power and energy, agriculture and food security, wealth and job creation, mass transportation, land reforms, security, qualitative and functional education and of course, the Niger Delta would turn around the nation’s economy and make possible the realisation of the Vision 20:2020 dream.
“With 20:2020 being only eight years away, this is definitely a tall order, especially in the light of where we are at the moment. But a great deal of impact could be made if there is the political will and sincere commitment to make things happen.”
Also, the President, Nigeria Union of Traders, Ken Ukaoha, said the industrial sector had been abandoned by successive governments and the inability of the private sector to brace up to the challenges of globalisation and competitiveness.
The sector, according to him, has therefore remained prostrate and add less value to the economy for over three decades.
Ukaoha said: “Indeed, the industrial sector has been dominated by exploitation of natural resources, specifically crude and natural gas. Unfortunately, while the exploration ought to have actuated maximisation of benefits in the nation’s hydrocarbon resources (petro-chemicals), what we rather have is an industrial sector that generates its own power, and depends on long queues for imported and exorbitant fuel.
“We urge a shift from the “siddon look” attitude of political appointees to a purely technical and project-driven governance where performance is evaluated on the basis of measurable outputs and actual impacts. This is the only way Nigeria can grow and remain in line with the nation’s strategic development plan represented by Vision 20:2020 framework,” he said.
Source: The Guardian Newspaper
The groups responded to comments credited to the Coalition of Northern Leaders led by Dr. Junaid Mohammed, that the presidency was using the Justice Alfa Belgore Committee on Constitution Review to pursue tenure elongation.
The Ijaw National Congress, the umbrella body of the Ijaw nation, said although Jonathan had not declared his intention to remain in office beyond 2015, the constitution had given him the right to pursue a second term agenda.
The Chairman of the group, Chief Joshua Benamaisia, further asked the northern elite to stop the ongoing violence by the Boko Haram.
He noted that if the group continued to destabilise the first term of Jonathan’s office, he would seek a second tenure to enable him to realise his transformation agenda.
Dr. Junaid Mohammed
He said, “Nobody says Jonathan is not entitled to second tenure in office. I have not seen a governor neither have I seen a senator nor a president of Nigeria that has not gone for a second tenure.
“The only person that did not do a second tenure was the late Yar’Adua and that was because he died in office. Apart from that, Shagari did first and second tenure; Obasanjo did two tenures; so I don’t see why this one should be different. If he delivers, I will be the first person to call him to come and do a second tenure.”
Also, the Spokesman of the Ijaw Youth Congress, Mr. Jeremiah Owoupele, said youths of the Niger Delta were behind Jonathan in whatever decision he would take over the second term dispute.
He said, “If the people of Nigeria decide that they don’t want Jonathan, they will vote him out. So the position of the North requires a serious questioning. I am aware that the president has not formally told Nigerians of a second term; so the northerners are being ridiculous. Let us wait till the president says so.”
Similarly, the spokesperson to the Ijaw Republican Assembly, Ankio Briggs, described the position of the northern leaders on reported second term ambition of President Goodluck Jonathan as “self-serving and divisive.”
Briggs, a Niger Delta activist, cautioned the North against inflammatory statements that could destabilise the country.
“If the late President Umaru Yar’Adua had been alive to finish his first tenure, would the North say he should not go for a second tenure? These are the reasons why things have been put in place to make sure that Jonathan does not have the concentration he needs to govern Nigeria.”
On the report issued by IMF after its consultation with Nigeria, in which the country's macroeconomic wellbeing and stability were reviewed, IMF's report was cautiously optimistic emphasizing progress not stability. IMF positively suggested that Nigeria is in a right direction with regards to the county's currency, GDP growth and its on going subsidy reforms.
The IMF recommendations and counsel were not utterly comprehensive, not delving deeply into the structural problem of the Nigerian economy makes it lopsided and insufficient. The report was congratulatory to the policymakers even when it was not necessary. The report should have adapted a laser beam approach to the problems of poverty, unemployment and others that makes the sound macroeconomic stability of the country unattainable.
Standard and poor’s (S&P), the authoritative credit rating agency gave a thumbs up to the county's banking reform that took $21 billion for the bailout and recapitalization. The Sanusi's CBN and Chike Obi's AMCON deserve some credits but with $21 billion sunk into the banking sector there must be a quantifiable progress and much more, in which there must be a sizeable returns, a reasonable dividends to the taxpayers that provided the fund. Another issue that was not delved by S&P was the inflationary trend that was probably triggered by the influx of large sums of money into the banking sector. The inflation can be easily accelerated by quick and cheap money supply at the monetary base. Standard and Poor's (S&P) stressed about safeguarding and protecting banking sector with credible supervision, more to that it is cogent, if not imperative that a stress test should be administered to checkmate breakdown.
Standard and Poor's (S&P) rightly and deservingly point to Nigeria towards a strong and sound banking environment that have checks and balances. Nigerian banks must be grounded on strong rules and regulations to avoid being a weak link and non-performing sector of the economy. Banks that are sound are needed for reliable and productive economies.
IMF report highlighted the troubling inflation rate which stood at 10.3 percent in December 2011 but since then has surged to 12.3 percent at the first quarter of 2012. Without mincing words IMF called on the Sanusi's Central Bank of Nigeria (CBN) to be more creative in its application of its monetary tightening policy to rein in the surging inflationary trends and to desist from jacking up interest rate erratically to combat inflation.
The report “noted the monetary authorities’ commitment to further reduce inflation but considered that a pause in the tightening cycle is at present warranted. More broadly, they agreed that a monetary framework better focused on a clear inflation objective should help anchor inflation expectations and support disinflation. Greater exchange rate flexibility will also facilitate the pursuit of price stability."
Sanusi's CBN has been so much fixated with the jacking up interest rate to combat the troubling inflation, at the expense of other alternatives. But other credible alternative is no easy task which is to convince the presidency to throw in its fiscal policy. To be fair to Sanusi he has been calling on the executive to trim down bloated budget with restrictive fiscal expenditure in order to reduce spending and to regulate the cheap money supply. The presence of Dr. Okonjo-weala as the finance minister has helped to make the case of living within the country's means more successful. Okonjo-Iweala's principle of transparency and probity makes the achievement of sound macroeconomic stability attainable.
The IMF report alluded to the fuel subsidy removal when it mentioned the higher petrol price that triggered higher inflation rate. IMF did shy away from the role it played in the subsidy removal in Nigeria but rather concentrated its report on methodology on combating higher inflation without slowing down the robust and impressive economic growth. The growth of the real GDP was 6.7 percent for both oil and non-oil sectors which was indeed a big one. The report consciously omitted on pointing out the greatest vulnerability of the impressive economic growth which is its inability to produce jobs for the working community. The impressive growth may lose its luster before Nigerian people that do not see the benefit of the surging economic growth.
Poverty an indicator of wellbeing was not sufficiently dealt with in the report, poverty is getting worse in Nigeria, most especially in the north of the country where the increasing instability and social unrest are making life unbearable. The point that must be made is the provision of infrastructure that must be present to achieve a long term macroeconomic stability. With steady electricity, security and highly trained workforce Nigeria can attract investors and improve naira value with accumulation of foreign exchange coming from array of products for export.
The recent appreciation made by naira was conditional as a result of selling of dollars in the forex market provided by CBN and oil companies. But after the appreciation of naira for past three weeks there was a slight decline of naira value due to the drying up of dollar sales by oil companies. The report provided by IMF failed to convey to the policymakers that the long term value of a naira should not be rested solely on the availability of dollars and higher price of oil. But also in the ability for Nigeria to be able to replenish it foreign reserve by multifarious ways other than oil exports. To be able to erect bulwark against currency speculators, the country's war chest which is its foreign reserve should be able to deter the forces of demand through abundant supply of dollar from exports from non-oil sector.
On the banking sector IMF report shared same perspective with S&P: IMF report “commended the authorities for their actions to resolve the recent banking crisis. The modalities of operation of the asset management corporation should continue to make sure that fiscal risks and moral hazard are minimized. Directors supported the central bank’s focus on strengthening supervision and the regulatory framework, including by addressing remaining deficiencies in the Anti-Money Laundering/Combating the Financing of Terrorism regime. They also agreed that a Financial Sector Assessment Program update will help take stock of the progress so far and provide a road map for remaining reforms in the financial sector."
Both IMF and S&P reports convey to Nigerian economic leaders and policy makers that a lax in the banking sector does not bode well for a nation trying to achieve a sound macroeconomic stability. Therefore a well fortified banking system with rules and regulations in place is the antidote to banking failures and vulnerabilities.
The lawyer for a group of Nigerian villagers seeking to sue a multinational corporation for alleged human rights violations received a chilly reception at the US Supreme Court Tuesday.
Paul Hoffman, a California appellate lawyer, endured a relentless barrage of blunt questions from the bench about whether a similar lawsuit could be filed in any other country in the world. "I don't know if this precise case could be brought," Mr. Hoffman finally conceded.
"If there is no other country where this suit could have been brought ... isn't it a legitimate concern that allowing the suit itself contravenes international law," Chief Justice John Roberts asked. The exchange came during an hour-long oral argument in a potential landmark case that could set the contours of corporate liability under an unusual 223-year-old American law.
The so-called Alien Tort Statute allows non-US citizens to file lawsuits in American courts for alleged violations of international law. Rather than filing their case in Nigeria, lawyers for the villagers decided to bring their fight to the US courts under the Alien Tort Statute. There is just one problem. It is not clear that the enigmatic statute permits lawsuits against corporations.
A federal judge in New York allowed a portion of the suit to move forward, but a federal appeals court threw the entire case out. The Supreme Court agreed to take up the appeal.At issue in Kiobel v. Royal Dutch Petroleum (10-1491) is whether international corporations may be held responsible in an American courtroom for allegedly aiding and abetting human rights abuses that take place in a foreign country.
Lawyers for Royal Dutch Petroleum maintain that the statute only permits lawsuits against individuals who personally perpetrate human rights violations, rather than the corporation that employs them. The appeal stems from a 2002 civil lawsuit filed on behalf of 12 residents of the oil-rich Ogoni region of the Niger River delta.
The residents charge that from 1992 to 1995 Royal Dutch Petroleum and its subsidiaries aided and abetted the Nigerian military in conducting a campaign of terror and intimidation through the use of extrajudicial killings, torture, and other tactics to protect the oil company's operations from the grassroots opposition of the Ogoni people. The company has denied involvement in atrocities. Normally, such a suit would be filed in Nigeria, where the events took place, or in the Netherlands or the United Kingdom where the corporate subsidiaries are based.
But lawyers for the villagers decided to base their suit on the Alien Tort Statute which permits non-US citizen "aliens" to sue other foreign residents for egregious violations of international law such as genocide, extra-judicial killing, torture, and slavery. The Alien Tort Statute was adopted by the first Congress in 1789. It was largely ignored for nearly two centuries, but since 1980, lawyers have been trying to establish it as a vehicle to fight human rights abuses around the world.
At first, foreign plaintiffs went after individual foreign torturers and abusive officials. But since the late 1990s, the trend has been to target deep pocket corporations doing business in countries ruled by oppressive governments. According to one analyst, 120 lawsuits have been filed in US courts against 59 corporations for alleged violations in 60 foreign countries.
Although four members of the high court's conservative wing expressed significant skepticism about the tactic of charging corporations under the ATS, not all justices were openly opposed to the concept. Justice Stephen Breyer hypothesized about a group of incorporated criminals operating as Pirates, Inc. Would they be immune from a civil lawsuit under ATS, he wondered.
oil spill in Ogoniland
"Yes, the corporation would not be liable," Appellate lawyer Kathleen Sullivan replied. She said the lawsuit could seek to seize the ship the pirates had used to carry out their illicit piracy, but the ATS would not permit a litigant to seize the corporate assets of Pirates, Inc. Justice Elena Kagan asked what would happen in an ATS lawsuit if the French ambassador to the US was assaulted by a corporate agent. "Would we say that the corporation there cannot be sued under the Alien Tort Statute," she asked.
There is no internationally-accepted norm concerning corporate assaults on ambassadors that would govern the case, Sullivan said. But she added that the ambassador would not be without recourse. He could use the ATS to sue the individual who carried out the assault, she said.
Sullivan said ATS lawsuits must be based on violations of the law of nations. "There is no country in the world that provides a civil cause of action against a corporation under their domestic law for a violation of the law of nations," she said. Sullivan's point is counterintuitive to many Americans who understand that corporations have long been subject to liability under US law. But the ATS operates under international law, not US domestic law, she said.
Violations of international law are crimes that are so egregious and universally condemned that a perpetrator could rightly be classified as an enemy of mankind. The Obama administration is arguing the case on the side of the Nigerian villagers and against the coporations. Deputy Solicitor General Edwin Kneedler told the justices that the ATS should be viewed as a reflection of US domestic law which permits lawsuits against corporations.
Corporations were subject to civil suit in 1789 and they still are under domestic US law, he said. Some analysts have suggested the case represents something of a reprise of the Citizens United case in which the court's conservatives ruled 5-4 that the First Amendment protects a corporation's right to engage in political speech.
But Citizens United was not discussed during the oral argument. During a second hour of argument, the high court heard a similar case, Mohamad v. Palestinian Authority (11-88), examining whether the Torture Victim Protection Act could be enforced against an organization in addition to an individual who allegedly carried out acts of torture or extra-judicial killing of a US citizen.
The issue arises in the case of Azzam Rahim, a US citizen of Palestinian heritage who died while being questioned by security officials on the West Bank. Mr. Rahim, a successful businessman in Dallas, was picked up by Palestinian security officials while on a visit to his boyhood village on the West Bank. Two days later his body was delivered to his family. It was bruised and included cigarette burns and broken bones, suggesting he had been tortured prior to his death.
Rahim's son, Asid Mohamad, filed a lawsuit in federal court in the US against three Palestinian officials, the Palestinian Authority and the Palestine Liberation Organization. He charged that his father had been subjected to torture and extrajudicial killing in violation of the 1993 Torture Victim Protection Act. A federal judge and a federal appeals court panel dismissed all charges against the Palestinian Authority and the PLO. The judge said the TVPA was only enforceable against individuals personally responsible for Mr. Rahim's torture and death. At issue before the Supreme Court is whether the lower courts were correct that only individuals may be sued under the TVRA, or whether organizations may also be held liable.
Decisions in both cases are expected by late June.
Forty-five years after proclaiming the breakaway Republic of Biafra, former rebel-leader Emeka Ojukwu was this week given a state burial by the Nigerian government.
It is unusual that the president of a country attends the funeral of a man who tried to engineer that country's breakup. But Ojukwu is being hailed as a hero today because many in Nigeria simply believe the man had a point. Many Nigerians are unhappy with the way their country has turned out. And some, just like Ojukwu in the 1960s, are now questioning the viability of the state in itself.
In 2005, the CIA published a report warning that Nigeria, the seventh most populous country in the world, could disintegrate within 15 years. At the time, that prediction was dismissed by most Nigerians as baseless alarmism. But recent events have prompted a re-evaluation of that gloomy forecast.
The funeral of Dim Ikemba Ojukwu, attended by Nigeria President Goodluck Jonathan (right). Photograph: Sunday Alamba/AP
The northern-based Boko Haram Islamists are currently wreaking havoc in Nigeria, ramping up their terrorist attacks and demanding that Sharia law be implemented throughout a country where roughly half the population is Christian. Northern Nigeria is predominantly Muslim, while southern Nigeria is largely Christian. Boko Haram have said that those originally from the south who are now living in the north should return to where they came from or face death. In response, some southern leaders have threatened retaliation against the northerners living in their region.
Nigeria is currently experiencing a surge in ethnic animosity fuelled by the sectarian violence, which the central government has been incapable of quelling. President Goodluck Jonathan recently described the present situation as "worse than during the [1967-70] civil war". In January, Nigerian Nobel laureate Wole Soyinka said that Nigeria is "already progressing towards a defacto break up."
Nigeria is the result of a 1914 British colonial decision to lump together more than 250 ethnic groups, differing in culture and social structure. In 1967, the eastern part of the country, dominated by the Igbo ethnic group, announced secession under then Colonel Ojukwu after a pogrom of Igbos living in the north. But the central government eventually battled the breakaway republic into submission at the cost of more than 1 million lives.
That laid to rest any ideas of dividing Nigeria at the time, but today a growing number of voices are saying that a breakup would be the best solution for the people living in its territory. "What's the point of keeping the country together when it is clearly not working? Only the northern elites wants one Nigeria, and that's because their region lacks natural resources while there is plenty of oil in the south," a friend of mine from the south told me recently.
"If Yugoslavia and Sudan could break up, then why can't we?" he added.
Many Nigerians from the south feel the north, where education levels are much lower, brings precious little to the nation's table in terms of resources and human capital, yet its elites consume a huge chunk of the national budget due to their political influence.
Why not engineer a peaceful breakup and let new nations build more functional political entities with rulers who share the same values as their citizens? It sounds simple enough.
But on reflection, the belief of a breakup improving things is based on false premises. The first of these is that there is a viable configuration under which Nigeria could split today in a peaceful manner. In reality, a simple north-south divide or even a north-east-west divide simply won't fly.
In the winner-takes-all mentality that pervades modern-day Nigerian society, no ethnic group will want to accept the role of "second fiddle" in a new entity: we would be talking of at least six, maybe even 10 new countries. How many would be able to survive? Are conflicts between them not inevitable, such as between Ethiopia and Eritrea? The post-Yugoslavian states could count on the EU for help. Post-Nigerian states would have no such luxury.
Secondly, the idea of unity even within the same ethnic group is overly idealistic. There are sub-groups and sub-groups of sub-groups within each of Nigeria's tribes. Take away a common enemy to unite them and chaos could ensue.
There would also likely be a battle for control of the oil, which is mostly located in the southern Niger Delta region. This could spark a long-lasting Congo-like conflict.
Nigeria's political scene today is controlled by men commonly referred to as "godfathers," a handful of rich and powerful figures who hand-pick candidates for all the significant political offices in the country, ensuring their victory through bribes, threats and, if necessary, murder.
When their "boy," as such a protege is called, gets into office, he repays his godfather for the "investment" made in him through bogus contracts and a host of other means. He is also obliged to turn a blind eye to any criminal activity that his godfather, or those he protects, might commit.
This system functions in all areas of Nigeria – north and south alike. So what would the creation of new countries change? Secession will not alter the situation of the average Nigerian.
Fingering religious or ethnic differences as the root of Nigeria's problems oversimplifies the situation. The most immediate problem is the godfathers' stranglehold on power. The people of Nigeria will not know freedom until they can unite against this menance and the corruption it brings, much as they did in forcing the British colonialists to relinquish power five decades ago.
Otherwise the outcome of a breakup would simply be smaller, weaker nations governed by systems no less corrupt and dysfunctional than today.
Remi Adekoya was born and raised in Nigeria. He is the politics editor of Warsaw Business Journal, an English-language weekly in Poland, The Guardian UK. He has also worked for the Polish weekly Wprost and has had his articles published in the daily Gazeta Wyborcza and Foreign Policy
The justices said they would hear an appeal by a group of Nigerians who argue they should be allowed to proceed with their lawsuit accusing the oil company of aiding the Nigerian government in human rights violations between 1992 and 1995.
The plaintiffs, families of seven Nigerians who were executed by a former military government for protesting Shell's exploration and development, sought to hold the company liable under a 1789 U.S. law called the Alien Tort Statute.
A U.S. appeals court in New York dismissed the lawsuit on the grounds that corporations cannot be held liable in this country for violations of international human rights law.
Attorneys for the plaintiffs appealed to the Supreme Court, arguing that review was necessary because appeals courts around the nation have issued conflicting rulings on the issue of corporate liability under the more than 200-year-old law.
The Supreme Court is expected to hear arguments in the Shell case early next year, with a decision likely by June.
Attorneys for the plaintiffs said the case raised a host of issues of national and international importance.
The Alien Tort Statute states that U.S. courts shall have jurisdiction over any civil lawsuit "by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States."
'ONLY OPPORTUNITY' TO DETER UNLAWFUL CONDUCT
"For the victims of human rights violations, such cases often provide the only opportunity to obtain any remedy for their suffering and to deter future unlawful conduct," attorney Paul Hoffman said in the appeal.
He said the ruling created blanket immunity for companies engaged or complicit in universally condemned human rights violations, including torture and executions.
In the Shell case, the lawsuit accused the company of violations related to the 1995 hangings of the activist Ken Saro-Wiwa and eight other protesters by Nigeria's then-military government.
Shell has denied the allegations that it was involved in human rights abuses in Nigeria.
Shell's attorney, Rowan Wilson, told the Supreme Court that the appeals court had been correct in dismissing the lawsuit and that further review of the case was unwarranted.
The Alien Tort Statute allows foreigners to sue in U.S. courts over international law violations.
It has been increasingly used in the last 20 years by plaintiffs to sue corporations for alleged involvement in human rights abuses overseas. There have been a number of recent U.S. appeals court rulings on the issue.
In one case, Indonesia villagers accused Exxon Mobil Corp's security forces of murder, torture and other abuses between 1999 and 2001 while in another case Firestone tire company was accused of using child labour in Liberia.
Many of the lawsuits over the past 20 years have been unsuccessful, though there have been a handful of settlements, attorneys involved in the Shell case said.
The Supreme Court also agreed to hear another case that raised a similar issue. The court will consider whether the Torture Victim Protection Act applied only to persons or also applied to the Palestine Liberation Organization.
The case involved a lawsuit against the PLO by the widow and sons of a U.S. citizen, Azzam Rahim, a Palestinian born and raised in the West Bank, who allegedly was tortured and killed in 1995 at a prison in Jericho. The PLO has denied the allegations.
The Supreme Court cases are Esther Kiobel v. Royal Dutch Petroleum Co, No. 10-1491, and Asid Mohamad v. Jibril Rajoub, No 11-88.
(Reporting by James Vicini, Editing by Gerald E. McCormick, John Wallace, Dave Zimmerman)