ECOWAS rejects Niger Junta’s 3-year transition plan

The transition plan presented by the Niger junta for a three-year period to presumably establish a democratic government has been unequivocally dismissed by the Economic Community of West African States (ECOWAS). General Abdourahamane Tchiani, leader of the Niger junta, had said in a televised broadcast on Saturday night that the army will hand over power to the civilian government within the next three years. According to him, his ambition is not to confiscate power but help the country out of its current conundrum. “Our ambition is not to confiscate power,” General Abdourahamane Tiani emphasized in a televised address. He further stated, “Any transition of power would not go beyond three years.” However, in a contrary view, the ECOWAS Commissioner for Political Affairs, Amb. Abdel-Fatau Musah, who made an appearance on Channels Television on Monday, voiced the West African bloc’s strong objection to the proposal. “This offer is completely unacceptable, and ECOWAS insists on the restoration of constitutional order as quickly as possible,” Amb. Musah stated firmly, emphasizing that the commission had prior experience dealing with similar maneuvers by military regimes. He referred to the situation in Niger, highlighting the creation of the “new” constitution in 2010, which was subsequently revised in 2017. Musah posed a pointed question, “What dramatic change do you need in the governance architecture of the country to require three years to experiment with something else? Expressing skepticism about the junta’s intentions, Musah remarked, “This is like subterfuge to throw ECOWAS off-course and then do whatever they want.” Drawing comparisons, he pointed out that some other West African countries under military rule had been given about three years, yet they were now “negotiating” with their populations for an additional 18 months. Putting the timeframe into perspective, he highlighted the fact that even a democratically elected president in Nigeria only has four years in office. Musah concluded by questioning the legitimacy of the junta’s decision to start with a three-year period and implying that it could extend beyond that. ECOWAS’ response underscores its unwavering commitment to democratic governance and stability in the region, raising concerns about the motives behind the proposed three-year transition plan.

MPC: Aligning fiscal, monetary policy for economic growth

The benefits of collaboration in any human endeavour cannot be over-emphasised. Every part jointly fitted together produces the whole.Monetary policy affects financial conditions and the level of bank reserves. Whereas, fiscal policy can put money directly into or out of people’s pockets. Without fiscal policy as a tool to fight inflation, the federal government is working with one hand tied behind its back.The fiscal approach is anchored by the Federal Government whose role is mainly to moderate the excesses of other operators in the economy, and provide law and order and enabling operating environments.The Central Bank acts alone when it hopes that its policies would change the economic dynamics without any input from the fiscal side.Fiscal policy can slow spending directly by raising taxes or reducing government direct payments without necessarily having the intermediate step of raising the unemployment rate.Modest upfront fiscal contraction would reduce the cumulative amount of monetary tightening necessary, thereby improving the odds of avoiding recession.In this regard, analysts opine that the CBN must not operate in isolation, but collaborate with fiscal authorities to achieve sustainable economic results. Ineffective policiesMost economic policies were not as effective as they ought to be during the last administration due to the lack of collaboration on the part of fiscal and monetary authorities as everyone seems to be running their ‘own thing’ as it were.While the Finance Ministry appears to be focused only on borrowing from all possible quarters and increasing tariffs to raise more revenue for the government, the CBN was preoccupied with shielding the Naira from unnecessary pressure through rampant importation of items that could have been produced locally, thereby depleting the foreign reserves and spiking exchange rate.Analysts note that one of the dilemmas of Nigeria is fiscal indiscipline that is seen in the actions of the political office holders. In the last dispensation, while the CBN was trying to grow the economy through expansionary policies targeted at increasing capital flows (or credit) to the real sector, the fiscal authorities, on the other hand, were raising taxes on many items that affect their activities, which the CBN was trying to expand.And that was why at every opportunity, suspended CBN Governor, Godwin Emefiele always called for an alignment between fiscal and monetary policies.According to Emefiele, the country’s monetary and fiscal authorities must “collaborate and work in harmony to accelerate Nigeria’s economic development even as he added that “finding a sustainable solution requires a broadened participation of colleagues from the fiscal side.”Speaking at the 149th meeting of the Monetary Policy Committee of the Central Bank of Nigeria (CBN), the Apex Bank’s Acting Governor, Folashodun Shonubi, said there was a need for fiscal and monetary authorities to align together to be able to address present economic challenges.Reading the communiqué at the end of the two-day meeting, Shonubi noted that subsidy removal, exchange rate liberalization and disbursement of palliatives, would have pass-through effects on inflation. He therefore, called “monetary and fiscal authorities to sustain collaboration towards addressing the inflationary pressure and incentivize domestic investment to reduce unemployment and boost output growth.The Monetary Policy Committee “…enjoined the Federal Government to continue to explore policies to improve investor confidence in the Nigerian economy and pave the way for foreign and domestic investments.“Members emphasized the need to attract investments, particularly, to auto manufacturing, aviation, and rail industries to boost non-oil revenues.”Experts have continuously argued that all these can only happen when both of them work in harmony. For instance, from time to time, the Federal Government comes up with its fiscal policies based on national economic philosophy and objectives, to aid or readjust the economy.CBN then makes monetary policies to ensure availability of money at the right cost, adequate volume and appropriate type to facilitate the cost effectiveness of production and trade. However, we saw monetary authority make incursions repeatedly into the economic policy territory hitherto exclusively reserved for the fiscal authority in Nigeria.This has then made the CBN a punching bag for every frustration in the economy in regards to monetary and fiscal balancing of macroeconomic issues. Breaking from the pastIn trying to break away from the past mistakes, President Bola Tinubu quickly appointed seasoned economist Wale Edun as his Special Adviser on Monetary Policy. The objective was to have the two sides coming together to align policies before they become public document.And true to type, Nigerians did see it in the MPC decision as the monetary policy rate hike was by 25 basis points contrary to what analysts and industry players had projected.In arriving at the decision, the MPC considered the outlook for the domestic economy with the policy options to either hold or hike the policy rate to offset the moderate increase in headline inflation.With headline inflation still on the rise due to the effect of fuel subsidy removal and the naira float which is driving the prices of goods and service upwards, the Apex Bank new that raising rates like in previous times will be counter-productive to what the monetary authorities wanted to achieve with the policy reforms that has been embarked upon by the fiscal authorities.Knowing that when the palliatives begin to flow, there would be much liquidity in the system, the Committee had to be proactive in line with current thinking.According to the CBN Governor, “Considering the option to hold, the Committee reviewed the impact of the continued rise in inflation on various macroeconomic variables, noting the potential dampening effect on output growth. Members agreed unanimously that the previous series of rate hikes had indeed greatly moderated the pace of price increases.“The option to continue to hike the policy rate, albeit moderately, also presented a strong alternative. This is premised on the expected liquidity injections into the economy from the recent policy developments and the likely impact on inflation.“The Committee remained cautious in arriving at a policy decision as Members noted the need to continue to support investment which will ultimately lead to the recovery of output growth. The balance of these arguments thus leaned in favour of a

West Africa Defence Chiefs meet Wednesday to discuss Niger coup

Defence chiefs from West Africa’s regional bloc ECOWAS will meet in Nigeria’s capital Abuja for two days beginning Wednesday to discuss last week’s coup in Niger, the bloc said in a statement on Tuesday. On Sunday leaders of the Economic Community of West African States slapped sanctions on Niger and warned they may use force as it gave the junta a week to reinstate President Mohamed Bazoum. The leaders gave the junta seven days to reinstate President Mohamed Bazoum, who is being held captive. Earlier, the junta warned it would resist any “plan of aggression against Niger” by regional or Western powers. Meanwhile hundreds of coup supporters protested outside the French embassy in the capital Niamey. A statement read out after the Sunday summit in Nigeria said that Ecowas had “zero tolerance” for coups. The regional bloc said it would “take all measures necessary to restore constitutional order” if its demands were not met within a week. “Such measures may include the use of force,” and military chiefs are to meet “immediately” to plan for an intervention, the statement added. The Special Representative and Head of the United Nations Office for West Africa and the Sahel was at the meeting, and said Ecowas had taken a decisive action because events in Niger were concerning. “Niger is playing a key role in fighting terrorism. If Niger stops playing this role this will give more space and more leeway to terrorists to expand in the region,” Dr Leonardo Santos Simao told BBC’s Newshour programme. He added that “no official negotiations” were taking place between ECOWAS and the country’s military junta. This is the first time ECOWAS has threatened military action to reverse the coups that have taken place in the region in recent years. It last sanctioned military intervention in 2017, when Senegalese troops were deployed to The Gambia to force long-serving ruler Yahya Jammeh to leave office after he refused to accept defeat in elections. Chad’s President Mahamat Idriss Déby Itno has gone to Niamey to tell the junta to step down, Chad’s government said. He met junta deputy leader Gen. Salifou Mody. It is unclear whether he will hold talks with Gen. Abdourahmane Tchiani, the head of the presidential guards unit who has declared himself Niger’s new ruler. The West African leaders also announced the immediate enforcement of a no-fly zone over Niger for all commercial flights, the closure of all land borders with the country, and the imposition of financial sanctions against the junta. Ahead of their meeting, Gen. Tchiani warned ECOWAS and unnamed Western nations against stepping in. “We once again reiterate to ECOWAS or any other adventurer, our firm determination to defend our fatherland,” the statement, which was read out on TV, said. The coup has prompted concern that Niger, a former French colony, could pivot towards Russia. The ousted president had worked closely with both regional and Western nations to fight militant Islamists. Burkina Faso and Mali moved closer to Russia after their own coups. In Niamey, some of the protesters outside the French embassy chanted “Long live Russia”, “Long live Putin” and “Down with France”, AFP news agency reports. They also set fire to the walls of the embassy compound. France would not tolerate any attack on its interests in Niger, and would respond in an “immediate and intractable manner”, President Emmanuel Macron’s office said in a statement.