The Economist - UK (2019-06-01)

46 Middle East & Africa The EconomistJune 1st 2019

S

unlight poursonto yellowing cloth in

the Gaskiya textile factory in Kano,

northern Nigeria’s largest city, through

gaping holes in its tin roof. Chickens in the

carcass of a van pierce the silence. Before

this textile mill closed in 2005, says Yau

Muhammad, one of 4,000 former employ-

ees, it was among West Africa’s largest.

In 1985, when Muhammadu Buhari—

then Nigeria’s military ruler—cut the rib-

bon on this factory, industry was thriving

in Kano. In the decades since many others

in the city have suffered its fate, crippled by

power shortages and cheap imports. More

than 300,000 jobs have vanished from the

textile industry alone. Mr Buhari, who was

elected president in 2015, wants to promote

manufacturing by getting Nigeria to make

more and import less.

His central bank governor has withheld

foreign exchange for some goods (see pre-

vious article) or slapped hefty import du-

ties on them. This has been excellent news

for industrialists such as Aliko Dangote, a

billionaire who grew rich selling cement at

eye-watering profit margins that reached

as high as 60% behind high import tariffs.

It has not been so good for Nigerian con-

sumers, who must pay more for their gro-

ceries and their homes, or for productivity.

Companies must pay more for buildings;

the government, for roads and bridges.

Officials insist that protectionism

works. They point to rice farming, which is

booming thanks to a 60% tariff on import-

ed rice. At the Umza Rice Mill on Kano’s

outskirts, workers feeding machines with

sacks of rice lifted from burlap mountains

do not have time to stop and talk. Muktar

Khaleh, the factory’s managing director,

says its capacity has more than doubled

since 2014 and that he has little sympathy

for failed textile firms. “They need to mo-

dernise and try to compete with China, the

way we compete with rice-producing

countries like Thailand,” he says, ignoring

the role tariffs play in nobbling the compe-

tition. Tariffs encourage smuggling, too.

Thai rice exports to Nigeria have slumped

since the tariffs were raised in 2016, but

those to neighbouring Benin mysteriously

more than doubled between 2015 and 2017.

This tiny country of 11m people is now the

world’s largest importer of Thai rice.

For manufacturers who are not protect-

ed by tariffs, things are grim. This is espe-

cially so if they cannot get subsidised for-

eign currency from the central bank to

import raw materials. A plastics-maker in

Kano says he and most of his neighbours

are operating at less than 10% of capacity.

Many may be sunk by a planned two-thirds

increase in the monthly minimum wage.

Other managers complain that electricity

supplies are unreliable and expensive.

Even successful firms like the Umza Rice

Mill rely on generators for their own power.

“There is no way anyone in Nigeria can pro-

duce without them,” says Mr Khaleh. A Chi-

nese textile importer laughs when asked if

he would ever move production to Nigeria.

The government says it is tackling the

power shortage. To its credit, factory own-

ers in Kano say power cuts have become

slightly less frequent in the past year. It has

extended loans to power distributors to

help expand their capacity and has loos-

ened regulations to allow companies to

buy power from independent producers at

whatever price they want, instead of the

one set by the regulator.

Even so, Nigeria’s electricity firms pro-

duce about as much power as the city of Ed-

inburgh. Without a huge increase in capac-

ity—let alone literacy rates— Nigeria has

little chance of expanding its industry, says

Charlie Robertson, an economist at Re-

naissance Capital, an investment bank.

This is harsh news for the millions of

Nigerians who will reach working age in

the next few years. For many, like those laid

off by Gaskiya textiles, the government’s

manufacturing push comes far too late. Mr

Muhammad gets a stipend from his union

to guard his former workplace, so that its

owners cannot sell off the land and ma-

chinery until they have settled unpaid

wage bills. But, he says, most of his ex-col-

leagues are still out of work. “Muhammadu

Buhari,” he sighs, “was our last hope.” 7

KANO

Tariffs help only a lucky few

Nigeria’s economy (2)

Protection racket

They lost their shirts

G

eorge weahhas usually had luck on

his side. To be sure, skill and hard work

propelled him from a west African slum to

playing for the top teams of European foot-

ball. But fortune also smiled on him. Take

the award he won for “fair play” in 1996—

just weeks after headbutting a player.

Now president of Liberia, Mr Weah’s

luck seems to be running out. Less than 18

months after being sworn into office he

faces a wave of protests on June 7th. Some

of the unhappiness with his government is

caused by a stumbling economy. The imf

reckons that growth will slow to 0.4% this

year, from 1.2% last year, and that annual

inflation will have more than doubled over

three years, to 22%.

But people are also furious about cor-

ruption. About half of Liberians polled by

Afrobarometer last June said they had been

forced to pay backhanders for help from

the police or to get public services. A simi-

lar proportion said graft had grown worse

over the previous 12 months.

It is not just Liberians who are fed up

with corruption. A recent letter to Mr Weah

from nine ambassadors—including those

of America, Britain, France and Japan—

raised concerns that his government was

taking money from programmes funded by

foreign donors, the accounts for which are

held at the central bank. The letter, which

was leaked to The Economist, demands that

the money be returned without delay and

that “such unacceptable practices cease

immediately”.

The World Bank has a similar gripe. In a

separate leaked letter to Samuel Tweah, the

finance minister, the bank complained

about millions of dollars that had been tak-

en out of accounts earmarked for providing

drinking water or for projects such as re-

sponding to Ebola, a deadly virus that rav-

aged west Africa in 2014-16. It, too, de-

mands that the money be repaid.

The self-styled Council of Patriots,

which is organising the protests, says it is

demanding cleaner government as well as

justice for atrocities committed during Li-

beria’s civil war. For many Liberians the

very thought of unrest evokes memories of

a conflict that raged almost continuously

from 1989-2003 and destabilised the re-

gion. A succession of bigwigs from the Afri-

can Union, un and ecowas, a club of coun-

tries in the region, have flown in to mediate

and call for calm. Mr Weah needs to get his

eye back on the ball. 7

DAKAR

Brazen corruption is testing donors’

patience and threatening the peace

Liberia’s lurch

A yellow card for

the government