Niger crisis may cost Nigeria $2 billion yearly, CPPE warns

 

As fear of escalation of Niger coup builds, the Centre for Promotion of Private Enterprise (CPPE) has warned that military intervention could be damaging for Nigeria, with yearly financial cost estimated at $2 billion.

Considering the current lean public revenue of the country, near 100 per cent debt service to revenue ratio and mounting indebtedness, CPPE balked at the country’s ability to absorb the cost and called for deeper introspection.

Nigeria, which shouldered the cost of the Economic Community of West African States Monitoring Group (ECOMOG) at the peak of the Liberian war, reportedly lost $8 billion to the crisis and lost hundreds of soldiers.

Also, in its big brother’s role, the country lost an estimated $4 billion in Sierra Leone during its five-year civil war.

Should the country concede to a military campaign in the crisis in Niger, CPPE said the loss could be much higher considering the inflationary trend of the intervening years and impactful in terms of the opportunity cost of the military spending.

The country spent an average of $1 billion yearly to contain crises in both West African countries that went into civil wars for a combined period spanning 12 years.

CPPE, in an analysis signed by its Director-General, Dr Muda Yusuf, said the cost of yearly spending could be much higher considering the current prices of equipment, cost of sustaining human resources that would be deployed and the peculiarity of the Sahel region.

“The lesson here is that the cost of military interventions can be very prohibitive. Similar military operations at this time may cost considerably higher, given the inflationary trend over the past 25 years. At the very minimum, it would cost Nigeria a minimum of $2 billion annually to prosecute a military operation in Niger, considering the prevailing geopolitical dynamics in the Sahel.

“It will be difficult to accommodate such a huge financial commitment at this time without putting a serious strain on our fiscal operations and foreign reserves. With the benefit of hindsight, it is doubtful whether Nigeria got any significant benefit from the military interventions in both Liberia and Sierra Leone,” the economic think-tank noted

The institution also raised concern over the consequences of the brewing crisis and possible sanctions for the trade aspirations of the Economic Community of West African States (ECOWAS), which is chaired by President Bola Tinubu. The crisis, it noted, would compromise the achievements recorded so far if it is not properly handled even as it described the negotiation as a “defining moment for ECOWAS which calls for rigorous thinking, robust consultation, sound diplomatic judgment, a deep sense of history and an exhaustive evaluation of the many ramifications”.

“One of the key mandates of ECOWAS is the promotion of economic integration. Military actions among member states would surely negate this fundamental objective. It would perpetuate fragmentation of the region and trade within the region will be severely impacted. This has grave consequences for the economies of member states and the welfare of the citizens.

“Already the recent border closure is beginning to adversely impact traders on both sides of the divide. The truth is that sanctions are typically a double-edged sword, which is why it needs to be cautiously and strategically applied,” the centre argued.

It argued that Nigeria often loses out after each round of brotherly intervention with “no concrete benefits” for expending so much of its financial and human resources.

It listed the current weak balance of payment position, weak external sector and possible destruction of assets during the war as reasons the country should steer clear of military involvement in the neighbouring country.

“If Nigeria decides to go ahead with a military campaign in Niger, our defense spending may have to increase substantially, possibly by 100 per cent or more. Over 70 per cent of the spending would have to be foreign exchange.

Though the military option would be an ECOWAS decision, the burden of prosecuting the operation would have to be borne substantially by Nigeria. These are scenarios we need to worry about,” the CPPE’s analysis noted.