Feature/OPED
Banks Cash Out, Economy Loses Out: How Nigerian Banks’ N5.05trn Government Securities Boom is Stifling Real Growth
By Blaise Udunze
In a year when Nigeria’s economy continues to groan under the weight of inflation, unemployment, and weak purchasing power, the banking sector has once again recorded a massive windfall, not from lending to the real economy or financing innovation, but from investing in government securities.
According to data compiled by MoneyCentral, Nigerian Tier-1 banks collectively realized N5.05 trillion in income from investment securities in the first nine months of 2025 represents a staggering 42.28 percent increase over the N3.55 trillion recorded in the same period of 2024.
At first glance, this performance might seem like a testament to the banking industry’s resilience and financial ingenuity. But beneath the lustrous profit sheets lies a deeper economic dilemma that reveals how Nigeria’s banks are making more money by lending to government than by lending to people, small businesses, and industries which are the very arteries that sustain productive economic life.
It is no secret that Nigeria’s commercial banks have long found comfort in the safe, predictable yields of government securities such as treasury bills, bonds, and promissory notes. These instruments are virtually risk-free, backed by sovereign guarantees, and often deliver attractive returns in a high-interest-rate environment. For the banks, it is a perfect business model where depositors’ funds flow in at low cost, and those funds are easily parked in high-yield government paper with minimal risk or operational hassle. There is no need to worry about non-performing loans, credit analysis, or the painstaking process of supporting small and medium enterprises (SMEs).
But for the economy, it is a tragedy of misaligned priorities. While the banks luxuriate in “safe profits,” the productive sectors like agriculture, manufacturing, transport, housing, and creative industries remain starved of credit. Nigeria’s SMEs, which account for over 80 percent of employment and nearly half of GDP, face prohibitive interest rates, limited access to capital, and chronic underfunding. The result is economic stagnation disguised as stability.
The data below tells the story clearly:
– Zenith Bank realized N1.14 trillion from income from short-term government securities, which is 55.49 percent higher than 2024’s N734.14 billion.
– Access Bank made N1.13 trillion income from investment securities as at September 2025 which is 36 percent higher than 2024’s N838.14 billion.
– GTCO realized N547.77 billion income from government bonds, which is 45.68 percent higher than 2024’s N376 billion.
– United Bank for Africa (UBA) saw its income from short-term government securities rise 29.77 percent to N973.12 billion in the period under review, up from N750.48 billion the previous year.
– FirstHoldco’s income from investment securities increased 33.70 percent to N720.15 billion in September 2025, from N538.59 billion in September 2024.
Collectively, these numbers paint a clear picture of the real economy struggling to breathe, while the financial sector is growing fat on sovereign debt. This is not banking as development finance; it is banking as arbitrage. And the scale of this investment obsession is enormous. In the past teo years alone, the top 10 listed banks have channeled at least N20.4 trillion into investment securities and this huge capital could have financed millions of jobs, supported thousands of small businesses, and accelerated growth in Nigeria’s productive sectors.
This has now caught the attention of Nigeria’s tax authorities. The Federal Inland Revenue Service (FIRS) recently directed banks, stockbrokers, and other financial institutions to deduct a 10 percent withholding tax on interest earned from investments in short-term securities. Prior to this directive, short-term bills were tax-exempt to boost returns for investors. The new rule requires tax to be deducted at the point of payment on instruments such as treasury bills, corporate bonds, promissory notes, and bills of exchange.
It remains unclear how much the government expects to generate from this withholding tax. However, the FIRS clarified that investors will receive tax credits for the amounts withheld unless the deduction represents a final tax. Notably, interest on federal government bonds remains exempt from the levy. “All relevant interest-payers are required to comply with this circular to avoid penalties and interest as stipulated in the tax law,” FIRS Executive Chairman Zacch Adedeji said in the official notice.
Yield-hungry investors including banks are likely to be the most affected by this directive. In the first half of 2025 alone, Nigeria’s biggest banks realized N3.03 trillion in income from treasury bills, which represents a 60.40 percent increase from N1.89 trillion recorded in the corresponding period of 2024. GTCO, Zenith Bank Plc, United Bank for Africa Plc, Access Holdings Plc, FirstHoldco Plc, FCMB Plc, Fidelity Bank Plc, and Stanbic IBTC Holdings Plc have been in the habit of buying up domestic government bonds that offer among the highest yields in emerging markets.
By introducing this withholding tax, the FIRS aims to reduce excessive speculative investment in short-term securities and redirect liquidity into more productive parts of the economy. Whether this policy shift achieves that goal remains to be seen. In theory, taxing government securities could make lending to the private sector relatively more attractive. In practice, unless accompanied by broader structural reforms such as reducing credit risk, improving collateral enforcement, and stabilizing the macroeconomic environment, banks may simply adjust their margins and continue business as usual.
Nigeria is witnessing a growing disconnect between financial growth and economic growth. On one side is the booming financial economy, driven by banks’ trading gains, FX revaluation, and investment returns. On the other side is the struggling real economy, where factories close, youth unemployment rises, and SMEs collapse under the weight of credit starvation. The banks’ balance sheets may glitter, but the nation’s balance of welfare is grim.
As inflation eased slightly to 18.02 percent in September 2025, the Central Bank of Nigeria (CBN) cut the Monetary Policy Rate (MPR) from 27.5 percent to 27 percent. While this move signals a dovish tone, it does little to change the fact that the cost of credit remains astronomically high. Commercial lending rates hover between 25 percent and 35 percent, which is completely out of reach for most small businesses. Meanwhile, banks can earn double-digit, risk-free returns on treasury bills. Faced with that choice, which banker would lend to a farmer or manufacturer?
Beyond the figures, this trend has human consequences. Every SME denied a loan represents jobs not created, taxes not paid, and innovations never realized. Every startup that shuts down for lack of funding represents a family’s dashed hopes. Every manufacturer operating below capacity because of working capital shortages translates into lost exports and higher import dependence. When banks turn away from development finance, the ripple effect touches every household ranging from the market woman running a petty trade to the tech entrepreneurs across the country.
Several factors explain why banks prefer the comfort of government securities to the challenge of real-sector lending. Many SMEs operate informally, without proper records or collateral, making them unattractive to traditional lenders. Nigeria’s judicial system often makes loan recovery slow and uncertain, discouraging risk-taking. Exchange rate instability and inflation distort business forecasts, making long-term lending risky. Banks also find it easier to meet liquidity and capital adequacy ratios by holding government paper. Executive bonuses and performance metrics are tied to quarterly profits, not long-term economic impact. These factors form an entrenched ecosystem of incentives that rewards speculation over production, in a system where financial stability comes at the cost of real growth.
If Nigeria must break free from this cycle, a paradigm shift is needed, one that redefines the purpose of banking in national development. The CBN and fiscal authorities must create differentiated incentives for banks that channel a higher percentage of their loan portfolio to productive sectors such as agriculture, manufacturing, renewable energy, and technology. Tax rebates, lower cash reserve ratios, or credit guarantees can help de-risk these loans. Nigeria’s collateral registry, credit bureaus, and bankruptcy laws need modernization to reduce perceived risk, while the legal system must guarantee faster resolution of credit disputes.
Government, through the Bank of Industry (BOI) or similar agencies, can establish a blended-finance vehicle that matches public capital with private lending, allowing banks to co-finance SME projects with shared risk. Many small businesses fail to access credit because they lack proper documentation or business plans. A coordinated financial literacy program, supported by banks and chambers of commerce, could improve their readiness for formal credit. Ultimately, change must come from the top. Bank CEOs and boards must see themselves not just as profit managers but as nation builders. The sustainability of their profits depends on the health of the economy that surrounds them.
If this imbalance persists, Nigeria risks becoming a country where banks thrive and industries die. The long-term cost is profound. Economic growth will remain consumption-driven rather than production-led. Unemployment will worsen as SMEs fold up. Government borrowing will continue to crowd out private investment. The naira will weaken due to import dependence and weak export diversification. Financial capitalism, without developmental conscience, will only deepen inequality and discontent.
The time has come for Nigeria’s banking industry, regulators, and policymakers to make a collective choice: between easy profits and enduring prosperity. It is not enough to celebrate trillion-naira incomes if the nation remains trapped in jobless growth. It is not enough to report record balance sheets while millions of Nigerians remain unbanked and unemployed. True financial innovation lies not in exploiting yields, but in empowering people. The banks that will define the next decade are those that look beyond treasury bills, especially those that find value in the dreams of Nigerian entrepreneurs, in the resilience of its farmers, and in the creativity of its youth.
The story of Nigeria’s N5.05 trillion securities income is not just about numbers; it is about choices and their consequences. It reveals a financial system that has lost sight of its developmental mission, a government too dependent on debt, and an economy where growth has become disjointed from human progress. Yet, it is not too late to change course. The recent 10 percent tax on short-term securities should be the first step toward a deeper reform as one that forces a reallocation of capital from paper to people, from speculation to production.
As yields fall and monetary policy adjusts, the smart banks will be those that read the writing on the wall knowing that the future of finance in Nigeria lies not in government debt, but in the real economy because it is the only economy that truly matters. Because in the end, a nation cannot prosper when its banks are rich and its people are poor.
Blaise, a journalist and PR professional writes from Lagos, can be reached via: [email protected]
Feature/OPED
PETROAN, ‘Abiku Refineries’ and the Comfort of Collapse
A sector that keeps reviving what has repeatedly failed, while resisting what works, is not trapped by fate but comforted by collapse. PETROAN’s latest outburst exposes just how invested some interests remain in Nigeria’s ritualised dysfunction.
By Abiodun Alade
Nigeria’s oil and gas sector has endured many seasons of noise masquerading as advocacy. From time to time, pressure is applied not in pursuit of reform, but in defence of habits that have outlived their usefulness. The latest episode is revealing not because it is novel, but because it exposes, with unusual clarity, the discomfort of rent-seeking intermediaries when genuine change threatens familiar margins.
That discomfort has recently found expression in the agitation by the Petroleum Products Retail Outlets Owners Association of Nigeria over comments made by Bayo Ojulari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited. In demanding his resignation, PETROAN has inadvertently illuminated a deeper problem in Nigeria’s petroleum political economy: the resistance of entrenched intermediaries to reform that narrows the space for easy rent.
Ojulari’s offence was not misconduct. It was candour. He observed, correctly, that the Dangote Petroleum Refinery has provided breathing space at a time when government-owned refineries are shut, and that the NNPC should not rush back into the familiar ritual of pouring millions of dollars into turnaround maintenance for facilities that have become monuments to waste. This is not heresy; it is prudence.
For a quarter of a century, Nigeria has chased the mirage of refinery rehabilitation. Public records suggest that between $18 billion and $25 billion has been spent on turnaround maintenance and rehabilitation of the four state-owned refineries, with little to show for it. Like the abiku of Yoruba lore, these refineries are revived with ceremony, only to relapse almost immediately. Working today, dying tomorrow. To insist that this cycle must continue, regardless of evidence, is not patriotism. It is sabotage dressed as concern.
PETROAN’s reaction is therefore instructive. In a recent statement, its spokesman, Joseph Obele, described it as “most worrisome” that there was no urgency to restart the Port Harcourt Refinery because Dangote is meeting current fuel needs. The association went further, threatening to lobby civil society groups and pursue legal options to force the removal of the NNPC GCEO should the refinery not resume operations by March 1. This is not policy engagement. It is pressure politics.
Why would a body of retailers, whose business model depends largely on buying and reselling products refined elsewhere, be so hostile to domestic refining capacity? The answer lies in incentives. Domestic refineries compress margins. They reduce arbitrage. They expose inefficiencies that thrive in scarcity. For decades, fuel importation and the dysfunction it encouraged created space for unearned profits across the value chain. Local refining threatens that arrangement.
History offers a useful parallel. In Mancur Olson’s classic work The Logic of Collective Action, he explains how small, organised interest groups often prevail over the broader public interest because they are better motivated to defend narrow gains. PETROAN’s conduct fits this pattern. It speaks loudly, often, and with confidence, but for whom does it really speak?
It is also worth recalling PETROAN’s posture during earlier periods of distress in the sector. At moments when the national oil company was accumulating unsustainable obligations, remitting little or nothing to the Federation Account and absorbing enormous costs, commendations flowed freely. Laurels were dished out even as the system bled. That era ended with the Federal Government writing off substantial debts, including about $1.42 billion and N5.57 trillion after reconciliation. Nigerians paid the price for that indulgence.
During the years when Nigeria’s petroleum sector was driven to the brink, PETROAN looked the other way. The record is clear. The national oil company captured the entire value chain, seizing crude exports, monopolising refined product imports, and then forcing the Federal Government to borrow an estimated N500 billion monthly to sustain opaque subsidy claims. By controlling nearly 90 per cent of the roughly $3 billion in monthly crude proceeds routed through the Central Bank, and combining this with subsidy payments and other shocks, fiscal space collapsed, driving the government into massive Ways and Means financing.
At the same time, refinery rehabilitation became an industry without output. About $10 billion was spent over a decade on maintenance with nothing to show for it, not even a litre of petrol. A further $3 billion was later securitised against future crude sales for yet another failed repair cycle, a sum that could have delivered dozens of modular refineries. Even after the Petroleum Industry Act prioritised Domestic Crude Obligation, compliance remained elusive, while Nigeria continued to burn scarce foreign exchange importing substandard fuel into a system with no functional midstream. These were not marginal errors but a business model that plunged the country into crisis. Throughout it all, PETROAN’s voice was conspicuously muted, generous with praise where scrutiny was required.
This is why the current agitation rings hollow. Reform always unsettles those who prospered under disorder. President Bola Tinubu’s administration has signalled, through words and decisions, that it intends to break with the old script. Ojulari’s mandate at NNPC is clear: commercial discipline, efficiency and profitability. That mandate cannot be reconciled with endless rehabilitation theatre.
There is another uncomfortable question PETROAN has not answered. What value does its leadership bring to the petroleum sector beyond television appearances and press statements? Serious business leadership is measured in assets built, jobs created and value added. Publicly available information suggests that some of the companies associated with PETROAN’s leadership are modest in scale, with limited project footprints. Allegations and controversies reported in the public domain around some of these entities, whether in the power metering space or elsewhere, only reinforce the need for caution in elevating moral authority. Perhaps PETROAN’s members would do well to examine the records of those who speak in their name before an association meant to represent many is reduced to the private estate of a few and recast as an adversary of the public interest.
This is not to say that retailers have no role in policy debate. They do. But influence must be earned through insight, integrity and alignment with the national interest. Threats and ultimatums betray a lack of confidence in argument.
Nigeria stands at a fork in the road. One path leads back to ritualised waste, institutional failure and the comfort of familiar inefficiencies. The other leads to local capacity, competition and a petroleum industry that finally works for Nigerians. The Dangote Refinery is not a silver bullet, but it is a signal that the old excuses are losing credibility.
PETROAN’s nuisance value thrives only when reformers flinch. President Tinubu has shown little appetite for cheap blackmail. Ojulari enjoys his confidence for a reason. The task before NNPC is too important to be derailed by those nostalgic for a broken system. If PETROAN wishes to be relevant in this new era, it must evolve from noise to nuance. Otherwise, history will remember it not as a defender of consumers, but as a footnote in Nigeria’s long struggle to escape the tyranny of waste.
Abiodun, a communications specialist, writes from Lagos
Feature/OPED
What If the Problem Isn’t Just the Government?
By Blaise Udunze
Recent reports in the media space highlighting threats of “naked protests” by market women across several states if the federal government fails to address the issue of hardship underscore the depth of hunger and poverty gripping the nation. No doubt, there is hardship in the country, of which Nigeria’s poverty crisis is often framed as the government’s failure, poor policies, weak institutions, corruption, and economic mismanagement.
From a balanced viewpoint, while these factors are undeniable, they do not tell the full story in its totality. The reality is that the majority of Nigerians, being the larger populace experiencing this challenge, will definitely oppose the ideology that poverty in Nigeria is not merely a policy problem; it is also a societal one. The underlying truth is that this is shaped by citizens’ behaviours, choices, cultural norms, and civic attitudes. This will remain a lived experience of the people until this dimension is confronted honestly; reforms will continue to yield limited results.
Nigeria’s economy has witnessed growth as inflation has decelerated, with headline inflation easing to 15.15percent and food inflation retreating to 10.84 per cent. The exchange rate was stabilising, and foreign reserves ($46.7 billion) had climbed to a seven-year peak. Despite the growth figures and ambitious government targets, millions of Nigerians remain trapped in poverty. More alarming is the recent estimates suggesting that an additional two million people could fall below the poverty line this year alone.
The intrigue is that the geographic distribution of these figures tells a deeper story, and this is more revealing than the numbers; however, there is an uneven geographical spread. Of concern here, which is troubling, is why states such as Yobe, Jigawa, Katsina, Kano, and Zamfara tend to experience or be deep in poverty when compared to other states like Lagos, Port Harcourt, Aba, Enugu, and Onitsha, which are projected to experience less poverty. This disparity raises a critical question, which calls for an urgent answer to why poverty outcomes differ so starkly within the same country, because no doubt, much of the explanation lies beyond government failures.
While governance challenges exist nationwide, the explanation extends beyond Abuja. Perhaps this is from deliberate ignorance of the people; the reality is that it lies in education, cultural practices, social norms, and individual responsibility play decisive roles in shaping economic outcomes.
One key alarming fact that has deeply entrenched poverty in many northern states, unlike other regions, is limited access to education, especially for girls, early marriage, polygamy, and large family sizes. There have been several factors that reinforce cycles of poverty by stretching limited household resources, reducing educational attainment, and limiting economic mobility, and this will continue to be a long-standing challenge or lived experience for the people if not addressed.
It is clearer that practical comparison illustrates this reality. Taking into consideration that a low-income worker in Yobe who marries four wives and raises over twenty children will inevitably struggle to provide adequate education, healthcare, and opportunities for his family, while in contrast, a similar worker in Aba is more likely to marry later, have fewer children, and invest in their education. Without much ado, over time, the children in the latter household acquire skills, productivity, and economic relevance because their parents chose to prioritise education for them, while the former remain trapped in subsistence and dependency. These differences are not subjective; they are structural and measurable.
Religion and culture further complicate the picture as record has it that Nigeria is one of the most religious countries in the world, yet religiosity often serves personal aspirations, prosperity, miracles, or divine favour rather than reinforcing civic responsibility and social ethics. Today in Nigeria, political leaders frequently reinforce this distortion and moral narrative. Only recently, it was announced that public officials in Abuja celebrate marrying off multiple children at once, some governors borrow billions to spend public funds on religious pilgrimages, while underfunding education, healthcare, and infrastructure, they send a clear message about priorities. In contrast, states that invest deliberately in education, such as Enugu with its smart school initiatives, demonstrate how leadership choices influence societal outcomes.
Still, the crisis of responsibility is not confined to any region. It is national, as proved during the discussions at Lagos State’s 12th Summit of the Association of Retired Heads of Service and Permanent Secretaries (ALARHOSPS), it was emphasised that societal progress depends not only on leadership but on citizenship behaviour. According to Professor Wusu Onipede, citizenship is defined by commitment to collective welfare, not mere residence.
The truth is not far-fetched, going by the saying that actions, positive or negative, directly impact society. What would have informed the common actions, such as stealing public assets, vandalising infrastructure, ignoring traffic laws, or tolerating corruption, all accumulate into widespread societal harm as seen in our everyday lives. Conversely, volunteering, mentorship, and community engagement generate resilience, opportunity, and shared prosperity. With close reading, one will notice that this dynamic was captured succinctly in Professor Oluwatomi Alade’s “Triangle for Change,” which pointed to the home, the school, and the community. Parents must brace up to understand that the primary responsibility is upon them to start prioritising education, teachers who impart both knowledge and character, and communities that uphold civic values create the foundation for sustainable development because the truth is that the change does not only rest on the government. In the same manner, it will be said that neglect in any of these spheres, whether through early marriage, disregard for schooling, or normalisation of polygamy, undermines national progress.
Religious institutions, as Professor Oguntola-Laguda argues, must also evolve, which means that beyond spiritual teachings, they should emphasise practical social ethics in the areas of responsibility, productivity, gender inclusion, and civic duty. In regions where harmful norms persist, faith leaders, traditional authorities, and elders possess the influence necessary to drive change, if they choose not to use it, otherwise the society will remain impoverished.
Globally, the link between social norms and poverty is well established, and norms that condone child marriage, gender exclusion, or unchecked family sizes perpetuate intergenerational deprivation. Over the period, in other countries, it is clear that economic interventions alone cannot dismantle these patterns because countries like India show that combining education incentives, political inclusion, and social protection can reduce poverty among marginalised groups. Initiatives such as Uganda’s SASA, which is a program that demonstrates that shifting attitudes toward gender and empowerment lead to improved economic outcomes. Nigeria’s poverty strategy must similarly integrate social transformation with economic reform.
None of this absolves government responsibility. Poorly sequenced reforms, rising taxes, insecurity, weak infrastructure, and inadequate social protection continue to deepen hardship. Senator David Mark of the African Democratic Congress has criticised what he terms “vicious policies” that worsen citizens’ vulnerability. Nigerians are acutely aware of these failures. What they demand is not statistics or political rhetoric, but practical policies that reduce hardship, enable productivity, and promote inclusion.
Even at this, Nigerians must take into cognisance that government action alone is insufficient. Poverty cannot be eradicated where large families are unsustainable, education is undervalued, and corruption is tolerated at the household and community levels. Individual responsibility remains the missing link. Citizens must be discreet in their timing for marriage until they can provide adequately, manage family sizes responsibly, educate all children, especially girls and reject the glorification of excess and impunity.
Insecurity further illustrates this shared responsibility. Though one will argue that the state bears the constitutional duty to protect lives and property, law and order, what about the dwellers? Communities must actively support security efforts through vigilance, information sharing, and conflict resolution. Silence in the face of crime and corruption enables disorder because independence loses meaning when citizens disengage from safeguarding their own communities.
Another critical aspect that is akin to insecurity is that economic development also falters when citizens undermine progress through dishonesty, rent-seeking, and apathy. What people fail to understand is that entrepreneurship, accountability, and cooperation are as vital as government-led job creation. The same thing can be said of cooperatives, vocational training, and local enterprise, which can deliver immediate relief and long-term sustainability. Wealthier Nigerians must focus on genuine social investment, creating opportunities, supporting education, and building institutions that outlast personal interest or individual generosity, rather than charity or wasteful spending or fueling crimes. Social responsibility must become a social norm.
One laughable misconception people harbour about independence, which must be clarified, is that it is not simply freedom from colonial rule; it is the presence of civic responsibility. It must be understood that poverty persists not only because of policy gaps but because of harmful norms, cultural practices, and neglected duties. Anyone can argue this, but the truth is that there will always be a replay of this menace kicked against because every child denied education, every early marriage, every act of corruption, reinforces the cycle.
Breaking this repeating problem, known as poverty, takes several coordinated strategies working together, not just one solution. There must be an understanding that the issues are complex and interconnected; they must be addressed from different angles at the same time. For these reasons, the government must provide stable policies, infrastructure, and social protection and the citizens, in like manner, must reform behaviours that perpetuate poverty. The same must be said of the families that must prioritise education, and also, the communities must reward civic engagement and innovation. Religious and cultural leaders must promote responsibility alongside faith because these are critical platforms that have the attention of the greater number of people. The policymakers at this juncture must ensure that policies not only deliver relief but also incentivise behaviours that support sustainable development.
Without too much argument, it is glaring that Nigeria’s potential is evident in states and communities that have embraced education, civic virtue, and social reform. Judging by the developments in different states, one will conclude that Lagos demonstrates how engagement and accountability improve outcomes, while Enugu shows that investing in children yields long-term dividends. Conversely, regions where harmful norms persist remain trapped, regardless of federal spending.
Without much ado, all Nigerian stakeholders must come to the terms that Nigeria’s poverty challenge cannot be reduced to government failure alone. It is a collective problem rooted in culture, norms, and personal choices because sustainable development demands both accountable leadership and responsible citizenship. The fact remains that poverty will remain an enduring shadow, irrespective of the repeated threats of “naked protests,” but until Nigerians fully embrace their role as architects, not just beneficiaries of national progress. True independence begins when citizens accept that the future of the nation rests as much in their daily choices as in public policy.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]
Feature/OPED
AU Must Reform into an Institution Africa Needs
By Mike Omuodo
From an online post, a commentator asked an intriguing question: “If the African Union (AU) cannot create a single currency, a unified military, or a common passport, then what exactly is this union about?”.
The comment section went wild, with some commentators saying that AU no longer serves the interest of the African people, but rather the interests of the West and individual nations with greedy interests in Africa’s resources. Some even said jokingly that it should be renamed “Western Union”.
But seriously, how has a country like France managed to maintain an economic leverage over 14 African states through its CFA Franc system, yet the continent is unable to create its own single currency regime? Why does the continent seem to be comfortable with global powers establishing their military bases throughout its territories yet doesn’t seem interested in establishing its own unified military? Why does the idea of an open borders freak out our leaders, driving them to hide under sovereignty?
These questions interrogate AU’s relevance in the ensuing geopolitics. No doubt, the AU is still relevant as it still speaks on behalf of Africa on global platforms as a symbol of the continent’s unity. But the unease surrounding it is justified because symbolism is no longer enough.
In a continent grappling with persistent conflict, economic fragmentation, and democratic reversals, institutions are judged not by their presence, but by their impact.
From the chat, and several other discussion groups on social media, most Africans are unhappy with the performance of the African Union so far. To many, the organization is out of touch with reality and they are now calling for an immediate reset.
To them, AU is a club of cabals, whose main achievements have been safeguarding fellow felons.
One commentator said, “AU’s main job is to congratulate dictators who kill their citizens to retain power through rigged elections.” Another said, “AU is a bunch of atrophied rulers dancing on the graves of their citizens, looting resources from their people to stash in foreign countries.”
These views may sound harsh, but are a good measure of how people perceive the organization across the continent.
Blurring vision
The African Union, which was established in July 2002 to succeed the OAU, was born out of an ambitious vision of uniting the continent toward self-reliance by driving economic Integration, enhancing peace and security, prompting good governance and, representing the continent on the global stage – following the end of colonialism.
Over time, however, the gap between this vision and the reality on the ground has widened. AU appears helpless to address the growing conflicts across the continent – from unrelenting coups to shambolic elections to external aggression.
This chronic weakness has slowly eroded public confidence in the organization and as such, AU is being seen as a forum for speeches rather than solutions – just as one commentator puts it, “AU has turned into a farce talk shop that cannot back or bite.”
Call for a new body
The general feeling on the ground is that AU is stagnant and has nothing much to show for the 60+ years of its existence (from the times of OAU). It’s also viewed as toothless and subservient to the whims of its ‘masters’. Some commentators even called for its dissolution and the formation of a new body that would serve the interests of the continent and its people.
This sounds like a no-confidence vote. To regain favour and remain a force for continental good, AU must undertake critical reforms, enhance accountability, and show political courage as a matter of urgency. Without these, it may endure in form while fading in substance.
The question is not whether Africa needs the AU, but whether the AU is willing and ready to become the institution Africa needs – one that is bold enough to initiate a daring move towards a common market, a single currency, a unified military, and a common passport regime. It is possible!
Mr Omuodo is a pan-African Public Relations and Communications expert based in Nairobi, Kenya. He can be reached on [email protected]
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