Feature/OPED
Nigeria and Unending Global Debate About Federalism
By Jerome-Mario Chijioke Utomi
There exists no ambiguity to the fact that Nigeria is a federal state with three tiers of government, which consists of the federal government at the centre, 36 federating states and 774 Local Government Areas.
What is, however, the news is that, like its global counterparts, the federal system currently practised in Nigeria is characterized by a high level of debates, controversies arising from structural imperfections and riddled with calls on the federal government to identify in the nation the imperfections and have them amended according to the changing time of its political sovereignty.
In December 2020, for instance, Bola Ahmed Tinubu, now President of the Federal Republic of Nigeria, while speaking in Ibadan, Oyo State, on the topic Time to Restructure is Now, at the 3rd Annual Abiola Ajimobi Roundtable, stated, among others, that the current relationship between the police and the people needs such reform so that the police may help better answer the security challenges we now face. In fact, it is long overdue.
Tinubu stressed that power generation was the most important factor in economic development. States currently are shut out from this vital sector even though the nation suffers a paucity of power. States must be allowed to engage in power generation as long as their efforts are consistent with and do not undermine federal labour in this sector. If we begin with these fundamental changes, then our states will become stronger, more able catalysts of economic development.
“By instituting true federalism, we open the door to prosperity and greater democracy and openness throughout Nigeria. This will help bring peace and tranquillity where there is now tension and uncertainty about the pathway our nation is on. This important change will require more funds in state hands and less in federal. Other items such as stamp duties for financial transactions, tourism, and the incorporation of businesses should also occur at the state level and be removed from the federal charge,” Tinubu concluded.
Obviously, while it is not hard to identify that Tinubu’s comment amply and perfectly demonstrates the way to go, it, on the other hand, remains an open secret that the challenge arising from federalism as a system of government is not Nigeria-specific but of global dimension and concerns.
It, therefore, elicits the question as to why the Federal system has become reputed for creating more friction than cohesion whenever and wherever it is practised. Why is it that the fundamental assumptions inherent in the system, in most cases, fail to offer targeted road maps for upholding the health and vitality of a nation’s peaceful coexistence?
Adding context to the discourse, available information at Wikipedia, the world’s information powerhouse, shows that there are roughly/about 25 countries in the world where the federal system of government is practised today.
Interestingly also, these countries, when put together, represent 40 per cent of the world’s population. These countries include but are not limited to; India, the United States of America (USA), Brazil, Germany and Mexico.
Typically, the federal system of government tends to have so much passion for constitutional governance based on a mixed or compound mode of government that combines a general government with regional governments in a single political system.
While many political commentators accept as true that its greatest strength as a system of government is that in a country where there is much diversity, and the establishment of a unitary government is not possible, a political organization can be established through this form of government.
In this type of government, local self-government, regional autonomy, and national unity are possible; others argue that with the division of powers, the burden of work on the centre is lessened, and the centre needs not to bother about the problems of a purely local nature.
It can devote its full attention to problems of national importance. Because of provincial or regional autonomy, the administration of these areas becomes very efficient. To the rest, in a federal government, the provinces, regions or states enjoy separate rights, and they have separate cabinets and legislatures. Local governments also have separate rights, and the councils are elected by the people to run the local administration.
Despite these virtues, there are examples of nations across the globe where like Nigeria, the federal system has remained a pathway to discord.
For instance, in India, the system presents a conflicting scenario. It is a quasi-federal system containing features of both a federation and a union that allows power to be divided between the central government and the states.
Article 1 of the Indian Constitution suggests that the territory of India shall be classified into three categories; the Union Government (also known as the Central Government), representing the Union of India, the State governments and the Panchayats/Municipalities. Basically, it implies an inculcation of a strong sense of love and respect for one’s region, ethnicity, language, and culture.
It is this love which makes regions fight for greater autonomy within the nation and directly puts the authenticity of Indian federalism in danger.
Another area of concern is that the most important power of the Governor sometimes comes in conflict with the federal structure of the country. To illustrate this claim, the power vested upon him by Article 154 of the Indian Constitution states that the Governor holds all the executive powers of the state. Going by analysis, this provision implies that the Governor can appoint the Chief Minister, the Advocate General of the State, and State Election Commissioners. The most paramount and, in my view, troubling executive power at his disposal is that he can recommend the imposition of constitutional emergency in a state.
In Brazil, the burden of the challenge is not different. More specifically, the problems facing the country’s federal system and constitutional governance involve several issues.
First and most importantly, Brazil is a federation characterized by regional and social inequality. Although the 1988 Constitution and those preceding it have provided several political and fiscal mechanisms for offsetting regional inequality and tackling poverty, these mechanisms have not been able to overcome the historical differences among regions and social classes. Governments of the three orders have not been able to reduce poverty and regional inequality.
Their ability to act is limited by a number of factors, not the least of which is the fiscal requirements of international leaders and federal financial institutions and regulations.
Another factor, says a report, adversely affecting states is the opening up of Brazil’s economy. This tends to make inter-governmental relations more complex, increasing the differences between developed and less developed states. This also contributes to the current trend towards reversing previous, although timid, initiatives favouring economic decentralization.
An added issue is that in Brazil, there are few mechanisms to coordinate the three government orders. This has become more important because municipal governments have upgraded their financial standing within the federation vis-à-vis the states and have also been responsible for important social policies. The prospect of transforming constitutional principles into policies for regional development is not currently on the agenda for Brazil.
While the world sympathizes with Brazilians on whose shoulders lay this awkward situation, the federal system in Germany, says 75-year-old Rain-Olaf Schultze, author of the book; the Politics of Constitutional Reforms in Northern America, is at a crossroads and dramatizes worrying concerns.
Schultze noted that new weaknesses have emerged in the success story of the postwar German federal system. The highly successful West German federal system, which for 40 years brought economic and social prosperity to Germany’s “second” democracy, has fallen into a state of crisis, mostly as a result of the momentous changes that occurred toward the end of recent decades.
On the surface, German reunification looks complete – however, reunification is still in progress on the cultural and economic levels, the consequences of which will continue to evaluate German politics for decades to come. These strains have made structural reforms essential for the political system.
From Germany to Nigeria, the situation is not different. Today, the restructuring debate, as noted in the introductory part of this piece, rends the political wavelength of the political space called Nigeria.
Synoptically, this is how a political commentator recently captured the whole debate: The south-south claim continued deprivation and blight from oil pollution, despite being the hub for the nation’s oil wealth. The south-east legitimately gripes that nothing will change the history of the Igbos being divested of some of their properties and wealth after the war and being handed only twenty pounds each; and that 62 years after independence, the Nigerian presidency continues to elude the Igbos. The North has valid stitches too.
Most of Nigeria’s insolvent states are in the North; the broadest swathes of underdeveloped Nigeria are in the North, and the largest numbers of uneducated and unskilled youths are from the north. Because northern states are not oil producing, they also lose out on preferential derivation from oil.
While it has, from the above concern, become obvious that the Federal System is riddled with challenges, particularly in a country like Nigeria, the truth must be told to the fact that, in absolute terms, federalism remains the answer to many of the nation’s political and socioeconomic challenges if well practised.
Aside from many supporting the validity of a federal system of government, the greatest lesson of the federal system, says Scott Moore, a research fellow at Harvard’s Belfer Center for Science and International Affairs, is that countries can often become stronger by adopting a looser union.
Utomi is the Programme Coordinator (Media and Policy) at Social and Economic Justice Advocacy (SEJA), Lagos. He can be reached via [email protected]/08032725374
By Shmuel Ja’Mba Abm
In a report filed by The Business Standard on August 8, 2026, India, the current BRICS chair, opposes a proposal for a common currency to counter the US dollar.
The Indian Commerce Minister, Piyush Goyal, told reporters in Jaipur, Rajasthan, northwestern India, after a two-day BRICS trade and industry meeting, that India was not in favour of a BRICS currency. He added that India did not support the introduction of any such BRICS currency scheme.
It is good these things are showing signs at this early stage of attempts by BRICS member countries to crystallise a research finding published by a British economist at Goldman Sachs, Jim O’Neil, in 2001.
None of the leaders and country members of BRICS ever conceived on record the formation of such an economic or political bloc until the research publication, which spurred leaders of the mentioned countries to marshal resources and begin a dialogue of formalisation.
The current membership that started involuntarily with just Brazil, Russia, India, and China as a concept published by a research economist, that later included South Africa, now has 10 members – Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, United Arab Emirates, and Indonesia.
Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan, and Vietnam are designated partner countries that participate in framework meetings without full voting rights.
Originally, the publication by Jim O’Neil wasn’t intended or proposed as a vehicle for the political grouping that has drawn the attention of the rest of the world, as mentioned members took a step further from the appraisal or assessment paper to coalesce into a political force overflowing its original boundaries today.
For the above reasons, the initial step of early contacts was to take advantage of things in common in member countries for the stimulation of economic growth and global prosperity. At that stage, suspicions were managed, and plans didn’t consider historical political differences and disagreements as grounds for suspicion or discontinuation of cooperation.
Of course, China and India had trust issues over decades of border disputes. And in the early stages of heightened escalations of the Russian-Ukrainian relationship when India offered to mediate and broker for ceasefire and eventual peace, Russia wasn’t sceptical but took steps to host the Indian Prime Minister, Narendra Modi.
But at the back of the mind of the Russian-Indian relationship, history was revealing about betrayals, especially after what the country endured in assassinations of leading members of the Indian National Congress, that killed Indira Gandhi and swept her son, Rajiv Gandhi, and thereafter ravaged the family dynasty with threats of violence.
These paved the way for the emergence of the Bharatiya Janata Party, a Hindu nationalist party, and its leader, Narendra Modi. The BJP is not directly responsible for the intimidation and violent campaign against the INC, a close former Soviet-era ally of Russia, but a beneficiary. There are grounds to suspect a frosty relationship with Russia, although concealed in diplomatic niceties and global market dynamics of cross-border business and trade.
India turned into the redistribution hub of Russian discounted grains and oil supplies as a third country, after sanctions were imposed on Russia in what Russia described as demilitarisation and denazification special operations in Ukraine.
India is considered by Western powers as a democracy. It was once a British colony, gaining independence on August 15, 1947. It is also a member of the British Commonwealth of Nations. On a normal day, it doesn’t add or take away anything. But under these circumstances, these are serious factors to consider in arriving at a decision.
Be it as it may, China and Russia have found their way out in world trade, bypassing SWIFT. China operates the Cross-border Inter-bank Payment System, whilst Russia is running the System for Transfer of Financial Messages (SPFS). India has IMPS and NEFT. In principle, these payment systems bypass SWIFT and the US dollar, nonetheless.
As the world waits to hear India back its dissenting views with supporting facts, world trade will never remain the same again.
Shmuel Ja’Mba Abm has extensive scholarly publications that establish him as a leading academic expert in regional geopolitical dynamics and diplomatic relations in Africa. Author of e-monographs on geopolitics, ethnic conflicts, and political philosophy.
Feature/OPED
What Dangote’s Reported $40bn Private-Placement Valuation Could Mean for Nigerian Investors, NGX
Dangote Petroleum Refinery could become an unusually large part of Nigeria’s stock market if its eventual IPO valuation is close to the roughly $40 billion implied by a recent private placement.
EBC Financial Group (EBC) highlights that this would value the refinery at about N54.63 trillion, using the Central Bank of Nigeria (CBN) Nigerian Foreign Exchange Market rate of N1,365.6856 per USD on August 7. Against the N158.513 trillion value of companies listed on the Nigerian Exchange (NGX) on the same date, adding the refinery at that value would produce a market worth about N213.14 trillion, with Dangote Refinery accounting for 25.6%.
This scenario assumes the full $40 billion equity value is reflected in NGX market capitalisation and other listed company values remain unchanged. At that size, movements in the company could become highly visible across the Nigerian equity market, although its actual influence on NGX indices may depend on the shares available for public trading and the relevant index rules.
David Precious, Senior Market Analyst at EBC Financial Group, said: “If Dangote Refinery entered the Nigerian Exchange at close to a $40 billion valuation, it could account for roughly one-quarter of the resulting NGX market value. If that valuation is difficult to support, few shares are available for public trading, or investors need to reduce other Nigerian holdings to participate, the effects could extend across Nigeria’s equity market, including existing NGX-listed companies and their shareholders.”
A Private Transaction Can Indicate Value, but Public Investors Need Financial Evidence
Based on the private transaction, $40 billion provides an indication of Dangote Refinery’s value, but it does not establish the eventual IPO price. Details published on August 4 said a $2.5 billion private placement for a 6% stake implied a valuation of roughly $40 billion. The proposed initial public offering (IPO) was reported to target about $5 billion, while the eventual IPO valuation and percentage offered to the public were not disclosed. This is important as a private transaction may produce a different valuation from the price a broad group of public investors is prepared to accept.
For context, public equity market values cited alongside the transaction were about $12 billion for Türkiye’s Tupras and $16 billion for US-listed HF Sinclair. The Dangote figure is about 3.3 times Tupras and 2.5 times HF Sinclair. They are not direct comparisons because profitability, debt, operations and growth plans differ. The gap nevertheless increases the need for audited earnings, cash flow, debt and investment plans that explain what supports the higher valuation.
The reported $5 billion fundraising target is equivalent to about N6.83 trillion at the August 7 exchange rate, or approximately 4.3% of the N158.513 trillion existing NGX market value. Proposed $5 billion raise. If new Nigerian or foreign money funds the offer, the pool of capital invested in Nigerian equities could expand. If investors sell current holdings to participate, capital could instead move away from other listed companies.
Publicly Tradable Shares and New Investment Could Shape the Wider Market Impact
NGX rules show why total company value does not tell investors how much stock they can actually trade. Main Board companies can qualify through either 20% public ownership held by at least 300 shareholders or publicly tradable shares worth at least N20 billion. The Premium Board value alternative is N40 billion. Holdings controlled by promoters, directors and close relatives, government, or strategic investors owning at least 5% are excluded from qualifying public shares.
This means a company worth tens of trillions of naira could still have a much smaller amount of stock available for regular trading if ownership remains concentrated. The key issue is therefore how much of Dangote Refinery becomes accessible to public investors and how widely those shares are held.
Regional investment could also affect the outcome. Details published on 4 August indicated engagement involving South Africa, Kenya, Egypt, Ghana and Rwanda, including possible Kenyan participation of up to $500 million, although no allocations were confirmed. The Johannesburg Stock Exchange separately said Dangote Group had shown strong intent to pursue a South African listing after Nigeria. Regional participation in the Nigerian offer could bring new capital directly into Nigerian equities. A later South African listing could broaden access but would not itself increase money raised through the Nigerian IPO.
Pension funds face the same question of capital allocation. The National Pension Commission (PenCom) waived the usual existence, profitability and dividend requirements so Pension Fund Administrators can consider the IPO, while retaining internal investment policies, risk-management requirements and duties to contributors and retirees. PenCom Circular on Dangote Refiner. PenCom states that the dispensation is exceptional, one-off and specific to this proposed IPO.
Pension funds held N5.907 trillion in domestic ordinary shares at the end of June, compared with the offer’s approximately N6.83 trillion equivalent. This does not imply pension funds would finance the offer. It shows why managers must consider exposure to one company and whether participation requires reducing other investments.
Precious added, “Dangote being listed could become a turning point for Nigeria’s equity market if it brings wider public ownership and additional African capital. Investors still need clear evidence supporting the valuation, clarity on how much of the company they can trade and an explanation of where the money raised will go. Those answers will determine whether the listing expands the Nigerian equity market or concentrates more investment around one company.”
An approved prospectus should clarify the valuation, shares offered, public ownership and use of proceeds. The Securities and Exchange Commission (SEC) said on June 23 that no IPO application had then been filed or approved and ordered unauthorised pre-marketing to stop. Details published on 4 August later said an IPO application had been submitted, with regulatory approval expected in the following weeks. Until final terms are disclosed, the test for Nigeria is whether the listing combines a supportable valuation with broad public ownership and genuinely additional investment.
Feature/OPED
Moving the Stablecoin Conversation From Hype to Utility in Africa’s Next Payments Evolution
By Rajat Mishra
For much of the past decade, discussions around stablecoins have been dominated by cryptocurrency speculation. Increasingly, however, stablecoins are emerging as practical financial infrastructure for moving money across borders, managing liquidity and improving payment efficiency.
The real opportunity lies not in choosing between traditional finance and digital assets, but in building an integrated financial ecosystem where both work together to improve efficiency, broaden financial access and deepen economic connectivity across the continent.
Despite significant advances in financial inclusion and digital payments, moving money across African borders remains far more difficult than it should be. Businesses continue to face challenges when making cross-border payments. Fragmented payment networks, multiple intermediaries, and lengthy settlement processes increase costs and create operational inefficiencies.
Remittance providers, the specialised financial services that millions rely on to send money home, face many of the same structural challenges. These providers play a critical role across the continent. In fact, 19 of Africa’s 54 countries receive remittance inflows equivalent to at least 4% of their GDP. Yet Africa remains the world’s most expensive region to send money to.
These challenges are not a reflection of remittance providers themselves, but of the fragmented banking and settlement infrastructure underpinning international money movement. Financial institutions must often manage liquidity across multiple disconnected currency markets while relying on complex correspondent banking networks and clearing systems. The result is higher costs, slower settlements, and capital that remains unnecessarily locked up.
One of the most immediate opportunities for stablecoins lies in improving cross-border settlement. Consider a Kenyan business importing goods from South Africa. Under traditional settlement models, payments often pass through multiple correspondent banking relationships, involve several foreign exchange conversions, and can take days before funds reach the intended recipient.
Stablecoin-enabled settlement rails have the potential to reduce much of this friction by enabling value to move more efficiently between financial institutions across markets. The result can be shorter settlement times, greater transparency and improved predictability for businesses operating across borders.
The benefits extend well beyond businesses. For millions of Africans working abroad, remittances remain a financial lifeline, helping families pay school fees, healthcare costs and daily living expenses. Yet sending money home often involves navigating a complex chain of money transfer operators, correspondent banks, and local payout partners, with each additional layer introducing costs and delays.
Stablecoins can help streamline the backend movement of funds between institutional participants, reducing settlement costs and improving efficiency across the value chain.
For end users, the advantage is simplicity. Recipients do not need to interact with, or even understand stablecoins directly. They continue to receive money through familiar, trusted channels, whether a local bank account or mobile money wallet, only faster and at a lower cost.
Beyond payments, stablecoins also address one of the less visible but most significant challenges in cross-border finance: liquidity management. Financial institutions operating across multiple markets must constantly ensure they have sufficient funds in the right currency, in the right jurisdiction and at the right time. Today, this often requires pre-funding accounts across multiple countries, a costly practice that traps large amounts of capital and limits financial flexibility.
Stablecoins introduce a new model for moving value across borders in near real time, enabling institutions to manage liquidity dynamically as demand arises. This can reduce the need for large pre-funded balances, improve treasury efficiency and free up capital that can be deployed more productively. Ultimately, these efficiencies can translate into faster settlements, lower costs, and better services for businesses and consumers alike.
However, the true value of stablecoins will not come from isolated blockchain networks operating independently of existing financial systems. Their long-term impact will depend on how effectively they integrate with banks, mobile money platforms, payment service providers and existing payment infrastructure. Interoperability will be critical to ensuring payment flows move seamlessly between systems, markets and currencies. The goal should be to strengthen and modernise today’s payment ecosystem, not replace it.
From experiment to infrastructure: what global moves are telling us
Some of the clearest signals that stablecoins are moving from experimentation to infrastructure are coming from card networks. Mastercard’s reported agreement to acquire BVNK, valued at up to $1.8 billion, points to a strategic investment in the settlement layer connecting stablecoin rails with traditional banking and reflects growing institutional confidence in stablecoin-enabled cross-border payments.
Visa’s expansion of stablecoin-backed cards through Stripe’s Bridge to more than 100 countries reflects a complementary strategy. Rather than acquiring infrastructure outright, Visa is leveraging its existing global network as the final distribution layer for stablecoin-funded payments.
The inclusion of African markets is particularly significant. It signals growing confidence that stablecoin-backed payment instruments can operate alongside, and in some cases complement, the mobile money ecosystems that already dominate wallet-based payments across much of the continent.
Taken together, these developments point to a broader shift. Card payment networks are moving from observing the stablecoin conversation to investing directly in the infrastructure that underpins it. For Africa, the implication is not that stablecoins will replace existing payment rails, but that success will increasingly belong to institutions capable of orchestrating multiple settlement rails – cards, bank transfers, mobile money and stablecoins- within a unified, interoperable ecosystem. Local market expertise, regulatory relationships and last-mile distribution will remain decisive competitive advantages.
Building for scale through trust and regulation
But despite their potential, stablecoins cannot operate outside the boundaries of regulated financial systems. Their long-term viability across Africa depends on clear regulatory frameworks, robust compliance standards and trusted infrastructure that supports transparency, risk management and consumer protection.
We are already seeing this evolution. In markets such as South Africa, institutions facilitating cross-border settlements must navigate increasingly sophisticated regulatory requirements, including approvals for certain offshore crypto-related activities. Globally, initiatives such as the OECD’s Crypto-Asset Reporting Framework (CARF) and expanded Travel Rule obligations are raising expectations around reporting, tax transparency and compliance.
These developments reinforce a simple reality: stablecoin infrastructure does not reduce compliance obligations. It raises the bar for governance, transparency and institutional risk management. The objective is not to bypass regulation, but to build interoperable payment systems that can innovate confidently within it.
From the edges to the plumbing
The stablecoin conversation is steadily moving beyond speculation and towards practical implementation. What once sat at the edges of the payments debate is becoming part of the plumbing of cross-border finance rather than a parallel system to it.
The question is no longer whether stablecoins have a role to play in payments. The question is where they deliver the greatest value. In Africa, that value is increasingly clear: faster settlement, improved liquidity efficiency and more connected cross-border commerce. The winners will not be those that replace existing financial systems, but those that successfully connect stablecoin rails with the banks, mobile money networks and payment providers that already power the continent’s economy.
For pan-African payment networks such as Onafriq, the priority is ensuring that emerging technologies complement the financial infrastructure businesses and consumers already trust, rather than introducing new layers of complexity.
The opportunity lies in connecting stablecoin settlement with banks, mobile money networks and payment providers, ensuring the benefits of this new infrastructure deliver tangible outcomes for African businesses and consumers.
Rajat Mishra is the CPO for Network Product & Deputy Group CPIO at Onafriq
