How the currency of moneychangers jumps during Nigerian elections

When Nigeria’s two presidential candidates kicked off campaigning this week, they had an unusual group of fans: black market moneychangers.
As political aspirants jostle for power in Africa’s biggest oil producer, the spending the two unleash can mean boom time for street changers such as Kareem Abdulkadir. The 44-year-old is positioning himself to catch some of the pre-election petrodollars that are spent oiling the wheels of patronage as politicians exchange briefcases of dollars for suitcases of Nigerian naira.
“Election time means satisfying people, and that means money,” said Abdulkadir, sitting in a cluttered tourist shop that also serves as a bureau-de-change in an upmarket Lagos hotel frequented by the city’s elite.
As is the case the world over, elections generate intense lobbying lubricated by vast sums of cash; in Nigeria that translates to heavy spending to secure seats or pay off rivals. At least some of this money is acquired through corruption or links to crimes such as oil theft or kidnapping. Much of the cash is then laundered through anonymous street changers.

“Campaign politics is an industry all by itself in Nigeria. The amounts being spent are eye-popping, and enough to sustain a huge array of contractors and political jobbers,” said Antony Goldman, head of Nigeria-focused PM Consulting. “The amount of grey money sloshing around at the moment is all about politics.”
Nigeria is considered one of the most corrupt countries in the world, with Transparency International ranking it 136th out of 174 on its corruption perception index. The issue was at the forefront on Thursday as the incumbent president, Goodluck Jonathan, launched his re-election campaign in Lagos.
Sporting the traditional robes and cap of the south-west Yoruba people – who have appeared largely in favour of the opposition – Jonathan opened with an unusually fiery speech that addressed a growing Islamist uprising in the north-east and, more pressingly for the south, a slump in oil prices and the value of the national currency.

President Goodluck Jonathan, centre, waves to his supporters during a campaign rally, in Lagos, Nigeria, on Thursday. Photograph: Sunday Alamba/AP

“There’s nothing like corruption anymore,” he told thousands of supporters dressed in the ruling Peoples Democratic party’s green and red stripes.

But the vast sums of money changing hands have not been ignored in some quarters. Last September, the central bank said it suspected early political campaigning was spurring inflation – brought on by politicians building war chests in dollars – and announced new measures aimed at tackling money laundering.

“We have seen evidence of huge demand for dollars by bureaux de changes, huge purchases of cash that are not accounted for. It is a small class of people that has access to huge rents,” said the bank’s then governor, Lamido Sanusi, who was ousted following a report that found up to $20bn (£13.2bn) had been diverted by the state oil firm over 18 months between 2012 and last year. The government denies the allegations.
For the past three elections, Abdulkadir has summoned a small army of fellow moneychangers from his home in the northern capital of Kano. Some make the 15-hour drive on bruising pot-holed roads to Lagos, while others head to the moneyed capital, Abuja. The men pool their money to meet soaring demand, and the amounts – and direction – in which they change provide a glimpse into the patronage networks underpinning Nigeria’s electoral system.

“Initially they [politicians] were buying dollars,” said another changer, Ibrahim, who recently bought a motorbike so he could weave through Lagos’ traffic-jammed streets when summoned to the homes of big-time clients. “During that time they wanted to store or move around their money, so they’re buying dollars. I was changing maybe $50,000 a week,” he explained. A frenzy of dollar-buying peaked in the week leading to the party primaries last month, he said.

Since then, the exchanges have reversed. “The [party] delegates are all paid in dollars. But now all the ogas [elites] are changing their dollars into naira because they need to start distributing to the common man,” said Ibrahim. Bags of rice emblazoned with a candidate’s faces often accompany envelopes of cash distributed on the campaign trail.

Estate agents say a rush of “distressed house sales” – when upscale properties are rapidly sold for knockdown prices for cash – has also accompanied politicians’ attempts to raise campaign funds.
“We had a client from the house of representatives who got wind that other contestants were giving delegates the sum of 250,000 naira [£904] each to vote them, so he directed that his two properties be sold at all costs within two days,” said estate agent Igwe Hassan of Godiya Properties. The houses were sold for 50m naira each – a third of their market value.

Nigeria is the biggest oil producer in Africa. But tumbling prices have hit government revenues. Photograph: George Esiri/EPA

Oil accounts for about 80% of government revenue. The benefits rarely trickle down, and revenues have been hammered by a halving of world oil prices since June last year.
“We’re facing the perfect storm – security challenges, oil collapsing and corruption,” said Folarin Gbadebo-Smith, a director at the Lagos-based Centre for Public Policy.

Nigeria’s naira was among the worst-performing currencies in Africa in 2014 . On top of this the government has had to cut its 2015 budget by 16% because of tumbling oil prices, which analysts forecast will keep falling this year. That has pushed up prices in Nigeria, where a lack of refining capacity means fuel and most other consumer goods are imported.

“The new budget, the old budget – neither has any meaning in a $40 per barrel environment. There’s an atmosphere of panic right now,” said Gbadebo-Smith. “If you pay school fees for your child abroad, they’ve gone up 40% overnight. Three weeks ago, I went to look at buying a generator and the price was 2.8m naira. I went back this week and the price was 3.5m.”That politicians are buying up the local currency means there is less of it around for ordinary traders like carpet seller Kabiru Obiswu.

“I’ve spent 18 years in this business and this is the worst by far. Everyone is saying there’s no money in town – is it because of elections we should starve?” he said, in a darkened shop full of handwoven carpets.