Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Nigeria’s central bank holds rates after border closures spur inflation, president seeks parliamentary nod on $23bn in foreign loans, 47 men plead not guilty to homosexuality charge, and Cambridge college to return looted Benin cockerel statue.
- Nigeria’s central bank left its benchmark lending rate on hold at 13.5% after a government decision to close borders with neighbouring countries sent inflation to a 17-month high last month. Central bank Governor Godwin Emefiele told a news conference in the capital Abuja that the decision by the bank’s monetary policy committee (MPC) was unanimous. He said the impact of the border closures on prices was “reactionary and temporary” and that the medium-term benefits of the government’s decision outweighed the short-term costs. Emefiele said he would advise the government to maintain the closures in the interests of boosting economic output, which has been recovering relatively slowly in the non-oil sector. “In view of the uptick in inflationary pressures, (the MPC) decided that the balance of risks was in favour of protecting price stability,” Emefiele said, after data last week showed inflation hit 11.6% in October. Emefiele said a central bank decision to set a minimum loan-to-deposit ratio for lenders had helped lift economic growth to almost 2.3% in the third quarter, adding that the policy must be sustained as it had led to a drop in interest rates. Some banks have been caught out by the initiative, incurring penalties from the central bank.
- Nigeria held talks with West African neighbours over its land border closures, with the African giant insisting on levying duties on goods transiting to its country through neighbouring nations to curb smuggling. “Tuesday, there was a meeting between … the comptrollers of customs of all the three countries involved. We have not reached any agreement … but our insistence is that we must all respect the ECOWAS protocol on transit goods,” Information Minister Lai Mohammed told reporters in Abuja. Mohammed said the protocol on duty payment for transit goods has not been followed to the detriment of local manufacturers. He said the government was putting in place checks to ensure that Nigeria’s economy will not be overrun as a result of a free trade agreement it signed this year. Nigeria plans to keep its land borders closed until at least January. In July, Nigeria signed up to an African Continental Free Trade Area, a project to create a $3.4 trillion economic bloc, despite fears that Nigeria could be flooded with cheap goods from competitive neighbours. Since taking office in 2015, Nigerian President Muhammadu Buhari has introduced policies aimed at curbing imports and smuggling, to boost local manufacturing. Buhari has also been trying to boost revenues after a 2016 recession slashed income. “We cannot continue to subsidize the rest of West Africa,” Mohammed said, adding that Nigeria has been able to save around 30% from its fuel consumption as a result of the border closure. Some 10–20% of Nigerian fuel is smuggled to neighbouring countries as gasoline is heavily subsidised in the country and prices are higher in neighbouring countries. Mohammed said import duty collection has grown by 15% since the closure, three months ago, noting that the number of weapons smuggled into the country has also reduced. Nigeria, Benin and Niger agreed this month to set up a joint border patrol force to tackle smuggling. The countries planned to hold their first meeting in Abuja this week.
- Forty-seven Nigerian men pleaded innocent to a charge of public displays of affection with members of the same sex, an offence that carries a 10-year jail term. Homosexuality is outlawed in many socially conservative African societies where some religious groups brand it a corrupting Western import. The Nigerian men, who appeared at a court in the commercial capital Lagos, were among 57 arrested in a police raid on a hotel in the impoverished Egbeda district of the city in 2018. Police said they were being “initiated” into a gay club, but the accused said they were attending a birthday party. The trial is a test case for a law banning gay marriage, punishable by a 14-year jail term, and same-sex “amorous relationships”. It caused international outcry when it came into force under former Nigerian President Goodluck Jonathan in 2014. Nobody has yet been convicted under the law, prosecution and defence lawyers in the case told Reuters. But Human Rights Watch and other activists say it has been used to extort bribes from suspects in exchange for not pursuing charges. “Police officers will stop you and then get you arrested, extort money from you and begin to call you names,” Smart Joel, one of the defendants, told Reuters before the hearing. “I just wish the case will be quickly dismissed as soon as possible,” added Joel, 25, who runs a laundry and dry cleaning business. Spokesmen for Nigeria’s police and ministry of justice did not respond to text messages and phone calls seeking comment on the extortion allegations. Activists working to protect rights of sexual minorities in Nigeria said they were tired of harassment. “The vagueness of the law makes it impossible to get a conviction,” Xeenarh Mohammed, executive director of the Lagos-based Initiative for Equal Rights (TIERS), told Reuters. “What does ‘amorous showing of same-sex affection’ mean?” she added.
- President Muhammadu Buhari has asked parliament to approve $22.72 billion of foreign borrowings tied to infrastructure and other projects, according to a letter seen by Reuters, after a similar request three years ago was rejected. In the letter dated Nov. 26, Buhari said parliament did not approve a $30 billion external borrowing plan in its entirety. Rather, a $4.5 billion Eurobond sale was approved alongside five projects out of a total of 39. He asked for the lower house to reconsider and approve the external borrowing plan for 2016–2018 as well as projects tied to the funds, he said in the letter. The government has said it wanted to borrow more from abroad so that 40% of its loans come from offshore sources by 2019 to lower cost and help fund its record budgets. Buhari plans to spend 10.33 trillion naira ($33.8 billion) next year, a 17% increase over this year’s budget. The Debt Management Office (DMO) said it had no plans to use the international debt market in 2019 after its sixth Eurobond sale a year earlier. However, the debt office has said the government plans to tap cheap concessionary loans this year. The new borrowings are tied to projects supported by the World Bank, African Development Bank, Islamic Development Bank, German Development Bank and China EXIMBank, the letter read. “Outstanding projects in the plan that were not approved by the legislature are … critical to the delivery of the government’s policies and programmes relating to power, mining, roads, agriculture, health, water and educational sectors,” Buhari said in the letter. In 2016, Buhari asked the Senate to approve $30 billion of foreign borrowing to fund projects. But the Senate dealt him an unexpected blow by rejecting the plan. During Buhari’s first term, the executive was embroiled in a power tussle with the legislature that slowed government including confirmation of appointments. However, in February, Buhari won a second term while some of his party loyalists in parliament were re-elected. Many of those who commented on social media focused on the president’s altered relationship with lawmakers.
- Still on the subject of borrowing, The African Development Bank (AfDB) has approved a $210 million loan to help Nigeria upgrade its dilapidated electricity transmission and distribution network. The loan to Transmission Company of Nigeria (TCN) will support the construction of 330KV double circuit quad transmission lines and sub-stations across the country, the bank said in a statement. The AfDB funded project will run across seven states and will improve the capacity of power grid where it is most constrained. Nigeria privatised most of its power sector in 2013 but retained control of its monopoly grid, operated by TCN. Most of the country’s power generation is from thermal power stations that use gas. The creaking power grid has often been blamed for hobbling growth in west Africa’s largest economy. AfDB’s acting vice president for Power & Energy, Wale Shonibare said implementing the project would increase evacuation from the south towards the north, where power supply is limited. The project would also improve power export and regional power system integration to the West African Power pool, especially through Niger and Benin interconnections, he said. The country’s power output stands at around 4,000 MW, the Nigeria Electricity System Operator has said. Total power generation capacity is about 7,000 MW but the transmission network cannot cope if plants operate at full tilt. Nigeria’s privatized power sector typically does not use meters to provide invoices, bill collections are low and energy tariffs have remained fixed for three years.
- And there was another story about a very different type of borrowing. A Cambridge University college said it would return an antique statue of a cockerel to Benin City in Nigeria, more than 120 years after it was looted by British colonial forces. The move by Jesus College will likely step up pressure on other institutions holding plunder from the historic Kingdom of Benin and other objects from other cultures taken by colonialists during the 19th century. Nigeria said it was delighted by the announcement and launched a broad appeal for museums across the world to return its heritage. “Considering the hundreds of Benin Bronzes looted during that occupation, the decision to return the cockerel is like a drop in the ocean, but it is an important drop and we welcome it,” the Minister of Information and Culture, Alhaji Lai Mohammed, said. Jesus College staff said research had shown there was no doubt the cockerel had been looted from the Court of Benin, the seat of the once-mighty West African kingdom. “This royal ancestral heirloom belongs with the current Oba at the Court of Benin,” the college said on its website, referring to the traditional and still influential ruler of what is now part of modern-day Nigeria. British museums have long resisted campaigns for the return of Nigeria’s Benin Bronzes, Greece’s Elgin Marbles, Ethiopia’s Magdala treasures and other loot, often citing legislation that bans them from disposing of their collections. But the debate has heated up in recent years, particularly in Britain’s universities, where students and campaigners have called for greater recognition of how the colleges benefited from colonial-era riches and funding. Jesus College said that from now on it would “acknowledge and contextualise” the role in its history of Tobias Rustat, a major 17th century benefactor who benefited from the transatlantic slave trade. Unsurprisingly, people had lots to say on social media.
- We wrote about entrepreneur Kofo Akinkugbe, whose company makes smartcards. Sub-Saharan Africa lags other regions such as Asia in moving away from cash to plastic money. SecureID, the company that Akinkugbe set up 14, years ago, is trying to bridge that gap. SecureID makes bank cards, mobile phone SIMs and voting cards for businesses in 21 African countries, to address an acute need for secure electronic cards carrying sensitive data, particularly in the banking sector. In sub-Saharan Africa, only 43% of people aged above 15 have a bank account, according to the World Bank’s Global Findex Database. That figure has grown from 34% since 2014, highlighting the potential for growth. Nigeria’s central bank has implemented policies aimed at encouraging a move away from cash, as have Ghana, Kenya and Rwanda, in large part motivated by efforts to tackle fraud, theft and money laundering.
- And the Nigerian government placed a bank guarantee of $200 million with a high court in London to secure a stay on asset seizures of up to $9 billion related to a failed gas project, a spokesman for its attorney general said. Process & Industrial Developments, a firm based in the British Virgin Islands set up solely to build a gas processing plant in Nigeria, won a $6.6 billion arbitration award after the 2010 deal collapsed. The award has been accruing interest since 2013 and is now worth more than $9 billion. Nigeria in September successfully sought the right to appeal an August ruling that would have converted the arbitration award to a judgment, which would make it easier for P&ID to seize its assets. Nigeria has said it would fight making any kind of payment to P&ID. The country’s anti-graft unit has also charged two foreign nationals and a former petroleum ministry official with wrongdoing related to the case. P&ID has criticised the investigations as a “sham” that would “never pass muster” in other jurisdictions. Nigerian Attorney General Abubakar Malami last week said the nation was appealing a requirement that it deposit $200 million with the court in order to secure a stay on asset seizures while it challenged the August ruling. Check out our explainer if you need a step-by-step guide to this dispute.