Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Dangote refinery completion delayed by year, leader of banned Shi’ite group granted medical leave, activist arrested for “revolution” call, plus the tensions between Buhari’s protectionism and Africa free trade deal.
- It was a bumper crop of news stories for anyone with a particular interest in oil. In one of the week’s oil-related stories, we reported that Africa’s largest oil refinery will not be finished until the end of 2020 due to problems importing steel and other equipment. Executives at Dangote, which is building the facility in the Nigerian commercial hub of Lagos, made this clear during an exclusive interview. Nigeria, Africa’s most populous nation, imports virtually all its fuel due to sclerotic and underutilised refineries, and even the state oil company is looking to the 650,000 barrel per day (bpd) Dangote refinery to help address this. Dangote Group Executive Director Devakumar Edwin, who oversees the project, said it would be completed by the end of next year and not this year as previously stated. And Giuseppe Surace, the refinery’s chief operations officer, said the company expects fuel production within two months of completion of the project. The refinery could transform Africa’s biggest crude producer from a fuel importer into a net exporter, upending global trade patterns. Edwin also said Dangote is setting up its own trading desk, with a senior team of three people and a staff of roughly 30 who will monitor international commodity prices.
- Nigeria’s state oil company plans to partner with Dangote’s refinery to turn the oil-producing country into a fuel supplier for the region, its new boss said in his first international media interview since starting in the role a few weeks ago. Mele Kyari also said he would publish the full list of those holding the nation’s crude oil contracts and the firms who won deals to swap Nigeria’s crude oil for products, along with audited accounts of NNPC’s books. He said the openness, and a plan to improve commercial terms for oil companies, would spur investment that has been throttled by uncertainty and opacity. The contract lists have not been published for years, and NNPC has been dogged for decades by a reputation for corruption and mismanagement.
- And our team in London reported that Nigerian oil has suffered its slowest sales of the year in August, traders said, as U.S. exports of competing light, sweet grades flood traditional markets in Europe and Asia. The changes illustrate how U.S. President Donald Trump’s strategy for “energy dominance” is reshaping oil markets worldwide, as U.S. oil exports surged 260,000 barrels per day in June to a monthly record of 3.16 million bpd. Crude from Africa’s top exporter has largely been pushed out of the U.S. market in the last decade due to booming domestic output. Exports to the United States slid to zero for three weeks in July, the U.S. Energy Information Administration said. But now shale oil from the U.S. Permian basin is pouring ever more into traditional strongholds for Nigerian oil in Western Europe, India and Indonesia.
- Aside from the oil stories, we reported on the latest developments in two ongoing sagas that have prompted an outcry from some human rights campaigners — the treatment of the leader of the country’s biggest Shi’ite Muslim group and a campaigner calling for a “revolution”. The continued detention of the Islamic Movement in Nigeria leader has prompted bloody clashes between his supporters and police over the last few weeks. At the start of the week, a judge in the northwestern city of Kaduna ruled that Ibrahim Zakzaky, the leader of the banned Islamic Movement in Nigeria (IMN), and his wife could seek medical treatment abroad under the supervision of state officials. Nigeria’s state security agency later said it was working to comply with a court order to allow Zakzaky to seek medical treatment abroad.
- Two days before Zakzaky was granted medical leave, Nigerian security agents arrested Omoyele Sowore, a human rights activist who was calling for revolution. Sowore, who founded Nigerian online news organisation Sahara Reporters and ran for president as a minor candidate in the February election, has said Nigeria needs revolution partly because the elections were not credible, along with a list of other issues ranging from corruption to ineptitude. President Muhammadu Buhari, who won a second term in the election, has faced criticism for his administration’s record on human rights. His administration has denied accusations that it has been heavy-handed. Opinions varied on the call for revolution and Sowore’s detention, which was extended to 45 days during the week.
- We took a long, hard look at the apparent inconsistencies between President Buhari’s protectionist policies and the African Continental Free Trade Agreement to which he signed up last month. In an effort to boost local production, Nigeria has in recent years placed import controls on a broad range of items, from rice, cocoa and tomatoes to furniture and footwear. Total duties — tariffs, fees and other taxes — on some imports can top 70%. And the central bank has also restricted access to foreign exchange for imports of more than 40 items it says Nigeria should produce itself. These measures have backfired in some cases. Import controls on rice, imposed even as local farmers fail to meet demand, have kept prices artificially high and led to smuggling from Benin into Nigeria.
Having now signed onto the AfCFTA, Nigeria’s presidency said last month it will set up a committee of government agencies and private sector groups to chart the way forward. “Something has to give,” said John Ashbourne, senior emerging markets economist at London-based consultancy Capital Economics. “Will other African countries allow in Nigerian goods if the (central bank) is actively trying to discourage trade going the other way?”
- We spoke to Nigerian manufacturers who fear the country could be flooded with cheap goods from more competitive neighbours as a result of the trade deal, undermining efforts to revive local manufacturing and expand farming to reduce dependence on crude oil exports.This video featured the views of an envelope manufacturer.
- The naira weakened to 364 per dollar on Friday, from a quote of 363.50 the previous day as falling oil prices tightened liquidity on the currency market, traders said. A dollar shortage was initially caused by a slowdown of foreign inflows after local debt market yields declined. The naira broke through resistance at 363 per dollar, where it has been quoted this week, as liquidity worsened, traders said. Pressure has been building on the naira as oil prices drop and foreign investors book profits on local bonds in response to falling yields. Crude sales account for the bulk of Nigeria’s foreign-exchange earnings and government revenues. “The (naira) is reacting to external shocks while local (dollar) demand is increasing,” one trader said.
- And, as the world marked 400 years since the first recorded African slaves arrived in North America, we looked at how slavery remains a modern-day scourge that affects the lives of Nigerians. We focused on the story of Blessing. She was only six years old when her mother arranged for her to become an unpaid housemaid for a family in the Nigerian city of Abuja, on the promise they would put her through school. In her home town in southwest Nigeria, her mother had trouble making enough money to feed her three children. But when Blessing arrived in Abuja, instead of going to school, the family worked her round-the-clock, beat her with an electrical wire if she forgot one of her chores and fed her rotten leftovers. It’s a sobering story. Over 40 million people are estimated to be trapped in forced labour, forced marriages or other forms of sexual exploitation, according to the United Nations.