A Week in Nigeria: 11 April

Highlights from Reuters coverage of Nigeria over the last seven days

In this week’s round-up: Nigeria seeks $6.9bn from multilateral lenders to fight coronavirus, pandemic set to push sub-Saharan Africa into first recession in 25 years, and how lockdowns are ruining livelihoods.

• Nigeria has requested $6.9 billion from multilateral lenders to combat the impact of the coronavirus pandemic on Africa’s biggest economy, the Finance Minister Zainab Ahmed. Nigeria, whose revenues have tumbled with the fall in oil prices, has asked for $3.4 billion from the International Monetary Fund, $2.5 billion from the World Bank and $1 billion from the African Development Bank (AfDB), the minister said. Africa’s most populous country and the continent’s biggest oil producer, which is still recovering from a recession caused by the last period of weak oil prices, had 232 confirmed cases of the novel coronavirus and five deaths, as of Sunday. A two-week lockdown was imposed last week on Lagos state, home to the nation’s sprawling commercial hub, as well as neighbouring Ogun state and the capital territory of Abuja, in an effort to prevent the virus spreading across the country. The minister told a news conference in Abuja that Nigeria was one of several African states seeking the suspension of debt-servicing obligations for 2020 and 2021 from multilateral lenders. The requests are part of a wider debate over debt relief. But analysts say securing such relief will be a challenge as it requires winning approval from a disparate array of creditors. The IMF, which has received requests for help from about 80 nations including 20 in Africa, is making about $50 billion available from its emergency financing facilities to help countries cope with the crisis. The World Bank has approved a $14 billion response package. Nigeria’s finance minister said IMF support would not be tied to a formal programme and the funds would not have conditions attached because the cash was being borrowed previous Nigerian contributions to the Fund. Nigeria, where economic growth had been about 2%, is still struggling to shake off a 2016 recession caused by a previous slide in oil prices to below $30 a barrel. In the latest crisis, oil prices plunged to a nearly two-decade low of close to $20. Meanwhile, Fitch on pushed Nigeria’s debt rating deeper into “junk” territory, rating it a “B” and saying it expected the virus pandemic to drive the economy back into recession. It forecast the economy would contract 1% in 2020.
• The International Monetary Fund said it was considering Nigeria’s request for $3.4 billion in emergency financing to combat the impact of the pandemic. IMF Managing Director Kristalina Georgieva said Nigeria’s economy was threatened by the twin shocks of the COVID-19 pandemic and a sharp fall in international oil prices, and the country had asked for funding to help protect the most vulnerable people and companies. “We are working hard to respond to this request so that a proposal can be considered by the IMF’s Executive Board as soon as possible,” Georgieva said in a statement.
• The World Bank, in a new forecast, said it expected the coronavirus pandemic to push sub-Saharan Africa into recession in 2020 for the first time in 25 years. The bank’s Africa’s Pulse report said the region’s economy will contract 2.1% to 5.1% from growth of 2.4% last year, and that the coronavirus will cost sub-Saharan Africa $37 billion to $79 billion in output losses this year due to trade and value chain disruption, among other factors. Real gross domestic product growth was projected to fall sharply particularly in the region’s three largest economies — Nigeria, Angola, and South Africa, the World Bank said. Oil exporting-countries like Nigeria would be hit particularly hard; while growth would likely weaken substantially in the West African Economic and Monetary Union, and the East African Community due to weak external demand, disruptions to supply chains and domestic production. Africa has at least 11,000 confirmed cases of the novel coronavirus, more than 500 deaths and just over 1,000 recoveries, according to a Reuters tally based on government statements and WHO data. “The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” World Bank Vice President for Africa Hafez Ghanem said. Various African governments have announced lockdowns or curfews in response to the virus, which was slow to reach many African countries but is now growing exponentially, according to the World Health Organization. The bank said the spread of the flu-like respiratory disease also had potential to lead to a food security crisis on the continent, with agricultural production forecast to contract 2.6% and up to 7% in the event of trade blockages. “Food imports would decline substantially (as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand,” the bank said in a statement accompanying the report. There have been calls for China, the United States and other bilateral creditors to temporarily suspend debt payments by the poorest countries so they can use the money to halt the spread of the disease and mitigate its financial impact.

• Some African countries could see a peak in coronavirus cases in the coming weeks and testing should be urgently increased in the region, World Health Organization officials warned. “During the last four days we can see that the numbers have already doubled,” Michel Yao, the WHO Africa programme manager for emergency response, told a media teleconference. “If the trend continues, and also learning from what happened in China and in Europe, some countries may face a huge peak very soon,” he said, adding that it could arrive in the coming weeks, but without naming countries. The WHO’s Africa chief, Matshidiso Moeti, said there is an urgent need to expand testing capacity beyond capital cities in Africa as the virus spreads through countries. “Without help and action now, poor countries and vulnerable communities could suffer massive devastation,” WHO Director General Tedros Adhanom Ghebreyesus told diplomats in Geneva. “The infection numbers in Africa are relatively small now, but they are growing fast.” In a separate development, African leaders including Nigeria’s Presiden Buhari and the heads of state of South Africa and Rwanda rallied around Tedros, a former foreign minister of Ethiopia, after U.S. President Donald Trump criticised the United Nations agency and threatened to withhold his country’s contribution to its budget.

• We looked at the impact of the lockdown in Lagos as part of a story about the way in which millions of Africans who work in the informal sector have been rendered unable to work while unable to benefit from government support. Informal work accounts for more than 85% of employment across the continent and will be largely bypassed by meagre economic support measures that cash-strapped governments are rolling out. The International Monetary Fund said in a blog on the outbreak’s impact on Africa last month that “social distancing” was not realistic for the most vulnerable, and the notion of working from home was only possible for the few. “The very measures that are crucial to slowing the spread of the virus will have a direct cost on local economies,” it said. “The disruption to people’s daily lives means less paid work, less income, less spending, and fewer jobs.” Lockdowns, initially slated to last 14 days, began in Lagos and the capital, Abuja, on March 30. Nigeria’s government has announced a repayment moratorium for government loans made to small businesses ranging from market traders to farmers, and has said it will offer similar relief to large companies. And it says it has begun making cash transfers to the country’s poorest households, but many hawkers and other informal traders do not have bank or mobile money accounts to pay into even if they were eligible. But some 60% of Nigerians do not have a bank account, according to the World Bank. There is a danger that government support will not reach those who need it most, said Tunde Ajileye, a partner at risk consultancy SBM Intelligence. “Until people can be found and tracked centrally and matched to their financial records, operations like these will at best be informed guesswork and fraught with corruption,” he said.

• Oil price again took centre stage this week. Nigeria was among oil producers in the OPEC+ group, led by Saudi Arabia and Russia, to agree to production cuts. Nigeria agreed to a cut of around half a million barrels of oil a day, down from the current level of some two million barrels per day. The group has been putting on Mexico to seal an accord for a collective cut in output of 10 million barrels per day, before asking other nations for a further 5 million bpd of cuts. Following talks on Thursday, OPEC, Russia and other allies outlined plans to cut output by more than a fifth and said they expected the United States and other producers to join in their effort to bolster prices. The group, known as OPEC+, said a final agreement was dependent on Mexico signing up to the pact after it balked at the production cuts it was asked to make.
• Nigeria has decided to shut down all its oil refineries as it works to secure funding and a model to upgrade them, the head of state oil company Nigerian National Petroleum Corporation (NNPC) said. The three refinery sites in Africa’s largest oil exporter have worked only sporadically due to years of underinvestment. The state oil company also would no longer manage the three refinery sites in Africa’s largest oil exporter after they restarted, NNPC head Mele Kyari said. Nigeria was pursuing “a different model” such as the type used by Nigeria LNG. NLNG is run by a consortium including international companies Shell, Total and Eni, with NNPC as a partner. The refineries have worked only sporadically due to years of underinvestment. Nigeria has been working to revamp them, but has struggled to find external financing to do so. Running Nigeria’s refineries is costly, as they are decades old and poorly maintained, and even world-class refineries are cutting output due to falling fuel prices.
• And we reported that President Buhari pardoned 2,600 prisoners to reduce overcrowding in Nigeria’s jails and slow the spread of the novel coronavirus. “President @MBuhari has granted a presidential pardon to 2,600 inmates nationwide,” Bashir Ahmad, President Muhammadu Buhari’s personal assistant on new media, said in a tweet. He said it was part of the government’s efforts to “decongest the custodial centres” and discourage the spread of the coronavirus that causes the disease COVID-19. Ahmad, in another message on Twitter, said those pardoned included inmates aged 60 and above, those with illnesses that were likely to kill them and prisoners sentenced to three or more years who had less than six months left to serve.