A Week in Nigeria: 13 February
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Nigerians win court approval to sue Shell over oil spills, IMF urges VAT hike, securities watchdog puts cryptocurrency regulation on hold, plus Nollywood meets Bollywood in love story.
- The UK Supreme Court on Friday allowed a group of 42,500 Nigerian farmers and fishermen to sue Royal Dutch Shell in English courts after years of oil spills in the Niger Delta contaminated land and groundwater. Senior judges said UK-domiciled Shell, one of the world’s biggest energy companies, did have a common law duty of care, in the latest case to test whether multinationals can be held to account for the acts of overseas subsidiaries. The ruling comes almost two years after a seminal ruling by the Supreme Court in a case involving mining company Vedanta. The judgment allowed nearly 2,000 Zambian villagers to sue Vedanta in England for alleged pollution in Africa. That move was seen as a victory for rural communities seeking to hold parent companies accountable for environmental disasters. Vedanta ultimately settled out of court in January. Nigeria’s Ogale and Bille communities allege their lives and health have suffered because repeated oil spills have contaminated the land, swamps, groundwater and waterways and that there has been no adequate cleaning or remediation. Represented by law firm Leigh Day, they argued that Shell owed them a duty of care because it either had significant control of, and was responsible for, its subsidiary SPDC. Shell countered that the court had no jurisdiction to try the claims. “(The ruling) also represents a watershed moment in the accountability of multinational companies. Increasingly impoverished communities are seeking to hold powerful corporate actors to account and this judgment will significantly increase their ability to do so,” Daniel Leader, partner at Leigh Day, said. SPDC is the operator of oil pipelines in a joint venture between the Nigerian National Petroleum Corporation which holds a 55% stake, Shell which holds 30%, France’s Total with 10%, Italy’s Eni with 5%. A Shell spokesman said the decision was disappointing. “Regardless of the cause of a spill, SPDC cleans up and remediates. It also works hard to prevent these sabotage spills, by using technology, increasing surveillance and by promoting alternative livelihoods for those who might damage pipes and equipment,” Shell said. Shell has blamed sabotage for oil spills. It said in its annual report published last March that SPDC, which produces around 1 million barrels of oil per day, saw crude oil spills caused by theft or pipeline sabotage surge by 41% in 2019. Shell CEO Ben van Beurden said last week that the firm would take “another hard look at its onshore oil operations” in the west African country. The ruling is the second judgement against Shell this year regarding claims against its Nigerian operations. In a landmark Dutch ruling two weeks ago, an appeals court held Shell responsible for multiple oil pipeline leaks in the Niger Delta and ordered it to pay unspecified damages to farmers, in a victory for environmentalists. Leigh Day said that the amount of compensation sought would be quantified as the case enters the trial stage. In 2015, Shell agreed to pay out 55 million pounds ($83.4 million) to the Bodo community in Nigeria in compensation for two oil spills, which was the largest ever out-of-court settlement relating to Nigerian oil spills.
- Nigeria will need to increase its value-added tax (VAT) rate to at least 10% by 2022 and 15% by 2025 from 7.5% now to boost revenues after it recovers from a recession, the International Monetary Fund said. In a report, the Fund also said the government must continue to pursue reforms to help overcome the twin shocks of the oil price crash and the COVID-19 pandemic. “The Nigerian economy is at a critical juncture. Policy adjustment and reforms are urgently needed to navigate this crisis and change the long-running lackluster course,” it said. VAT was raised from 5% in February 2020 but disruptions due to the pandemic have delayed full implementation of the increase. The rate remains among the lowest in the world and less than charged by other major oil-exporting nations including Nigeria’s West African neighbours, the IMF said. Africa’s largest economy probably contracted by 3.2% last year, the IMF said in December, after the coronavirus crisis tipped it into its second recession in five years. The Fund has projected growth of 1.5% this year and said on Monday that output was likely to recover to pre-pandemic levels by 2022. Nigeria collects the equivalent of 5.7% of gross domestic product in tax and the government mostly relies for revenue on crude sales. Tumbling oil prices had already hammered the economy, triggering a historic decline in growth and weakening the naira while pushing up the government’s financing needs. The Fund welcomed fiscal, power and oil sector reforms. It said a gradual and multi-step approach to establishing a unified and clear exchange rate would help clear a payment backlog. Nigeria’s central bank adjusted the exchange rate last year, after an official devaluation in March, in an attempt to align multiple quoted currency rates. But the naira has continued to weaken this year. The IMF proposed a monetary policy reset to tackle high inflation. “The central bank’s financing of the fiscal deficit has resulted in large buildup of open market operations bills … which … has increased Nigeria’s susceptibility to capital outflow risks,” its report said.
- One of the two youth members of a Lagos state panel investigating police brutality and the deadly shooting of protesters resigned. Rinu Oduala, 22, cited “undue intimidation of peaceful protesters” and the panel’s recent vote to reopen Lekki Toll Gate, where the Oct. 20 shootings took place, before the panel concluded its investigation. Rights group Amnesty International and witnesses have said soldiers opened fire on protesters, killing at least 12 people at a toll gate in the city’s affluent Lekki district and another area. The military has denied shooting live rounds and the police have denied involvement.“I will be stepping down from the Lagos Judicial Panel as it is now obvious that the government is only out to use us for performative actions,” she said on Twitter. A Lagos state government spokesman did not immediately respond to a request for comment. Reuters could not reach the panel for comment. It was not immediately clear whether the panel, which convened on Oct. 26, promising neutrality and justice, could move forward without both youth members. Oduala laid out her position in a series of tweets on Friday.
- On Saturday morning, Nigerian police beat and arrested demonstrators as a small group protested over the reopening of the site where activists denouncing police brutality were shot last year in the commercial capital, Lagos, Reuters witnesses said. There was a heavy presence of armed police officers on Saturday at the toll gate, where a group of about 15 protesters gathered despite calls by the government this week to scrap the demonstration, Reuters witnesses said. At least six of the protesters were beaten with truncheons and arrested before being driven away in police vans. “They are already manhandling us, but we’re not going to be deterred. We’re not going to step down,” said one man, who did not provide his name and spoke to Reuters as he was being arrested. A Lagos state police spokesman said in a text message he was unaware of the arrests but would look into accusations that activists had been manhandled. Nigeria’s information minister warned activists earlier in the week to drop plans for the protest, saying it risked being “hijacked by hoodlums”. Lai Mohammed said violence would not be tolerated, adding: “The security agents are ready for any eventuality.”
- Nigeria’s securities regulator suspended a planned assessment of cryptocurrency and its dealers after the central bank ordered lenders to close accounts of individuals and entities transacting in or operating in the asset, it said. The Securities and Exchange Commission (SEC) has sought to regulate cryptocurrency investments on the grounds that they qualify as securities transactions. It assesses crypto products and dealers prior to admitting them for regulation. “The SEC will continue to monitor developments in the digital asset space and further engage all critical stakeholders with a view to creating a regulatory structure,” it said. The use of bitcoin, the original and biggest cryptocurrency, has boomed in Nigeria in recent years, driven by payments from small businesses and a weakening naira currency which makes it difficult to get the U.S. dollars needed to import goods or services. Last week, the central bank barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies, warning that banks which fail to act could face “severe regulatory sanctions”. The SEC said regulation of crypto dealers affected by the central bank’s ban will be put on hold until they can operate a bank account. The securities regulator said the central bank had identified certain risks within the digital asset sector. It did not provide details of the risks. The central bank has argued that cryptocurrencies, which are unregulated and not legal tender, are risky for the user. One banking executive, who did not want to be named because they were not authorised to speak to the media, told Reuters that lenders have been closing accounts to ringfence risk because most cryptocurrency dealers were speculating. The Senate, Nigeria’s upper chamber of parliament, on Thursday issued an invitation to the central bank governor to explain the reasons for the ban as part of an inquiry into the benefits and risks posed by cryptocurrencies. The situation around cryptocurrencies has prompted a flurry of comments on social media over the last week.
- President Muhammadu Buhari approved the creation of a new company that will focus on infrastructure development, with a seed capital of 1 trillion naira ($2.63 billion). The company, named Infra-Co, will be a public-private partnership, and the initial capital will come from the central bank, the Nigerian Sovereign Investment Authority (NSIA), and the Africa Finance Corporation, it said. “Infra-Co will finance public asset development, rehabilitation and reconstruction as well as invest in cutting edge infrastructure projects for roads, rail, power and other key sectors,” the president’s office said in a statement. Its board will be chaired by the central bank governor, the managing director Nigeria’s sovereign wealth fund, the president of the Africa Finance Corporation, and three independent directors from the private sector, the statement said. The aim is for the entity to grow to 15 trillion naira in assets and capital, it added. Nigeria’s poor transport and power networks have stymied economic growth for decades, holding back the distribution of wealth in the country which has Africa’s biggest economy but 40% of people live below the national poverty line of 137,430 naira ($360.99) per year.
- Fifteen Turkish sailors kidnapped by pirates last month in the Gulf of Guinea have been freed in Nigeria and will head home, a shipping company executive said, two weeks after the attackers made contact to discuss a ransom. One sailor, a citizen of Azerbaijan, was killed in the raid on Jan. 23 which crew, family members and security sources described as a sophisticated and well-orchestrated attack. Those kidnapped were from Turkey. Speaking to state TV broadcaster TRT Haber, Levent Karsan from Istanbul-based Boden Shipping said the sailors were all in good health in Nigeria and would be brought to Turkey in the coming days. “This wasn’t a political kidnapping. This kind of kidnapping happens in that region unfortunately and is completely aimed at getting ransom,” Karsan said. Talks to free the sailors had been handled by a team based in Hamburg, he added. The Liberian-flagged container ship, the Mozart, was headed to Cape Town from Lagos when it was attacked 160 km (100 miles) off Sao Tome island, maritime reports showed. The pirates made first contact with Boden on Jan. 28 to discuss ransom. Karsan did not share details of the talks but said he hoped the incident would prompt officials at the United Nations and International Maritime Organisation to take action against piracy in the region.
- And, finally, we spoke to the director and actors behind cross-cultural love story Namaste Wahala, which starts streaming on Valentine’s Day on Netflix. The film, whose title translates in Hindi and Nigerian pidgin as ‘Hello trouble’, tells the tale of a Nigerian woman who falls in love with an Indian investment banker living in Lagos. The young couple face a series of challenges — including their families — to be together. “I wanted to do something that will be more relatable so it is a full-on Nollywood movie, but I brought in some Indian actors to make it a little bit more fun,” Daryani Ahuja, who directed, executive produced and acted in the movie, told Reuters. “What I tried to do is the ’90s style Bollywood … the singing and dancing around trees. We have all of that. It is a very cheesy, mushy romantic drama.” Born of Indian parents, Daryani Ahuja has lived most of her life in Nigeria. “I have lived in an Indian house, I know the Nigerian culture, the pidgin, the food and it is so interesting how even though everybody thinks with ‘Namaste Wahala’ the cultures are different, we are actually so similar,” she said. “We are actually all one, and that’s the whole theme of the movie.” The 110-minute film stars Indian actor Ruslaan Mumtaz and Nigerian actress Ini Dima-Okojie in the lead roles. “It is very important to make films like this when you show cross-cultural love stories, because in every country … people just separate each other as far as religion is concerned,” Mumtaz said. “Especially in India, you can’t marry somebody if they are from a different religion or from a different caste.”