A Week in Nigeria: 13 March

Highlights from Reuters coverage of Nigeria over the last seven days

Fintech company Flutterwave said its valuation had topped $1 billion after its latest fundraising round

In this week’s round-up: Naira incentives for importing dollars, armed gang abducts around 30 students, Flutterwave eyes New York listing after raising $170m, and mobile courts punish COVID rule-breakers.

  • Nigeria will offer a naira incentive to import U.S. dollars through certain licensed channels, the central bank said, in a push to shore up the country’s dollar supply. Recipients of remittances from the Nigerian diaspora made through international money transfer operators licensed by the central bank will receive 5 naira ($0.0131) for every imported dollar, the regulator said in a statement dated Friday and sent on Saturday. The scheme will run from March 8 to May 8, the bank said. Nigeria in November changed the currency of remittance payments to the U.S. dollar from naira, after the currency fell to a 3–1/2 year low of 500 naira to the dollar on the black market. The bank said the change was to narrow the arbitrage whereby money transfer operators profited from unofficial channels. Rising dollar demand has been putting pressure on the naira. Importers have scrambled for hard currency, while providers of foreign exchange, such as offshore investors, exited after the COVID-19 pandemic triggered an oil price crash. Remittances or money transfers make up the second-largest source of foreign exchange receipts after oil revenues in Nigeria, Africa’s biggest economy. Around $26.4 billion was sent to Nigeria in 2019, according to the World Bank.
  • In a now all too familiar story, an armed gang kidnapped around 30 students in an overnight raid on a forestry college in northwest Nigeria. It was the fourth mass school abduction since December in a country where violence is on the increase. The following day authorities said nine more students than originally thought were missing, taking the total to 39. An armed gang broke into the Federal College of Forestry Mechanization, located on the outskirts of Kaduna city near a military academy, at around 11:30 p.m. (2230 GMT) on Thursday, Kaduna state’s security commissioner, Samuel Aruwan said. After a distress call, the army rescued 180 people in the early hours of Friday but “about 30 students, a mix of males and females, are yet to be accounted for”, he said. “A combined team of army, air force, police and DSS (Department of State Services) troops are conducting an operation to track the missing students.” The city is the capital of Kaduna state, part of a region where banditry has festered for years. Hours before the kidnapping, Nigeria’s federal government said it would “take out” abductors after earlier criticising local deals to free victims. Kaduna resident Haruna Salisu said he had heard sporadic gunshots at around 11:30 p.m. on Thursday from the area of the compound, where the concrete perimeter wall had a large hole in it on Friday. “We were not panicking, thinking that it was a normal military exercise being conducted at the (nearby) Nigerian Defence Academy,” he said by phone. “We came out for dawn prayers, at 5:20 a.m., and saw some of the students, teachers and security personnel all over the school premises. They told us that gunmen raided the school and abducted some of the students.” The trend of abduction from boarding schools was started by the jihadist group Boko Haram, which seized 270 schoolgirls from a school at Chibok in the northeast in 2014. Around 100 of them have never been found. Armed criminal gangs seeking ransom have since carried out copycat attacks. Within the last few weeks, 279 schoolgirls were freed after being abducted from their boarding school at Jangebe in northwest Nigeria’s Zamfara state. In the north-central state of Niger, 27 teenage boys were released after being kidnapped from their school, along with three staff and 12 family members. One student was shot dead in that attack. Military and police attempts to tackle the gangs have had little success, while many worry that state authorities are making the situation worse by letting kidnappers go unpunished, paying them off or providing incentives. In Zamfara, state government officials said they had given ‘reformed bandits’ access to land for cattle grazing, while also building schools and medical facilities. They do not specifically identify the recipients as kidnappers. In late February, the presidency said President Muhammadu Buhari had urged state governments to “review their policy of rewarding bandits with money and vehicles, warning that the policy might boomerang disastrously”. Buhari held talks with security officials and traditional leaders on Thursday to discuss the country’s multiple security challenges. The national security adviser, Babagana Monguno, after the talks said the government would take a tough stance on criminal gangs.
  • Africa-focused payments company Flutterwave may consider a New York listing, its chief executive said after it raised $170 million from investors to expand its customer base, pushing its valuation up to more than $1 billion. Founded in 2016 by Nigerians and headquartered in San Francisco, the company specialises in individual and consumer transfers. It is one of several fintech groups aiming to facilitate and capitalise on a booming African payments market driven by increased mobile phone use and faster internet speeds. “We may consider the possibility of listing in New York or a possible dual listing in New York and Nigeria,” Flutterwave’s CEO and co-founder Olugbenga Agboola told Reuters in a telephone interview late on Tuesday. Flutterwave on Wednesday said it had “secured $170 million from a leading group of international investors” to expand its customer base in existing and international markets and to develop new products. “The company’s valuation is now in excess of $1 billion. The fundraise brings the total investment in Flutterwave to $225 million,” it said in a statement, adding that the COVID-19 pandemic had accelerated the shift to digital payments in Africa. The fundraising round was led by Avenir Growth Capital and Tiger Global Management LLC. “Flutterwave is at the forefront of innovation in payments technology,” said Jamie Reynolds, a partner at Avenir Growth Capital. “We are excited to support the team as they build the last available payments infrastructure frontier in the world — connecting merchants and consumers intra-Africa and globally.” Other backers in this funding round included venture capital firms Early Capital Berrywood, Green Visor Capital and Greycroft Capital. The completion of the fundraising round, a little more than a year after Flutterwave announced a partnership with Visa and Worldpay, highlights the growing interest in the burgeoning payments market in Africa. In October U.S. payments company Stripe bought Nigerian fintech business Paystack for $200 million and in late 2019 Visa bought a 20% stake in Nigerian payments company Interswitch, the main platform for the country’s business-to-business transactions.
  • Hundreds of members of Nigeria’s main trade unions marched to the parliament building in the capital on Wednesday in protest against a possible change to the minimum wage system. President Buhari in 2019 signed into law a bill to increase Nigeria’s monthly minimum wage to 30,000 naira ($79) from 18,000. Unions had gone on strike in late 2018 to push for the rise. A bill now under discussion in the House of Representatives, the lower chamber of parliament, suggests a change whereby the country’s 36 states would each set their own minimum wage rather than it being decided by the federal government. Hundreds of members of the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC), which represent millions of workers across most sectors of Africa’s biggest economy, filled streets in the capital, Abuja, in protest at the proposed move. Many Nigerian states have struggled to pay the salaries of civil servants in the last few years. “Once you remove that bar of having a national ceiling of what cannot be paid as a wage they will now go back and pay slave wages,” NLC President Ayuba Wabba told Reuters. Quadri Olaleye, the TUC’s president, said the bill must be “killed immediately” or strike action could follow. Ado Doguwa, majority leader of the lower house, accepted a letter from protesters and said the bill was still only a proposal. He said the speaker of the lower chamber wanted to hold talks with trade unions next Tuesday to discuss the issue. The bill passed its second reading in late February but would need to be passed by lawmakers in the upper chamber of parliament and by state lawmakers before being sent to the president who could still refuse to sign it into law.
  • Nigeria has not increased gasoline pump prices, its fuel regulator said on Friday, after sparking confusion at fuel stations and a public backlash by apparently flagging a big rise was on the cards. “There is no price increase. The current (gasoline) price is being maintained while consultations are being concluded,” the Petroleum Products Pricing Agency (PPPRA) said in a statement. On Thursday, the regulator posted an online notice listing the “guiding price” for “ex-depot”, or wholesale, gasoline at 206.42 naira per litre — well above the previous pump prices of around 167 naira. After local media reported the post, some consumers flocked to fuel stations, prompting a sharp rise in prices at some, and others to stop selling amid the confusion. In Lagos, at least two stations were charging 248 naira per litre, compared with 167 naira on Thursday. Nigeria is struggling to balance a promise to eliminate costly fuel subsidies with public anger over more expensive fuel. Oil prices have risen about 25% since the beginning of February, but state oil company NNPC vowed prices would not increase in March, meaning that it could be losing millions daily on gasoline imports. Following the public backlash — and statements from NNPC, the petroleum minister and a presidential spokesman that higher prices were not approved — PPPRA removed its post about the guidance for ex-depot prices. NNPC is currently the only gasoline importer due to the state-controlled ex-depot price that is keeping levels artificially low. It has said it is consulting with unions to agree a formula that allows gasoline prices to float, but still protects consumers. In mid February, fuel marketers estimated gasoline was costing NNPC some 1.2 billion naira ($3.2 million) per day, a huge risk to government finances. Eliminating subsidies was among conditions for a $1.5 billion World Bank budget support loan.
  • Nigeria is rolling out mobile courts where those who break rules aimed at containing the coronavirus are prosecuted. Our team reported on a mobile court in the capital, Abuja. Other Nigerian states, including southeastern Anambra and western Kwara state have also trialled mobile courts, where the accused are brought by police to courts that are dismantled daily and can move to different locations. Enforcers face a daunting task — few in Nigeria’s markets, shops or on public transport wear masks, and those that do often wear them below their nose or mouth. Even some police at the many Abuja road checkpoints are without masks. Rights groups have warned that arbitrary enforcement of these rules could lead to human rights abuses. But authorities say letting up on the rules could allow infections to soar, even as Nigeria rolls out vaccinations. Nigeria has had around 160,000 confirmed cases and about 2,000 deaths from the virus.
  • Britain has agreed to send to Nigeria £4.2 million ($5.84 million) recovered from a former state governor who was jailed for laundering money in Britain, the two countries said. James Ibori, who was governor of southern oil-producing Delta State from 1999 to 2007, pleaded guilty at London’s Southwark Crown Court in 2012 to 10 counts of fraud and money-laundering. He received a 13-year sentence. The £4.2 million was stolen by Ibori and his associates but retrieved through operations led by British law enforcement agencies, who identified assets bought in Britain with illicit funds, the Foreign Office said in a statement. Nigeria’s attorney general, Abubakar Malami, said the funds would be used to help complete a number of infrastructure projects, including a road connecting the capital Abuja and northern commercial hub Kano. “I am confident that both the Nigerian and British governments remain committed to all affirmative actions to combat corruption… (and) illicit financial flows,” Malami said at a ceremony at which officials from the two countries signed an agreement on the return of the funds. The agreement builds on a 2016 memorandum of understanding that provides a framework for the return of stolen assets to Nigeria.