A Week in Nigeria: 13 September

Highlights from Reuters coverage of Nigeria over the last seven days

President Buhari reasserted his protectionist stance by telling the central bank to stop providing foreign exchange for imports

In this week’s round-up: Buhari tells central bank to stop FX for imports, NNPC in talks to give up majority stake in refineries, weak naira prompts bitcoin boom and pandemic creates health tech opportunities in Africa.

• President Muhammadu Buhari directed the central bank to stop issuing foreign exchange for food and fertiliser imports, according to a statement by his spokesman. It follows a similar order the president issued last year that the nominally-independent bank only partly followed, with some food importers still receiving foreign exchange. The latest directive will completely ban providing foreign currency for all imported food and fertiliser, the spokesman told Reuters. “Nobody importing food should be given money,” Buhari said. Since his election in 2015, Buhari has sought to cut foreign imports, particularly agricultural products. Expanding Nigeria’s farm sector is a key pillar of his economic policy. But the bans on imports like rice have seen prices surge, sparking widespread frustration. Nigeria’s foreign reserves have been battered as the central bank spends billions of dollars on costly programmes such as propping up the local naira currency despite double-digit inflation. There was no immediate, public reaction from the central bank to Buhari’s comments, though its governor was present at the meeting where the order was given.
• Earlier in the week, President Buhari said Nigeria’s increase in electricity prices and the deregulation of petroleum sector were crucial decisions taken at the start of year. Multilateral lenders have for years urged Nigeria to remove costly fuel subsidies, change electricity tariffs which have held prices artificially low and end the country’s multiple exchange rate system. Last month sources said a much-needed $1.5 billion World Bank loan was held up due to concerns over such reforms. The government in March announced a new pricing mechanism that it said would maintain its control, but allow prices to move with the market and eliminate subsidies. Earlier this month pump prices rose to a record level and electricity prices rose within days of each other. A statement issued by the presidency said the increase in electricity prices and deregulation of the petroleum sector were “crucial decisions that were taken at the beginning of the year”. “There is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now simply have no choice,” Buhari was quoted as saying in the statement. Cheap fuel prices are seen by many in Nigeria as a benefit of living in an oil-rich country. An attempt by erstwhile President Goodluck Jonathan to eliminate subsidies was scuppered after riots ensued. Africa’s largest oil producer had been spending 1 trillion naira ($2.63 billion) a year subsidising petrol prices but the global oil price crash made removing subsidies “inevitable”, the oil minister said last week, adding that the country was no longer fixing fuel prices.
• Nigeria is holding talks to give up majority stakes in all four of its moribund oil refineries, Mele Kyari, head of the state oil firm told local Channels TV. He said discussions were taking place on an operating model in which the state oil company NNPC or the government would be a minority shareholder in the assets. “It means there will be more scrutiny of shareholders and also becoming more efficient to operate. That conversation is on the table,” said Kyari, NNPC’s group managing director, without specifying how the government planned to transfer ownership, or to whom. The refineries have for years worked only sporadically due to chronic under-investment. NNPC said in April that it had shut them all down to secure funding for their refurbishment, and would no longer manage them when they reopened. The four refineries are located at three sites in Kaduna, Warri and Port Harcourt. Kyari said the pipelines that feed them with crude oil were badly damaged. The refineries processed almost no crude in the 13 months to end June, according to NNPC data last month, even though their operating costs totalled $367 million.
• In a separate development, Nigerian conglomerate BUA Group has selected France’s Axens for a multibillion-dollar 200,000 barrel per day (bpd) refinery and petrochemicals plant in Nigeria, the French company said in a statement. Axens, which makes systems to convert oil and biomass to cleaner fuels, said it will provide technology for the greenfield project designed to produce Euro-V fuels and polypropylene targeted at domestic and regional markets. “This large complex will help in reducing Nigeria’s dependence on imported fuels and petrochemicals,” said BUA, which also has interests in cement, food and mining. The BUA project will be located in Nigeria’s oil-producing region of Akwa-Ibom state, the statement said. A separate 650,000 bpd oil refinery, owned by Africa’s richest man, Aliko Dangote, is already under construction in Lagos.

• We ran two stories that sit at the nexus of business, technology and the pandemic. One was about a surge in bitcoin use in Nigeria — and other countries across Africa. The other story was about the rise of health tech companies. Where bitcoin is concerned, we reported on how the original and biggest cryptocurrency is finding the practical use that it has largely failed to provide elsewhere. The quiet bitcoin boom in Africa has been driven by payments from small businesses as well as remittances sent home from migrant workers, according to data shared exclusively with Reuters and interviews with around 20 bitcoin users and five cryptocurrency exchanges. Monthly cryptocurrency transfers to and from Africa of under $10,000 — typically made by individuals and small businesses — jumped more than 55% in a year to reach $316 million in June, the data from U.S. blockchain research firm Chainalysis shows. The number of monthly transfers also rose by almost half, surpassing 600,700, according to Chainalysis, which says the research is the most comprehensive effort yet to map out global crypto use. Much of the activity took place in Nigeria, the continent’s biggest economy, along with South Africa and Kenya. This represents a reversal for bitcoin which, despite its birth as a payments tool over a decade ago, has mainly been used for speculation by financial traders rather than for commerce.

Why a boom in Africa? Young, tech-savvy populations that have adapted quickly to bitcoin; weaker local currencies that make it harder to get dollars, the de facto currency of global trade; and complex bureaucracy that complicates money transfers. The bitcoin users interviewed by Reuters, based in five countries from Nigeria to Botswana, said the cryptocurrency was helping people make their businesses nimbler and more profitable, and helping those working in places like Europe and North America hang on to more of the earnings they send home. Yet risks abound. Bitcoin and other cryptocurrencies are unregulated in many countries and their legal status is unclear, meaning there is no safety net and little recourse if you lose funds. For many, converting local currencies to and from bitcoin relies on informal brokers. Prices are volatile, and buying and selling is a complex process that demands technical knowledge.

• Across the globe, the COVID-19 pandemic has accelerated changes in the way medicine is practised as medical care increasingly begins with an online consultation rather than a face-to-face meeting. But the opportunities in Africa, where access to medical care is often restricted, are transformational and offer growth prospects to companies that provide online consultations and online sales of medicine. The chief executive of CureCompanion, which developed the online platform used by a woman we spoke to for a remote consultation with a doctor about her sick baby, said the Texas-based company had seen a 12-fold increase in business in Africa this year from 2019. That compares with a 10-fold rise in online medicine across all seven countries — Armenia, Honduras, India, Saudi Arabia, United Arab Emirates and the United States, as well as Nigeria — where it is present. We also reported that Ghana’s government is in talks with drone company Zipline, which delivers medical goods, about expanding its operations in the country by creating three new distribution centres in addition to the four it already operates there. The president’s health advisor and the company’s country head informed Reuters of the talks. Even before the pandemic, public health experts and investors saw the potential for telemedicine to help Africa cater for the needs of rapidly-expanding populations. Funding from development agencies and venture capitalists alike has flowed into tech companies providing healthcare in Africa. Data from San Francisco-based investment firm Partech showed venture capital investment in Africa’s health tech companies grew to $189 million in 2019 from around $20 million in both 2017 and 2018. Even in the turmoil of the pandemic, some $97 million was raised in the first half of 2020, Partech said.
• Still on the subject of aircraft deliveries, Nigeria’s government said it plans to drop humanitarian aid supplies by air to people in remote communities in parts of the northeast that have been ravaged by the decade-long Islamist insurgency spearheaded by Boko Haram. The insurgency, which since 2009 has killed around 35,000 people and forced two million people to flee their homes, has spawned one of the world’s worst humanitarian crises. Seven million people need some form of aid, the United Nations estimates. Humanitarian affairs minister Sadiya Umar Farouk told reporters in Maiduguri, capital of the conflict-ravaged Borno state, that Nigerian Air Force helicopters and planes would be used to drop food supplies and items such as blankets. “There has been an issue of inaccessible areas where humanitarian workers cannot reach the people,” she said at a news conference on Sunday. “Air drops are especially good for areas we cannot access by road,” she added. Farouk did not provide details of the number of people authorities expected to reach or the frequency of deliveries.
• Nigerian resident doctors began their second strike of the year over pay and working conditions amid the spread of the new coronavirus. The strike began on Monday, and included 16,000 resident doctors out of a total of 42,000 doctors in the country the president of the National Association of Resident Doctors said. The union suspended the strike on Thursday to give the government time to meet its demands.
• And we reported on a Nigerian charity trying to salvage a slum’s schooling amid the pandemic, which shut schools in March. Already with more children out of education than any other country, 13 million according to the United Nations, the virus threatens even more futures. Organisations like Slum2School have tried to fill the void. The Lagos-based charity is working across Africa to educate children growing up in poorer communities. Since July, it has given tablets and laptops to teachers and pupils in the floating Makoko slum for live remote lessons — normally an unaffordable solution for the children. But the slum’s lack of power means difficulty charging electronics. We looked at the way the charity operates, including its efforts to combat the electricity problems by providing power banks and solar charging kiosks.