A Week in Nigeria: 14 September
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Nigerian tribunal rejects bid to overturn election result, a proposed VAT rise, Nigeria LNG moves closer to investment decision, and the global push to cash in on Nollywood.
- A Nigerian election tribunal rejected a bid by the main opposition candidate to overturn the result of February’s presidential election, which saw Muhammadu Buhari returned to office. Defeated contender Atiku Abubakar, a businessman and former vice president, was the candidate of the main opposition People’s Democratic Party (PDP). The tribunal rejected all three of Atiku’s claims: that the election was marred by irregularities, that he received more votes than Buhari and that the president did not have a secondary school certificate, a basic requirement to contest the election. The defeat for Atiku was widely anticipated. Every election result has been contested unsuccessfully since Nigeria returned to democracy in 1999, with the exception of the 2015 poll in which Goodluck Jonathan conceded defeat to Buhari. The PDP said it would mount an appeal against this week’s ruling at the country’s Supreme Court. But history isn’t on the opposition party’s side. On each of the previous occasions when the result was contested, the losing candidate - having lost at the tribunal - appealed at the Supreme Court where they were also defeated.
- Nigeria LNG said it had moved closer to an investment decision on the long-awaited Train 7 project to expand its liquefied natural gas plant on Bonny Island. The company said in a statement it had signed a letter of intent for the engineering, procurement and construction of Train 7, one of the key milestones towards a final investment decision (FID). The letter was signed with a consortium consisting of Italy’s Saipem, Japan’s Chiyoda and South Korea’s Daewoo. NLNG said the construction period after FID will last approximately four to five years. The project is expected to increase Nigeria’s LNG production by 35% to 30 million tonnes per annum (mtpa) has been delayed for several years. Nigeria was fifth-largest LNG producer in the world last year, with its production declining. It lost its fourth place to the United States in 2018, according to the International Group of Liquefied Natural Gas Importers.
- The finance minister announced that the government plans to increase value-added tax on goods. Zainab Ahmed said the government proposed raising VAT next year to 7.2% -up from 5%. The current level is one of the lowest in the world. The government has repeatedly said it wants to boost non-oil revenue since oil sales make up 90% of foreign-exchange receipts. Raising more money from taxes has proved difficult in a country where so many small businesses are not registered. The planned VAT rise must be approved by parliament before it can become law. The committee on finance in parliament’s upper house, the Senate, will invite Ahmed and the chairman of the Federal Inland Revenue Service to explain the reasons behind the plan, its chairman said late on Thursday. The PDP criticised the proposal, saying the change would hit the country’s poorest citizens hardest. The proposal prompted a vigorous response on social media.
- The ripple effect was felt from tensions between Nigeria and South Africa a week earlier. Nigeria’s president will visit South Africa next month to reinforce the bonds between the two countries after the wave of deadly riots and xenophobic attacks, the South African presidency said. Those riots killed at least 10 people, including two foreigners, and targeted foreign-owned businesses. Retaliatory attacks in Nigeria forced South African businesses to shut doors for several days, and South Africa temporarily closed its embassy on safety fears. At least 640 Nigerians signed up to take free flights home from South Africa in the wake of the attacks, according to Nigeria’s presidency. Private Nigerian airline Air Peace flew people from South Africa back home with Boeing 777 aircraft.
- The Islamic Movement in Nigeria (IMN), a banned Shi’ite group, said police killed 12 of its members and injured more during marches in the north of country to mark a Muslim holiday. The government banned the group in July after a series of deadly clashes with police. IMN said the police were responsible for the deaths of at least 20 people in July but the police gave no death toll. Police in the northern city of Kaduna, where IMN said three were killed and 10 injured on Tuesday, disputed the account and said it dispersed marchers “professionally”. A nationwide police spokesman did not immediately respond to a request for comment. The group was marching to mark Ashura, the day in Islamic tradition when the Prophet Mohammed’s grandson Imam Hussein died in battle. Police had warned IMN members not to march, saying that any gathering or procession by group members is “ultimately illegal and will be treated as a gathering in the advancement of terrorism”.
- Oil ministers for Nigeria and Iraq pledged both pledged to reduce oil output to comply with their OPEC output targets. An OPEC+ statement said it was important for all countries to reach full conformity with cuts. Also this week, Nigeria’s finance minister said Nigeria is producing roughly 2.3 million barrels per day (bpd) of crude oil and condensates - well about the1.685 million bpd OPEC cap. In the same briefing session, the finance minister also said the government had cut its forecast for its benchmark crude oil price, citing expectations that the global oil market will be oversupplied next year. She said the forecast for Nigeria’s benchmark price next year had been lowered to $55 per barrel from $60 per barrel, in part “to cushion against an unexpected price shock”, adding that there were “strong indications” of an oversupplied oil market in 2020.
- Still on oil, we reported that refineries on the U.S. West Coast are purchasing millions of barrels of Nigerian oil as their location makes it harder and more expensive for them to buy U.S. shale. It’s a rare glimmer of hope for Nigerian oil in its competition with U.S. shale. No pipelines easily connect the shale hub at the Permian basin, located in Texas and New Mexico, to the West Coast, driving the latter to look to Nigeria to quench its thirst for crude. Early this year, Californian refineries began loading up on Nigerian oil - taking cargoes of Qua Iboe, Bonga, Erha, Forcados and others, according to traders and Refinitiv Eikon data. The more than 6 million barrels that the U.S. West Coast imported from Nigeria between April and August this year was almost four times higher than the amount for all of 2018. The route is relatively rare for cargoes that must weather the 20,000-km (12,500-mile), 40-day journey from Nigeria’s lush coasts, around South America’s Tierra del Fuego and up to Los Angeles. Traders said a combination of market factors — including the difficulty and expense of getting U.S. crude oil to the West Coast — made Nigerian grades attractive. “It makes more cost sense. Even if U.S. crude is closer on the map, when you factor in the price and availability of taking in barrels from Louisiana or Nigeria, Nigeria came out cheaper,” one seller of West African oil said.
- And we took an in-depth look at attempts by global brands to tap into Nollywood, the world’s second-biggest film industry and arguably Nigeria’s top cultural export. For decades it was a factory churning out visual pulp fiction destined for the market stalls of DVD pirates. But Nollywood is increasingly grabbing the attention - and financing - of global entertainment companies. Some, like French group Vivendi’s Canal+, seek to harness Nigerian hustle and know-how to extend the lifespan of the traditional pay-TV model, which is bleeding customers in developed markets but still has a future in African countries. In July, Canal+ acquired Nollywood studio ROK. Since it was founded six years ago, ROK has produced more than 540 films and 25 series. Under the Canal+ deal, it aims to increase production from next year to around 300 films and 20 series annually. It will also create films across Francophone West Africa. African countries are attractive because pay-TV is growing fast in those markets due to better access to electricity across much of the continent. At the same time, high data costs mean streaming isn’t taking off in the way it has in wealthier countries where Netflix and other video-on-demand platforms are crushing subscription TV. Undaunted, some companies, including South Africa’s MultiChoice, are using Nigeria as a testing ground for introducing streaming platforms in African markets, despite the poor communications infrastructure and low-income levels.