A Week in Nigeria: 15 June

Highlights from Reuters coverage of Nigeria over the last seven days

Muhammadu Buhari this week gave his first major public speech since his re-inauguration last month

In this week’s round-up: President Buhari promises a repeat of first term, firm seeks right to seize up to $9 billion of Nigerian government assets and the battle to dominate Nigeria’s motorcycle ride-hailing market.

• President Muhammadu Buhari promised to repeat in his second term successes from his first four years including an improved economy and new infrastructure during his first major speech since last month’s low-key inauguration ceremony. “The principal interest of this administration is to consolidate on the achievements of the last four years,” the 76-year-old former military leader said. Critics have often found fault with Buhari’s first term when he was absent for long periods for health reasons, and economic improvement was largely down to improved oil prices. But he won re-election in February with 56% of the vote — albeit on a turnout of just 36%. “In the last four years, we have made solid progress,” Buhari told an audience of government, military and traditional figures and foreign dignitaries during a celebration of the return to democracy in 1999. “We can lift 100 million Nigerians out of poverty in 10 years,” he vowed.
• Buhari said Nigeria’s economy would grow 2.7% this year — but that was below the central bank’s 3% forecast in March. Economists have lamented Nigeria’s sluggish growth since it climbed out of recession in 2017, with the population getting poorer as birth rates outpace economic expansion. Nigerian economist Bismarck Rewane delivered an interesting and detailed analysis of the country’s economy in relation to the president’s speech.

Unsurprisingly, the Twitterati also weighed in with opinions.

• Still on the subject of the economy, and trends seen in recent years, a United Nations report showed foreign investment in sub-Saharan Africa rose 13% last year to $32 billion, reversing two years of decline. But that good news didn’t extend to Nigeria. Foreign direct investment to Nigeria fell 43% to $2 billion. Investors were put off by dispute between the government and MTN, the United Nations Conference on Trade and Development wrote in its “World Investment Report”. Elsewhere in the region, development of new mining and oil projects, a new U.S. development-finance institution and the ratification of an agreement to create a continent-wide free-trade area (to which Nigeria hasn’t yet signed up) could further boost FDI in 2019, it said. Africa stands in sharp contrast to developed economies, which saw FDI inflows plunge 27% to their lowest level since 2004.
• A firm incorporated in the British Virgin Islands asked a British court for the right to seize up to $9 billion of Nigerian government assets — some 20% of the oil-rich nation’s foreign reserves — over an aborted gas project. The case highlights a risk to Nigeria’s foreign assets, potentially clouding its appeal to some investors. The request is part of a long-running saga over a 2010 deal in which the Nigerian government agreed to supply gas to a processing plant in the southeastern city of Calabar that Process and Industrial Developments Ltd (P&ID) — a little-known firm founded by two Irish businessmen specifically for the project — would build and run. When the deal fell apart P&ID won a $6.6 billion award at arbitration, based on what it could have earned during the 20-year agreement. It now says the total owed has ballooned to $9 billion because of interest accrued since 2013 . Nigeria has tried to nullify the award, saying it was not subject to international arbitration but British courts rejected the argument. P&ID is now asking the Commercial Court in London to convert the arbitration into a judgement, which would allow them to try to seize international assets. A source close to President Muhammadu Buhari said they were fully aware of the matter and the government “is not sleeping”, adding they were optimistic the matter could be resolved in the courts. There are also proceedings pending at a U.S. District Court in Washington, D.C.

• We reported on moves by motorcycle taxi companies to expand in West Africa with backing from investors betting that the meteoric rise of two-wheeled taxi firms in Asia can be replicated. Four bike taxi firms are now battling it out on the streets of Nigeria’s commercial capital Lagos and the oldest, Nigerian motorcycle taxi firm max.ng, is planning to launch in Ghana and Ivory Coast this year, as well as a fourth Nigerian city. While informal motorcycle taxis have been around in Africa for years, the new companies are hoping to win market share by offering trained, accountable drivers and the convenience of booking rides through a mobile app. As in Asia, the companies are also looking to turn their ride-hailing apps into one-stop mobile shops offering a host of services from e-payments to deliveries to insurance — the kind of strategy that transformed Indonesia’s Go-Jek into a $10 billion company in less than a decade.
• Nigeria’s central bank says it will close the bank accounts of firms caught smuggling into the country any goods for which access to foreign exchange has been restricted. The central bank curbed access to dollars in 2015 for firms importing 43 items ranging from rice and soap to private jets and Indian incense in a bid to conserve foreign reserves and diversify the economy of Africa’s biggest crude oil producer. But the currency restrictions accelerated the descent of Africa’s biggest economy into recession and fuelled inflation. Nigeria’s economy emerged from recession in early 2017 but growth remains fragile and inflation has stuck above the central bank’s single-digit target for more than three years. “Once we discover that people are using illicit foreign exchange to import those items into Nigeria and smuggle them through the borders … we have every right to close their accounts,” a central bank spokesman said.
• Nigeria’s securities regulator ordered the suspension of Oando’s annual shareholder meeting that was due to be held on June 11, the Securities and Exchange Commission (SEC) said. The regulator said the suspension was due to ongoing litigation after it set up an interim management team and ordered Oando’s chief executive, Wale Tinubu and others to resign following an investigation over financial infractions. Tinubu has dismissed the SEC charges as unsubstantiated. Last month, the SEC ordered Lagos-listed Oando, which also has a dual listing in Johannesburg, to hold an extraordinary meeting before July 1, to appoint new directors after its regulatory action against certain members of the board including Oando’s chief executive.
• Islamic State’s West African branch claimed responsibility for an attack on a Nigerian army base in northeastern Borno state and said its fighters had killed 20 soldiers. The assault, which raised questions about government claims to have almost defeated the insurgents, took place in the town of Kareto on Wednesday. The barracks were burnt and a tank destroyed, Islamic State in West Africa (ISWA) said in a statement published on the SITE Intelligence website. Security sources had said earlier that the base, home to the from the Nigerian Army’s 158th Battalion and 130 km (80 miles) from the state capital Maiduguri, had been overrun and the commander killed. The Nigerian Army did not respond to requests for comment. Islamic State in West Africa (ISWA), which split from Nigerian Islamist group Boko Haram in 2016, has carried out a number of attacks in the northeast over the last few months, including on military bases.
• Looking at the week ahead, the naira is seen stable against the U.S. dollar supported by global oil prices and foreign investors buying the local currency to participate in a treasury bill auction.