A Week in Nigeria: 17 April
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Up to 65,000 people flee insurgents in northeast Nigeria, media blamed for Twitter choosing Ghana over Nigeria for Africa HQ, and buyer found for Shoprite’s Nigeria business.
- Up to 65,000 people in northeastern Nigeria have fled their homes after an assault by armed groups on a border town on Wednesday, while attacks that appear to be targeted have forced a temporary halt to aid operations, U.N. agencies said. Local officials and a resident said on Wednesday that at least eight people had been killed in the attack on Damasak by suspected Islamists, and that hundreds had fled across the border to Niger, a few kilometres away. “Following the latest attack on Wednesday 14 April, the third in just seven days, up to 80% of the town’s population — which includes the local community and internally displaced people — were forced to flee,” Babar Baloch of the U.N. refugee agency UNHCR, told a Geneva briefing. Jens Laerke, spokesman for the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) told the same briefing that aid operations had been temporarily suspended. “The situation on the ground is extremely critical and if this continues it will be impossible, maybe for longer periods of time, for us to deliver aid to those who desperately need it,” he said. Laerke added that humanitarian workers appeared to be targets, amid reports of house-to-house searches for aid workers and the burning of their offices. UNHCR has relocated its staff from Damasak town due to the risks, Baloch said.
- We exclusively reported that Nigerian property group Persianas is buying Shoprite’s business in Nigeria as the South African retailer retreats from other African markets, citing three banking sources. Shoprite, with more than 2,300 stores across Africa, is awaiting regulatory approval on the sale of its Nigerian supermarket operation, though no further details have been disclosed. Banking sources told Reuters that Persianas Properties emerged as the buyer after a bidding process and the company is arranging debt for the buyout. The Palms shopping mall, Persianas’ flagship mall, houses a Shoprite store in the West African country’s commercial capital, Lagos. Shoprite has more than 25 retail stores across Nigeria, including some of the largest in West Africa. Persianas and Shoprite declined to comment on the deal. MBO Capital and KPMG advised Persianas while FBN Quest, a unit of FBN Holdings, is arranging debt, the sources said, adding that Investec advised Shoprite. Shoprite shares, which fell 1.20% in early trade, recovered ground to stand 0.31% higher after the news. South Africa’s biggest grocer has been reviewing its long-term options across Africa as currency devaluations, lower commodity prices and high inflation have hit household incomes and weighed on earnings. This has led to the company exiting Kenya and Nigeria, restricting capital allocations to its supermarkets outside South Africa and instead investing that money in its home business to take advantage of its dominance in the discount grocery market and growing share in premium food. Nigeria, Africa’s most populous country which has the continent’s biggest economy, is grappling with double-digit inflation. Rapidly rising food prices have heaped financial pressure on households already faced with a shrinking labour market and a stagnant economy at a time of mounting insecurity. Shoprite has said it is in the process of concluding a franchise agreement for the brand to remain in Nigeria as well as a services agreement to provide support to the new shareholders with operating the outlets.
- And, in another exclusive, we reported that Nigeria has sweetened the terms of a sweeping oil reform bill in a bid to attract much-needed investment to its oil industry. The reporting was based on four people closely involved with the legislation and a letter from oil companies, seen by Reuters. The proposed changes signal a shift by Africa’s largest oil producer and show the impact of an increasingly competitive environment in the energy business after 2020’s global oil price collapse and an expected shift to renewables. Nigeria in 2019 had fast-tracked a law to boost its take of offshore oil revenue, a move industry experts said at the time could put billions of dollars of offshore oil investments at risk. Now Nigeria has changed its stance in an attempt to balance its immediate revenue demands with the need to lock-in long-term investment for its oil industry. The reform bill has been in the works for two decades, but the contentious nature of changes to Nigeria’s oil sector, which provides 90% of foreign exchange and nearly half the national budget, have scuppered previous versions. In January, a fist fight broke out between local community leaders during one of the public hearings on the bill. But with political alignment between President Muhammadu Buhari and the National Assembly, the measure is expected to pass this year, though likely not before late May, the people said. Key changes to the bill would lower the royalties for new production from deepwater oilfields to 5% from 7.5% and boost the production level that triggers higher royalties from 15,000 barrels per day (bpd) to 50,000 bpd. For onshore and shallow water oilfields, it would reduce the hydrocarbon tax to 30% for converted leases, down from 42.5% in the original bill. The changes would also guarantee that state oil company NNPC’s assets and liabilities would transfer to a limited liability corporation. This will help oil companies to collect money owed by NNPC. The Ministry of Petroleum declined to comment. NNPC did not respond to a request for comment. In the letter seen by Reuters, oil industry executives pushed for more changes, particularly around gas development and “fiscal term stability” which provides assurance that there will not be any unexpected changes in the royalties and tax regime. The executives said that “terms are not sufficiently competitive to stimulate the desired new investments.” Oil companies have noted that Nigeria got just 4% of the $70 billion invested in sanctioned projects in Africa between 2015 and 2019. Last year, oil industry analysts Wood Mackenzie had said Nigeria’s oil output could fall sharply without reforms. Gail Anderson, research director with consultancy Wood Mackenzie, said of the changes to the bill: “It shows that (the government) listened. They recognise the need to attract investment, not just in the Nigerian context but globally in the energy transition,” Anderson said. “The competition is going to be more intense, and this is a move in the right direction to attain and attract investment.” But Anderson also said that not all the gas terms in the bill were good enough to spur development, which Nigeria has said it wants for its “decade of gas.” President Buhari originally sent the bill to the National Assembly in September. The legislative body has held two public hearings, but there have been a series of private consultations with stakeholders, including oil companies and community leaders that culminated in dozens of amendments. Legislators worked over the Easter holidays to consider the amendments, which the executive submitted in March. One proposed change, which would have instituted a mandatory review of fiscal terms every seven years, was removed after a backlash from companies concerned about the stability of terms for projects with decades-long investment cycles.
- Twitter failed to choose Nigeria for its first African office because the media misrepresents the country, its information minister said on Thursday, citing coverage of police reform protests last year. The social media giant on Monday said it would set up its first office on the continent in neighbouring Ghana, as the company seeks to make inroads in some of the world’s fastest-growing markets. Nigeria, Africa’s biggest economy, has a thriving technology sector that has attracted international investors but faces numerous security challenges including a decade-long Islamist insurgency in the northeast, mass abductions from schools in the northwest and piracy in the Gulf of Guinea. Rights group Amnesty said soldiers and police shot dead at least 12 people on Oct. 20 after largely peaceful protests calling for police reforms in the wake of alleged brutality turned violent. The military and police deny the allegations. “This is what you get when you de-market your own country,” Information Minister Lai Mohammed told reporters, in a video posted on Twitter by his ministry, when asked about Twitter’s decision. “Nigerian journalists were…painting Nigeria as a hell where nobody should live,” he said of coverage of the protests in which Twitter users coalesced behind the #EndSARS hashtag in reference to the widely feared Special Anti-Robbery Squad that was disbanded after abuse allegations surfaced. “The natural expectation would have been for Nigeria to be the hub for Twitter in this part of Africa,” said Mohammed. In the weeks before the shootings, protesters used social media to organise, raise money and share what they said was proof of police harassment. Twitter’s CEO, Jack Dorsey, tweeted to encourage his followers to contribute to the protests using bitcoin. In the wake of the shootings, Reuters interviewed18 activists, lawyers representing protesters and human rights advocates who depicted a pattern of intimidation of those who took part in the protests. In addition to detentions and the freezing of assets by the central bank, those interviewed said some protesters had received threats or been subject to other harassment. Reuters was unable to confirm who was behind the threats. Mohammed, days after the circulation of images, video and an Instagram live feed of the incident, said “some form of regulation” could be imposed on social media to combat “fake news”. Twitter described Ghana as “a champion for democracy” and “a supporter of free speech, online freedom, and the Open Internet”. The flurry of announcements (made on Twitter, of course) sparked a wave of lively responses.
- Annual inflation climbed to a more than four-year high in March, rising 82 basis points from a month earlier to 18.17%, the statistics office said. Households in Africa’s largest economy, are contending with skyrocketing food prices at the same time as a shrinking labour market and stagnant growth amid the backdrop of mounting insecurity. Food prices rose 1.16 percentage points from the previous month to 22.95% in March, the National Bureau of Statistics (NBS) said. Inflation hit 18.72% in January 2017. “This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetables, fish and fats,” the NBS said in a report. The government has said it will cut import duty on tractors and mass transit vehicles to try to reduce transportation costs and tackle high food prices that are contributing to the double-digit inflation. President Muhammadu Buhari has made investment in rail and road a focus of his administration’s drive to kick-start growth, but falls in public revenue — linked to lower oil prices due to the global coronavirus pandemic — have checked his ambitions. Given the high-inflation backdrop, few analysts expect the central bank to keep rates on hold, which it has done since last September, as prices have more than doubled the bank’s inflation target band of 6% to 9%. Nigeria, Africa’s most populous country, went into recession in the third quarter of 2020, as the coronavirus pandemic caused oil prices to crash, slashing state revenue, creating large financing needs and weakened the naira. The economy emerged from recession in the fourth quarter but analysts say the weak naira currency continues to fuel inflation. The central bank sold dollars to foreign investors for the first time this week since December, quoting the naira at a low of 435.81 for the 150-day forwards.
- Nigeria will no longer provide foreign currency for importers of sugar and wheat, the central bank said on Twitter on Friday, as the country tries to conserve national dollar reserves. The country relies on imports to feed its 200 million people. The central bank restricted access in 2015 to foreign exchange for 41 items it says can be produced locally, and has added to the list since then. “Sugar and wheat to go into our FX restriction list. We must work together to produce these items in Nigeria rather than import them,” the central bank said in a tweet. Currency restrictions aimed at easing pressure on the local currency amid a shortage of dollars have contributed to inflation and further weakened the naira in recent years, analysts say. The World Trade Organization has voiced concerns about Nigeria’s foreign exchange management and the way the country has used it to support manufacturing, imports and exports. In August 2019, the central bank told lenders to stop offering credit to importers of milk after saying it would ban access to foreign exchange for dairy purchases to spur local production. It later lifted forex restrictions for milk imports for six firms following an outcry from businesses.
- Sub-Saharan Africa is set to record the slowest economic growth of any world region this year as the continent struggles to bounce back from a pandemic-induced downturn, the International Monetary Fund said. Wealthy countries must step up to ease access to vital vaccines and make financing available to Africa, where the global health crisis and its economic fallout plunged 32 million people into extreme poverty last year, the Fund said. The continent has fallen behind much of the rest of the world in the vaccination race as countries with the financial means to reserve shots have cornered supplies. Current trends indicate few African countries will be able to make vaccines widely availability before 2023. Africa’s rebound will be uneven, the Fund said. South Africa, the region’s most developed economy, will grow by 3.1% following a 7% contraction last year. Oil producers Angola and Nigeria, meanwhile, will grow by 0.4% and 2.5% respectively. In East Africa, Kenya is predicted to record GDP growth of 7.6% after a contraction of 0.1% last year, while Ethiopia’s growth will slow from 6.1% in 2020 to 2% this year.
- Nigeria has given the green light to telecoms firm operating in the country to resume selling new SIM cards from Monday, four months after it suspended them to check compliance with registration rules, the government said. Nigeria’s communications ministry said the sale of new SIM cards can resume as long as telecommunications firms, including giants such as Airtel and MTN, link them with identity registration numbers. The new policy will commence on Monday, the government said in a statement. In December, the communications regulator directed all telecommunications firms to stop selling SIM cards while it audited their compliance with registration requirements. Investors watch telecoms subscriber numbers closely and use them to estimate average revenue per user (ARPU), a key metrics for measuring profitability. South Africa’s MTN has the highest number of subscribers in Nigeria. Nigeria created SIM card registration rules in an attempt to stop terrorists and criminals from using unregistered SIM cards.
- Shares of the Nigerian Exchange Group fell to 22.03 naira on the NASD over-the-counter market on Friday, following its debut earlier this week as long-standing investors sought to create liquidity. The shares began trading on Wednesday at 25 naira, valuing the company at 47.5 billion naira ($125 million), NASD OTC exchange data showed. The group had not sought the NASD listing, the exchange said. However, investors can trade their shares before the company’s planned listing on its own exchange, it added. “NGX was admitted to trading via the security admission route … at the instance of an investor,” Chinwendu Ekeh, NASD’s head of market operation, told Reuters. Investors admitted around 1.9 billion shares for trade on the OTC market, the OTC market data showed. The securities regulator, Nigerian Securities and Exchange Commission, confirmed the admission. Ekeh said NASD would delist the security should the exchange seek its own listing on a different exchange. Other exchanges in Africa such as those in Johanesburg and Nairobi are listed with their shares publicly tradeable. The Nigerian Stock Exchange began changing its ownership structure from a mutual company of stockbrokers in 2017, adding new shareholders in a process known as “demutualisation”. It then re-registered as a profit-making entity, owned by shareholders, called the Nigerian Exchange Group Plc, after being a not-for-profit entity. The exchange, the second biggest in sub-Saharan Africa and one of the main entry points to invest on the continent, has around 200 listed companies, all included in its benchmark share index. The group — made up of Nigerian Exchange, NGX Regulation and NGX Real Estate — received approval for the listing last month. It has said stockbrokers will hold 78% of the shares and that it will not be raising new cash from the listing. Nigerian stocks are down 4.2% this year after rising 50% in 2020 as the world’s best performing market.
- And, finally, Reuters announced that its website will go behind a paywall in new digital strategy. In addition to targeting its current global readership, the newly revamped Reuters.com is hoping to attract professional audiences prepared to pay $34.99 per month for a deeper level of coverage and data on industry verticals that include legal, sustainable business, healthcare and autos. Reuters.com will remain free for a preview period, but will require users to register after five stories. It is not immediately clear when it will begin charging. As a result of the new strategy, I’ll wind down this newsletter. You can find more than 100 of these digests on my Medium profile if, like me, you have an (arguably unhealthy) obsession with Nigerian news.