A Week in Nigeria: 17 August

Nigeria’s president has been a vocal proponent of protectionist policies since first taking office in 2015
  • One story dominated the Nigerian news cycle in a working week that was much shorter than usual due to a two-day public holiday: Nigeria’s president told the central bank to stop providing funding for food imports. That raised fears that any such move would drive inflation while raising questions about the central bank’s independence. “President Muhammadu Buhari … disclosed that he has directed the Central Bank of Nigeria (CBN) to stop providing foreign exchange for importation of food into the country,” said a statement issued by Buhari’s spokesman. “Don’t give a cent to anybody to import food into the country,” Buhari said, according to the statement, which said that the call was in line with efforts to bring about a steady improvement in agricultural production, and attainment of full food security. “The foreign reserve will be conserved and utilised strictly for diversification of the economy, and not for encouraging more dependence on foreign food import bills,” it said. Since Buhari first took office in 2015, Nigeria’s central bank has presided over policies aimed at stimulating growth in the agricultural sector to reduce dependence on oil. Those policies included a 2015 ban on access to foreign exchange for 41 items that the bank felt could be produced in Nigeria. The central bank is yet to comment on Buhari’s request. The story evoked an outpouring of strong feelings on social media.
  • The day after the presidency’s statement, the central bank auctioned treasury bills at higher rates to try to lure foreign investors. Pressure has been building on the naira currency as oil prices drop and foreign investors book profits on local bonds in response to falling yields. Crude sales account for 90% of foreign exchange earnings and two-thirds of government revenues in Nigeria, Africa’s top oil producer. The bank auctioned 34.4 billion naira worth of bills, paying 12% for the longest tenor one-year paper, up from 11.2% it paid at its last sale, on ample demand for the bills, traders said. That was followed by a second bill sale in a week a day later.
  • Banking stocks fell 1.26% on Wednesday, to help drag the main share index to a more than two-year low as negative sentiment persisted on the stock market. Traders said the bank told them to increase their rates at the bills auction from last auction rates as the central bank tries to lure foreign inflows. With falling oil prices and foreign investors taking profits, the naira is regaining focus. A dollar shortage was initially caused by a slowdown of foreign inflows after local debt market yields declined. Traders also said the market was waiting for more information on how an FX ban on food imports would be implemented, especially for importers with existing lines of credit.
  • A judge in London said he would grant a small gas firm called Process and Industrial Developments Ltd (P&ID) the right to seek to seize some $9 billion in assets from the Nigerian government over an aborted gas project. The company was awarded $6.6 billion in an arbitration decision over a failed project to build a gas processing plant in the southern Nigerian city of Calabar. With interest payments, the sum now tops $9 billion — some 20% of Nigeria’s foreign reserves. The judge’s decision, issued on Friday, converts the arbitration award to a legal judgement, which would allow P&ID to try to seize international assets.
  • Annual inflation in Nigeria stood at 11.08% in July, compared with 11.22% in June, the National Bureau of Statistics said in a report. And a separate food price index showed inflation at 13.39% in July, compared with 13.56% in June.
  • Amid the flurry of financial news and stories related to foreign exchange, we also reported a heartwarming story about student filmmakers in the northern state of Kaduna who create stunning special effects with mobile phones. It’s well worth watching the short video.
  • With regards to crude oil programmes, at least 30 cargoes of Nigerian crude were still available for September loading. Shell and Sahara were heard to have been awarded a tender by Turkey’s Tupras with a cargo of Bonny Light each, though prices did not immediately emerge. And India’s IOC appears to have stepped up its imports of West African oil this week, with Glencore set to send a VLCC of Escravos for mid-September loading.
The scandal involving ex-Nigeria football coach Samson Siasia is the latest to emerge from FIFA’s long-running investigation into match-fixing allegations

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Alexis Akwagyiram

Alexis Akwagyiram

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.