A Week in Nigeria: 19 September

Some houses were destroyed following heavy rains in the northwestern state of Kebbi
  • Nigeria plans to form an agency to manage the hundreds of millions of dollars in assets seized domestically or returned from abroad following anti-corruption probes, according to the justice minister. The oil-producing nation has repatriated more than $300 million this year that officials determined were the proceeds of corruption. Last year, it seized $40 million worth of jewellery and a gold iPhone from a property in Nigeria belonging to a former oil minister. The anti-graft agency in the past has also seized an ill-gotten apartment block and other real estate. Justice Minister Abubakar Malami said the plan would create a one-stop shop to manage seized assets in an open and accountable way. He called the plan the “next level of transparency,” and said the agency could also give the Finance Ministry a budget for recovered assets. Nigeria has struggled for decades with endemic corruption, and U.S. Senator Chuck Grassley raised concerns this year about the return of money due to worries over whether there were “proper safeguards to prevent the further misuse of funds”. Currently, seized or returned cash and assets go to whichever agency got them, be it the police, state security service or the Economic and Financial Crimes Commission. In July, Nigeria suspended the EFCC chief after the justice minister accused the agency of diverting funds that had been recovered during investigations into corruption allegations.
  • Nigeria will begin regulating trade in crypto-token or crypto-coin investments, the financial watchdog said in a statement. Nigeria’s Securities and Exchange Commission said regulation was essential to protect investors and ensure market integrity and transparency. “The position of the Commission is that virtual crypto assets are securities, unless proven otherwise,” the SEC said in a statement. “Thus, the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.” The statement said any crypto assets that are not structured to be exclusively offered through crowdfunding portals or “other exempt methods” would be regulated. In 2018, the Nigerian central bank warned cryptocurrencies were not legal tender, and that investors were unprotected. Still, monthly cryptocurrency transfers to and from Africa of under $10,000 jumped more than 55% in a year to reach $316 million in June, data from U.S. blockchain research firm Chainalysis showed. In Nigeria, the data showed small cryptocurrency transfers totalled nearly $56 million in June, almost 50% more than a year before.
  • Thousands of hectares of rice in Nigeria’s northwestern state of Kebbi were left underwater after heavy rain. Floods early this month across northwest Nigeria destroyed 90% of the 2 million tons that Kebbi state officials expected to harvest this autumn, the head of the state branch of the Rice Farmers Association of Nigeria told Reuters. We spoke to rice farmers in Kebbi The loss amounts to some 20% of the rice Nigeria grew last year, and the waters are still rising. Farther south, just outside Nigeria’s capital, Abuja, chicken farmer Hippolite Adigwe is also worried. A shortage of maize forced him to sell most of his flock of more than 1,000 birds, and the 300 left are hungry. Chicken feed prices have more than doubled, and he isn’t sure how long he can cope. Twin crises, floods and maize shortages, come just after movement restrictions and financing difficulties caused by COVID-19 containment measures complicated spring planting. Some farmers and economists say it could push Nigeria, Africa’s most populous nation, into a food crisis. Rice is the country’s staple grain, and chicken is a core protein. The threat of a food crisis comes against the backdrop of galloping inflation. Annual inflation rose in August for the 12th month in a row to a more than two-year high of 13.22%, compared with 12.82% in July, as the pandemic disrupted the supply of goods and services. The central bank, which will hold its interest rate-setting meeting on Tuesday, has said it expects inflation to rise to 14.15% by the end of the year.
  • Nigeria needs to more than double the proportion of bank loans it makes to the agricultural sector to 10% within the next four years to boost food production in Africa’s biggest economy, Central Bank Governor Godwin Emefiele said. Nigeria is reliant on imports, including of foods, to meet its needs due to limited manufacturing capacity. It has been trying to cut its $20 billion annual food import bill, but has struggled to build up an economy outside its dominant oil sector. Loans to the food sector account for around 4% of total credit, Emefiele told bankers. President Muhammadu Buhari last week told the central bank to stop dollar sales for food and fertilizer imports. Emefiele said the coronavirus pandemic had exposed the risk of relying on food and drug imports, as most countries are reluctant to export goods. Despite rice growing being a government priority, many farmers still work with their bare hands in fields lacking irrigation channels. Mills are often ramshackle, while poor roads make getting the crop from the main growing areas in northern Nigeria to consumers in the south difficult and costly. The country is facing its worst economic crisis in four decades, triggered by an oil price crash induced by the pandemic. The crisis has slashed government revenues, weakened the currency and created a large financing gap.
  • We reported on how businesses have been hit hard by the double whammy of petrol and electricity price rises. Earlier this month President Buhari said the increases, announced days apart in early September, were needed to bolster the economy which for years has been urged by multilateral lenders to remove costly fuel subsidies and change electricity tariffs, both of which held prices artificially low. Small business owners described how surging prices made them fear for the future, with closure now a distinct possibility. Nigeria’s economy contracted by 6.1% in the second quarter due to the impact of the coronavirus pandemic and low oil prices. Last month sources said a much-needed $1.5 billion World Bank loan was held up due to concerns over the implementation of reforms such as the fuel and electricity price changes.

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Alexis Akwagyiram

Alexis Akwagyiram

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