A Week in Nigeria: 20 February

Glass half-full or half-empty? Africa’s largest economy exited recession in the fourth quarter of 2020 but endured a full-year contraction
  • Nigeria exited recession in the fourth quarter despite a full-year contraction in 2020, reflecting the easing of COVID-19 induced restrictions, the statistics office said. Africa’s largest economy achieved economic growth of 0.11% in the last three months of 2020, the National Bureau of Statistics (NBS) said, following contractions in the second and third quarters. Nigeria had been grappling with low growth before the pandemic triggered recession and created large financing gaps, including dollar shortages and inflation. “Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters,” the NBS said. Nigeria’s economy contracted 1.92% in 2020, its second annual contraction since 2016. It grew 2.27% in 2019. The World Bank had predicted a 4% contraction in 2020. The International Monetary Fund had forecast 3.2%. “Our expectation had been for a deeper Nigeria GDP contraction of 4.3% in 2020,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered. “That said, we expect that oil sector growth will remain negative for much of H1 2021, given Nigeria’s compliance with OPEC+ production cuts,” Khan said, adding that the current second wave of COVID-19 is a concern. The NBS said the non-oil sector, which the government is trying to make the main growth sector, rose 1.69% in the fourth quarter. Telecoms, crop production, real estate, food manufacturing and construction lifted growth in the quarter. Oil, which accounts for around two-thirds of government revenue and 90% of foreign exchange, contracted 19.76% in the fourth quarter as crude production fell to 1.56 million barrels per day from the third quarter. The IMF said in December it expected Nigeria’s economy to grow by 1.5% in 2021. “We expect that growth will gather pace in the second half, as distribution of a COVID-19 vaccine accelerates,” said William Attwell, sub-Saharan Africa risk analyst at Fitch Solutions.
  • Unidentified gunmen killed a student in an overnight attack on a boarding school in the north-central Nigerian state of Niger on Wednesday and kidnapped 42 people including 27 students, the state governor said. The assailants stormed the Government Science secondary school in the Kagara district of Niger state at around 2 a.m., overwhelming the school’s security detail, Governor Abubakar Sani Bello said. “Twenty-seven students, three staff and 12 members of their families were kidnapped. Unfortunately, one student was shot dead,” he told a news conference. Aliyu Isa, a teacher, told local TV news station Channels that the abductors were dressed in army uniforms and shooting as they broke into the school. “They were telling the students not to run,” added Isa, who said he and others fled in the confusion while the gunmen rounded up some of the pupils. Kidnappings for ransom by armed groups are common across many northern Nigerian states. The attack came two months after gunmen attacked a secondary school in northwestern Katsina state and kidnapped nearly 350 boys, who were subsequently rescued by security forces. Rights group Amnesty International said in a statement that education is “under attack” in northern Nigeria. “The Nigerian authorities must act immediately to prevent attacks on schools, to protect children’s lives and their right to education,” the group added. Militant Islamist group Boko Haram and a branch of Islamic State also carry out abductions in Nigeria’s turbulent northeast. About 100 of more than 270 schoolgirls abducted by Boko Haram from the town of Chibok in 2014 remain missing. In the wake of Wednesday’s attack, the Niger state governor ordered the immediate closure of boarding schools in the region. President Muhammadu Buhari dispatched security chiefs to coordinate rescue operations, his spokesman Garba Shehu said in a statement. The recent attacks have raised concern about rising violence by armed gangs and Islamist insurgents, fuelling criticism of Buhari’s handling of national security. In January, the president appointed a new military high command.
  • Nigeria’s defence minister prompted criticism for urging Nigerians not to “be cowards” and to stand up to armed bandits, while security forces embarked on a mission to rescue the 42 people kidnapped in Niger state. The comments by Bashir Salihi Magashi, a retired army major, came on Wednesday, hours after the kidnapping by gunmen in Niger state. Speaking about armed gangs, the defence minister told reporters: “We shouldn’t be cowards.” “I don’t know why people are running away from minor, minor, minor things like that,” he said. “They should stand. Let these people know that even the villagers have the competence and capability to defend themselves.” The comments attracted widespread criticism. Kayode Ogundamisi, a commentator on Nigerian affairs with nearly 600,000 Twitter followers, tweeted: “Simply put, he’s saying YOU ARE ON YOUR OWN!” A spokesman for Magashi did not immediately respond to a request for comment. In Kagara, where the school building stood empty on Thursday following the early hours attack a day earlier, businessman Ahmed Yakubu said gunmen were attacking communities that lack protection from security forces. “The security situation is so bad,” he said. “I see no reason why people will come on motorcycles… and they will enter a village, carry out an operation successfully and leave without any challenge.” The defence minister’s comments prompted a wave of responses on social media.
  • The African Union’s (AU) vaccine task team said that Russia had offered it 300 million doses of its Sputnik V COVID-19 vaccine along with a financing package for countries wanting to secure the shots. Africa’s coronavirus death toll surpassed the 100,000 mark on Friday as a result of 3,818,608 cases, according to a Reuters tally. The Russian vaccine will be available for a period of 12 months starting May 2021, it said in a statement. The Russian Direct Investment Fund (RDIF), which is responsible for marketing the vaccine abroad, said some deliveries could start in May but most would be from June. The 55-member AU hopes to see 60% of the continent’s 1.3 billion people immunised over roughly the next three years. But even as some wealthier nations are well into their immunisation campaigns, just a handful of countries in Africa have started to roll out vaccination programmes. “We are grateful to receive the Sputnik V vaccines from the Russian Federation and tremendously proud to be able to offer them… for our AU Member States,” John Nkengasong, director of the AU’s disease control body, said in the statement. “Bilateral and private sector partnerships such as these are critical in our efforts to bring the COVID-19 pandemic to an end,” Nkengasong added. The AU previously said it had secured 270 million doses of AstraZeneca, Pfizer and Johnson & Johnson vaccines for delivery this year. On Friday the vaccine team said all 270 million doses had been “taken up by the first allocation phase deadline”. Russia has marketed the Sputnik V vaccine globally. It has struck manufacturing deals with firms in India, South Korea and Brazil, and has pledged to supply doses to countries including Venezuela and Hungary. The offer to the AU, if delivered in full, would be among its biggest foreign supply deals to date. While Moscow is touting such deals to highlight its role in fighting the pandemic, exports of the vaccine have stirred concerns in Russia, where authorities have struggled to roll out a nationwide vaccination strategy. In Africa, Algeria is already deploying the Sputnik V vaccine. And after receiving an initial batch of a few dozen shots, Guinea is now in talks to source around 400,000 doses, a health ministry official said on Thursday. South Africa’s health ministry said this week that Sputnik V’s manufacturers had submitted documentation to the local medicines regulator for registration.
  • Nigeria said in March that it had ended costly fuel subsidies, and announced in September it was no longer fixing pump prices. Since then, Lagos prices have risen to just over 160 naira per litre from 145. But state oil company NNPC remains the country’s sole gasoline importer, and its group managing director, Mele Kyari, said that if prices floated with no control, that could hurt consumers. “Government is very keen on making sure that people are not exploited,” he told Reuters in an interview. Four private importers, one former NNPC executive and a source close to the company said it was still setting gasoline prices — but at fuel depots rather than at the pump. Those prices, set using an unpublished template, block private companies from importing, leaving the government as also the sole gasoline seller and opening it to continued losses. NNPC’s Kyari insisted there was no allocation for fuel subsidies, elimination of which was among conditions for a $1.5 billion World Bank budget support loan. The Bank did not comment. But Tunji Oyebanji, chairman of the Major Oil Marketers Association, said NNPC was losing at least 30 naira ($0.08) per litre on gasoline in early February, based on the international fuel price and the publicly available dollar exchange rate. With daily consumption of roughly 40 million litres, that’s 1.2 billion naira ($3.15 million) per day, at a time when low oil prices have left Nigeria’s budget 5.60 trillion naira in deficit. “The reality of it is that whether it’s subsidy, (whatever) you want to call it… it’s still happening,” Oyebanji told Reuters at his office in Apapa, the port where most fuel enters Nigeria. Nigeria, Africa’s largest oil exporter, imports all its fuel, a sore point for its government. Its 200 million citizens view cheap petrol as one of the few consistent benefits from a system where graft and inefficiency are ingrained. Unions threatened strikes after price increases last year, and rumours of pump price rises of just a few naira sparked fuel queues and shortages across Lagos this week. But subsidies cost some 10 trillion naira between 2006–2018 — more than the health, education or defence budgets. NNPC’s Kyari said the current system was temporary, and the government was working on a permanent mechanism to enable market-based prices, and private sector imports, while protecting consumers. In the meantime, observers say the lack of transparency means consumers can’t know if they are getting a fair price — or budget watchdogs if the government is losing money. “It has become more confusing,” said Bello Rabiu, a former NNPC chief operating officer and group executive director. “Any time there is no transparency, definitely there will be corruption.” A copy of the unpublished template seen by Reuters does not outline what dollar exchange rate or international fuel price NNPC is using to set ex-depot prices.
  • A federal court in Lagos has issued an injunction barring Royal Dutch Shell’s Nigerian subsidiares from withdrawing money at 20 local banks until it ringfences potential damages in a lawsuit brought against the oil major by local energy firm. Aiteo is seeking about $4 billion in total over alleged problems with the Nembe Creek Trunk Line (NCTL) pipeline it bought from the Anglo-Dutch group in 2015 and over claims Shell undercounted its oil exports. Court documents seen by Reuters show that Aiteo is seeking compensation over what it says was the poor condition of the pipeline and associated lost oil sales. Aiteo also accuses Shell of deliberate improper metering of the Nigerian company’s oil exports from the Bonny Light terminal. It is seeking $2.7 billion over the pipeline deal plus $1.28 billion for lost oil sales, the court documents show. A spokesman for the Shell Petroleum Development Company (SPDC) said the allegations are “factually incorrect”. “SPDC is working to secure an expeditious discharge of the freezing injunction, which we believe was obtained by Aiteo without any valid basis,” an SPDC spokesman said. Aiteo declined to comment on an ongoing legal case. The lawsuit is latest in a string of legal headaches for the biggest international oil company operating in Nigeria, Africa’s biggest oil exporter. A British court last week cleared the way for local communities to sue the company over oil spills in the West African nation, and last month Shell lost a case brought in the Netherlands by Nigerian farmers and fisherman over pollution claims. Shell, meanwhile, has initiated international arbitration proceedings against Nigeria over a case relating to oil spills that took place during the 1967–1970 civil war.
  • And, three months after the Trump administration rejected her, former Nigerian finance minister Ngozi Okonjo-Iweala received unanimous backing to become the first woman and first African director-general of the World Trade Organization. A self-declared “doer” with a track record of taking on seemingly intractable problems, Okonjo-Iweala will have her work cut out for her at the trade body, even with Donald Trump, who had threatened to pull the United States out of the organisation, no longer in the White House. As director-general, a position that wields limited formal power, Okonjo-Iweala, 66, will need to broker international trade talks in the face of persistent U.S.-China conflict; respond to pressure to reform trade rules; and counter protectionism heightened by the COVID-19 pandemic. “What it (the WTO) needs is someone who has the capability to drive reform, who knows trade and who does not want to see business as usual. And that is me,” she said on Monday. Earlier she told Reuters in an interview that her top priority would be to ensure the trade body does more to address the COVID-19 pandemic, calling the disparities in vaccine rates between rich and poor countries “unconscionable” and urging members to lift export restrictions on medical items. She also expressed confidence that her priorities were aligned with Washington’s. “I think our interests and priorities are aligned. They want to bring the WTO back to (its) purpose,” she told Reuters. The U.S. delegate said that Washington was committed to working closely with her and would be a “constructive partner”. China’s delegate pledged “full support” for her. EU trade commissioner Valdis Dombrovskis said he looked forward to working closely with her to drive “much-needed reform of the institution”. A 25-year veteran of the World Bank, where she oversaw an $81 billion portfolio, Okonjo-Iweala ran against seven other candidates by espousing a belief in trade’s ability to lift people out of poverty. She studied development economics at Harvard after experiencing civil war in Nigeria as a teenager. She returned to the country in 2003 to serve as finance minister and backers point to her hard-nose negotiating skills that helped seal a deal to cancel billions of dollars of Nigerian debt with the Paris Club of creditor nations in 2005. “She brings stature, she brings experience, a network and a temperament of trying to get things done, which is quite a welcome lot in my view,” former WTO chief Pascal Lamy told Reuters last week. “I think she’s a good choice.” Key to her success will be her ability to operate in the centre of a “U.S.-EU-China triangle”, he said. The endorsement of the Biden administration cleared the last obstacle to her appointment and she is due to begin March 1. Okonjo-Iweala, who goes by ‘Dr. Ngozi’, becomes one of the few female heads of a major multilateral body. When she joins the WTO’s Geneva lakeside headquarters her portrait is set to be hung beside others of men, mostly white and from rich countries. The Trump administration’s main criticism of her was that she lacked direct trade experience compared to her main South Korean rival and even supporters say she will have to quickly get up to speed on the technicalities of trade negotiations. She has rejected this, saying that she has plenty of experience of trade, plus other expertise. Asked about how she took the Trump rejection, she replied: “When things happen you take them in your stride and move on”. Raised by academics, the mother-of-four earned a reputation for hard work and modesty amid the pomp of Nigeria’s governing class, acquaintances say. “She is persistent and stubborn,” said Kingsley Moghalu, former deputy governor of Nigeria’s central bank who worked with her when she was the country’s first female finance minister. Nigeria’s President Muhammadu Buhari welcomed her election, saying it brought “more joy and honour to the country’. Her appointment also was welcomed by people in the streets of Nigeria’s capital Abuja where Ibe Joy, who works in marketing, said Okonjo-Iweala’s achievements were an inspiration to young women. “If she can do it, we all can do it,” said Joy.

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Alexis Akwagyiram

Alexis Akwagyiram

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