A Week in Nigeria: 20 October

Hauwa Liman, a midwife, became the second aid worker for the International Committee of the Red Cross to be killed by Islamist militants in the last month

In this week’s round-up: A Boko Haram offshoot affiliated with IS kills an aid worker, inflation rises again and the Senate approves the issuance of a $2.8 billion Eurobond.

  • Sixty people were killed after a fire broke out last week Friday on an oil pipeline in the southeast of Nigeria, a spokesman for the National Emergency Management Agency (NEMA) said on Monday. That was up from the tally of 16 dead given by officials three days earlier. State oil company NNPC said the fire caused the closure of the key System 2E pipeline network that supplies imported gasoline and output from the Port Harcourt refineries to much of the southeast and northern Nigeria. It said the fire was caused by vandals who breached the pipeline near the southeastern city of Aba.
  • China is likely to boost imports from African countries as it seeks new sources of commodities in the wake of a trade war with the United States, a senior executive of Standard Chartered Bank in China told Reuters in Nairobi. “We believe that countries like Kenya and Nigeria will benefit because China will look to import more from Africa; some agricultural products from Kenya, some oil products from Nigeria,” she said. “Trade flow patterns will change because China will need to look for new trade partners.”
  • The National Bureau of Statistics said inflation rose for the second month in a row, following a period in which it fell for a year-and-a-half, driven by an increase in food prices.
  • Nigeria’s upper house of parliament said it plans to investigate an alleged $3.5 billion fuel subsidy fund at state oil firm NNPC. Fuel subsidies are contentious in Africa’s top crude oil producer, which imports most of its gasoline due to underperforming refineries. Prices are kept artificially low at 145 naira ($0.48) per litre. As fuel prices increase globally, it has become unprofitable for private petrol marketers to import, with the NNPC stepping in to prevent major shortages.
  • The state oil company responded by issuing a statement in which it denied the existence of the alleged $3.5 bln fuel subsidy fund. It said a $1.05 billion “National Fuel Support Fund” did exist, set up by the company “to ensure stability in the petroleum products supply”. That fund, it added, was jointly managed by a group of bodies that included the NNPC, the central bank and the finance ministry.
  • Still on the subject of oil, sources said NNPC has extended its crude-for-product swap contracts, the country’s main avenue to meet the bulk of its fuel needs, until June 2019. Nigeria became increasingly reliant on NNPC for fuel imports via swaps after a currency devaluation and recession in the last few years which priced independent importers out of the spot market. NNPC’s swap contracts currently account for about 70 percent of the country’s imports while 30 percent is done through the spot market, said a source. The swap contracts known as Direct Sale Direct Purchase, in which NNPC pairs up foreign trading firms with local partners to do the swaps, came into effect in July last year and were due to end after one year. They had already been extended once earlier this year to December.
  • Nigerian politician James Ibori, who was jailed in Britain for laundering tens of millions of dollars in stolen public funds through British banks and properties, lost an appeal against his conviction in London. Ibori, who in his heyday was one of Nigeria’s richest and most powerful men, pleaded guilty in a London court in 2012 to 10 counts of fraud and money-laundering involving sums amounting to at least 50 million pounds ($66 million). He received a 13-year jail sentence of which he served half, as is common in the British system, and is now back in Nigeria. He has resumed political activities in Delta State. Some questioned the logic of mounting an appeal.
  • Nigeria’s upper house of parliament approved a planned $2.8 billion Eurobond issue. However, it also advised the government to limit foreign borrowing and instead boost revenues. “The federal government should do everything possible to reduce or limit its request for more external borrowing and (seek) other means of generating revenue internally,” said the Senate. “This is to avoid a cleverly managed re-conquest of our country through a debt overhang.” Lawmakers said the new bond issue will raise foreign borrowing to 32 percent of Nigeria’s total debt from 30 percent at June 2018.
  • Nigeria plans to cut its 2019 budget to lower debt, its budget minister said a day after parliament’s approval of the new $2.8 billion Eurobond issue and warnings about debt. Next year’s budget was planned to be 5.15 percent lower than this year at 8.65 trillion naira, the minister, Udoma Udo Udoma, told reporters when he presented the 2019–2021 Medium Term Fiscal Framework & Fiscal Strategy Paper, a draft document on which the budget is based. The fiscal paper needs to be approved by the government and parliament before the budget is finalised.
  • We reported on central bank data that show Nigeria spent $2.2 billion in the month to October to boost liquidity in the currency market and keep the naira stable, as foreign investors left the market in favour of rising rates in developed economies. The central bank said its reserves were at a comfortable level and it could afford to use them to support the naira. Nigeria’s dollar reserves fell to an eight-month low of $42.92 billion as of 16 October, down 4.8 percent from $45.07 billion in September. Nigeria has been growing its forex buffer in recent months in the wake of high oil prices. However, the trend started to reverse after foreign investors exited the local market on rising interest rates in the United States. Some questioned the wisdom of this attempt to keep the naira stable.

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

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Alexis Akwagyiram

Alexis Akwagyiram

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

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