A Week in Nigeria: 23 August

The World Bank had aimed to bring the $1.5 billion loan to its board for approval this month
  • The World Bank is unlikely to approve a much-needed $1.5 billion for Nigeria in August as planned due to concerns over desired reforms, according to three sources familiar with the talks. A delay in financing from multilateral lenders could leave Africa’s biggest economy and top oil producer, battered by low crude prices, unable to fully finance a record 10.8 trillion naira ($28.35 billion) budget. The central bank has said Nigeria’s balance of payments gap this year will be $14 billion. The World Bank, which has said Nigeria could be heading toward its greatest fiscal crisis in 40 years, had aimed to bring the loan to its board for approval this month, but the sources said negotiations over what Nigeria will do to secure it were incomplete. “They are not convinced about the reforms,” a source close to the government said. All three sources declined to be named due to the sensitivity of the negotiations. The source added that the currency was the core issue. World Bank loans are often contingent upon reforms. It has not outlined any demands, but said previously that it was “recommending” a more unified, flexible exchange rate. Fuel subsidies and electricity tariffs are also being discussed. Another banking source said the loan could now not be approved until October. Nigeria’s finance ministry directed queries to the World Bank. In a statement, the lender said discussions were at an advanced stage, but confirmed that it had not presented the loan to its board.
  • Nigeria’s oil ministry will present a long-awaited oil and gas reform bill to the president in the coming days aimed at boosting output and attracting foreign investment, three sources close to the negotiations told Reuters. The reforms, 20 years in the making, are particularly urgent this year as low oil prices and a shift towards renewable energy have made competition tougher to attract investment from oil majors. Fiscal uncertainty has delayed a decision on a multi-billion dollar expansion by Royal Dutch Shell and its partners, while Chevron, Total and ExxonMobil are selling various Nigerian assets. A spokesman for the petroleum ministry, which led the bill’s drafting, did not reply to a request for comment and the president’s office declined to comment. A draft summary seen by Reuters included provisions that would streamline and reduce some oil and gas royalties. One of the sources described even the government’s reduced take of oil revenues, through taxes, royalties and other fees, as “aggressive” compared with other nations. Some African countries are trying to cut red tape and taxes in order to make developing their oil and gas reserves attractive to companies. It proposes to boost the amount of money companies pay to local communities and for environmental cleanups. It would also alter the dispute resolution process between companies and the government, though specifics of the changes were not included in the summary. The bill also included measures aimed at pushing companies to develop gas discoveries and a framework for gas tariffs and delivery. Commercializing gas, particularly for use in local power generation, is a core government priority. The bill will be presented in one piece with four chapters, the sources said. An effort to pass reforms by breaking them into several bills in 2018 fell flat; just one portion made it to President Muhammadu Buhari’s desk, and he never signed it. Once Buhari signs off on the draft, it will go to the National Assembly, which is controlled by his All Progressives Congress party. The alignment of the presidency and the assembly give the measure the best chance of passage it has had in years.
  • Nigeria will reopen its airports for international flights from Aug. 29, its aviation minister said. The airports have been closed since March 23 to all but essential international flights as part of the country’s efforts to combat the COVID-19 pandemic. Aviation Minister Hadi Sirika said four flights would begin landing daily in Lagos, and four in Abuja, with strict protocols. He did not say where they would be coming from. It resumed domestic flights on July 8 and Sirika said there had been no confirmed virus transmissions on flights. Passengers on international flights will need to provide a negative COVID-19 test in order to board and pay for another test after they arrive in Nigeria, Sirika said. They will also be required to fill in an online health questionnaire and present it to authorities when they land. Those currently returning to Nigeria aboard repatriation flights are required to self-quarantine for 14 days, and authorities retain passports for that period. Sirika said they could “gradually” stop keeping passengers’ passports.
  • There have been other announcements in recent days related to the resumption of flights. On Friday, Sirika said Nigeria will bar entry to nationals of countries that do not allow Nigerians to enter amid the new coronavirus pandemic. He told airline and travel industry representatives on a Zoom call late on Friday that a reciprocal ban on travel would apply to both airlines and citizens. “If they ban both the passengers and the carriers together, then that’s what’s going to happen,” Sirika said. A day earlier, a spokesman for Sirika said the reciprocal ban targeted landing rights for aircraft, rather than citizens. But Sirika said completely reciprocal measures were a matter of fairness to Nigerians.
  • President Buhari was involved in talks by West Africa’s regional bloc in the wake of Mali’s coup. The 15-nation Economic Community of West African States (ECOWAS) has taken a hard line on the coup, shutting borders and halting financial flows — a move diplomats said was as much about warning opponents at home as stabilising Mali. A delegation from the bloc arrived in the capital, Bamako, on Saturday for talks aimed at reversing the overthrow of Ibrahim Boubacar Keita. Nigeria’s former President Goodluck Jonathan headed the delegation.
  • Annual inflation in Nigeria rose for the 11th straight month in July, the statistics office said, as the novel coronavirus pandemic took its toll on imports and logistics. Inflation climbed to 12.82%, its highest level in more than two years, from 12.56% in June, the National Bureau of Statistics said. Yields on Treasury bills and bonds have now fallen below inflation, a major stumbling block for the central bank’s push to attract foreign inflows to support the naira and boost the economy. A separate index for food, which accounts for the bulk of the inflation basket, showed a price increase of 15.48% from 15.18% in June. Food inflation has been in double digits for more than three years.
  • Nigeria expects to spend a record 12.65 trillion naira ($33.20 billion) in 2021 despite severe revenue constraints, according to an outlook released by the Finance Ministry. The spending by an economy still reeling from low oil prices and the new coronavirus pandemic is a 17.2% jump from the record 10.8 trillion naira budgeted this year. The projected debt servicing payments would consume 3.1 trillion naira of the spending, or just under 25%. Additionally, revenues in the year are expected to reach 7.5 trillion naira in 2021, implying a higher deficit. The document also said spending would focus on completing as many ongoing projects as possible, and that no new works would be allowed unless there were adequate resources to complete ongoing projects.
  • Nigeria’s central bank has secured government approval to set up a 15-trillion naira ($39.4 billion) infrastructure development company with the sovereign wealth fund to invest in the country’s transport network, the bank said. The sum is projected to cover an initial five-year period, Central Bank Governor Godwin Emefiele said in a statement on the central bank’s website. The current poor state of infrastructure puts the plans of Buhari’s government — including ambitions to turn Nigeria into a manufacturing hub and for the agriculture sector to fuel economic growth — at risk, economists say. The development company will be co-owned by the central bank, the sovereign wealth fund and the Africa Finance Corporation (AFC). It will be managed independently. In 2017, the government set up the Development Bank of Nigeria to boost credit to small-scale businesses that make up almost of half of the economy.
  • Experts say COVID-19, which has killed around 1,000 people in Nigeria, jumped from animals to humans, possibly at a wet market in China. But we discovered that few at a market in Epe are worried about their health. “We are not afraid of it because the coronavirus is not inside the meat,” said vendor Kunle Yusaf. “We do eat the meat, even during this coronavirus, and we do not have any disease.” University of Cambridge epidemiologist Dr Olivier Restif called for more education around safe animal trade and hygiene. “We’re very concerned with the risk that it poses,” he said of markets where live animals are kept in close quarters. But he warned that simply banning markets could alienate people and drive trade underground.
  • And, finally, we reported on a film that depicting a love story between two women that will be released online to avoid a crackdown by local censors. A trailer released online in July shows the women discussing their love and, as one character phrased it, the fear of being forced to choose between your family and happiness. “I really feel that the censors board is playing a big part in stopping these kinds of stories from coming to the big screen… and it is just really stifling creativity,” said Pamela Adie, who produced “Ife” — which means “love” in the Yoruba language widely spoken in southwest Nigeria. The National Film and Video Censors Board (NFVCB) did not respond to requests for comment.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Alexis Akwagyiram

Alexis Akwagyiram

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