Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Nigeria’s economy to shrink 8.9% in worst case, UK court rejects Nigerian oil corruption case against oil majors, precision lockdowns set for coronavirus hotspots, and Lagos doctors briefly strike over alleged police harassment.
- Nigeria’s economy could shrink as much as 8.9% in 2020 in a worst-case scenario without stimulus, Finance Minister Zainab Ahmed said, a deeper recession than forecast after oil prices plunged due to the coronavirus pandemic. Ahmed told Nigeria’s highest economic advisory body, the National Economic Council, that the contraction could reach 4.4% in a best-case scenario, without any fiscal measures. But with stimulus, the contraction could be kept to just 0.59%, she said. The pandemic and an oil price plunge have not only hit growth but also dented the state’s main source of income, creating large financing needs and weakening the naira. “We will go into recession — but what we are trying to do is to make sure that it is shallow so that we will quickly come out of it, come 2021,” Ahmed told the council in a virtual meeting. She said 40% of Nigerians were poor and the crisis would increase poverty. A World Bank director taking part in the meeting said the Bank was planning a package for immediate fiscal relief for Nigeria. Later in the week, the head of the World Bank in Nigeria in an interview told Reuters the lender expects to make a decision in late July on a $1.5 billion loan. Ahmed said the proposal was worth $1.5 billion and intended for Nigeria’s states to provide relief at sub-national level. She said it could be disbursed by September. Nigeria’s first quarter revenue from crude sales was 940.9 billion naira ($2.6 bln), missing its target by 31% due to the oil price crash, she said. Ahmed said Nigeria has $72.04 million in its oil savings account as of May 21, compared to $325 million in November.
- An English court threw out a $1.1 billion case Nigeria had brought against Royal Dutch Shell and Eni related to a dispute over the OPL 245 oilfield, a court document showed, while a related trial in Italy continues. The Nigerian government filed the case in 2018 at a commercial court in London alleging payments made by the companies to get the oilfield licence in 2011 were used for kickbacks and bribes. Justice Butcher said in his ruling seen by Reuters that the High Court “must decline jurisdiction over the action against” Shell and the other defendants. Eni said it was pleased the London court had rejected its jurisdiction in the matter, noting the U.S. Department of Justice and the U.S. SEC had both closed investigations of Eni on OPL 245 matters without taking any action. A Shell spokeswoman said the company welcomed the decision. “We maintain that the 2011 settlement… related to OPL 245 was a fully legal transaction with Eni and the Federal Government of Nigeria (FGN),” she said. A spokesman for Nigeria said it was “naturally disappointed the Court has declined jurisdiction”. The OPL 245 oilfield is also central to a corruption trial in Milan — in which former officials from the companies and, in Eni’s case, some current ones, are on the bench — as well as court proceedings Nigeria started against JP Morgan, which processed some of the payments in question.
- Government officials announced precisely targeted lockdown measures would be imposed in areas that report rapid increases in cases of the coronavirus, while the phased reopening of the economy as a whole would go ahead more slowly than planned. The government extended a full lockdown in Kano state, the northern economic hub where authorities are investigating a spate of mysterious deaths. Kano has the second highest number of confirmed cases in the country after Lagos. The government said its phased reopening of strict lockdowns in Lagos, Abuja and Ogun states would go more slowly than initially planned, and the current phase of gradual reopening would last a further two weeks. Nigeria had planned to completely ease coronavirus lockdowns in those states over a six-week period from May 4. “Nigeria is not yet ready for full opening of the economy and tough decisions have to be taken for the good of the greater majority,” said Boss Mustapha, chairman of Nigeria’s presidential task force for COVID-19. “Any relaxation will only portend grave danger for our populace.” Mustapha said the government had identified nine densely populated “high burden” local government areas which could be candidates for “precision” lockdown measures. He did not say where they were located. Nigeria has imposed a nationwide curfew from 8.00 p.m. to 6.00 p.m., ordered people to wear face masks in public and banned travel between states. Mustapha said the country would step up enforcement of these measures.
- Nigeria’s largest medical union ordered its members in Lagos to begin an indefinite strike on Wednesday evening over the alleged police harassment of doctors as they travelled to and from work during a night curfew. In one incident the union, which said it was inundated with complaints from its members, said an ambulance carrying a patient was stopped while medics were harassed by police officers. The union ended the strike on Thursday morning. The West African country has had more than 6,000 confirmed cases of the coronavirus and 200 deaths. Most of the cases have been in Lagos, sub-Saharan Africa’s biggest city with some 20 million people. A lockdown in Lagos lasting just over a month was eased on May 4, but an overnight curfew was put in place nationwide. Essential workers were given the right to move at all times. But the Nigerian Medical Association (NMA), which represents doctors, said it was not properly implemented and doctors had been harassed by police. The union said it had received assurances that doctors would be exempt from the curfew and would be allowed to move freely.
- We reported on the experience of visually impaired people grappling with the challenges thrown up by social distancing in Lagos, a megacity that is difficult for most people to navigate at the best of times. We explored the problems involved in moving around sub-Saharan Africa’s biggest city when you can’t see, but touching people and surfaces could be harmful. And we looked at the role played by solar power in meeting energy demands since working from home became the norm among Nigeria’s workforce in major cities.
- Nigeria impounded a plane operated by a British company for allegedly contravening a flight ban imposed to prevent the spread of the coronavirus, the aviation minister said at the start of the week. Passenger flights into the country, with the exception of ones to evacuate people or repatriate Nigerian citizens, have been banned for weeks. The ban will remain in place until at least June 4. Flights for essential services, such as the delivery of food supplies and items for humanitarian use, are permitted. Aviation Minister Hadi Sirika said on Twitter on Sunday that a plane had been impounded after the rules were broken. Sirika said a UK company “was given approval for humanitarian operations but regrettably we caught them conducting commercial flights”. The message added: “The craft is impounded, crew being interrogated. There shall be maximum penalty.” James Oduadu, an aviation ministry spokesman, told Reuters later in a telephone interview that the plane was operated by a company called FlairJet. The British private charter company that is an affiliate of Flexjet, in a statement said: “We are continuing to respectfully work with the Nigerian authorities to resolve this situation.”
- Nigeria’s central bank governor is warning against the use of black markets for foreign currency exchange after a coronavirus-induced oil price crash caused dollar shortages for Africa’s biggest economy, in a video seen by Reuters. Governor Godwin Emefiele warned domestic and foreign investors against patronising the unofficial market, saying it was helping to overheat that market. The central bank was not immediately available for comment on the video. The naira has hit a series of lows on the black market widening the gap with the official and over-the-counter spot markets, especially after dollar sales were suspended due to a coronavirus lockdown in April and a 15% devaluation in March. Dollar sales have since resumed following a phased easing of the lockdown but foreign investor currency demand is yet to be met, analysts say. “Don’t go there it is not good for you,” Emefiele told investors on the call, referring to the black market. The date on the computer screen is May 18 2020. “You would lose money because you would have bought at a price that is not realistic,” he said. Dollar demand has been swelling and piling up pressure on the naira. Importers with past due obligations have scrambled for hard currency while providers of foreign exchange, such as offshore investors, have exited. In the week ahead, the naira is seen weakening on the black market as dollar shortages at official sources cause investors and importers to channel demand to the parallel market, traders said. The black market naira traded on the streets fell to 460 against the dollar on Thursday, reflecting the build-up of demand. The naira was quoted at 450 last week on the unofficial market after a lockdown was eased.
- Nigeria is wooing local companies to boost manufacturing and food production in the West African country, the central bank said, after the novel coronavirus disrupted imports and created large financing needs. The coronavirus outbreak and an oil price plunge have intensified headwinds for Nigeria, which relies on imports for consumption, triggering a historic decline in growth and large financing needs. Emefiele urged domestic companies to support efforts to grow the economy, he told chief executives of conglomerates operating in Nigeria at a virtual meeting over the weekend. Emefiele said the bank was willing to provide hard currency for imports of machinery and raw materials that cannot be sourced at home, he said in a statement.
- Annual inflation in Nigeria rose for the eighth straight month in April, lifted by higher food prices, the statistics office said, as measures to curb the spread of the novel coronavirus hindered economic activities and increased costs. Inflation, a measure of living costs, climbed to 12.34% in April, its highest level in more than two years, from 12.26% the previous month, the National Bureau of Statistics said. Food inflation, which accounts for the bulk of the inflation basket, rose at a much faster pace, to 15.03% in April, compared with 14.98% in March. The statistics office attributed the rise in the food index to increases in the prices of potatoes, yams and other tubers, bread and cereals, fish, oils, fruits and vegetables. Food inflation has been in double digits for more than three years. Lockdowns have created bottlenecks for food and other deliveries in a country where investment is needed in transport infrastructure. The inflation data comes ahead of next week’s interest-rate meeting where the central bank will weigh inflationary risks and a weaker currency against an economy projected to shrink this year due to the oil price crash caused by the pandemic. The meeting of the bank’s monetary policy committee was moved to Thursday, from Monday and Tuesday, due to public holidays to celebrate Eid.