A Week in Nigeria: 25 July

Highlights from Reuters coverage of Nigeria over the last seven days

Signs of oil spills can be seen in the water in Port Harcourt, in the Niger Delta region that has remained impoverished despite being Nigeria’s oil production heartland

In this week’s round-up: lawmakers recommend new board for Niger Delta development body amid corruption probe, Islamist militants execute aid workers and central bank holds main lending rate.

  • Nigeria’s president should appoint a new board to run a government agency overseeing economic development in the oil-rich Niger Delta region that has faced accusations of financial mismanagement, lawmakers said. Nigerian lawmakers are investigating alleged corruption around procurement at the Niger Delta Development Commission (NDDC) over 20 years. An audit of the body, which last year had a budget of 346 billion naira ($909 million), was ordered by President Muhammadu Buhari in October after a number of state governors from the Delta complained about how it was run. The Niger Delta remains impoverished despite providing most of the oil, the mainstay of the economy, produced in Africa’s biggest crude exporter. Locals have for decades complained of poverty, with agitation at times spilling over into attacks on energy facilities. “The committee noted that it is difficult to find a correlation between Niger Delta community development and cash invested in the zone,” the lawmakers in the Senate, parliament’s upper chamber, said in a report published on Thursday. The acting managing director of NDDC, Daniel Pondei, told lawmakers at a hearing earlier in week: “There is no money missing in NDDC since I took over in February this year. Everything we have done are in accordance with the laid-down procedures.” The NDDC has been run by an interim board since October after the audit was ordered. The committee “strongly recommends” that Buhari takes steps to inaugurate a new board of directors. The absence of a permanent board “created a major lacuna of oversight”, the report said. A spokesman for the president declined to comment on the recommendations, which also said a monitoring committee should be set up to ensure there are checks and balances over the way the NDDC is run. It also said the office of the auditor general should oversee a forensic audit of the body. A NDDC spokesman did not immediately respond to phone calls and a text message seeking comment. Earlier in the week there were dramatic scenes at a House of Representatives hearing when Pondei was taken to hospital after slumping forward in his chair during the session, in which he gave evidence to the panel. After he fainted, people around Pondei rushed to sit him upright, using handkerchiefs as fans and forcing his mouth open in an apparent attempt to ensure he was not choking. The Twitterati reacted quickly to the scenes which unfolded live on TV. There wasn’t much sympathy.
  • Islamist militants in northeast Nigeria executed four aid workers and a private security guard, according to a video seen by Reuters. International Rescue Committee and Action Against Hunger, both aid groups, confirmed the killing of their colleagues and other humanitarian workers in statements condemning the executions. Last month, the militants released a video in which the hostages identified themselves. The execution underscores the increasing risk for aid workers in northeast Nigeria, where a decade-long conflict with Boko Haram and Islamic State’s regional ally has fuelled one of the world’s worst humanitarian crises. “You that are working for infidel organisations, you are working to deliver their mandate but they do not care about your plight,” said a man wearing a balaclava in the video, with the five captives wearing red blindfolds and kneeling in a row in front of him. “This is why whenever we abduct you, those organisations do not show any form of concern,” he said. When the man finished his speech, he and four other men in balaclavas and military fatigues shot the captives. Since Nigeria’s military withdrew into garrison towns they call “super camps”, the northeast has become deadlier for many civilians, leaving previously safe major roads, much of the countryside and smaller towns unprotected.
  • Nigeria’s central bank held its benchmark lending rate at 12.5%. Its governor, Godwin Emefiele, said members of the monetary policy committee wanted to assess the impact of a 100-basis-point rate cut at the last meeting. In May, the bank unexpectedly cut the rate to 12.5% from 13.5%. It was the largest rate cut since 2015.“The committee was mindful of the cut in policy rate at the last MPC (committee) meeting and the need to allow time for its effect to permeate the economy,” said Emefiele at a press conference Monday. Emefiele said the rate cut was having a “positive impact” as credit growth had increased significantly in the economy. Emefiele said eight of the 10 committee members voted to retain the rate and two voted for a rate cut.
  • Italian prosecutors asked for oil majors Eni and Shell to be fined and some of their present and former executives, including Eni CEO Claudio Descalzi, to be jailed in a long-running trial over alleged corruption in Nigeria. In a Milan court, prosecutors asked for eight years in prison for Descalzi and seven years and four months for Shell’s former head of upstream Malcolm Brinded. The prosecutors also asked for Eni and Shell to be fined 900,000 euros ($1.04 million) each and sought to confiscate a total of $1.092 billion from all the defendants in the case, the equivalent of the bribes alleged to have been paid. In one of the oil industry’s biggest suspected scandals, Italian prosecutors allege Eni and Shell acquired a Nigerian oilfield in 2011 knowing most of the $1.3 billion purchase price would go to politicians and middlemen in bribes. The companies and individuals accused have all denied wrongdoing in the case.
  • Nigerian banks revealed plans to reduce the amount customers can spend abroad using debit cards, as banks try to limit foreign currency settlement risk. The country is facing dollar shortages because of the sharp fall in the price of oil, Nigeria’s main export, and domestic banks are trying to avoid transactions with hard currency. Stanbic IBTC Bank, the local unit of South Africa’s Standard Bank, said it will halve the spending limit for offshore card transactions to $500 per month from Monday and will limit cash withdrawals to $100. Another top tier lender Zenith Bank said it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200. “This review is in response to today’s economic realities,” Zenith said in a notice, advising clients to request prepaid dollar cards. Other lenders — Ecobank and Fidelity Bank — have also lowered withdrawal limits for individuals while abroad. Such moves have previously been at the behest of the central bank, but it was not clear if the regulator was behind the latest action. The central bank did not respond to a request for comment. The bank is battling to conserve dollar reserves that are down 19% from a year ago. Last week it depreciated the currency on the official market prompting the naira to weaken on the black and over-the-counter spot markets.
  • Sub-Saharan Africa’s economy will contract this year after shutdowns disrupted activity and as daily cases of coronavirus are still rising in the region but a recovery is expected next year, a Reuters poll found. Following months of lockdowns which have muted economic activity a Reuters poll taken in the past week suggested the region will contract 3.1% this year but bounce back to around 3.5% growth in 2021. Nigeria, Africa’s biggest economy, was expected to contract 3.7% this year but bounce back to 2.0% growth next year. Continental peer South Africa was expected to grow 3.5% next year following an 8.0% contraction this year, a Reuters poll showed last week. However, Ghana, one of the continent’s oil exporters, was still expected to grow, expanding 1.9% this year and 4.2% in 2021. Some countries have begun relaxing restrictions but virus cases are still increasing, unlike in many developed countries that have started to show signs of recovery, so the uncertainty meant the range of forecasts for next year was wide — between flatlining and 4.8% growth. South Africa has reported the most cases in Africa, partly reflecting more widespread testing, and it is harder to gauge the full extent of outbreaks elsewhere although there are no signs numbers are falling. “Growth downgrades dominate in a region where external and fiscal buffers were already substantially eroded. The impact of COVID-19 will reduce growth even further,” Standard Chartered wrote in a note.
  • Nigeria’s gross revenues rose to 653.35 billion naira ($1.7 billion) in June from 517.8 billion naira in May due to higher crude and tax receipts, accountant general Ahmed Idris said, as oil prices recovered from April’s crash. The coronavirus outbreak early this year prompted a sharp fall in oil prices, Nigeria’s main export, slashing government revenues, weakening its currency and creating a large financing gap for the country. The global benchmark Brent Crude has since recovered to about $43 a barrel from a 21-year low below $16 in April. The government generated 42.83 billion naira from exchange rate gains, it said in a statement. Income from crude sales and value added tax (VAT) made up the bulk of gross revenues. In February, Nigeria increased VAT to 7.5% from 5% to boost revenues, seen among the lowest in the world. Lower government revenue could worsen Nigeria’s debt to revenue ratio this year from a year earlier.
  • Pirates kidnapped seven Russian sailors from the crew of a ship in the Gulf of Guinea, the Russian Embassy in Nigeria said. The seven Russians were among 13 crew members pirates abducted from the Curacao Trader 210 miles off the coast of Benin last Friday, the embassy said on its official Twitter account, but did not provide further details. The shipping industry has warned in recent months about increased incidents of piracy and kidnapping in the Gulf of Guinea, particularly around Nigeria. Pirates this month attacked an oil production vessel off Nigeria and kidnapped nine Nigerian nationals.
  • West African leaders will hold a virtual extraordinary summit on Monday to propose measures to end the deepening political crisis in Mali. The move comes after five heads of state, including President Buhari who was sighted wearing a mask in public for what some said was the first time, held talks with the government and opposition in the country’s capital city Bamako on Thursday. “We have decided that we will report back to all the heads of state during an extraordinary meeting on Monday July 27,” said Mahamadou Issoufou, Niger’s President and current chair of the 15-member regional ECOWAS bloc. Infuriated by corruption, disputed local election results and army losses to jihadists, tens of thousands of people have taken to the streets in recent weeks, sparking clashes with police in which the United Nations says at least 14 protesters have died this month. The opposition, a group called M5-RFP whose figurehead is Saudi-trained Muslim cleric Mahmoud Dicko, has said it will not quit until President Ibrahim Boubacar Keita steps down, raising concerns in neighbouring countries of a protracted crisis.
  • And Foreign Minister Geoffrey Onyeama said he had tested positive for COVID-19, and became the first member of President Buhari’s cabinet to contract the new coronavirus. Onyeama, 64, said on Twitter he had taken a COVID-19 test because of a throat irritation. Buhari’s cabinet has been conducting executive council meetings virtually as part of measures to keep the government working while abiding by social distancing rules. Onyeama has played a role in repatriating Nigerians stranded because of travel restrictions during the COVID-19 pandemic. Buhari’s former chief of staff, Abba Kyari, died in April from the novel coronavirus, making him the most high profile person in the country to die from the virus.