A Week in Nigeria: 27 October
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Panic on the streets of Kaduna, cabinet approves the draft 2019 budget and mass resignations at Diamond bank.
- Nigeria’s government deployed troops and a special police force to restore calm in the northern state of Kaduna following communal violence that killed 55 people at the end of last week. The state government also imposed a curfew on Sunday after the clashes between Christians and Muslims which began at a market in the Kasuwan Magani area of southern Kaduna, around 50 kms (30 miles) from Kaduna city. Hundreds of people have been killed this year in outbreaks of communal violence across Nigeria. Security has become a key campaign issue ahead of the February 2019 election in which Buhari will seek a second term.
- Nigerian trade unions said they may resume an indefinite nationwide strike on 6 November if the government fails to publicly agree to a proposed increase in the minimum wage. The Nigerian Labour Congress (NLC), Trade Union Congress (TUC), and United Labour Congress (ULC) said in a joint statement they had agreed to a compromise of a 30,000 naira minimum wage in talks with the government since halting the strike. They accused the government of failing to disclose the agreement on a new minimum wage and said procedures should be launched to put the commitment into law. The government hasn’t commented since talks resumed after the last nationwide strike a few weeks ago. With just a few months until the election, President Buhari’s opponents have taken up the issue. The main opposition candidate, Atiku Abubakar, expressed support for Nigerian workers in a carefully worded tweet that avoided making any policy commitments.
- Others point to the level of the current minimum wage compared with the cost of living.
- MTN and Nigerian authorities continued to talk positively about the chances of resolving disputes worth a total of $10.1bn. The South African telecoms giant said it was continuing to hold talks with Nigerian officials to find a mutually acceptable solution to the row over the alleged illegal transfer of $8.1 billion of funds. Later in the week the minister of industry, trade and investment - Okechukwu Enelamah - gave Reuters an exclusive interview in which he said the government was talking to all parties involved and aiming to resolve both the repatriation issue and that of an alleged $2bn unpaid tax bill a soon as possible to boost investor confidence. “We want to deal with it … in a way that would be responsive to investors,” said Enelamah, himself a former private equity executive.
- Despite the volley of warm(er) words from both sides, time is running out to resolve the disputes before the issues are raised in court. The repatriation case, involving MTN and the central bank, is due to be heard at the federal high court in Lagos on 30 October. A hearing related to the tax bill, between the telecoms firm and the attorney general, is scheduled to take place at the same court on 8 November.
- Nigeria’s cabinet agreed to submit to lawmakers an 8.73 trillion naira ($28.57 billion) draft 2019 budget. The proposed spending plan would be a reduction from a record 9.12 trillion naira in 2018, a move that the government has previously said was part of an effort to reduce debt. Udoma Udo Udoma, the delightfully monikered budget minister, said the draft spending plan assumes an oil price of $60 per barrel and production of 2.3 million barrels per day. The plan needs to be approved by parliament before the budget is finalised. For context, crude production in Africa’s top oil producer and exporter was at 1.9 million barrels per day in the second quarter against an estimated 2.3 million barrels per day budgeted for in 2018. The draft fiscal paper approved by ministers this week - the snappily titled 2019–2021 Medium Term Framework - assumes an exchange rate of 305 naira to the dollar and gross domestic product (GDP) rising by 2.01 percent. But growth has been sluggish and Nigeria has struggled to meet previous revenue targets. GDP was up 1.50 percent in the second quarter of this year. This chart from Charlie Robertson of Renaissance Capital provides a useful look at Nigeria’s government finances in the context of other African countries.
- Mid-tier lender Diamond Bank was in the headlines this week. Four of the bank’s directors quit with immediate effect, with sources saying this paved the way for new investors to recapitalise the bank. Local lenders have been trying to raise fresh capital after huge loan losses worsened by an economy that has just recovered from a recession. The crisis turned a once lucrative oil sector loan book sour with banks looking for new avenues to make money. Shares in Diamond Bank rose to a four-month high the day after news broke of the resignations. But shares then fell a day later after the lender denied it was talking to new investors to shore up its capital. Analysts have noted that the bank has maintained a 16 percent capital adequacy ratio, the minimum required by the central bank, which has limited growth and profitability.
- And sources revealed that the U.S. Department of Justice is seeking documents from Glencore about intermediary companies that the commodities firm has worked with in the Democratic Republic of Congo, Venezuela and Nigeria. Glencore said on 3 July it had been subpoenaed for documents relating to its business in the three countries since 2007. A source who was familiar with the Nigerian element of the probe said the Department of Justice wanted Glencore to hand over documents related to associates of former Nigerian oil minister Diezani Alison-Madueke, namely the owners of Nigeria-based Atlantic Energy Holdings. The U.S. authorities are investigating alleged bribery of the former minister and alleged money-laundering by her associates, who include Olajide Omokore and Kolawole Aluko, according to U.S. court documents seen by Reuters. Glencore was a buyer of oil from Atlantic Energy Brass Development, a subsidiary of Atlantic Energy Holdings, which was owned by Omokore and Aluko.