A Week in Nigeria: 29 August
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Africa is declared free of the wild polio virus, Nigeria’s economy shrinks by 6% in second quarter of this year, and international flight resumption delayed by a week.
- Africa was declared free of endemic wild polio, four years after the last case was recorded in Nigeria. The certification, announced during a World Health Organization (WHO) event, confirmed that all 47 countries in the WHO’s Africa region have eradicated the crippling viral disease that attacks the nervous system and can cause irreversible paralysis within hours. Children under five are the most vulnerable, but people can be fully protected with preventative vaccines. To keep the virus at bay, population immunisation coverage rates must be high and constant surveillance is crucial. The last case in Africa was recorded in 2016 in Nigeria’s northeastern Borno state, which has been ravaged by the Islamist militant Boko Haram insurgency since 2009. Tunji Funsho, a Nigerian anti-polio coordinator for Rotary International, said one way the disease was stamped out in Borno was to use the military and a government-approved militia to escort vaccinators in unsafe areas. Globally, wild polio case numbers have been cut drastically due to national and regional immunisation for babies and children. The disease remains endemic in Afghanistan and Pakistan, however. “Until wild poliovirus is eradicated everywhere, it’s still a risk everywhere,” Michael Galway, a polio expert at the Bill and Melinda Gates Foundation, told Reuters, urging continued vigilance. “There’s nothing that prevents the virus from making the route from Pakistan and Afghanistan to Africa,” he said. The WHO estimates that 1.8 million children have been saved from life-long paralysis from wild polio. Yet despite Tuesday’s announcement, a vaccine-derived strain of the disease — which can infect people where there is only partial vaccination and results in the same symptoms as the wild form — continues to circulate in Africa. “We must stay vigilant and keep up vaccination rates to avert a resurgence of the wild polio virus and address the continued threat of the vaccine-derived polio,” said Dr Matshidiso Moeti, WHO Regional Director for Africa. Vaccine-derived poliovirus cases can occur when the weakened live virus in the oral polio vaccine passes among under-immunized populations and eventually changes to a form that can cause paralysis. The 16 countries in Africa affected by circulating vaccine-derived polio virus outbreaks include Angola, Burkina Faso, Cameroon, Ethiopia, Ghana, Nigeria and Zambia.
- Nigeria’s economy contracted by 6.1% in the second quarter of 2020 from a year earlier, the statistics office said, with lockdowns in its two main cities and low oil prices taking their toll. The country reported its first coronavirus case in late February. Lockdowns were imposed for just over a month in the commercial hub Lagos and the capital Abuja, ending in early May. “The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic,” the statistics office said. Crude oil production was 1.81 million barrels a day in the second quarter, compared with 1.98 in the same 2019 period. A global oil price crash due to reduced demand from the pandemic saw the oil sector shrink by 6.63% in the second quarter. The non-oil sector declined by 6.05%, which the statistics said was the first decline in real non-oil GDP growth in nearly three years. The World Bank has warned that Nigeria potentially faces its worst financial crisis in four decades due to the crash in oil prices and the pandemic. However, the bank is also unlikely to approve a much-needed $1.5 billion loan for Nigeria due to concerns over desired reforms, sources familiar with the talks told Reuters this month. Inflation in Nigeria rose to 12.82% in July, its highest level in more than two years, and the unemployment rate stood at 27.1% in the second quarter, according to data released earlier this month. “Given that lockdown measures have been loosened in recent months and oil prices have picked up, Q2 might be the trough of this year’s recession in Nigeria,” said John Ashbourne, global emerging markets economist at Fitch Solutions. Other commentators weighed in on Twitter.
- Nigeria might fall into recession, the head of the country’s budget office told reporters in the wake of the GDP stats. “Because of the twin effect of COVID-19 pandemic and the drop in oil price, subsequently that it is expected that Q3 will be negative and the country might fall into recession,” Director General of Budget Office, Ben Akabueze, told reporters. His comments were only slightly stronger than those contained in a presidency statement which said it expects the third and fourth quarters to reflect the continued effects of a slowdown. Nigeria’s economy was last in recession in 2016, its first in 25 years, since when growth has been sluggish.
- The head of the aviation regulatory body told reporters Nigeria will resume international flights from 5 September, marking a week-long delay to the resumption date previously announced by the government. 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. Last week Aviation Minister Hadi Sirika said four flights would begin landing daily in commercial hub Lagos, and four in the capital Abuja from Aug. 29. But the director general of the Nigerian Civil Aviation Authority (NCAA), Musa Nuhu, announced the revised time at a news conference in Abuja for the task force on coronavirus.“While airlines and airports were ready, other non-aviation logistics require the one-week extension to be ready,” said Musa, explaining the reasons for the week-long delay. Nigeria resumed domestic flights on July 8.
- Guinness Nigeria slumped to an annual pretax loss of 17.07 billion naira ($45 million), its first in four years, hurt by writedowns and coronavirus-induced disruptions, sending its shares almost 9% lower on Friday. The company, which is 54% owned by UK-based drinks group Diageo, said the COVID-driven lockdown had affected sales in the fourth quarter, closing bars and making it difficult to transport products across the country. The economic backdrop also made life difficult for Guinness Nigeria, with Nigeria set to fall into recession in the third quarter after GDP contracted by 6% in the second three months of the year. Guinness Nigeria’s sales in the 12 months through June fell to 104.37 billion naira, down 21% from the year before. The company, which had made a pretax profit of 7.10 billion naira last year, faced declining sales, dollar shortages and higher inflation, similar factors to what had in 2016 triggered its first loss in 30 years at a time when Nigeria entered recession. Guinness Nigeria was also hit by naira devaluation, which contributed to increased financing costs, and a drop in the value of its shares, prompting it to take a writedown based on their market value. The brewer, which had concentrated on the premium beer and malt segment, shifted focus in 2017 to the cheaper or volume end of the market. Now it is betting on spirits, such as Johnnie Walker whisky and Orijin gin, to revive its fortunes. “It’s been a tough quarter and we took decisions to refresh the business,” Finance Director Stanley Njoroge told an analyst call.
- Nigeria’s central bank said it plans to resume dollar sales to retail currency operators by the end of the month. The central bank suspended forex sales to bureaux de change (BDC) operators in March as a coronavirus-induced lockdown cut demand for individuals with dollar expenses, to help protect the naira after a 15% devaluation prompted as an oil price crash. It later weakened the naira in a move to unify its multiple exchange rates. The bank said it will sell $10,000 to each of the country’s 5,000 retail currency operators on Aug. 31, according to a bank circular, down from the $20,000 each it sold to the traders. A BDC official said it planned to sell dollars to them twice in a week, compared to four times in the past. Traders cannot resell dollars bought from the central bank at more than 386 naira, the circular said. The central bank resumed dollar sales to commercial banks in April in view of the gradual easing of the lockdown. However, demand has been swelling and piling up pressure on the naira, particularly from individuals and from foreign investors that need to repatriate funds abroad. It did not provide details on when sales to foreign investors will resume. The bank this week rolled out new measures targeted at non-oil exporters to try to force them to process dollar proceeds through domestic lenders to increase hard currency liquidity and support the naira.
- The naira eased 1.3% against the dollar on the official market on Friday, the day after the central bank announced its plans to resume forex sales to retail currency operators. The naira opened for trade at 385.50 per dollar on the market, supported by the central bank. It later recovered to close at 381 per dollar, where it has been stuck since July, Eikon Refinitiv data showed. It was not clear whether the opening trade of 385.50 naira per dollar was carried out by the central bank. Bank officials were not immediately available for comment. With the early deal, the naira traded close to the over-the-counter spot market, widely quoted by investors and importers. But it was still 20% weaker on the unofficial black market patronised mostly by individuals at 477 naira. The naira forward traded in London for the one-year settlement rose 3.64% to 478 on Friday.
- The country’s refineries processed almost no crude oil in the 13 months to end June, according to the latest data published by the Nigerian National Petroleum Corporation (NNPC). In the same period, operating costs for the country’s three main oil refineries, which the NNPC has shuttered pending revamps, totalled $367 million. “No white product (Premium Motor Spirit and Dual Purpose Kerosene) was produced in June 2020 and apparently for the past 12 consecutive months. The lack of production is due to ongoing rehabilitation works at the refineries,” the report said. The state oil company announced in April that it had closed all its oil refineries as it works to secure funding and a model to upgrade them, adding that when the Kaduna, Port Harcourt and Warri refineries are revived they would no longer be managed by the company. For years the facilities have only worked sporadically due to under-investment and the country faces an uphill battle to sell its oil abroad due to hollowed out demand from the coronavirus pandemic and abundant oil in global markets. The NNPC report said that all but a tiny fraction of the country’s domestic fuel had come via an agreement between Nigeria and a large handful of companies to swap the nation’s crude oil for fuels, dubbed direct sale, direct-purchase (DSDP). Just under 40,000 megatons of crude was the only oil processed by the country in the reporting period, the report added, only 2 percent of the country’s refining capacity. “The declining operational performance is attributable to ongoing revamping of the refineries which is expected to further enhance capacity utilization once completed,” NNPC added.
- The African Development Bank (AfDB) said its board had re-elected Akinwumi Adesina for a second five-year term as AfDB president. The Abidjan-based bank conducted the vote to reappoint Adesina during its annual meeting on Thursday, which was held via video link. Adesina, a former Nigerian minister who was running unopposed, gained 100% of votes cast, the bank said in a statement. His reappointment comes after the bank’s ethics committee and an independent panel investigated whistleblowers’ allegations he had abused his office and cleared him of all wrongdoing in July.
- Lawmakers have instructed the country’s most senior accountant to investigate payments totalling $18 billion as dividends from Nigeria’s investment in Nigeria Liquefied Natural Gas (NLNG) between 2004 and 2019, a Senate statement said. The Senate, parliament’s upper house, has ordered the accountant general to investigate the dividend payments, it said in a statement, without giving details of what wrongdoing, if any, it suspected. “The accountant general was mandated to investigate among other things if the amount was actually remitted to NNPC, how much was actually remitted to the Federation Account, if there is any deduction by NNPC, how much was deducted and who authorized the deductions,” it said in its statement. An NLNG spokeswoman did not immediately respond to a request for comment.
- And Nigerian energy company Lekoil Ltd needs to raise around $100 million before it can start drilling in its Ogo oilfield, its chief executive told Reuters. Lekoil reached a deferred payment deal earlier this year to keep its stake in OML 310, where Ogo sits, after it discovered a $184 million loan it wanted to use for the purchase was fraudulent. Chief Executive Lekan Akinyanmi said the company was able to finance much of the Ogo preparation work with cash from its producing field, Otakikpo, and will drill once it raises the money. Lekoil is in talks for a mix of direct investment into the asset and vendor financing, which Akinyanmi said is the most cost-effective way to raise money for drilling. He expects to spend $1 billion developing Ogo through its life cycle. Shares in London-listed Lekoil plunged in January after it revealed the loan that it thought was from the Qatar Investment Authority (QIA) was a “complex facade”.