A Week in Nigeria: 29 September

Nigeria’s central bank governor, Godwin Emefiele, held the benchmark interest rate at 14 percent and expressed optimism about the $8.1 bln MTN dispute

In this week’s round-up: Shell’s struggles to shift strategy, a general strike and a tightly contested bellwether gubernatorial race in Osun.

  • The central bank kept its main interest rate at 14 percent, the record high it has maintained since July 2016, in a split decision that reflected the bank’s need to contend with both sluggish growth and accelerating inflation. The central bank governor, Godwin Emefiele, said three of the 10 members of the monetary policy committee who met voted to increase the rate by 25 basis points.
  • The interest rate decision wasn’t the most notable announcement by Emefiele on Tuesday. It was his first press conference since the financial regulator ordered South African telecoms giant to repatriate $8.1 billion which it said was taken out Nigeria illegally. The central bank governor said he was optimistic that the dispute would be resolved to the satisfaction of all parties. “MTN will be happy, the banks will be happy. CBN and government would be happy,” he said as the press conference that follows the interest rate announcement drew to a close.
  • Shell increasingly relies on onshore oil, despite selling off assets and investing heavily offshore. That conclusion is counterintuitive because the oil major wants to reweight its footprint in Nigeria to focus on oil and gas fields far offshore - away from the theft, spills, corruption and unrest that have plagued the country’s onshore industry for decades. Our story looks at why the oil major is finding it so hard to shift focus and finds that while Shell has cut onshore oil production and sold some onshore assets, it continues to invest in others. Much of the increase comes from less polluting gas, used mainly in power generation, which Shell thinks will be key to the transition to lower carbon energy. Gas made up 70 percent of onshore production in 2017, up from 47 percent in 2008.
Onshore production has risen in recent years as a share of Shell’s output in Nigeria
  • PZ Cussons said its quarterly results were in line with expectations, even as volumes and margins in Nigeria remain under pressure. The soaps and cosmetics maker said new products and cost cuts helped offset challenging trading conditions in Nigeria for the quarter ended 31 August, but added that consumer disposable income in Africa’s most populous country remains subdued ahead of presidential and gubernatorial elections scheduled to take place in February and March respectively. The company has suffered from a slowdown in Nigeria, its largest market, forcing it to warn in July of a challenging year ahead after Africa profits declined sharply in the year to 31 May.
  • Nigeria’s main unions launched a nationwide strike over the minimum wage after talks with the government broke down. They want the government to almost triple the monthly minimum wage to around 50,000 naira ($164) from 18,000 naira. The impact of the industrial action was felt most in the capital, Abuja, where civil servants stayed at home. That shut down government ministries and agencies. The strike was felt less in other parts of the country, most notably in commercial capital Lagos where life largely carried on as usual.
  • A Nigerian military pilot died in Abuja after being involved in an accident while rehearsing for an air display to mark Nigeria’s independence from British colonial rule. Witnesses reported seeing the wings of two planes collide.
  • Nigeria’s ruling party narrowly won a key governorship election in southwestern Osun state, suggesting the region that helped sweep President Muhammadu Buhari to power will be hotly contested in national polls early next year. The vote had been seen as a test of the ruling party’s popularity in the southwest where backing for Buhari’s All Progressives Congress (APC), a merger of four regional parties, proved to be crucial in the presidential and gubernatorial races of 2015. Perhaps unsurprisingly, opinions differed starkly on the two sides of the political divide regarding the manner in which the poll was conducted.

While the presidency expressed delight at the result, the opposition PDP alleged that the vote had been marred by violence and voter intimidation.



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