A Week in Nigeria: 3 August
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: MTN awarded financial services licence while tackling tax issue, Islamists reportedly kill around 100 people as Boko Haram insurgency hits 10-year anniversary and Shi’ite Muslim group suspends protests after ban.
- Telecoms giant MTN was back in the news this week. A subsidiary of MTN Nigeria has been awarded a licence by the central bank that would allow it to provide financial services. Nigeria announced last year that it would allow telecom companies to provide banking services, aiming to give millions of Nigerians without bank accounts access to so-called mobile money services, a policy that has been successful in Kenya. MTN Nigeria’s CEO Ferdi Moolman said on Monday its Yello Digital Financial Services Limited (YDFS) unit had been granted a “full super agent” licence by the Central Bank of Nigeria. “Through the network established by YDFS, MTN is in a position to broaden the availability of financial services for the under-served across the country. This marks a very important first step in leveraging our infrastructure to scale our Fintech initiatives,” said Moolman.
- In an unrelated development, MTN Nigeria said it has asked a local tax tribunal to rule on whether the company should pay corporate tax on a 330 billion naira ($1.1 billion) fine. MTN Nigeria, part of South Africa’s MTN Group, was originally fined 1.04 trillion naira for failing to deactivate more than 5 million unregistered SIM cards, but it negotiated a reduced fine to clear its path to list on the Nigerian Stock Exchange earlier this year. MTN Nigeria said it had requested the judicial review after the Nigerian tax authority, the Federal Inland Revenue Service (FIRS), disagreed with the company’s accounting treatment of the fine as an operating cost. “We’ve paid everything to the FIRS then we went to the tribunal and because the case is with the tax tribunal the government can’t access the money.” Nigeria’s tax service was not immediately available for comment.
- Islamists reportedly killed around 100 people during a week in which the Boko Haram insurgency reached a 10-year anniversary. At least 65 people died in an attack by suspected Islamists on a group returning from a funeral in Nigeria’s northeastern Borno region, state television reported on Sunday, one of the deadliest attacks on civilians in recent years. There was no immediate claim of responsibility, but the Boko Haram group and rival Islamic State in West Africa (ISWA) splinter group have often carried out attacks in the area. And Islamic State said via its Amaq news agency that it killed or wounded more than 40 soldiers in the northeast Nigerian state of Borno in two separate attacks on Tuesday. The army didn’t respond to requests for comment and Reuters was unable to independently verify the number of casualties, although residents and military sources confirmed that attacks took place.
- The Islamic Movement in Nigeria (IMN), a Nigerian Shi’ite Muslim group, said it had suspended a series of protests calling for the release of its detained leader and will temporarily seek other avenues to secure his release. The move came days after Nigeria banned the group and outlawed its demonstrations in the wake of protests in which the group said at least 20 of its members were killed by police. Police gave no death toll. The group’s leader, Ibrahim Zakzaky, has been held since 2015 when government forces killed around 350 people in a storming of its compound and a nearby mosque. His bail application will be heard on Monday. That application is part of an attempt for him to seek treatment in Egypt for injuries related to the military ambush on his compound four years ago.
- Nigeria is backing its commitment to join Africa’s recently agreed free trade zone by setting up a committee to implement the agreement, and promising new laws where necessary to enact membership of the pact, the presidency said. The African Continental Free Trade Agreement (AfCFTA), launched by African leaders on July 7, will if successful create a $3.4 trillion economic bloc and usher in a new era of development. Nigeria joined AfCFTA despite initial reluctance due to a desire to ensure it would not open local industries to dumping from countries outside the region, and its decision is an important endorsement as the largest economy on the continent. The presidency said it would set up a committee made up of government agencies and private sector groups to implement the trade agreement.
- A piece of equipment that will process crude oil for Nigeria’s Dangote refinery set sail from China, oil company Sinopec said. The 650,000 barrel per day (bpd) refinery near Lagos is set to be Africa’s largest, and could transform the country from a fuels importer to a net exporter. For the type of refinery the company is building, the atmospheric tower is the primary unit processing crude oil into fuels, Citac analyst Jeremy Parker told Reuters. It will likely take at least a month to reach Lagos. Billionaire Aliko Dangote, who built his fortune on cement, said last year that he planned to finish building the $12–14 billion refinery in 2019 and to start production in early 2020. Most analysts and observers said the ambitious project would take longer in order to begin pumping out fuels such as diesel and gasoline. Citac expects the refinery to start producing fuels in 2023.
- The Nigerian central bank has been intervening in the currency market over the past two weeks to keep the naira stable as foreign investors took profits after yields fell on the local debt market, Reuters was told. The naira was quoted at 362.80 to the dollar on the currency market for investors, weaker than the level around 361 level where it has traded for much of this year, said a dealer, who trades currency for the local unit of an international bank. Pressure has been building on the currency amid a dwindling supply of dollars. It now takes more than a week to fill customer orders. Nigeria operates a multiple exchange rate regime. It maintains an official exchange rate of 306 naira to the dollar, supported by central bank. The traded rate of 362.80 is the one widely quoted by foreign investors and exporters. The central bank does not disclose how many dollars it injects into the currency market. We are currently seeing more outflow than inflow … but the central bank has been intervening,” the trader said. “The moment the central bank doesn’t provide support, people may start to panic.” Nigeria’s central bank has cut back on open market auctions to attract foreign investors in its bonds, a policy shift aimed at stimulating lending to boost an economy stuck with low growth after a recent recession. The trader said some offshore clients were taking profits and that summer holidays in Europe could also account for the low volumes.
- One of Nigeria’s main oil and gas trade unions said on Friday it had suspended planned industrial action related to a staffing dispute with U.S. oil major Chevron. OPEC member Nigeria is Africa’s largest oil producer and crude sales bring about 90% of foreign exchange, but the moribund state of refineries means it imports most refined fuel. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) had accused U.S. oil major Chevron of sacking hundreds of Nigerian workers and altering contracts, both of which it said were in violation of an agreement. On Thursday, the union issued a statement in which it said it was prepared to take industrial action if certain demands, including the return to work of all “NUPENG executives”, were not met by Chevron within 7 days. But, in its new statement, NUPENG said it had suspended the planned industrial action following talks brokered by the state oil company that were held on Thursday and Friday.