A Week in Nigeria: 4 May

Highlights from Reuters coverage of Nigeria over the last seven days

Lawmakers increased the size of the budget that was presented to parliament by the president

In this week’s round-up: Senate passes budget, Britain seeks closer investment ties and Dutch court rules on Nigerian widows’ Shell case.

• Nigeria’s Senate passed the 2019 budget after increasing it to 8.91 trillion naira ($29 bln). Lawmakers said the rise was due to a rise in spending on security to help the government combat rising militancy and kidnapping across the country. The upper house of parliament increased the spending plan by 80 billion naira, up from the 8.83 trillion naira budget presented by President Muhammadu Buhari to lawmakers last year. Buhari needs to sign the budget for it to become law. Parliament approved a budget deficit of 1.9 trillion naira, representing 1.37 percent of GDP. Nigeria’s economy grew by 1.93 percent last year, its fastest pace since a recession two years earlier, data showed, while inflation which has been in double digits for three years, fell to 11.25 percent in March.

• In the last few weeks there has been a spike in security issues, as highlighted by lawmakers. Gunmen killed a British woman and a Nigerian man, and abducted three others in the northern city of Kaduna. Note that in the last few weeks gunmen kidnapped three oil workers from Canada, Scotland and Nigeria and, in a separate incident, abducted two Shell oil workers. Where the last incident is concerned, this week we reported that the two Shell workers, who were kidnapped in the Niger Delta region, were now free.
• The International Monetary Fund’s Africa chief, during an interview in Abuja, told me African countries coping with low commodity prices must do more to re-balance investment and sustainable debt. The commodity price slump of 2015 ended a decade of rapid growth across Africa. The IMF cut its 2019 economic growth projection for sub-Saharan Africa this year to 3.5 percent, from 3.8 percent set last October, in its regional report published in early April. The IMF said its lower forecast reflected downward revisions for Nigeria and Angola as oil prices weakened. Nigeria, which has Africa’s biggest economy, should do more to increase domestic revenue by raising taxes to improve debt service and fund infrastructure development, Abebe Aemro Selassie, the IMF’s director for Africa said. “Going forward, you cannot sustain these high levels of deficits,” he said. “More pressing is the fact that you have interest payments accounting for a large share of tax revenues. What is needed … is to do more domestic revenue mobilisation.” Nigeria has one of the lowest tax-to-GDP ratios in the world. Earlier this month, lawmakers said they had asked the government to consider raising taxes on luxury goods to boost revenues, though collection has previously been difficult in a country where many small business are not registered.
• Nigeria and Britain aim to deepen insurance sector ties and look into introducing naira-denominated instruments onto London’s financial market, the trade ministry in Abuja said, as Britain makes efforts to expand trade links with partners beyond the EU. The ministry statement followed a visit to Nigeria by British foreign minister Jeremy Hunt on an international tour to push for a greater UK diplomatic presence in Africa. Advising Nigeria’s government to improve the investment climate, Hunt said that, with Britain planning to leave the European Union, now was a good time to focus on bilateral ties. “Britain has a big pool of funds that could be tapped for investment in infrastructure in Nigeria.” Hunt’s trip was the latest in a series of visits to Nigeria by British officials aimed at bolstering ties with Africa’s biggest economy. The last two years have included: a visit by Prime Minister Theresa May, Hunt’s predecessor Boris Johnson and the City of London’s Lord Mayor who last year said Britain and Nigeria were exploring ways to list naira-denominated bonds on the London Stock Exchange to help fund infrastructure projects. Africa represents 2 percent of British trade activity, with Nigeria accounting for a tenth of that, according to the trade ministry.

• A Dutch court said it has jurisdiction to hear a damages suit brought against Royal Dutch Shell by four widows of activists executed by the Nigerian government in 1995. In a preliminary decision, judges at the Hague District Court said they would allow the suit to go forward, a rare win in a decades-long legal fight. However, it said the claimants must still prove Shell’s liability. Shell denies wrongdoing. “This procedure will continue,” said presiding judge Larissa Alwin, reading the decision of a three-judge panel. The men executed were among a group that became known as the “Ogoni Nine” — activists who included writer Ken Saro-Wiwa. The group had protested against what it said was Shell’s exploitation of the Niger Delta. Its nine members were arrested and hanged after a flawed trial that turned international opinion against Nigeria’s then-military rulers.
• Still on the subject of oil in the Niger Delta, we reported that Nigeria’s Department of Petroleum Resources has deployed satellite technology to track oil smugglers. The DPR has turned to French data firm Kpler, just six years old and staffed by a hundred mostly young employees, to help it ferret out the smugglers from the thousands of ships plying Nigerian waters. The DPR began its collaboration with Kpler in December and unveiled it this month, among other tech-focused plans to detect what it calls “rogue” or “dark” ships. Kpler and the DPR declined to specify the value of their contract. Shell alone recorded 128 oil spills resulting from sabotage in 2018, more than double the previous year and the highest since 2014.
• And, if your thirst for oil stories still hasn’t been quenched, there’s more. No, really. State oil company NNPC said 132 companies had bid for the right to swap the nation’s crude oil for fuels as a tender for the deals closed. The tender for the one-year contracts, dubbed direct sale, direct-purchase (DSDP), was issued in March. NNPC extended the 2018 contracts through June of this year. Nigeria is almost entirely reliant on imported fuel due to years of neglect at its own refineries. It has leaned heavily on the swap arrangements to get fuel, particularly gasoline, as other would-be importers struggle to make money due to price caps. Since the scheme was introduced in 2016, replacing another programme that paid subsidies to importers, NNPC managing director Maikanti Baru said it had saved the nation $2.2 billion and supplied some 90 percent of its import requirements.