A Week in Nigeria: 6 February
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Former finance minister Ngozi Okonjo-Iweala nears WTO top job, Nigeria expects 41 million COVID vaccine doses from the African Union, central bank orders cryptocurrency crackdown, and oxygen shortage kicks in during second wave.
- Former finance minister Ngozi Okonjo-Iweala moved a step closer to becoming the first African and first woman to lead the World Trade Organization, after a South Korean rival withdrew on Friday following months of uncertainty over the body’s leadership. The United States, previously a stumbling block, threw its support behind her. Okonjo-Iweala faced opposition from the U.S. administration of former President Donald Trump after a WTO selection panel recommended her as chief in October. The decision required consensus. South Korea’s trade minister Yoo Myung-hee’s withdrawal clears the way for Okonjo-Iweala to be director-general of the global trade watchdog. Okonjo-Iweala said she was looking forward to the conclusion of the race. “There is vital work ahead to do together,” the former World Bank executive said in a statement, saying she wanted to focus on needed reforms. The embattled Geneva-based body has gone without a director-general since Brazil’s Roberto Azevedo quit a year early in August and his replacement must contend with a COVID-induced recession, U.S.-China tensions and rising protectionism. In the more than three months since the selection panel recommended Okonjo-Iweala, Yoo had resisted mounting diplomatic pressure to bow out. Observers say the leaderless WTO is facing the deepest crisis in its 25-year history. It has not clinched a major multilateral trade deal in years and failed to hit a 2020 deadline on ending subsidies for overfishing. Some of its functions are paralysed due to the actions of the Trump administration which blocked judge appointments to its top appeals body. Many hope that the change of U.S. administration will lead to reform of the organisation. Okonjo-Iweala has previously stressed the need for the WTO to play a role in helping poorer countries with COVID-19 drugs and vaccines – an issue on which members have failed to agree in ongoing negotiations.
- Nigeria expects to receive 41 million COVID-19 vaccine doses from the African Union, the head of the country’s primary healthcare agency said, while the health minister said vaccines from Russia and India were being considered. Authorities in Africa’s most populous country, which has 200 million people, plan to inoculate 40% of the population this year and another 30% in 2022. The African Union initially secured 270 million COVID-19 vaccine doses from manufacturers for member states. Last week it was announced that the bloc would receive another 400 million doses of the AstraZeneca vaccine. Faisal Shuaib, who heads the National Primary Health Care Development Agency, said Nigeria’s previous request for 10 million doses through the AU had been increased four-fold. “We have applied for 41 million doses of a combination of Pfizer, AstraZeneca and Johnson & Johnson COVID-19 vaccines,” Shuaib said in a text message response to written questions. Shuaib said the request was for 7.6 million doses of the Pfizer-BioNTech vaccine, 15.3 million of the AstraZeneca vaccine and 18.4 million of the Johnson & Johnson vaccine. He said the doses were expected to arrive by the end of April, adding that Nigeria was “exploring multiple payment options” for the doses including through the African Export-Import Bank (Afreximbank) financing plan to make repayments in installments over five to seven years. Nigerian authorities have previously said the country is working with the COVAX programme backed by the World Health Organization, that aims to secure fair access to COVID-19 vaccines for poor countries, and expects to receive its first doses in February. Shuaib, speaking in a news conference in the capital Abuja, said 16 million doses of the AstraZeneca vaccine were expected to be delivered under the COVAX programme. “This will replace the earlier communicated 100,000 doses of Pfizer vaccines which we all agreed was grossly inadequate,” he said. Health Minister Osagie Ehanire told reporters that dossiers for two vaccines, one from India and another from Russia, were being studied by the country’s National Agency for Food and Drug Administration and Control (NAFDAC) drugs regulator.
- Nigeria’s banks and financial institutions are barred from dealing in or facilitating transactions in cryptocurrencies, the central bank said in a circular on Friday, warning that banks that fail to act could face “severe regulatory sanctions”. The bank directed institutions to identify individuals and entities transacting in or operating in cryptocurrency exchanges within their systems and immediately close their accounts. Bitcoin use has boomed in Africa in recent years, driven by payments from small businesses and remittances sent home by migrant workers. Much of the growth was driven by Nigeria, which has a large, young, tech-savvy population and a weak national currency, the naira, which makes it difficult to get the U.S. dollars needed to import goods or services. But the central bank has argued that cryptocurrencies, which are unregulated and not legal tender, are risky for the user. In June, small cryptocurrency transfers totalled nearly $56 million, nearly 50% more than a year before. The number of transactions jumped over 55% to 120,000. Late last year we reported on the bitcoin boom in Nigeria which involved activists using the cryptocurrency to raise funds for protests against police brutality as well as small businesses.
- Royal Dutch Shell needs to take another hard look at its onshore oil operations in Nigeria due to continued problems with theft and sabotage, Chief Executive Ben van Beurden said, calling the situation a “headache”. His comments came days after a Dutch appeals court held Shell’s Nigerian subsidiary responsible for multiple oil pipeline leaks in the Niger Delta and ordered it to pay unspecified damages to farmers, in a victory for environmentalists. Shell maintains that the spills were caused by sabotage. In November, it also lost a Nigerian high court case that could lead to $44 million in damages for spills. “Our onshore oil position, despite all the efforts we put in against theft and sabotage, is under challenge,” van Beurden told reporters, saying it was a headache. Shell’s Nigerian onshore joint venture SPDC has sold about 50% of its oil assets over the past decade, he said. “But developments like we are still seeing at the moment mean that we have to take another hard look at our position in onshore oil in Nigeria.” This week Shell also announced that its profit last year dropped to its lowest in at least two decades as the coronavirus pandemic hit energy demand worldwide, though the company’s retail network and trading business helped cushion the blow. The oil major’s annual profit slumped 71% to $4.8 billion as its oil and gas production and profits from refining crude into fuels dropped sharply.
- Nigeria’s state oil company is renegotiating commercial contract terms with major oil firms, its chief said, in a move that it hopes will keep investment flowing into a sector crucial for its economy at a time when spending is being slashed. Africa’s largest oil exporter and biggest economy relies on the oil sector for half of its budget and 90% of its foreign exchange. It wants to raise revenue but also attract investment. Oil companies meanwhile, including Shell, ExxonMobil, Total and Eni, are cutting billions in spending after taking hits to their profits, shifting money to renewable fuels and focusing only on the most cost-effective markets. Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), said in an interview that new commercial terms were being negotiated and would be finalised before a pending oil overhaul bill is passed. “No company will invest where they cannot get the appropriate margin,” Kyari said in a video interview, declining to say specifically what was being renegotiated. “We’re very conscious of the fact that people have choices, companies will make choices to leave countries when they have to.” Nigeria’s parliament has promised to pass the long-awaited oil overhaul bill by May. It will define the sector for decades to come, but companies have criticized the draft for not doing enough to attract development dollars. They have raised issues over taxation, royalties and local community obligations. Kyari said companies would have the option of the newly negotiated commercial terms or moving to the updated terms outlined under the new law. By the end of June the NNPC is planning to have found $2 billion of financing to overhaul its Warri and Kaduna refineries, Kyari said. Talks are underway on financing repairs to the Port Harcourt refinery after a pre-finance bid for more than $1 billion was oversubscribed, he said. The money will be repaid in profits and fuel cargoes from the refineries, rather than in oil cargoes, Kyari said. While the refineries have not operated at full capacity for years, NNPC had to shut all of them completely last year as they await much-needed maintenance, repair and upgrades, leaving it with a hefty fuel import bill.
- Authorities are battling a second wave of COVID-19 infections that has caused nationwide oxygen shortages. Hospitals in the capital, Abuja, have come close to running out, while demand in Lagos, the centre of the outbreak, has increased as much as sevenfold since early autumn. “There was a national scarcity of oxygen. We were pulling from all our normal suppliers, and finding new suppliers,” Lagos State Health Commissioner Akin Abayomi told Reuters in an interview. Demand for cylinders in Lagos went from around 70 per day early last year to as high as 500 daily from November, Abayomi said. Nigeria, population 200 million, was spared the worst in its first COVID-19 wave that began in February last year. But a second wave has hit hard. More than half of Nigeria’s 131,242 confirmed cases have been logged in the past three months. Fatalities now total 1,586. In December, the government enlisted Nigeria’s Air Force to increase liquid oxygen production at a plant in the northeastern city of Yola and fly 117 cylinders to two COVID-19 centres in Abuja. Authorities pledged in January to build a new oxygen plant in each of Nigeria’s 36 states. A Clinton Health Access Initiative study in 2018 found widespread oxygen supply shortages across Nigeria well before the pandemic hit. It said that due to high demand, hospital patients were often asked to pay fees for oxygen that “vary by facility and … can be quite exorbitant”. Nigeria has at least 30 oxygen plants but there are frequent production disruptions due to poor maintenance, aging equipment and the notoriously unreliable power supply, the global health organisation said. Abayomi said patients are not charged for oxygen, and none who need it have been denied. But patients sometimes only need oxygen for a few hours, and it is taken away afterwards. “Oxygen is scarce at this point in time, so we are not wasting it,” Abayomi said.