Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: coronavirus threatens Nigeria’s economy due to reliance on China, parliament approves president Buhari’s $22.7 bn loan request, and gunmen kill 50 people in Kaduna.
- Despite only one confirmed case of coronavirus in Nigeria, a country of some 200 million people, the virus spells trouble for Africa’s largest economy. We looked into why. China accounts for around a quarter of Nigerian imports, greasing much of the country’s supply chain, and is funding and building much-needed infrastructure. China’s economic health is also crucial for oil prices, which make up more than half of government revenues for Africa’s top producer, and have tumbled more than 20% since January. At close to $50 per barrel, oil prices are below the $57 per barrel budget benchmark. Finance Minister Zainab Ahmed said the government was concerned about the impact of the coronavirus outbreak on world oil prices and it could trigger a midterm budget review. Meanwhile, the number of people infected with coronavirus across the world surpassed 100,000 as the outbreak reached more countries and the economic damage intensified. All of the above, combined with disrupted supply chains and the possibility of coronavirus spreading within Africa’s most populous nation, threatens to torpedo Nigeria’s anaemic economic growth and boost borrowing costs just as the country plans to return to the Eurobond market. Nigeria’s depleted buffers and shaky exit from a 2016 recession, with growth around 2%, could make any setback hard for it to weather. Moody’s, which downgraded Nigeria’s outlook in December, has warned that its debt, which has ballooned to 26 trillion naira ($85.5 billion), quadruple the 2008 level, made it particularly vulnerable to external shocks. And last week, S&P also downgraded Nigeria, citing declining external reserves. This could increase Nigeria’s borrowing costs as it plans $3 billion in new Eurobond offerings.
- Still on the subject of debt, Nigeria’s upper house of parliament approved foreign borrowing of $22.7 billion requested by President Muhammadu Buhari. About $17.06 billion of the total loans will be provided by China’s Eximbank, while the World Bank, African Development Bank, Islamic Development Bank and German Development Bank are in the mix of the new borrowings tied to projects. Nigeria has been borrowing abroad to fund projects after a 2016 recession caused largely by low global oil prices hurt its spending plans, but debt service costs have been rising. The country also plans to sell a $3.3 billion Eurobond this year to refinance an existing maturity and part-fund its 2020 budget of 10.59 trillion naira ($35 billion), which is a 17% rise over last year’s. “Let me emphasise here that we are going to follow very strictly how these loans are applied,” Senate President Ahmed Lawan said. Buhari asked parliament in November to approve the borrowings, which are tied to infrastructure and other projects, after a similar request was rejected three years ago. During Buhari’s first term, the executive was embroiled in a power tussle with the legislature that slowed government, including confirmation of appointments. The tension have evaporated after his party loyalists took up leadership role in parliament in the wake of the president’s second term election victory last year. The decision to approve the borrowing prompted lively discussions on Twitter.
- And, in oil news, Brent slid to its biggest daily loss in more than 11 years on Friday after Russia balked at OPEC’s proposed steep production cuts to stabilise prices hit by economic fallout from the coronavirus, and OPEC (of which Nigeria is a member) responded by removing limits on its own production. The split between OPEC and Russia revived fears of a 2014 oil price crash, when Saudi Arabia and Russia fought for market share with U.S. shale oil producers, which have never participated in output-limiting pacts. OPEC was pushing for an additional 1.5 million barrels per day (bpd) of cuts until the end of 2020. Non-OPEC states were expected to contribute 500,000 bpd to the overall extra cut, OPEC ministers said. The new deal would have meant OPEC+ production curbs amounting to a total of 3.6 million bpd, or about 3.6% of global supply.
- An armed gang killed at least 50 people in attacks on villages in the northern Nigerian state of Kaduna on Sunday, Kaduna’s governor said on on a visit to the affected communities. Governor Nasiru El-rufai said the gunmen are suspected to have come from the neighbouring states of Katsina, Zamfara and Niger Republic, adding that troops had been sent to the area. Hundreds of people have been killed in the northwest of Nigeria since last year, in attacks the government attributes to bandits — a loose term for gangs of outlaws carrying out robberies and kidnappings. Houses and vehicles were set ablaze by the gunmen in the Kaduna state attack.
- No women were arrested in a 2018 police raid that led 47 Nigerian men to be charged with displays of affection with members of the same sex, a witness said at the latest court hearing in a case that tests a law criminalising homosexuality in Africa’s most populous country. In November the men pleaded not guilty to the offence which carries a 10-year jail term and resulted from legislation introduced by former Nigerian President Goodluck Jonathan in 2014. No one has yet been convicted under the law, which targets same-sex unions with prison terms of up to 14 years, prosecution and defence lawyers in the case have told Reuters. Police said the men were being “initiated” into a gay club at the Kelly Ann hotel in the southwestern commercial capital of Lagos in August 2018. However, the accused said they were attending a birthday party. Among the contentious points in the case are whether some women were also arrested during the raid but later released, which according to human rights campaigners would suggest that men were unfairly singled out by police. A senior policeman called as a witness by the prosecution told the court women were not among those arrested. But the defence lawyer claimed women were present at the event and were arrested, only to be released later. The case was adjourned until 2 April. Some of the men have previously told Reuters they have been stigmatized as a result of the raid and a televised news conference held by police in which they were identified the day after their arrest.