Highlights from Reuters coverage of Nigeria over the last seven days

Nigerian businesses from the streets to the boardroom rely heavily on imports from China

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.

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.