Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Nigeria reacts to South Africa’s xenophobic attacks, economic growth slowed in the second quarter of this year, plus tax chief opens up on infrastructure policy and collection targets.
- The week was dominated by tensions between Nigeria and South Africa - the two biggest economies in Africa - which played out in violence, diplomacy and commerce. It followed a wave of xenophobic attacks in South Africa against foreigners, some of whom were Nigerian. South Africa’s president, Cyril Ramaphosa, said at least ten people had died during a week of violence targeting foreign-owned businesses, of whom two were foreigners. South African companies MTN and Shoprite closed stores in Nigeria on Wednesday in the face of attacks targeting their premises in retaliation. Nigeria is MTN’s biggest market, with 58 million users in 2018 and accounts for a third of the South African group’s core profit. Shares of MTN Nigeria hit a three-month high on Friday after the telecoms firm’s offices partially reopened following the attacks. The diplomatic impact on relations between the two countries was swift just as South Africa was hosting the three-day World Economic Forum (WEF) African summit which it had hoped would serve as a shop window for efforts to boost intra-African trade. Nigeria’s Vice President Yemi Osinbajo pulled out of the event, as did Jim Ovia, chairman of Nigeria’s Zenith Bank and a co-chair of the whole Cape Town event. The latter cited the “hypersensitivity of the issues surrounding the lives and well-being of Nigerian citizens living in South Africa”. Nigeria withdrew its ambassador to South Africa. Meanwhile, South Africa temporarily closed its embassy and diplomatic offices in the West African country. Strong feelings were shared by social media users including former minister Oby Ezekwesili who was among Nigerian WEF attendees criticised in some quarters for attending the event. Unlike Mr Ovia, she didn’t pull out.
- Nigeria’s economic growth slowed to an annual rate of 1.94% in the three months to the end of June for the second quarter in a row, according to GDP figures released by the statistics office. Nigeria’s economy, the largest in Africa, grew by 2.10% in the first quarter compared with the previous year. The economy has been held back by sluggish performance in the non-oil sector, despite government efforts to improve those industries and wean Nigeria off the crude oil on which it depends. In the second quarter, the non-oil sector grew 1.64% and the oil sector expanded 5.15%, according to the statistics office. But crude production in the continent’s top oil-producing country dipped to 1.98 million barrels per day from 1.99 million in the previous quarter. The central bank has forecast growth of 3% for 2019. “Weak growth itself should not have been too much of a surprise,” said Razia Khan, chief economist for Africa and Middle East at Standard Chartered Bank. She argued that “Q2 represented something of a lost, post-election quarter”.
- Nigeria is using a system of tax credits to encourage private companies to share the cost of infrastructure projects as part of a drive to diversify Africa’s biggest economy away from its reliance on oil sales, the country’s tax chief said in an exclusive interview. Tunde Fowler, executive chairman of the Federal Inland Revenue Service (FIRS), said in an interview in Abuja that more than 10 local companies had applied for the scheme to receive 50% of expenditure in tax credits. Fowler said one of the two successful applications was by a company owned by Africa’s richest man Aliko Dangote, which will build a road under the scheme. He also said Nigeria had a target to nearly double tax revenues this year from 2018 due to a surge of new payers following the end of an amnesty and the introduction of a new database that uses biometric data. Fowler said 5.32 trillion naira ($17.39 billion) was collected in taxes in 2018 and his office was targeting 8.9 trillion naira this year. He said the number of tax payers was expected to jump to around 45 million this year from 20 million in 2018. Fowler’s targets, which he described as “ambitious”, may be hard to meet in a country of 190 million people where around 80% of the workforce is employed in the informal sector. That has hindered tax collection in the past. Nigeria has struggled to improve non-oil revenues as debt servicing costs rise. Nigeria spent 35% of government revenues servicing debt in 2016, when its economy entered a recession that it left the following year. Since then, it has taken on more local and foreign debt.
- Nigeria’s multiple security problems have created a crisis that requires urgent attention and could lead to instability in other African countries if it is not addressed, a United Nations rapporteur said. Security forces in Africa’s most populous country are trying to tackle a decade-long Islamist insurgency in the northeast, banditry in the northwest and bloody clashes between nomadic herdsmen and farming communities over dwindling arable land in central states. Addressing a press conference in Abuja, Agnes Callamard - the U.N. special rapporteur on extrajudicial, summary or arbitrary executions - said the country required changes in the judiciary, police and military to stop people resorting to violence in the absence of justice. “The lack of accountability is on such a scale that pretending this is nothing short of a crisis will be a major mistake. If ignored, its ripple effect will spread in the sub-region given the country’s important role in the continent.” She was presenting her preliminary findings following a 12-day visit to the country.
- A U.S. judge rejected Exxon Mobil Corp’s and Royal Dutch Shell Plc’s effort to revive a $1.8 billion arbitration award against Nigeria’s state-run oil company, which stemmed from a dispute over a 1993 contract to extract oil near the African country’s coastline. “NNPC is very pleased with the decision, and was always confident that there was no basis for a U.S. court to confirm the award,” its lawyer Cecilia Moss said in an interview. According to court papers, the 1993 contract anticipated that Exxon and Shell affiliates would invest billions of dollars to extract oil from the Erha field, about 60 miles (97 km) off Nigeria’s coast, and share profits with NNPC. But the affiliates, Esso Exploration and Production Nigeria Ltd and Shell Nigeria Exploration and Production Co Ltd, accused NNPC of unilaterally “lifting” more oil than was contractually allowed, at the behest of Nigeria’s government, depriving them of billions of dollars of oil. Representatives of Exxon and Shell said the companies still have “multiple appeals pending” in Nigeria.
- And the trading arm of Nigeria’s state oil firm is leaving its London office to set up in Dubai as part of a strategy to be closer to the Asian market which is fast becoming the main buyer of the West African country’s crude, according to four oil industry sources.