A Week in Nigeria: 9 May

Highlights from Reuters coverage of Nigeria over the last seven days

In this week’s round-up: Nigeria’s government expects economy to contract by 3.4% this year and cuts oil benchmark to $20 a barrel, lockdowns eased in Lagos and Abuja, flight ban extended by four weeks, and statistics office says 40% of Nigerians live in poverty.

• Nigeria’s economy is projected to contract by 3.4%, government officials said, as dwindling oil revenues and the new coronavirus forced the country to cut budget plans for a second time to assume a lower petroleum price of $20 per barrel. The West African country, which emerged from a recession in 2017, was already contending with low growth of around 2% before oil prices plummeted. Africa’s top oil exporter relies on crude oil sales for around 90% of foreign exchange earnings and more than half of government revenue. With global oil prices plunging, Finance Minister Zainab Ahmed said in March that this year’s record 10.59 trillion naira ($29.42 billion) budget would be cut by about 15%. At the time, she said the initial assumed oil price of $57 per barrel would be reduced to a worst case scenario of $30 per barrel. But on Tuesday, she said that benchmark would again have to be revised down. “We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,” Ahmed said in a web conference about the impact of low oil prices on the country. Budget revisions need to be approved by lawmakers before being signed into law by the president. Ahmed also said Nigerian oil and gas projects will be “delivered much later than originally planned” due to upstream budget cuts.
• Officials also said Nigeria will not hold bidding rounds for major oilfields until crude prices recover. “Where you require foreign investment … this is not a good time,” Mele Kyari, group managing director of the Nigerian National Petroleum Corporation, said of licensing rounds, adding “the appetite would be very very low”. Nigeria is, however, accelerating bidding rounds for so-called “marginal” fields, which Kyari said were less impacted by low oil prices because they would likely be taken up by local producers and would require less capital to develop. He made the remarks in the same web conference at which Ahmed spoke.
• Lockdowns were eased in Abuja and Lagos, heralding the reopening of Africa’s biggest economy after more than four weeks of restrictions imposed to contain the new coronavirus. On Monday, the usually frenetic streets of the coastal megacity Lagos, largely empty during the lockdown, were busy again as the lockdown was eased, with cars, buses and motorised tricycle taxis. Despite rules banning groups of more than 20 people and stipulating that individuals remain two metres (6.6 feet) apart, large groups of people often gathered by the road waiting for public transport. Social distancing rules were largely ignored. Distinctive yellow minivans used as buses were full, with some passengers struggling to find space to enter vehicles. However, in a crucial difference to pre-lockdown life, most people on the streets of Lagos wore face masks. The decision to begin a phased lifting of the lockdown despite the recent sharp rise in cases was criticised by some medical experts including the Nigerian Medical Association. The NMA president, Francis Faduyile, said on Friday the move was “very premature” and risked driving up the rate of infections, which he called a “frightening scenario”. Two days later, during a press briefing held by the presidential task force set up to oversee the coronavirus outbreak response, the country’s top civil servant said an early assessment of the eased restrictions suggested Nigerians were underestimating the virulent nature of the disease. He pointed to non-compliance with social distancing measures and the sharing of face masks. Nigeria and other African governments have sought to balance curbs to avert an outbreak that could overwhelm hospitals with efforts to mitigate the impact on workers in a continent where 85% are employed in the precarious informal sector. “While the initial reaction (in Nigeria) was a wholesale transfer of containment measures designed in and for substantially richer economies, the government is now adapting its approach to domestic realities,” said Malte Liewerscheidt, vice president of Teneo Intelligence.
• Lockdowns in Lagos, Abuja and Ogun state may have been eased, but other restrictions remain in place. Authorities said a ban on all flights would be extended by four weeks from Thursday (7 May). Aviation Minister Hadi Sirika said there was a need to train airline staff in safety measures before flights restarted.

• A deeply reported story and graphic that drew on contributions from Reuters reporters across Africa provided a comprehensive snapshot of the gaping holes in healthcare provisions in the countries that make up the continent. Health officials or independent experts provided answers in 48 out of Africa’s 54 countries, to create the most detailed picture publicly available on resources including intensive care beds, ventilators, testing and essential personnel. The findings are stark. Most nations have severe shortages of medical personnel, especially critical care nurses and anaesthesia providers. The continent averages less than one intensive care bed and one ventilator per 100,000 people, Reuters found. This compares with 20–31 intensive care beds per 100,000 people in the United States, according to estimates in a 2012 survey for the U.S. National Institutes of Health. The continent’s three giants — Nigeria, Ethiopia and Egypt — have 1,920 intensive care beds between them for more than 400 million people. The Reuters survey and analysis of researchers’ projections showed that even in a best-case scenario, Africa could need at least 111,000 more intensive care beds and ventilators — more than 10 times the number it has at present.
• Forty percent of people in Nigeria live in poverty, figures published by the statistics office showed, highlighting the low levels of wealth in a country that has Africa’s biggest economy. The National Bureau of Statistics (NBS), in a report about poverty and inequality from September 2018 to October 2019, said 40% of people in the continent’s most populous country lived below its poverty line of 137,430 naira ($381.75) per year. It said that represents 82.9 million people. “In Nigeria 40.1 percent of total population were classified as poor. In other words, on average 4 out of 10 individuals in Nigeria has real per capita expenditures below 137,430 Naira per year,” it said. The statistics office said it did not include Borno, the state worst hit by the decade-long Boko Haram insurgency, because many areas there were not safe to reach. A total of nearly 8 million people need humanitarian assistance across Borno and two neighbouring states affected by the insurgency, according to the United Nations. Rapid population growth outstrips economic growth, which stands at around 2%. The United Nations estimates that Nigeria will have a population of 400 million by 2050. Endemic corruption dating back decades, along with a failure to diversify the economy and build much needed transport and power infrastructure, has stymied growth and the spread of wealth beyond a rich elite.
• A demonstration of the extent to which Nigerian wealth has been held in the hands of a few came this week when the country received more than $311 million of funds stolen by former military ruler General Sani Abacha from the United States and the British dependency of Jersey. Abacha ruled Africa’s largest oil exporter from 1993 until his death in 1998. Corruption watchdog Transparency International estimates he stole as much as $5 billion of public money during that time, though he was never charged with corruption while he was alive. Nigeria has been working with governments worldwide in to repatriate some of the cash and boost its finances. The repatriation agreement requires the money go towards infrastructure projects, and if any of the cash is diverted Nigeria could be required to replace it. “These funds have already been allocated, and will be used in full, for vital and decades-overdue infrastructure development,” said presidency spokesman Garba Shehu, citing the second Niger Bridge, the Lagos-Ibadan and Abuja-Kaduna-Kano expressways as examples. They are, respectively, a river crossing in the southeast and roads connecting major cities. Shehu said part of the money would be invested in the 3,050 megawatt Mambilla hydroelectric plant, which has been planned for over three decades.
• Nigeria’s five-year naira futures slid past 550 to the dollar on Thursday after the central bank weakened the naira on the derivatives market, signalling more pain to come for the currency, traders said. The non-deliverable forwards (NDF) market traded in London, which gives an indication of where the currency could trade in a year’s time, quoted the naira at 525 to the U.S. dollar. The naira has been hitting new lows on the black and over-the-counter spot markets since March after the central bank adjusted its official rate, implying a 15% devaluation. An oil price crash last month, triggered by a coronavirus pandemic, also worsened dollar shortages. Dollar demand has been swelling and piling up pressure on the naira. Importers with past due obligations have been scrambling for hard currency while providers of foreign exchange such as offshore investors have exited. The central bank devalued the official currency rate two months ago in a move to converge a multiple exchange rates regime which it has used to manage pressure on the naira. But dollar shortages has caused the gap between the black market and official market to widen especially after the bank suspended dollar sales in the wake of a coronavirus lockdown. The bank has resumed dollar sales to local clients this week, selling around $100 million per week but is yet to sell to offshore investors, traders say, estimating backlog demand at around $1.5 billion to $1.8 billion. The currency was quoted at 386.93 naira per dollar on the spot market, mostly used by foreign investors and exporters.