Nigeria – Borrowing Limit

arbe_large

Diversification efforts fail to bear fruit as the country can no longer afford to keep borrowing.

According to Finance Minister Kemi Adeosun, who was speaking during a quarterly business forum in Abuja on July 11th, the country can no longer afford to keep borrowing and must find alternative fundraising mechanisms.

Adeosun said that the country should seek to continue to diversify its economy to generate more revenue.

“We have got to get our budget bigger and to do that we cannot borrow anymore. We simply have to generate more revenue, we have to plug the leakages, we have to improve tax collection so that we can manage our borrowing,” she said.

“The problem is that we have been relying on oil and oil gave us a big budget size,” the minister added.

Nigeria has been in talks with the World Bank and the African Development Bank (AfDB) for at least US$2bn in loans, with another $1.5bn proposed from international sources. President Muhammadu Buhari has also proposed borrowing of up to $30bn to finance major infrastructure projects across the country, although this continues to remain stalled.

The Naira (N) 7.44trn (about $24.39bn) 2017 budget has a deficit of N2.2trn, according to the Premium Times. Meanwhile, Nigeria’s external debt increased to $13.8bn in the first quarter of 2017 from $11.4bn in the fourth quarter of 2016, reported Vanguard.

The government had planned to borrow extensively from overseas to fund this record budget, aimed at enabling the country spend its way out of its first economic recession in around 25 years.

PIC.10.-MINISTER-OF-FINANCE-HOLDS-NEWS-CONFERENCE-ON-STATE-OF-THE-ECONOMY-IN-ABUJA
Finance Minister Kemi Adeosun – Premium Times

However, some lawmakers, sceptical about the proposal, expressed fears that it might not be favourable in the long run, especially as the government presented no clear plans of how it will utilise the proposed loans.

When Buhari was elected in 2014 he was hailed as the saviour, a transformer of the economy, and the man to lead the country away from fossil fuel reliance and susceptibility to oil price volatility.

Since then little has changed and he has spent much of the past year being treated for a unspecified illness. According some commentators and analysts his financial and economic policies have been largely incoherent.

The push for economic diversification and boosts for manufacturing have not materialised. Many manufacturers were banned from receiving important foreign exchange and in 2016 the manufacturing sector shrank, reported the Financial Times.

However according to reports from BBC News, Buhari is now “recuperating fast” and will soon return to Nigeria from London, where he has been receiving treatment since May. His absence has led to speculation about whether he will be able to resume his position. In his place Buhari has given Vice-President Yemi Osinbajo full powers to act.

Find out more in the Africa Research Bulletin:

NIGERIA: Emergency Aid Shortfall
Economic, Financial & Technical Series
Vol. 54, Issue. 5, Pp. 21707C–21709A

NIGERIA: Dim Light at End of Tunnel
Economic, Financial & Technical Series
Vol. 54, Issue. 4, Pp. 21675A–21676A

NIGERIA: Forex Boost
Economic, Financial & Technical Series
Vol. 54, Issue. 3, Pp. 21649A–21651C

Subscribe to the Africa Research Bulletin today. 

Uganda – Oil Refinery Project

arbe_large700

The government seeks to resolve tender for huge project, as they look to Nigeria for advice. 

Uganda has shortlisted four companies for the construction of the US$4.27bn (UShs 15.3 trillion) oil refinery, according to Energy Minister Irene Muloni.

Muloni made the announcement during a session of the joint Uganda Chamber of Mines and Petroleum, Uganda Freight Forwarders Association and Private Sector Foundation, inaugural logistics fair in Kampala from April 25-27th.

A decision on the chosen tender is to be made within a month, said acting director of the refinery, Robert Kasande. However, others have said there are not four but eight companies in the bidding.

The companies are Canadian firm SNC Lavalin, United States (US) firms Yatra Ventures LLC and Apro, and Turkish firm IESCO. Others include Chinese-based Guangzhou Dongsong Energy, Spanish firm Profundo Bantu Energy, and Italy’s Maire Tecnimot.

Uganda had previously picked Russian firm RT Global Resources, but the Russian eventually pulled out citing failures by the Ugandan government to meet demands.

The decision needs to be made soon to allow a final investment by three oil firms, CNOOC, Total and Tullow, which revolves around the US$3.5bn East African Crude Oil Pipeline from Hoima disrict in Uganda to Tanga Port in Tanzania. The 1445km pipeline will be the longest electrically heated pipeline in the world, with a capacity of 200,000 barrels per day.

5979066547_9bd5ebcfb6_b
Tullow Oil Refinery – CC 2010 

Another central aspect of the project is a refinery to be built at Hoima, for which financing is still yet to be ascertained, reported the Monitor.

In February the government relocated 46 families to make way for the refinery in Kabaale parish, Buseruka sub-county, Hoima. In June 2012 the government acquired the 29 square kilometres of land, covering 13 villages and displacing 7118 people.

Francis Elungat, the Land Acquisition Officer from the Ministry of Energy and Mineral Development said, “each family has been promised a cow, two goats, 10 kilograms of maize seedlings, a machete, hoe and other domestic tools,” adding that these supplies are meant to sustain the families until they will be self-reliant, reported Oil in Uganda. 

According to the Deputy Commander of Operations for Wealth Creation in Uganda, Lt Gen Charles Angina, Uganda is looking to learn from Nigeria in the oil sector.

“Nigeria is our admired African country who have demonstrated and exhibited local content in building and running its energy sector. And they have managed to promote this particular sector to a point that Nigerians now actively involved in different segments of the nation’s oil and gas sector. We felt Nigeria is the best country to come and learn from as well as work with our brothers and sisters of Nigeria, so that we can be able to do the same in building the local content in Uganda, so that together we benefit as Africans,” he said.

“As it stands today, most of what we see in the field today, in terms of operators and operations in the sector were formerly dominated and run by foreign companies like Shell, Total, ExxonMobil, but today, Nigeria has gained substantial control of this sector,” Angina added, reported This Day.

In Uganda, at least six major oil-related engineering projects are rolling and major project milestones are set for August and December, with numerous other small deadlines.

Find out more in the Africa Research Bulletin:

UGANDA: Drought Hits Hard
Economic, Financial & Technical Series
Vol. 53, Issue. 12, Pp. 21533A–21534A

UGANDA: Diversify From Oil, World Bank Advises
Economic, Financial & Technical Series
Vol. 53, Issue. 6, Pp. 21315A–21315C

UGANDA: Major Investments
Economic, Financial & Technical Series
Vol. 53, Issue. 5, Pp. 21283A–21284A

Subscribe to the Africa Research Bulletin today. 

 

Nigeria – ‘Astonishingly High’ Pollution

Oil giant accused of concealing data on the health effects of two major spills. 

Data gathered among the Bodo community, which was devastated by two huge oil spills in 2008 and 2009, showed levels of pollution were “astonishingly high”, according to a letter by former employee of Shell, Kay Koltzmann.

Holtzmann was the former director in charge of Shell’s project to clean up oil spills in the Bodo community, in the oil-producing Niger Delta region. He accused the company of refusing to make the findings public.

The clean-up project carried out an analysis of the environment in the Bodo creeks in August 2015 “against fierce opposition” from Shell’s subsidiary company, Shell Petroleum Development Company of Nigeria (SPDC). 

“The results from the laboratory were astonishingly high, actually the soil in the mangroves is literally soaked with hydrocarbons. Whoever is walking in the creeks cannot avoid contact with toxic substances… negative long term effects on their health are unpredictable,” he said.

The letter was addressed to the chairman of the Bodo Mediation Initiative, which is sponsored by the Dutch Government and is tasked to ensure the clean up meets international standards.

Shell accepted liability for the 2008 and 2009 oil spills. In 2011, the United Nations Environment Programme (UNEP) published a report claiming it would take up to 30 years to clean the Niger Delta from oil spills. In 2015, Shell agreed to pay £55m to the Bodo community.

Holtzmann called for “immediate action to protect the health of the Bodo residents” and urged for “medical mass screening” to take place, warning against the risk for people exposed to toxic substances by bathing or drinking the polluted water, reported UK-based the Independent

No one could explain the decision to withhold the data from the public.

Further, on April 10th Shell and ENI were forced to deny that their staff had been involved in payments to officials. In 2010 transactions worth $1.3bn were made by Shell and ENI for exploration of the OPL 245 offshore block, but the companies reportedly knew the funds would go to a front company connected to former petroleum minister Dan Etete, reported Lagos-based, the Guardian

Find out more in the Africa Research Bulletin:

NIGERIA – UK: Pollution Claims Blocked
Economic, Financial & Technical Series
Vol. 54, Issue. 1, Pp. 21560C–21562C

OIL AND GAS: Nigeria
Economic, Financial & Technical Series
Vol. 53, Issue. 12, Pp. 21549B–21550C

OPEC TALKS: Oil Price Boost [Free to Read]
Economic, Financial & Technical Series
Vol. 53, Issue. 11, Pp. 21508A–21509A

Subscribe to the Africa Research Bulletin today. 

Nigeria – Aviation Woes

arbe_large700

Airports close and airlines suspend flights as the aviation sector struggles in a challenging environment.

On December 21st passengers across the country were left stranded after Arik Air, the largest airline in the country, suspended services due to action by unions, including the National Union of Air Transport Employees (NUATE), the Air Transport Senior Staff Services Association of Nigeria (ATSSSAN) and the National Association of Aircraft Pilots and Engineers (NAAPE).

The protests related to arrears in salaries amounting around seven months and the perceived anti-labour direction of policymaking. The Nigeria Civil Aviation Authority (NCAA) brokered a meeting with Arik Air meeting the following day in which strike action was shelved, reported This Day.

Additional capacity was allocated afterwards from both Lagos and Abuja to destinations such as Enugu, Asaba, Owerri, Port Harcourt, Benin, Warri, Uyo, Yola and others to enable many of the Arik customers to get to their destinations.

Some of the placards placed around Arik counters read: ‘ARIK owes staff seven months salaries, defaults in taxes and other statutory deductions, criminalises trade unionism and union membership.”

Other airlines such as Air Peace, First Nation, Med-View, Dana Air, Overland and Azman were unable to take the spillover from Arik due to low capacity; according to Lagos-based the Guardian there was a 100% hike in ticket fares followed the strike action as passengers scrambled for available seats.

In Lagos, outside the Arik Headquarters, company officials from the Nigerian Lagos Congress (NLC) and the National Union of Electricity Employees (NUEE) barricaded the main entrance, causing traffic problems on the airports access road.

There were reports later on January 6th that aggrieved passengers had attacked staff at the Murtala Muhammed International Airport in Lagos, as a number of flights were again rescheduled and some cancelled, reported Daily Trust.

14820265992_7d550a38b4_o
CC – 2014

It is reported that Arik Air owes in the region of Naira (N) 13bn to the Federal Airports Authority of Nigeria (FAAN) and N6bn to the Nigerian Airspace Management Agency (NAMA). The airline is also reportedly indebted to fuel supplies and ground handlers.

The Spokesman for Arik Air, Banji Ola, in his response to the allegations said the organisation was “disappointed” by the actions of the unions to “ambush and disrupt the operations.”

Meanwhile, the Nnamdi Azikiwe International Airport in Abuja is to close for six weeks from February to March 2017 for repairs, which will involve almost total reconstruction of the badly damaged runway. The full construction works are expected to take six months, but the middle section of runway will be unusable for 6 weeks, reported the Premium Times.

President Muhammadu Buhari reportedly commenced the work through an emergency procurement procedure, due to the centrality of Abuja to the country. Passengers have been directed to use Kaduna airport as an alternative during this period.

Passengers will travel in bus shuttles, guarded by security provided by the government; the stretch of road from Kaduna airport to Abuja has seen a number of kidnapping incidents over the last few years.

A number of foreign airlines, however, have considered suspending services after the decision to close the Abuja airport, as the alternative in Kaduna was deemed unsafe for foreigners. However, Minister for Aviation Hadi Sirika said that Kaduna was preferable to alternatives such as Ilorin or Minna as it was able to cater for larger aircraft. Sirikia assured that the safety of passengers would be the top priority.

Additionally the oldest domestic carrier in the country, Aero Contractors, has resumed operations after a suspension of four months, according to a report from the Daily Trust. Operations started again on December 23rd with flights to Lagos, Port Harcourt and Warri.

Find out more in the Africa Research Bulletin today:

NIGERIA: Darker Days
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21418B–21420A

AIRPORTS AND SERVICES: Nigeria
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21432A–21433C

NIGERIA: Recession and ‘Record’ Low Foreign Investment
Economic, Financial & Technical Series
Vol. 53, Issue. 8, Pp. 21384C–21386C

Subscribe to the Africa Research Bulletin today

Nigeria – Cocoa Crop in Decline

arbe_large700

Many claim that the once central industry is now the most neglected, while others eye the opportunities.

The decline in the cultivation of the crop is reportedly to due with long growing periods and impatience among the younger generation, according to President of the Federation of Agricultural Commodity Associations of Nigeria (FACAN), Victor Iyama, who was speaking at the 2nd Daily Trust Agricultural Conference in Abuja on December 15th.

“It’s not four to six months, it is up to five years minimum but the beauty is that it can last for 70 years,” he said, adding that chocolate production generated large sums of money; out of a $120bn cocoa economy only around $15bn goes to products other than chocolate.

Iyama noted that cocoa was the second largest foreign exchange earner, next only to oil, adding that 29 states in the country can produce the crop, reported the Daily Trust.

According to Lagos-based the Guardian, a number of stakeholders in the Nigerian industry have said that it has remained the most neglected sector of the economy despite at the same time being one of the most viable industries in the world. Setbacks include the high cost of borrowing, deregulation and inconsistent government policy.

CEO of FTN Cocoa Processors Plc, Akin Laoye, explained that the deregulated environment is impeding the growth of the processing sector, adding that the cocoa sector needs some degree of regulation.

“To deepen Nigeria’s industrial base, it is counter productive to allow agricultural raw materials to be exported without adding value. Value addition will grow the industrial sector, generate employment, and enhance value of the revenue from export.” Laoye also urged government to find a lasting solution to tackle the ongoing recession, reported the Guardian.

The Minister for Agriculture, Chief Audu Ogbeh, on December 15th said that Nigeria used to be a leading cocoa exported but has since fallen to seventh among exporting countries exporting 27.5m tonnes annually, in comparison to first place Cote D’Ivoire with an annual export volume of 1.75bn tonnes, reported This Day.

23904959686_4e6332d5c6_k
CC 2015.

On December 7th AgWeb reported that the Nigerian government was preparing to capitalise the state owned Bank of Agriculture with Naira (N) 1trn (US$3.2bn) to boost the agricultural sector. “We are looking at 25 million farmers” as stakeholders or depositors, Minister Ogbeh said.

From November 8-10th a regional symposium focusing on the next generation of cocoa research for West and Central Africa was held at the International Institute of Tropical Agriculture (IITA) in Ibadan, Oyo State.

The symposium drew leaders from across the southwestern part of the country, the predominant area for the cultivation of cocoa, such as Ife, Oyo, Osum, Ogun, Cross River and Ondo states. The symposium drew leaders alongside academics and industry representatives to discuss research priorities and alliances to take advantage of the potential of cocoa.

According to Executive Director of the Cocoa Research Institute of Nigeria (CRIN), O. Olubamiwa, the Regional Cocoa Symposium is the first of its kind in Africa. “It is happening in West Africa—the hub of global cocoa production. It will highlight the diverse roles of cocoa in improving farmers’ livelihood. It is also a forum for stakeholders to synthesise ideas on sustainable cocoa production,” reported the Guardian.

However, other reports have suggested that cocoa cultivation in Ondo state appears to be waning, despite having what could mildly be described as comparative advantage. Farmers in the state accused the state government of failing to implement practical policies and programmes.

One of the cocoa farmers in Akure, the state capital, Olorunfemi Ashagi asserted that one major problem facing the growth of cocoa is finance. Another farmer expressed fear that cocoa farming in the state may soon go into extinction, as many of the young men engaged in it are increasingly to alternative livelihood opportunities, reported Leadership.

Find out more in the Africa Research Bulletin:

COCOA: Côte d’Ivoire
Economic, Financial & Technical Series
Vol. 53, Issue. 7, Pp. 21366A–21366C

NIGERIA: Recession and ‘Record’ Low Foreign Investment
Economic, Financial & Technical Series
Vol. 53, Issue. 8, Pp.21384C–21386C

COCOA: Ghana
Economic, Financial & Technical Series
Vol. 53, Issue. 2, Pp. 21184A–21184B

Subscribe to the Africa Research Bulletin today.

Nigeria – Delta Region Infrastructure Targeted

arbp_large

A newly formed rebel group has repeatedly targeted oil and gas installations in Niger Delta State.

On June 1st the latest in a string of attacks on oil and gas facilities hit two Chevron oil wells in Dibi, Warri North Local Government Area, claimed by a newly formed group the Niger Delta Avengers (NDA), occurring a few days before President Muhammadu Buhari‘s planned visit to the area.

Speculation is that the NDA is made up of powerful ‘unpatriotic’ individuals and the military Joint Task Force is specifically pursuing ex-militant leader Government Ekpemupolo.

NDA on its twitter handle @NDAvengers, said: “With the heavy presence of 100 gunboats, 4 warships and jet bombers, NDA blew up Chevron oil well RMP 23 and RMP 24 at 3. 44 am this (yesterday) morning, ” reported Vanguard.

It marks the third such attack on Chevron facilities in a month. The group has also targeted other Chevron and Shell facilities. In April Shell had to break contractual agreements after an attack on a truck line, and a few days later Chevron shut its Valve Platform following another attack.

The damage to infrastructure, along with a global fall in prices, have brought oil production in the country to a 22 year low, alongside impacting the already strained power network, as the power plants rely on gas supply from the damaged pipelines.

Residents in Oporoza area fled to neighbouring Azama community and have been homeless for a number of days. Chairman of Kokodiagbene community Sheriff Mulade said, “the invasion by soldiers affected the ongoing school certificate examinations…hundreds of students, who ran into the bush because of the invasion, are yet to be accounted for, while the academic session has been disrupted.”

22707273700_50629285aa_k

Oil Spill Ogoniland – CC 2015.

Elders in the region, speaking under the auspices of ‘Concerned Niger Delta Elders’, said that the perpetrators of the attacks were against the pro-development and anti-corruption stance of the Buhari administration, reported Vanguard.

The NDA first appeared in February 2016 after claiming responsibility for an attack on a Shell underwater pipeline, which forced company to halt its 250,000 barrels per day Forcados terminal for weeks. Experts noted the high level of technical expertise present in the attacks.

There has been speculation that the NDA consists of members of the Movement for the Emancipation of the Niger Delta (MEND). Another group, the Red Egbesu Water Lions, also recently emerged and has pledged to join with the NDA, reported ABCNews.

In a statement earlier in April the NDA, on their website, said, “we are a group of educated and well-travelled individuals that are poised to take the Niger Delta struggle to new heights that has never been seen in this nation before,” reported BBC News.

The NDA is the first armed group to emerge in the Niger Delta since ex President Umar Musa Yar’Adua granted an amnesty to militants in the region seven years ago. There were agreements for compensation and security following severe environmental degradation and displacement by oil firms, but the NDA claims these have not been upheld and such trends have continued.

Find out more in the Africa Research Bulletin:

NIGERIA: Military Industrial Complex
Political, Social & Cultural Series
Vol.53, Issue.4, Pp.20979C–20980C

NIGERIA: Chibok Second Anniversary
Political, Social & Cultural Series
Vol.53, Issue.4, Pp.20972C–20974B

NIGERIA: Army ‘Has the Measure’ of Boko Haram
Political, Social & Cultural Series
Vol.53, Issue.3, Pp.20938A–20939B

Subscribe to the Africa Research Bulletin today

Nigeria – Privatisation Concerns

arbe_large700

As the government pushes forward with wide-ranging privatisation measures, rights groups remain apprehensive. 

Wide ranging privatisation measures are taking place in Nigeria, particularly within the water and power sectors, in a bid to ease pressure on already scarce resources and funds. However, according to one commentator, from the Senior Staff Association of Electricity and Allied Companies (SSAEAC) , the privatisation of the power sector was leading to the casualisation of the workforce, job insecurity, unemployment, and an increased cost of living.

“To date, companies in the power sector have adopted all manners of anti-labour practices, including denial of salaries and sacking without fair hearing,” the source said, reported the Daily Trust.

Earlier, on March 22nd, the Daily Trust also reported that three years after the privatisation of the sector was begun, a number of conflicts over employee settlements have yet to be resolved. Meetings were held in 2013 between the government and the National Union of Electricity Employees (NUEE). While around 90% of workers stated they did received payments, many, including most from the Enugu Distribution Company, said they had yet to see anything.

In Lagos, rights groups, including Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), have expressed concerns over the drive towards public private partnerships (PPPs) for water concessions in the state. The group had launched a campaign in 2014, entitled ‘Our Water, Our Right‘.

“As we have said time and again, the failure of the Lagos State government to open up on the controversial water PPP gives room for us to suspect that something is in the offing and the people are deliberately being kept in the dark,” said Akinbode Oluwafemi, Deputy Director at ERA/FoEN.

“Worse is the fact that the Lagos State government is toying with a failed model of PPP that the World Bank private arm – International Finance Corporation (IFC)  advised it to embark upon even with documented failures in Manila and Nagpur, in the Philippines and India respectively,” said Oluwafemi cited by the Premium Times.

PHCN-SUBSTATION-AT-MAKERI

Source – Nigeria Electricity

A United States (US) lawmaker, Gwen Moore – a representative for Wisconsin -, and also a member of the Monetary Policy and Trade Subcommittee, penned a letter to the World Bank President Jim Yong Kim, which stated that the Bank and its finance arm the IFC had inadequately considered the conflicts of interest it had created upon taking stakes in water corporations.

“I am increasingly uneasy with water resource privatisation in developing countries and do not believe that the current ring-fencing policies separating the investment and advising functions of the IFC are adequate‎.”

“I would respectfully urge the World Bank and IFC to cease promoting and funding privatisation of water resources, including so-called PPPs in the water sector, until there has been a robust outside evaluation of the IFC’s conflicts policy and practices”; Moore said that the trends of water privatisation indicated an “improper mingling” of the World Bank and IFC advisory and investment functions.

In March many women marched in Lagos against the proposed plans to privatise the Lagos public water works, reported the Premium Times.

In the airline sector, the former Federal Airports Authority of Nigeria (FAAN) Managing Director Richard Aisuebeogun has urged the federal government to privatise the 22 federal airports under the auspices of the agency. He claimed that privatisation would enhance income generation and boost efficiency.

Aisuebeogun explained that the airports should be encouraged to look to aeronautical revenues to make them “more business minded, rather just being operations…we need to encourage private investments to cone into the airports and develop it in terms of non-aeronautical activities, so that the unviable airports will become Strategic Business Units (SBUs).”

In recent years there has been great demand for the privatisation of air facilities, due to scarce resources and demand in other sectors, particularly education, health, road and rail infrastructure, reported This Day.

According to campaigns and advocacy group Global Justice Now, there are serious concerns not only with the increasing informalisation, casualisation and increasing precariousness of the workforce engendered under privatisation, but also the huge amounts of money that are being directed at the move, which some have said is doomed to failure. According to the report the United Kingdom (UK) has contributed £50m towards the privatisation of Nigeria’s energy sector.

Find out more in the Africa Research Bulletin

NIGERIA: Rising Hopes, Falling Revenues
Economic, Financial & Technical Series
Vol.52, Issue.4, Pp.20811A–20812B

POWER: General
Economic, Financial & Technical Series
Vol.52, Issue.2, Pp.20727A–20729C

Nigeria’s Forgotten Crisis
Economic, Financial & Technical Series
Vol.51, Issue.11, Pp.20634A–20634B

Subscribe to the Africa Research Bulletin today