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Nigeria approves $200 million World Bank loan for projects in Lagos

Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria’s government has approved a $200 million loan from a World Bank agency to develop infrastructure in Lagos state, its commercial hub, the minister for works, power and housing said on Wednesday.

The loan was the second tranche of a total of $600 million lent by the International Development Association to the Nigeria government for Lagos state since 2010, Babatunde Fashola said.

Lagos, a mega-city of 21 million people in the state of the same name, is the commercial engine of Africa’s biggest economy. Its gross domestic product accounts for about a third of Nigeria’s overall GDP.

Fashola, who did not give details of any projects for which the loan would be used, said the money had been intended for distribution in three tranches each of $200 million to end in 2013 but had been delayed.

“It suffered delays as a result of partisan political differences in the last dispensation. After the first tranche was disbursed there was a freeze on the second tranche,” he told reporters.

Fashola said the loan was to be repaid over 25 years at an interest rate of 2.5 percent.

 

(Reporting by Felix Onuah; Writing by Alexis Akwagyiram; Editing by Chijioke Ohuocha, Larry King)

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Nigeria’s “bad bank” AMCON seeks bids for stake in Peugeot plant

Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s state-backed AMCON “bad bank” said on Tuesday it plans to sell its majority stake in Peugeot Automobile Nigeria (PAN) Limited, a local joint venture with the major French automaker, and is seeking bids from investors.

Peugeot Citroen is the technical partner to the Nigerian assembly plant, which has capacity to assemble 240 cars a day, PAN said on its website.

In a statement, the Asset Management Corporation of Nigeria (AMCON) said it owned 79.3 percent of PAN Nigeria Limited, having acquired the stake four years ago after purchasing the company’s debt and taking some as equity.

PAN Nigeria Limited was set up in 1972 as a joint venture between the Nigerian government and France’s Peugeot, with an annual production of 90,000 cars by the 1980s.

But operations nosedived and the company accumulated bad loans shortly after the government sold its stake via a privatisation to local core investors in 2006.

AMCON said PAN Nigeria had assets totalling 24.96 billion naira ($125.43 million) as of December 2014 and equity of 11.98 billion naira, and was seeking investors with experience in automobile manufacturing to buy the stake on offer.

Bids will close on Jan. 26 at 1600 GMT, it said.

President Muhammadu Buhari is keen to promote a “Made in Nigeria” industrial policy. In November, he met Peugeot’s executive vice president for Africa and the Middle-East, Jean-Christophe Quemard, to discuss the revival of local production.

The government under a National Automotive Industry Development Plan has ordered local car distributors to come up with plans for new assembly plants, along with threats of imposing prohibitive import duties.

U.S. carmaker Ford Motor Co’s partnership with a local car dealer has built its first model in Nigeria at a new assembly plant in November and said it will produce an initial 10 vehicles a day for the domestic market.

The auto market in Africa’s biggest economy has huge potential but only a small number of new vehicles are sold annually because the sector is dominated by imported used vehicles, and the absence of an industrial policy that would encourage suppliers to set up in Nigeria has stunted growth.

AMCON was set up to absorb bad loans from banks after a $4 billion bailout in 2009 rescued nine lenders from collapse. AMCON then bought bad loans at a discount in exchange for government-backed bonds and has since been selling off collaterals against those loans to pay bondholders.

 

(Reporting by Oludare Mayowa; Writing by Chijioke Ohuocha; Editing by Mark Heinrich)

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Nigeria to sell 80 billion naira of bonds on Jan 20

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LAGOS (Reuters) – Nigeria said on Monday it will sell 80 billion naira ($402.92 million) worth of bonds  denominated in the local currency at an auction on Jan. 20, its first debt auction of the year, the Debt Management Office (DMO) said.

The debt office said it will issue 40 billion naira each of bonds maturing in 2020 and 2026, using the Dutch auction system.

The 2020 debt is a reopening of a previously issued bond. The 2026 debt is a fresh issue. Results of the auction are expected the next day.

Nigeria has proposed a plan to issue 260 billion to 390 billion naira in 5-, 10- and 20-year naira bonds in the first quarter of the year. [L8N14V1QE]

Nigeria said it will borrow about 900 billion naira locally to finance part of the 2.2 trillion naira deficit in its 2016 budget.

($1 = 198.5500 naira)

 

(Reporting by Oludare Mayowa, editing by Larry King)

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How have crises become endemic in Northern Nigeria?

Comments (0) Africa, Politics

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“This is how the world ends. Not with a bang, but with a whimper.” The famous lines from T.S Elliot’s poem The Hollow Men was written concerning post-World War I Europe and the Treaty of Versailles five years after the Nazi Party became active in Germany. Elliot despised the Treaty of Versailles, and realized over a decade before World War II that the suffering and whimpers brought about by the Treaty of Versailles set the stage for a sequential buildup of events that would lead to disaster if unattended.

Setting the Stage for Disaster

In Northern Nigeria, this whimper has become endemic as vulnerability is worsened through each drought, food crisis, mass-displacement, and flooding. More often than not, local and international authorities only provide band-aid solutions: temporary measures that soothe the symptom without treating the infection. As a result, almost half of Africa’s most-populated nation has been trapped in a silent cycle of disaster, more vulnerability, and thus more disaster.

The link between disaster and vulnerability has been emphasized in recent decades as academics began to understand the significance of “the whimper.” In disaster literature, one of the most common analogies used to explain this link is that if there were no humans, it would not be a disaster: if a hurricane hit the South Pole no one would call it a crisis. And in terms of raw data, when disasters do occur the burden is disproportionately carried by the poorest. Since natural disasters lack the autonomy to pick their victims, vulnerability becomes the deciding factor in who gets hurt and who doesn’t. Critically, disasters are not a bang, or a freak accident. It takes years to form the necessary intervening conditions for disaster to occur.

Disasters depend on the social order, its everyday relations to the environment, and the larger historical matters that shape or frustrate these matters. In the north of Nigeria, power has historically been centralized in the Sokoto Caliphate, where political unity was designed to cleanse paganism from Islamic beliefs and discourage ethnic tensions. Kano was an economic hub even during Prophet Muhammad’s lifetime, and for centuries involved in slave trade, so in the 1600s when Europeans began arriving they partook in the pre-­existing West African slave trade by purchasing slaves from African merchants, eventually leading to the Atlantic slave trade. In 1850 it was estimated that 50% of the residents in Kano where slaves. Northern Nigeria was so invested in this trade that slavery was not made illegal in Nigeria until 1936. The grandchildren of these slaves now live in poverty in the North.

There are obvious trends moving south to north in Nigeria. The North has nearly double the poverty rate of the south, the judicial use of Sharia law, and a predominantly Muslim community. Life expectancy at 2001 was about 52 years with a total fertility rate of about 6.2 children per woman of childbearing age. A 2002 Core Welfare Indicator Questionnaire reveals that only 37% are literate, only 63% have access to quality drinking water, and about 40% have access to medical services. Within the demographics, we can see that the current residents are burdened with legacies of vulnerability in terms of access, income, education, and quality of life.

north nigeria

The Moment of Crisis

These whimpers of hazard, vulnerability, and intervening conditions set the stage for disaster since the 1600s, but also ultimately make up daily life for Nigerians. Before a crisis of extreme flooding in 2014, northern villages were in the grip of a food crisis, over 70% in poverty, many of whom were internally displaced due to 2013’s flooding. When the extreme event of moderate flooding is first superimposed, it acts as a catalytic agent, causing a chance encounter of all factors, and a failure of intervening conditions. This causes a deviation from the social norm, that moment of crisis that appears on televised news and captures the general public’s definition of “disaster.” And the carnage was dramatic: entire villages were literally washed away since houses of the poor were usually made of mud.

The International Red Cross was only able to offer short term relief (blankets, mosquito nets, water) to 3000 families and long term relief (gardening tools and seeds) to 800 families, which is helpful but on a small scale considering that over two million people in Nigeria alone were displaced from the flooding. The Nigerian government was unwilling to devote many of its resources towards recovery, citing the prioritization of other demanding issues.

Largely on their own, these rural communities rebuilt their houses out of the same mud, even poorer than before. Though the fluctuations in the natural/physical system are gone, their re­adaptation to nature is not buffered with intervening conditions to prevent a flood from happening again. The new norm that is established is even more vulnerable due to the failure of containment in the post­disaster response.

The Emergence of Disastrous Policy

There is an urgent need for a collaborative effort of both government and stakeholders to support town planning, engineering and other professional agencies to combat flooding in Nigeria to avoid its long ­range consequences. The tasks ahead are immense as these solutions must be implemented in the face of a multitude of problems, such as economic corruption, lack of infrastructure, and poverty.

But because these affected communities via disaster agents have become even more vulnerable, eventually the local and international authorities will grow impatient of always bailing out those who live at risk, thus their post-disaster response will become increasingly indifferent and ineffective, furthering the vulnerability conditions of the affected communities. Short-sighted solutions to whimpers are embroiled in good intent and disastrous consequences. Much like the Treaty of Versailles, there is a willing ignorance of how policies are paving a path to disaster: “this is how the world ends, not with a bang, but with a whimper.”

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Nigerian interbank rate eases on liquidity boost

Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s overnight lending rate eased marginally to 0.75 percent on Wednesday from 1 percent in the last five weeks after the central bank refunded cash set aside by banks to buy dollars.

Traders said the impact of the refund and anticipated injection of additional cash from November budgetary allocations to states and local government also helped to reduce cost of borrowing among banks.

However, the secured open buy-back (OBB) — the rate at which lenders can borrow from the interbank market using treasury bills as collateral — held flat at 0.5 percent it has traded in the last five weeks, far below the central bank’s benchmark rate.

Traders said about 300 billion naira additional funds are expected from the budget disbursal before the close of business on Wednesday.

They said although market liquidity dropped to around 230.5 billion naira on Wednesday from 400 billion naira on Friday, it was expected to rise again helped by the refunds and possible budget disbursals.

“We expect the cost of borrowing to stay flat for the rest of the year as most businesses wind down and tidy their books for the financial year ending,” another dealer said.

The Nigerian money market reopens next Tuesday.

 

 

(Reporting by Oludare Mayowa; Editing by Raissa Kasolowsky)

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Nigeria orders MTN to pay $3.9 bil fine by Dec 31

Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – South African mobile phone operator MTN will have to pay a $3.9 billion fine imposed by Nigeria for failing to disconnect users with unregistered SIM cards by Dec. 31, a source in the Nigerian telecommunications regulator said on Wednesday.

Nigeria’s telecoms regulator had cut the fine from an initial $5.2 billion after weeks of lobbying by Africa’s biggest mobile phone company to get it reduced.

“Appropriate action will be taken,” should MTN fail to meet the deadline, the source said, asking not to be named and giving no further details.

MTN said this month it would challenge the decision in court.

Nigeria has been pushing telecoms firms to verify the identity of subscribers amid worries unregistered SIM cards were being used for criminal activity in a country facing the insurgency of militant Islamist group Boko Haram.

The fine came months after Muhammadu Buhari swept to power in Africa’s biggest economy following a campaign in which he promised tougher regulation and a fight against corruption.

 

(Reporting by Felix Onuah; Writing by Ulf Laessing, editing by William Hardy/Keith Weir)

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Nigeria to review mining licences as part of industry overhaul

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ABUJA (Reuters) – Nigeria will review all its mining licences as its wants to overhaul a largely unproductive sector dominated by artisan miners, the mining ministry said on Monday.

The West African nation wants to lower dependency on oil production as crude prices tumble and boost output of solid minerals that contribute only 0.34 percent to GDP, according to official data.

Africa’s largest economy has some gold and iron deposits but little seismic data exists as the government has focused on oil exploration in the past decades.

To make a sector 80 percent dominated by artisan miners more efficient, mining minister Kayode Fayemi said all licences would be reviewed by March 1, according to a statement.

“We will work with stakeholders to review existing licenses and bring them up to date where there are issues,” he said in the statement, his first policy comments since taking office last month. “The period from today to 1st March 2016 should be considered an amnesty period to allow regularisation of papers.”

He said Nigeria had 44 known minerals including gold, iron ore, bitumen, zinc, tin and coal but authorities needed to get better data before deciding on a policy focus.

Nigeria has attracted few foreign investors to the mining sector due to a lack of roads, corruption and weak regulation.

 

(Writing by Ulf Laessing; Editing by David Evans)

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Nigeria’s Kaduna refinery restarts

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CAIRO (Reuters) – Nigeria has restarted its northern Kaduna refinery, an official at state oil firm NNPC said on Monday after a pipeline pumping crude to the plant resumed operations.

The refinery, which has a capacity of 110,000 barrels a day, resumed on Saturday, said Ohi Alegbe, a spokesman for NNPC. He gave no production data.

Nigeria’s four ageing oil refineries produced nothing in October, despite a goal from the state company to produce 30 percent of its own gasoline in 2016.

Despite exporting 2 million barrels per day (bpd) of crude oil, Nigeria is almost wholly reliant on imported gasoline, kerosene and other petroleum products.

 

(Reporting by Ulf Laessing; Editing by David Goodman)

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Nigeria Sterling Bank says open to merger to build scale

Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s Sterling Bank is open to merger or acquisition talks to build scale to counter weak market conditions caused by slow economic growth this year which could continue into 2016, its chief executive said.

Africa’s biggest economy relies on oil exports for about 58 percent of government revenue and faces its worst economic crisis in years because of the fall in crude prices, which tumbled to their lowest in more than six years last week.

CEO Yemi Adeola said late on Thursday the slowdown in the economy couple with currency weakness provided opportunities for a market consolidation to build scale and cut costs, adding that one or two foreign banks were having discussions about possible acquisitions in Nigeria.

“You could see … one or two international banks taking over one or two Nigerian banks … in 2016 from the look of things,” he said, declining to name the lenders.

“As for us at Sterling, we are always open, anything that will give us scale, we will pursue.”

Sterling Bank, which itself is the product of a merger of six local banks, was the target of a takeover in 2011 by South Africa’s No.2 banking group FirstRand. Acquisition talks collapsed after the two sides failed to agree on terms.

Shares in the bank, which have fallen 25.9 percent this year, are trading at less than 1 times its book value, analysts say. The stock shed 4.79 percent on Friday to 1.79 naira, giving it a market value of 51.5 billion naira ($259 million).

Adeola expects investment flows to reverse after the U.S. Federal Reserve raised interest rates this week for the first time in almost a decade, a move that could also hurt borrowers exposed to the dollar.

The naira, which is pegged to the dollar, has been hitting new lows among retail bureaux de change operators since last week with the central bank trying to curb demand to conserve its reserves, hurting commercial banks’ trade business.

Sterling Bank said on Thursday it would raise 35 billion naira ($177 million) in Tier II debt early next year to expand its loan book and saw no need to tap equity markets.

 

(By Oludare Mayowa. Writing by Chijioke Ohuocha; Editing by Mark Potter)

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Nigeria says its oil refineries produce nothing

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ABUJA (Reuters) – Nigeria, aiming to boost its crude output, is still grappling with decrepit refineries that fail to produce fuel, which it has to import, the head of state oil firm the Nigerian National Petroleum Corporation (NNPC) said on Thursday.

Oil production is forecast to reach 2.1 million barrels of oil per day (bpd) this year and should rise to 2.4 million bpd next year, Emmanuel Ibe Kachikwu told reporters, though none was being refined domestically.

“In October we had zero performance (from refineries), we didn’t produce anything,” Kachikwu said. “As of now the refineries are still not working. We are going to try and repair them.”

In an apparent attempt to lower fuel subsidy costs amid sharply lower oil revenues, Kachikwu said refined products would be sold in a band between 87 and 97 naira per litre that is adjusted based on crude prices. Prices are currently set at 97 naira per litre regardless of market prices.

“So it’s no longer subsidy as in the air, it’s not a static number,” he said. “Probably once in quarter we say what is the price of crude, how can we reflect (it) in the price of the product to make sure we don’t pass the ceiling of 97 (naira).”

In November, the country’s top refinery official told Reuters that Nigeria aimed to produce up to 30 percent of its domestic gasoline needs by the first quarter of 2016 following an overhaul of the refineries.

Kachikwu reiterated Africa’s top oil producer was trying to secure external funding to revamp the refineries before considering their sale. “We cannot sell the refineries in their present state. They will be worth nothing.”

President Muhammadu Buhari, also oil minister, has made refurbishing the country’s dilapidated refining system a priority as he seeks to reform an industry hampered by mismanagement and corruption.

 

(By Camillus Eboh. Reporting by Camillus Eboh; Writing by Ulf Laessing; Editing by David Holmes and William Hardy)

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