12 Apr

Nigeria’s Wheat Plan Falters With Imports Set to Surge

Nigeria’s decades-old program to boost wheat production and reduce imports worth more than $4 billion a year has faltered with farmers cutting output because of soaring input costs, leaving foreign suppliers to meet rising domestic demand, officials and farmers’ groups said.

The latest harvest is coming in slowly and output will drop in the current season, Zakari Turaki, head of cereals research at the Lake Chad Research Institute, based in the northeastern city of Maiduguri, said in a phone interview.

Many farmers say that the government of President Muhammadu Buhari, which took office in 2015, suspended a program to support strategic crops, including wheat subsidies, causing many of them to abandon the grain.

“The problem is that farm inputs, like seeds, are not subsidized and the poor farmer cannot afford to buy it,” said Mala Kachalla, a wheat farmer who spoke by phone from the northern city of Zaria. “Some of our farmers imported winter seeds as they’re cheaper. Unfortunately, this type doesn’t grow in this part of the world, because here we grow spring wheat.”

Nigeria produced an average of 80,000 tons of wheat a year for decades until the introduction of a new variety in the 2012-13 season that tripled the average yield as more areas were cultivated, according to the Lake Chad Institute.

Output fell sharply to 60,000 metric tons in the 2016-17 season after reaching a peak of 350,000 tons in 2013-14, according to Turaki, with farmers also hurt by the Boko Haram Islamist insurgency in some of the growing regions. He sees a further production decline in the current season to 50,000 tons.

In contrast, Nigeria’s wheat imports, which reached 4.6 million tons in 2017, are expected to expand by 9 percent to 5 million tons next year and double from that by 2030, according to the U.S. Department of Agriculture, as demand surges for wheat-based foods such as pizza, pasta and bread. The West African nation estimates it spends $4 billion to $5 billion annually on wheat imports.

To read the full article, click here.

12 Apr

Nigeria Rate-Cut Hope Lives as Inflation Slows to Two-Year Low

Nigerian inflation slowed for a 14th straight month in March, taking consumer-price growth below the benchmark interest rate for the first time in two years and opening the door for a rate cut.

Consumer inflation in Africa’s most-populous nation decelerated to 13.3 percent from a year earlier, the lowest rate in two years and below the benchmark rate of 14 percent.

 Nigeria’s central bank left its main lending rate at a record high of 14 percent when policy makers met April 4 to continue fighting inflation that’s been above the target range of 6 percent to 9 percent for more than 2 1/2 years. Governor Godwin Emefiele said the bank would consider cutting rates from where they have been since July 2016 when inflation slows closer to single digits.
“Absolutely, they now have more scope to cut rates because of the pronounced drop in inflation,” Razia Khan, head of macroeconomic research at Standard Chartered Bank Plc, said by phone from London.
The median estimate in a Bloomberg survey was for annual price growth to slow to 13.6 percent. Inflation slowed from 14.3 percent in February, the Abuja-based National Bureau of Statistics said in a statement.
Food-price inflation decelerated to 16.1 percent in March the weakest rate of growth since July 2016, it said.
The cost of gasoline climbed to an average 9.4 percent in March to 163.4 naira ($0.46) a liter (0.3 gallon) from a year earlier, said the bureau, whose data includes unofficial pump prices. Nigeria currently caps gasoline retail prices at 145 naira per liter.

Food-price inflation decelerated to 16.1 percent in March the weakest rate of growth since July 2016, it said.

The cost of gasoline climbed to an average 9.4 percent in March to 163.4 naira ($0.46) a liter (0.3 gallon) from a year earlier, said the bureau, whose data includes unofficial pump prices. Nigeria currently caps gasoline retail prices at 145 naira per liter.

To read the full article, click here. 

28 Mar

Nigeria’s Sahara Revives IPO as It looks to Pump More Oil

Nigerian energy conglomerate Sahara Group Ltd. said it revived plans for a share-sale as it looks to increase oil production four-fold to 100,000 barrels per day.

Lagos-based Sahara mulled an initial public offering in the Nigerian commercial capital and London in 2015, before falling crude prices forced it to backtrack.

“The IPO is now back on the table,” Tonye Cole, Sahara’s executive director and co-founder, said in an interview in Kigali, Rwanda. “After we made the announcement then, the entire market crashed, oil prices went down, and so we put the plans on hold.”

Cole didn’t provide a timeframe or say how much he wanted to raise. In 2015, he said he would look to sell as much as 25 percent of Sahara for $600 million.

Read the full article @Bloomberg

 

22 Mar

Smugglers Cheer as Nigeria Tries to Keep Foreign Rice at Bay

At Nigeria’s normally manic border post of Seme, Lasisi Fanu says business has all but ground to a halt.

He and other customs agents who help clear goods coming into Africa’s biggest economy from its smaller neighbour Benin say the long lines of trucks loaded with rice that used to jam the crossing have eased.

The slowdown is a result of import restrictions and tighter border policing as President Muhammad Buhari seeks to diversify the oil-dependent economy by boosting agriculture, especially rice production.

Two years ago, Buhari set 2018 as a target to end Nigeria’s status as the world’s second-largest importer of the grain after China and become self-sufficient.

He’s since overseen investments of almost $1 billion in farming and milling, virtually banned rice importers from buying foreign exchange, raised tariffs to as high as 60 percent and pushed the central bank to lend to farmers. Confident that his administration is making progress, he told rice growers this month that “our policies are working.”

But the numbers tell a different story: they suggest smuggling is rife because local producers are struggling to meet growing demand in Nigeria, whose 180 million people mix rice with tomatoes and spices to create jollof, practically a national dish.

Nigeria grew 3.7 million metric tons of rice in 2017, a 4 percent increase from a year earlier, according to the U.S. Department of Agriculture. At the same time, imports rose 19 percent to 2.5 million tons, the USDA said.

Most imports are smuggled in from Benin, which despite a population of 11 million — barely 5 percent of Nigeria’s population — is now the world’s biggest buyer of rice from Thailand, the number two exporter globally.

Official shipments to Nigeria plummeted by more than 95 percent in the past four years, while those to Benin have surged, according to the Thai Rice Exporters Association.

“This is Nigeria and people are cutting corners,” said Fanu, the customs agent. “They bring in the rice through the many unofficial border crossings further north. The government knows it. It’s very difficult to police.”

Source: https://www.bloomberg.com/news/articles/2018-03-21/smugglers-run-riot-as-nigeria-tries-to-keep-foreign-rice-at-bay

19 Mar

Milost Plans $1 Billion Investment in Nigerian Bank

Milost Global Inc. is looking to inject as much as $1 billion to recapitalize Nigeria’s Unity Bank Plc, which is struggling to build buffers after a slowdown in Africa’s biggest economy, according to two people familiar with the matter.

New York-based Milost offered to invest $700 million in equity and $300 million in five-year bonds that can be converted into shares in the Nigerian lender, said one of the people, who asked not to be identified as talks are confidential.

The private-equity firm will get an initial stake of about 30 percent in the Lagos-based bank in exchange for its first equity investment of $250 million, the person said.

The transaction is still subject to a due diligence as well as regulatory approvals, the people said. The first part of the deal may be completed in the second quarter, one of the people said.

The rest of the cash will be drawn down in intervals over a period of four years, provided Unity Bank has sufficient shares to issue to Milost, one of the people said.

Some small- and mid-sized Nigerian lenders are battling to rebuild capital levels after a slump in oil prices triggered a foreign-currency shortage and a contraction in the country’s economy in 2016 made it difficult for businesses to repay loans.

Unity Bank, which was formed out of the merger of nine banks between December 2005 and March 2006, said in April last year that it is in talks to sell its non-performing loans to avoid penalties after missing a deadline set by regulators on its recapitalization plans.

An investment in Unity Bank will be Milost’s third in a publicly traded Nigerian company since it agreed to pump $350 million into oil-services company Japaul Oil & Maritime Services Plc in February and to provide a $250 million financing facility to Resort Savings & Loans Plc. Several calls to the numbers listed on Milost’s website have gone unanswered.

To read the full article, click here.

14 Mar

Nigerian Inflation Slows for 13th Consecutive Month in February

Nigeria’s inflation slowed for a 13th consecutive month in February, but may still be too high for the central bank to start cutting rates from a record.

Consumer-price growth in Africa’s most populous nation decelerated to 14.3 percent from 15.1 percent in January, the Abuja-based National Bureau of Statistics said in an emailed statement. The median estimate in a Bloomberg survey was 14.6 percent. Prices rose 0.8 percent in the month.

Governor Godwin Emefiele said last month the Central Bank of Nigeria may reduce its benchmark from a record-high 14 percent before July if inflation drops closer to single digits. Price growth has exceeded the target range of 6 to 9 percent for 2 1/2 years partly due to increasing fuel and food costs, as well as a weaker currency that raised prices of imported goods.

The cost of gasoline increased an average 15 percent to 172.5 naira ($0.48) in February from a year earlier, according to NBS, which collects data including pump prices that are above the government’s official cap of 145 naira per liter.

The Monetary Policy Committee is scheduled to meet March 19-20 if at all, having missed its January gathering because it had insufficient members to form a quorum. That’s because lawmakers refused to confirm new members amid a political stalemate with President Muhammadu Buhari.

The committee has kept the policy rate at 14 percent since July 2016 as it tries to balance fighting inflation, propping up the naira, and supporting an economy that the International Monetary Fund forecast will expand 2.1 percent this year, strengthening a recovery after contracting in 2016.

Source: https://www.bloomberg.com/news/articles/2018-03-14/nigerian-inflation-slows-for-13th-consecutive-month-in-february

12 Mar

Nigeria State Oil Company Hasn’t Explained Missing Billions

An agency tasked with cleaning up Nigeria’s murky oil industry says even though financial accountability has improved the state oil company still hasn’t explained billions of dollars of missing revenue.

While energy producers have cooperated and complied with requirements to publish payments, the Nigeria Extractive Industries Transparency Initiative has struggled with the state-owned Nigerian National Petroleum Corp., Waziri Adio, executive secretary of the agency known as Neiti, said in a March 7 interview in Abuja, the capital.

The state oil company hasn’t explained what it did with at least $22.7 billion earned from the sale of oil licenses and in dividends from its stake in Nigeria LNG Ltd. over a 15-year period, he said.

“The sector is no longer the black hole that it once was, but we can still use more transparency,” Adio said. “Things are opening up. There could be more in the area of contracts, ownership and expenditure transparency, but definitely there is some progress.”

Ndu Ughamadu, NNPC spokesman, didn’t answer three calls on his mobile phone and two text messages seeking comment. The company has said in the past it has the authority of the government in its actions.

Royal Dutch Shell Plc, ExxonMobil Corp., Chevron Corp., Total SA and Eni SpA operate joint ventures with the state oil company that account for about 90 percent of the output of Nigeria, Africa’s top producer.

Neiti was set up in 2004 after Nigeria acceded to the Extractive Industries Transparency Initiative, which requires international energy companies and governments involved in mining to publish all their payments.

Nigeria LNG is owned 49 percent by NNPC, 25.6 percent by Shell, 15 percent by Total and 10.4 percent by Eni. President Muhammadu Buhari, who pledged during his 2015 election campaign to fight widespread graft in the oil and gas industry, appointed Adio, 49, in February 2016 to head Neiti.

For all its work in auditing oil industry payments, critics say the agency remains toothless, lacking the power to compel companies to disclose payments or penalize erring producers.

To read the full article, click here.

06 Mar

Buhari Grapples With Widening Crises as Nigerian Vote Looms

Islamist militant attacks, gasoline shortages, worsening violence over grazing land, simmering unrest in the southeast — the crises keep mounting for Nigerian President Muhammadu Buhari less than a year before general elections.

The most recent setback came on March 1 when suspected Boko Haram Islamist militants killed three United Nations aid workers and eight soldiers in an attack in the northeastern town of Rann, about two weeks after they kidnapped more than 100 schoolgirls aged 11-19 in the same region. The actions have undermined the government’s claim to have “technically defeated” the group.

“There will be consequences politically; it’s a huge blow to soldier morale,” said Cheta Nwanze, an analyst at Lagos-based SBM Intelligence risk advisory. “It just adds to Buhari’s woes.”

While Buhari, 75, hasn’t said whether he will run for re-election, his ruling All Progressives Congress has backed him to do so, and he remains popular in his political base in the mainly Muslim north.

Yet he spent more than five months in London last year being treated for an undisclosed illness, and the coalition that brought him to power shows signs of fraying.

On Monday, Buhari started a visit to five states that have been gripped by violence in recent months, including Yobe, where the girls were kidnapped, his office said in an emailed statement.

The government’s much-vaunted anti-graft war also suffered a blow when Berlin-based Transparency International’s latest global corruption-perception index released last month showed Nigeria had dropped 12 places under Buhari to 148 out of 172 countries.

In his plus column, the main opposition People’s Democratic Party hasn’t recovered from its loss in 2015 and is in disarray.

While gasoline shortages are causing havoc for motorists, the economy of Africa’s top oil producer is also looking brighter, with the Abuja-based National Bureau of Statistics saying it may expand 2.1 percent this year after growth of 0.8 percent last year and a contraction of 1.6 percent in 2016.

To read the full article, click here.

05 Mar

Nigeria’s Sticky Inflation Threatens to Frustrate Rate-Cut Hopes

Nigeria’s long-awaited interest rate-cutting cycle risks being short-lived if it starts at all.

Governor Godwin Emefiele said last month the Central Bank of Nigeria may reduce its benchmark from a record-high 14 percent before July if inflation drops closer to single digits.

But with fuel costs surging and government spending swelling before next year’s election, he may struggle to reach that threshold at a time when the pace of price growth is still just over 15 percent.

“With inflation remaining sticky, it is unlikely that the CBN would want to cut rates so soon,” Gaimin Nonyane, London-based economic-research head at Ecobank Transnational Inc., said by email.

Further complicating the picture is the Senate’s refusal to approve President Muhammadu Buhari’s nominees to the Monetary Policy Committee, which means the panel lacks a quorum to hold meetings to formally set rates, further delaying any hope of cuts. The MPC didn’t sit in January, and it’s not clear if the March 20 decision will be made.

The inflation rate in Africa’s most-populous nation rose to 15.1 percent in January from a year earlier and has exceeded the target range of 6 percent to 9 percent for 2 1/2 years. The statistics agency is due to release data for February on March 14.

Africa’s largest oil producer imports almost all its refined-fuel requirements because local capacity can’t match demand.

While higher crude prices have increased Nigeria’s revenue, they have also raised the cost of processed products, with the average gasoline price surging 27 percent in January from a year earlier.

The resultant fuel shortages prompted retailers to boost pump prices above the official cap of 145 naira ($0.40) a liter, adding to inflationary pressures.

“Unless fuel pricing is resolved, bouts of fuel shortages could keep prices sticky, feeding into other items,” said Razia Khan, head of macroeconomic research at Standard Chartered Bank Plc in London.

To read the full article, click here.

02 Mar

Nigerian Bank Profits Set to Get Boost From Economy’s Comeback

The spring in the step of Nigeria’s economy is likely to show up in the results of the country’s banks when they start reporting 2017 earnings from this month.

An improvement in unpaid loans, higher interest income from holding government debt and a rise in profit will have helped lenders bolster their capital buffers, according to Renaissance Capital analysts including Olamipo Ogunsanya and Ilan Stermer.

The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017.

An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.

Here’s a closer look at some of the major drivers and points of interest that investors will keep an eye on as they assess the outlook for banks.

Record high-interest rates of 14 percent since July 2016 means there is no shortage of yield for banks, many of which parked their funds to profit from the safety of Treasury bills and other fixed-income securities rather than lending, where there is more risk.

A drop in those yields from a record highs in August means that 2018 will be more challenging for lenders, despite the positive macro backdrop, according to Ogunsanya and Stermer.

Volatility in foreign-exchange related gains, limited scope for cost efficiencies and rising political risks before elections in early 2019 also cloud the outlook for this year, the RenCap analysts said.

Banks will be able to close the revenue gap created by declining interest rates by lending more into a strengthening economy, according to Stanbic IBTC Holdings Plc analyst Muyiwa Oni.

Some banks may boost loan growth to 15 percent this year compared with 10 percent in 2017, he said.

To read the full article, click here.