The Financial Times says that the cost of servicing government debt in Nigeria is dampening foreign investors’ appetite to inject capital into the country. Many of the investors continued to be willing lenders, despite the signs that their money might not always have been put to the most productive use. Increasingly, however, analysts are raising questions over the proceeds of bond sales, and whether the public finances of the country, according to the IMF, are as sustainable as they appear. Andrew Roche, Managing Partner of Finexem, a Paris-based financial consulting firm said that Nigeria’s government had been using borrowed cash to patch up holes in budgets, rather than investing in infrastructure or industry, or in efforts to diversify the economy from a heavy dependence on oil. Nigeria has been among the big beneficiaries of a global hunt for yield. The country sold its sixth Eurobond in November 2018, raising $2.9 billion in maturities of seven, 12 and 30 years in an issue that was more than three times oversubscribed. On April 25 this year, the government raised ₦100 billion ($326 million at the official rate) in an auction that included a debut 30-year local currency bond that was four times oversubscribed. Last month, the Minister of Finance, Zainab Ahmed, stressed that Nigeria’s government debt, while it had risen in recent years, was still equal to just 19 percent of GDP in 2018.
The recent rise in vandalism of oil pipelines across Nigeria poses a threat to the implementation of the country’s financial plan for 2019 barely two weeks after the National Assembly passed the ₦8.916 trillion budget. The country had set oil production target of 2.3 million barrels per day at a price benchmark of $60 to support the year’s budget, but force majeures by oil majors threaten the country’s revenue, which is more than 90 percent dependent on oil exports. Inflows of forex, pegged at ₦305/$1 in the budget are also threatened. Nigeria lost over $10 million (about ₦3 billion) revenue projection to the NCTL pipeline, considering 150,000 barrels of crude are transported daily through the line at the price of $70.61 per barrel. According to Aiteo spokesperson, Ndiana Matthew, the pipeline suffered two new leak points near Awoba in River State. On its part, the NNPC recorded no fewer than 230 cases of pipeline vandalism in January 2019. Reuters had reported that the Bonny Light exports had been planned at 222,000bpd in June and 184,000bpd in May, as trading sources said they were awaiting new loading plans. But the agency, quoting a source, said that oil-well shutdowns had reduced Amenam’s daily production, and led to force majeure. Exports of Amenam are typically around 100,000bpd, and trading sources said loadings had been delayed by roughly 25 days.
MTN Nigeria has registered to list 20.4 billion ordinary shares at ₦0.02 ($0.0001) each with the country’s securities regulator. The telecoms firm said it has started negotiations with the Nigerian Stock Exchange to complete the listing. The NSE said on Monday that it has received MTN’s listing application. The telecom giant had asked the Nigerian Securities and Exchange Commission for permission to proceed with a listing of its shares on the NSE on Friday. The listing on The NSE is a condition of the settlement of a $1 billion regulatory fine three years ago. Nigeria is the biggest market for Africa’s largest telecoms firm, with 52.3 million users in 2017, and accounts for a third of the company’s annual core profit.
Medview Airline is faced with huge financial challenge as its revenue fell by 74 percent in 2018 to ₦9.5 billion as against ₦36.9 billion recorded in 2017 when it had profit after tax of about ₦1.2 billion. It made a ₦10.3 billion loss after tax in 2018. Revenue from its international operations fell from ₦13.8 billion to ₦2.8 billion while local operations fell from ₦14.8 billion to ₦3.6 billion. The company also made provision for bad debt of over ₦2.5 billion. The reasons for the financial troubles, according to the firm, were as a result of “political tension” and “extremely tight market liquidity.” The Chairman of the company, Sheik Abdul-Mosheen Al-Thunayan said its depleted aircraft due to “C-Check at the early part of 2018 and re-protection exercise” all contributed to the poor performance. A look into the airline liquidity status shows that Medview owes its main lender, First Bank Ltd, about ₦1.5 billion. The firm’s main creditors are its trade partners, which it owes about ₦14 billion. Going by the firm’s current situation amid competitive obliteration from the likes of Air Peace and Amcon backed Arik, Medview, according to analysts at Nairametrics, will either need to raise capital as soon as possible or face imminent liquidation from its lenders.