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 per cent of GDP in 2018.

The Nigerian Financial Intelligence Unit has issued guidelines to stimulate the reduction of crime vulnerabilities created by cash withdrawals from local government funds across the country. NFIU spokesman, Ahmed Dikko announced that the effective date for operation of the guidelines was 1 June. He urged all financial institutions, relevant stakeholders, public servants and citizens, to ensure full compliance with the provisions of the guidelines which had already been submitted to the institutions. Dikko said that cash withdrawal and transactions from State Joint Local Government Accounts posed (the) biggest corruption, money laundering and security threats at the grassroots and to (the) entire financial system. He explained that the measures were necessitated by reasons on the NFIU to respond to threats of isolating the country’s financial system by international financial systems due to deficiencies in anti-money laundering.

A Premium Times investigation has revealed that almost all of the 16 companies awarded contracts for the first phase of the Ogoni Clean-Up exercise by the Buhari administration have no experience whatsoever in the remediation of oil spills. A good number of the companies, it turns out, were set up for businesses that cater to agricultural needs. Furthermore, the agency in charge of the coordination of the cleanup, The Hydrocarbon Pollution Restoration Project (HYPREP) flouted its own rules in the award of the remediation contracts, as many of the 16 companies fall short of the minimum prequalification requirements.

Police fired tear gas and live ammunition to disperse crowds protesting against President Patrice Talon in Benin Republic’s largest city, Cotonou. Hundreds of people have been protesting since Wednesday, erecting makeshift barricades of burning tyres, and calling for Talon to step down. Medical sources say a woman died from injuries sustained from the previous day. The protests began hours after initial results on 8 May showed record low turnout across the country.


  • Investors have continued to buy Nigerian debt precisely because the increased risk has made the expected returns higher, hence such investors were willing to take a chance on a high but risky return buy. However, as it is beginning to appear, even such investors are reaching their limits and Nigeria will find it increasingly hard to sell its bonds, or have to sell them at ever-rising yields. Either of these scenarios portends serious funding challenges for a government whose main economic activity is sharing the proceeds of oil sales. With the passage of the new minimum wage, even more strain has been added to the budget, condemning the country to yet more debt. Soon the market indicators which government officials routinely trump to justify the borrowing will be less attractive, and investors will demand more premium for the perceived risk.
  • The NFIU announcement is a good move, as it is all about wrestling the local government system away from the control of the state governors, a control which governors have used to more or less emasculate the LG system. By sanctioning the banks directly, since the governors have proven to be ungovernable, the NFIU has given an incentive for better behaviour, because it is the banks themselves that will act as a block to the governors. There is, however, a flip side. While the NFIU plays an integral role in the fight against money laundering and terrorist financing, it is stepping into legal murky waters with the issuance of these guidelines, a responsibility ordinarily within the Central Bank’s legal authority. This action appears to be in step with a new wave of assertiveness by agencies apparently spurred by the need to generate revenue from sanctions issuance whilst ignoring the damage done to the country’s business-friendly credibility. The finance minister, who has oversight of the entire Nigerian financial system, needs to provide clarity or else more agencies are likely to seek new means of allotting powers alien to the Constitution, to themselves.
  • Unfortunately, this kind of news from Ogoniland was expected. When HYPREP began holding seminars where monies would be shared at the end in the name of ‘transport’, it became obvious to the area’s residents that the entire cleanup operation was merely a structural setup for people to corruptly enrich themselves for the duration of the exercise at their expense and that of the wider Niger Delta region. When citizens demanded transparency after the jamboree which was the launching of the clean-up, government officials said the calls were politically motivated. This case highlights the country’s never-ending struggle to institute accountability; an open, transparent process (which was promised by the government in 2017) would have been an effective deterrent. The government has simply not shown any seriousness with the Ogoni Clean-up, losing a genuine opportunity at fostering a much-needed rapprochement with the country’s oil producing communities.
  • Hitherto one of West Africa’s more stable democracies, the recent election and a host of political developments in Benin – including a new law that effectively barred all opposition parties from contesting – has left regional powers and the United Nations concerned. The UN said its Special Representative from West Africa and the Sahel, Mohamed Ibn Chambas was engaging with ECOWAS and Beninese stakeholders to “encourage a consensual and peaceful solution to the situation” as civil society seethes over the clear regression in democratic norms. Benin’s relative stability has masked a low-level power struggle between Talon and his immediate past predecessor and old friend, Boni Yayi, precipitated by Talon’s victory over Yayi’s candidate in 2016. In addition, economic pressures and security concerns in the country’s north which is part of the wider Sahelian zone of instability has meant that an increasing number of Beninese are frustrated with Talon’s leadership. Whether the protests will lead to any substantial political change remains to be seen.