Daily Watch – Nigera and Cameroon to cooperate on cocoa, FG meets P&ID deadline

Nigeria has paid Process and Industrial Developments the sum of £250,000 (₦111.25 million) as running cost on the order of Justice Christopher Butcher of the Commercial Court in London. The Judge granted Nigeria a right to appeal the $9.6 billion judgement awarded in favour of P&ID over an alleged breach of a gas supply contract tagged Gas Supply Processing Agreement. The country’s government was asked to pay £250,000 as running cost to P&ID within 14 days for the appeal to be granted. The 14-day ultimatum ended Thursday, which Nigeria was able to meet. The money was paid through the CBN. Confirming the series of events, Attorney-General of the Federation, Abubakar Malami stated that the money was paid out of respect for the court.

Data from the NBS has shown that the total credit from Nigerian banks to the private sector recorded a decline of ₦411.8 billion in Q2 2019. According to the report, the total credit from banks to the private sector dropped from ₦15.54 trillion in March 2019 to ₦15.13 trillion at the end of June 2019, indicating a 2.6 percent decline. The breakdown of the data shows that specifically in the Q2’19, 10 out of 18 sectors witnessed decline in the total credit provided by the banks. Top of the identified sectors that witnessed the biggest decline credit is the oil and gas sector, which during the period under review had a total credit of ₦4.39 trillion in June, as against ₦4.61 trillion in March 2019. This means loans to the sector dropped by ₦222.8 billion in three months. The power and energy sector ranks high among sectors that witnessed a decline in total loans. Total loans to the sector dropped by ₦57.7 billion from ₦393.2 billion in March to ₦335.5 billion in June 2019.

The FG has entered a $3.9 billion deal with a Chinese firm to construct a railway from Itakpe to Abuja, and a seaport in Warri. The construction is expected to be funded via a Public-Private Partnership, which Nigeria will contribute 15 percent while the China Railway Construction Corporation will contribute 10 percent and the remaining 75 percent will be borrowed through an SPV designed to cover the project. CRCC would manage the rail for 30 years for the 75 percent loan to be serviced, before the FG gets back full control. Giving further insights into the deal, the Minister of Transportation, Rotimi Amaechi, explained during the signing that the PPP agreement was adopted to avoid accumulation of debts. A delegation from CRCC was led by its Vice President, Wang Wenzhong. Several railway activities were handled by Chinese firms, including the Abuja-Kaduna railway constructed by the CCECC and the Lagos-Ibadan rail project which is under construction.

Nigeria has suggested plans to team up with Cameroon on a premium for their cocoa with buyers, the vice president of the World Cocoa Producers Organisation, Sayina Riman told Reuters, after top growers Ivory Coast and Ghana moved to boost prices for their crops. The plan is part of a drive by growers in West Africa and Latin America to try to address a perceived imbalance between farmers’ incomes and money made by big commodities traders. Ivory Coast and Ghana, which account for nearly two-thirds of global output, have imposed a fixed “living income differential” of $400 a tonne on all cocoa contracts sold by either country for the 2020/21 season. The two countries, despite being the world’s leading cocoa producers, exert limited influence over international prices as cocoa-producing countries have sought ways to protect farmers from market swings after global overproduction sent prices crashing in 2016-17, and oversupply has meant a slow recovery. According to Sayina Riman, who doubles as president of the Cocoa Association of Nigeria, Ivory Coast and Ghana had effectively agreed a $400 for the per tonne premium above global prices for their cocoa, and that Nigeria wanted to follow suit to protect its farmers. Nigeria, the world’s fourth-largest cocoa producer, has had informal discussions with Cameroon, Riman said, so as to see if they can become a regional bloc. The approach, he said comes as a bilateral discussion. Peru has said it would propose a minimum price of $3,200 per tonne to its regional growers, which together make up 17 percent of global output, after the moves by West African producers. Nigeria and Cameroon both account for around 10 percent of global production and have the potential to more than double output within five years, Riman said, noting that the countries share a border and similar weather.