Nigeria has received the approval of $750 million International Development Association credit for the country’s Power Sector Recovery Operation from the World Bank. The credit is expected to help to improve the electricity supply in the West African Country. The Bank, quoting its Country Director for Nigeria, Shubham Chaudhuri, Wednesday, said it worries that about 47 percent of Nigerians have no access to grid electricity and those who had access, faced regular power cuts. The institution put the economic cost of power shortages in the country at $28 billion dollars, which is equivalent to two percent of its Gross Domestic Product. Experiencing electricity deficiency was one of the major constraints for the private sector, according to the Ease of Doing Business report. The Bank said that electricity is what is needed to lift 100 million Nigerians out of poverty. Saying that the objective of the operation is to help turn around the power sector and set it on a fiscally sustainable path, the organisation added that this is particularly urgent at a time when the government needs all the fiscal resources it can marshal to help protect lives and livelihoods amid the COVID-19 pandemic.
President Buhari has backed Victor Giadom as acting national chairman of the ruling All Progressives Congress amid the crisis rocking the party. Buhari’s spokesman, Garba Shehu, said on Twitter that Buhari had received convincing advice on the position of the law as far as the situation in the party was concerned, and had determined that the law was on the side of Giadom. He added that the President was expected to attend the virtual meeting Giadom called for this afternoon. The Giadom meeting will, hopefully, be attended by APC governors and the leaders of the National Assembly. However, the APC’s national vice chairman, South-South, Hilliard Etta, who was appointed to act on behalf of deputy national chairman, South, Abiola Ajimobi, while reacting to the issue, described Giadom’s NEC meeting as unconstitutional. Scheming for the control of the APC by various camps has worsened the crisis rocking the ruling party. Two members of the party claimed to be acting chairman following the Appeal Court’s suspension of Adams Oshiomhole. The NWC had named Ajimobi, who is in hospital, as the acting national chairman of the party, but Giadom declared himself as the acting chairman of the party, puncturing the announcement by the NWC of the party.
Nigeria’s government will spend all accrued revenue in 2020 on interest repayments, the International Monetary Fund has projected. According to the IMF’s mission chief and senior resident representative for Nigeria, Jesmin Rahman, the country’s fiscal problems are a result of low revenue. The official made the projections during a webinar hosted by the Nigerian Economic Summit Group, Fiscal Policy Roundtable and Tax Investment and Competitiveness Policy Commission. He said Nigeria’s total revenues at seven percent of GDP is less than half of sub-Saharan Africa’s average and far lower than the averaging oil-exporting countries, which keeps the country vulnerable to shocks. The total revenue ratio to GDP, Rahman said, is also lower than the minimum threshold of 12 percent which is considered necessary for the government to provide an enabling and growth-enhancing role. He added that interest payments taking up a large share of Nigeria’s revenues leaves little resources for everything else this year. In a related development, Fitch Ratings, a global credit rating agency, has said Nigeria could experience a rating downgrade going by a sharp rise in the country’s sovereign debt and an increasing financing gap. The global rating agency downgraded Nigeria to “B” in April with a negative outlook from “B+” citing aggravation of pressure on external finances. Moody’s Investors Service had said in April that it would likely downgrade the country if the government was unable to alleviate the damage to its revenue and balance sheet while S&P cut Nigeria’s rating in March on weakening external finances. The country’s foreign currency reserves could fall to $23.3 billion this year if foreign exchange access is normalised, Foreign rating director at Fitch, Mahmoud Harb told Reuters, from around $36 billion. Nigeria could avoid a ratings downgrade if it strengthens its finances, reforms its forex policy and shows a path to reducing its deficit by boosting non-oil revenues, Harb said.
Fintechs, information technology firms, and other companies in Nigeria, Kenya, and South Africa attracted a total of 613 Venture Capital deals valued at $3.9 billion, between 2014 and 2019. The Africa Private Equity and Venture Capital Association’s report titled “Venture Capital in Africa: Mapping Africa’s start-up investment landscape”, marked 2019 as the best year for VC investments on the continent since 2014. The pan-African organisation that monitors VC investments on the continent said a total of 139 deals valued at $1.4 billion were recorded last year alone as a large portion (21 percent) was recorded in South Africa during the 6-year period. The country was said to have a “well-developed VC ecosystem”. Kenyan companies attracted 18 percent of deals while Nigerian companies came third with 14 percent. About 21 percent of the VC deals were said to have gone to African-owned companies that are headquartered outside of the continent, although offering their services, mostly fintech solutions, to African consumers. A typical instance of such companies is Chipper Cash, an African-owned fintech company based in San Fransisco which offers payment services in Nigeria and elsewhere. According to the AVCA’s board Chair, ‘Tokunboh Ishmael, Africa’s VC industry continues to grow from strength to strength and it is expected that 2020 will be another strong year despite global macroeconomic headwinds. The report said fintech and information technology sectors received the majority of VC deals, accounting for 19 percent. Consumer discretionary and industries accounted for 18 percent and 12 percent of the deals, while communications, health care, and consumer staples collectively accounted for 19 percent of the VC deals in the period under review.