Nigeria’s economy contracted for the first time in three years after its exit from the 2016 recession, in the second quarter of 2020 as the crash in oil prices and the global fallout from Covid-19 hit output. The country’s gross domestic product shrunk by six percent in the period, according to a report by the National Bureau of Statistics. The report released Monday showed that Oil GDP contracted by -6.63 percent from 5.06 percent in the first quarter and 5.15 percent in the second of 2019. Non-oil GDP was also reported to have contracted by -6.05 percent from 1.55 percent in Q1’20 and 1.64 percent in the Q2’19. The decline, the report said, was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic. Restrictions on vehicular movement saw sectors like transport and storage decline by nearly 50%, accommodation declined by 40%, and trade by 16.59%. Nigeria recorded its first COVID-19 case on 28 February and went into lockdown to slow down the spread of the coronavirus in March. However, the country has begun to open up with the resumption of domestic flights, reopening of restaurants and hotels while international flights are also scheduled to resume on 29 August. The country’s economy was projected to record its second recession in four years; one that is estimated to be its worst in 30 years.
The Central Bank of Nigeria has announced the elimination of third parties, including companies and agents in the payment of foreign exchange to Form M applicants. In a memo signed by the director of trade and exchange department at the bank, O.S. Nnaji, the CBN will now pay the ultimate provider of goods and services the forex directly. Dealers can only open letters of credit and bills for collection in favour of the ultimate supplier of products or services. The development is part of continued efforts by the monetary regulator to ensure “prudent use of forex resources.” The bank also said it is a step to eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to average Nigerian consumers, Nnaji said. The monetary authority to introduce a price verification mechanism to forestall over-pricing and mispricing of goods
The FG has come up with a number of emergency mitigating measures to cope with any form of complications around the privately-owned Azura Power Plant project. Nigeria had signed a World Bank partial risk guarantee for the project but still risks sovereign default as the project has negatively affected the government’s ability to secure financing from global markets. Senior government officials told The Cable that the emergency measures approved by the FG to cope with Azura include waivers and moratorium as the government hopes this will bring down the monthly invoices issued by Azura. All government agencies that receive payments from Azura are to suspend such till December 2021. However, it is legally complicated for Azura to suspend loan payments to the Bank of Industry because of the inter-credit agreement between the bank and 15 other lenders. To address the challenge, BoI has been directed to automatically credit government accounts with loans repaid by Azura till December 2021. The money will then be recycled to meet obligations to the 461MW power plant. The total liability on the government arising from the moratorium arrangement with the BoI from June 2020 to December 2021 is $20 million. BoI has sent a repayment proposal to the federal government to start in January 2022 and end in January 2027, as directed by the finance ministry. The FG has also directed the Nigerian Gas Company and the Nigerian Petroleum Development Company to grant temporary waivers to Azura. In August 2015, the FG signed the PRGs with the World Bank to provide backing for Azura after the previous government had stalled because of the absence of a sovereign immunity clause in the put-call option agreement (PCOA). Azura is the only private power company in Nigeria that enjoys sovereign guarantee, a privilege that allows it to produce and transmit at higher capacities than other plants.
Mali’s military junta and regional mediators on Monday discussed the make-up and goals of an interim administration following an 18 August 2020 coup. The junta wants the transitional body will rule for three years and has agreed to release the ousted president, detained along with other political leaders since the coup on Tuesday, and he would be able to return to his home in the capital Bamako, a source in a visiting West African delegation and the rebel soldiers said Sunday. An official in the Junta told AFP that “the three-year transition would have a military president and a government mostly composed of soldiers”. Prime minister Boubou Cisse, who has been held with Keita at a military base outside the capital where the coup began, would be moved to a secure residence in the city. While the coup was met with international condemnation, thousands of opposition supporters celebrated the president’s ouster in the streets of Bamako. The junta has said it “completed the work” of the protesters and has vowed to stage elections “within a reasonable time”. Last week’s coup — Mali’s second in eight years — followed months of protests calling for Ibrahim Boubacar Keita to resign as public discontent with the government grew over the collapsing economy and a brutal Islamist insurgency. Nigerian ex-president Goodluck Jonathan, head of the delegation, told reporters as Sunday’s discussions drew to a close, that the parties have reached a number of agreements but we have not reached agreement on all the issues. Both the regional delegation and the military officers “want the country to move on” after the coup, he said. “We are just discussing the way forward.” Jonathan met Keita on Saturday and said that he seemed “very fine”. Keita won an election in a landslide in 2013, presenting himself as a unifying figure in a fractured country, and was re-elected in 2018 for another five-year term.