GRF DALLEY NEWSLETTER 0032 – A COMPILATION OF LEGAL NEWS AND EVENTS
‘Well positioned’ to be Africa’s most advanced economy
Nigeria presents an interesting tale of seeming opposites in the African growth agenda. While it took pole position as the largest economy on the continent in 2016, it’s also suffered its worst recession in 25 years. Charles Weller, the Head of FI Trade Nigeria for Barclays Africa, writes in The Huffington Post that the last 24 months, in particular, have been difficult for the nation as an exodus of foreign direct investment and assets took place prior to and at the time of the last presidential elections in February 2015. The country faced a liquidity crunch, with the central bank and Nigerian Stock Exchange facing trials and the country’s reserves decreasing from over $50bn to $20bn. Overseas remittances also contributed to the crisis. Remittances are the second highest source of foreign exchange in Nigeria. Weller writes that the difficulties of the past two years have caused the country to diversify its economy, with less reliance on oil and greater investment in industries such as manufacturing, agriculture and retail. There’s also been an increased focus on local producers, which drives growth. With improved transparency between banks and international companies, greater regulation and an increasingly inclusive economy, he says, Nigeria is well-positioned to be the most advanced economy on the continent.
Nigeria has been identified as one of the top five countries for growth acceleration for 2018, reports THISDAY. Other countries in the group include Kuwait, Oman, Kazakhstan and Tunisia. The global chief economist at Renaissance Capital, Charles Robertson, who made this forecast in a report titled: ‘Africa 2017,’ urged investors to take advantage of the opportunities in these countries. ‘These are some of the markets I think investors should be considering because of the growth acceleration story,’ he explained. According to Robertson, Nigeria still has a very positive demography, pointing out that the country’s working age population has been growing at 15% over the past five years. He also noted that there has been improvement in Nigeria’s legal system. Central Bank of Nigeria governor, Godwin Emefiele recently predicted that with economic policies put in place by the Nigerian government, the country should be out of recession by the third quarter of the year.
But a year after Nigeria’s government passed an ambitious plan to revamp its capital markets, The Banker reports that low trading volumes, high inflation and a lack of economic policy direction have investors voicing doubts over whether stocks and bonds can power the growth of Africa’s most populous country. Nigeria’s ‘capital market masterplan’, a framework released in 2015 to overhaul the country’s stock and bond trading over the next 10 years, is jeopardised by low market liquidity and high inflation caused by the recession, according to analysts and fund managers. ‘It’s one thing to have a developmental framework on paper. It’s another thing to actually put it into action,’ says Bayo Adeleke, national secretary of the Independent Shareholders
Association of Nigeria. ‘If the economy is a little more buoyant, I think we’ll be able to face this proposal for the capital market and look at areas we can accelerate.’ ‘Many of the frameworks that should launch this market to where it should be are already in place,’ says Pabina Yinkere, head of research at Vetiva. Yinkere says for the progress of the capital markets to continue, liquidity must increase. ‘If companies see that there are values in being listed, that they can come to this market and raise money and the market is close to efficient in pricing, (and) that the market is transparent, then it can encourage listings,’ he says.
The Huffington Post
US and UK confidence in Osinbajo’s ability to govern
The US and the UK have expressed no doubt in the ability and commitment of acting President Yemi Osinbajo to continue with the anti-corruption war and economic revival in Nigeria. According to a Punch, Nigeria report, the two countries said that they have confidence in Osinbajo to carry on with the ‘quality leadership’ President Muhammadu Buhari has been providing the country. The President left for the UK last Sunday to receive medical attention and he is expected to be there for an indefinite time, according to his media aide, Femi Adesina. The report says in the last few weeks, some prominent Nigerians had been worried about a cabal that has purportedly hijacked power in the Presidency due to Buhari’s protracted illness, leaving Osinbajo in the cold. Spokesperson for the US Embassy in Nigeria, Russell Brooks, said President Donald Trump’s administration believed in Buhari and Osinbajo. Brooks said: ‘We are very much in favour of President (Muhammadu) Buhari’s campaign against corruption. We also believe that Acting President (Yemi) Osinbajo is strongly committed to this agenda and will continue to pursue it while President Buhari is out of the country.’
Buhari has travelled to London for follow-up consultations with doctors after a previous trip there earlier in 2017, reports Business Day. ‘Government will continue to function normally under the able leadership’ of Vice-President Yemi Osinbajo, Adesina said. The duration of Buhari’s absence would be determined by doctors, Adesina said. ‘The president wishes to assure all Nigerians that there is no cause for worry,’ the spokesperson said. Buhari, president since 2015, returned to the country on 10 March after a seven-week medical leave to treat an undisclosed ailment in the UK, and has missed the past three weekly cabinet meetings.
Reacting to speculation about a military coup, the UK government has warned against ‘non-democratic’ change of government in Nigeria, amid speculations about military coup as concerns grow over Buhari’s health. ‘The British government believes that democracy is actually critical in Nigeria,’ the UK High Commissioner to Nigeria, Paul Arkwright, is quoted in a Premium Times report as saying. ‘There are elections. If you’re not happy with your leaders then you should change your leadership through the democratic process and through elections.’ The report says his comments came a day after the Chief of Army Staff, Tukur Buratai, warned of suspect communication between Army officers and politicians.
Osinbajo will sign off on the 2017 budget when he is satisfied with the content, Premium Times reports his spokesperson said. Coming shortly after Buhari’s ‘medical follow-up’ letter to the Senate had generated controversy, Nigerians started expressing concerns over the effectiveness of Osinbajo. The report says that in the letter, Buhari invoked Section 145(1) of the Constitution, transferring full powers to Osinbajo, but said his deputy would ‘coordinate’ affairs of the government in his absence. The report says Buhari’s use of ‘coordinate’ instead of ‘will perform duties of my office’ or ‘act on my behalf’ as previously used had unsettled the polity. But the spokesperson to the acting president, Laolu Akande, said Osinbajo would sign the budget into law in due course.
Rules to stop transactions with non-CAC registered companies
A new set of rules will allow Nigeria’s government to make good on its threats to sever ties with organisations that do not add economic value to its efforts to raise the country’s revenue profile, reports The Guardian, Nigeria. Ministries, departments and agencies (MDAs) have been ordered to stop transactions with companies and other corporate bodies that are not duly registered by the Corporate Affairs Commission (CAC). The measure is aimed at protecting MDAs from entering contractual obligations with fake or unregistered companies. The development means that for companies and other corporate bodies to qualify for business transactions with the MDAs, their letterhead must bear the registration number as issued by CAC.
The Guardian, Nigeria
Nigeria looks at setting up a national airline
Nigeria has appointed advisers to help it set up a national airline and develop its aviation infrastructure – currently seen as a barrier to economic growth – to create a hub for West Africa. Reuters Africa reports that this is according to junior aviation minister Hadi Sirika who said a group of six firms, including German carrier Lufthansa, would advise the government on setting up an airline, an aviation leasing company and a maintenance hanger, and on creating concessions to run the country’s airports. The report says a cabinet meeting chaired by Vice President Yemi Osinbajo had approved N1.52bn ($4.99m) of funding for the project. Decades of neglect and lack of investment have left Nigeria with low-quality infrastructure that is seen as a hurdle to prosperity and the government has already said that upgrading it will require private investment. The government set up a committee on establishing a national airline in 2015, in fulfillment of the campaign promises which brought Buhari’s All Progressive Congress to power.
A likely merger and conversion of assets of Arik Air and Aero Contractors is one of the options being considered by the government. The Guardian, Nigeria reports that this option is due to the airlines’ alleged debt burden – despite the government’s recent intervention and their takeover by the Assets Management Corporation of Nigeria (AMCON), the airlines are not delivering in terms of operations and debt payment. The report says the plan – not favoured by some stakeholders – will further reduce private domestic operations to six airlines. The report quotes sources in the Ministry of Aviation as saying that ‘all options, including the rumour surrounding Arik Air, Aero, are all on the table…’
The Guardian, Nigeria
Etisalat loan negotiation talks deadlocked
Discussions between Etisalat Nigeria and its lenders to renegotiate the terms of a $1.2bn loan have reached deadlock after the telecoms firm missed a payment, says a Nigerian Bulletin report. Lenders, under pressure to avoid loan-loss provisions, are pushing to finalise the debt restructuring before next month’s half-yearly audit, a banking source is quoted as saying. Etisalat met with the lenders, led by Guaranty Trust Bank, in London, on 28 April but they could not agree a way forward. The telecom firm signed the medium-term seven-year facility with 13 local banks in 2013 to refinance a $650m loan and fund expansion of its network, but is now struggling to repay. A source at Etisalat, which owns 45% of the Nigerian company, said the company was not willing to invest more after converting some loans it made to the affiliate to equity and writing down its investment to $50m.
Nigeria looking to be IsDB’s regional hub in Africa
Nigeria may become the regional operational hub of the 43-year old Islamic Development Bank (IsDB) in Africa. According to a Daily Trust report, the development finance institution is considering a proposal to expand its existing country gateway office in Abuja to serve as a key regional office. The office, which was opened by the Minister of Finance, Kemi Adeosun earlier in the year, will co-ordinate the operations of the Bank in its West and Central African member-countries, which constitute a majority of the 27 African countries in the Institution. The report says the Abuja gateway office will serve Nigeria, Gabon, Niger, Mozambique, Burkina Faso, the Republic of Cameroon, Uganda, Senegal, Djibouti and Guinea Bisaau, among others. Nigeria is an active member of the bank and has benefitted from its development financing programmes located in various parts of the country.
World Bank loan to generate more electricity sought
Nigeria is seeking $5.2bn from the World Bank to expand electricity generation and help the economy recover from its first contraction in 25 years, reports Business Report.
The bank’s private-sector lending arm, the International Finance Corporation, may invest about $1.3bn in power projects and electricity distribution companies. Its political-risk insurer, the Multilateral Investment Guarantee Agency, could provide equity and debt of $1.4bn for gas and solar power programmes, according to Power, Works and Housing Minister Babatunde Fashola. That’s in addition to loans of $2.5bn Nigeria is seeking from the lender to help improve the distribution of power, expand transmission-capacity and increase access to electricity in rural areas, Fashola said. Africa’s most populous nation produces about 4,000 megawatts of power compared with an average peak generation of about 35,000 megawatts in South Africa, with a population that’s less than a third of the size of Nigeria’s 180m people.
Billions stolen between 1960-2014
A Chatham House – the Royal Institute of International Affairs independent policy institute – report has estimated that at least $480bn was stolen by corrupt officials between 1960 and 2004. The Guardian, Nigeria reports that the report, titled “Collective Action on Corruption in Nigeria, a Social Norms Approach to Connecting Societies and Institutions,” said that close to $400bn was stolen from Nigeria’s public accounts from 1960 to 1999. It added that between 2005 and 2014, $182bn was lost through illicit financial flows from the country. British Ambassador to Nigeria, Paul Awkright, said at the launch that corruption is bad for people and business. The study, co-authored by Dr Leena Koni Hoffman, an associate fellow of the Africa programme at Chatham House and Raj Navanit Patel, a consultant at the University of Pennsylvania, suggested policy approaches to dealing with corruption and offered methods of integrating behavioural insights into anti-corruption strategies.
Some Nigerian banks are being investigated for allegedly colluding with some international oil companies to defraud Nigeria. Vanguard reports that a document showed that the affected banks were asked by the Senate to submit all copies of certified Nigeria export proceeds issued/or processed by them in respect of all crude oil and gas exported by Nigeria Agip Company Ltd, Chevron Nigeria Ltd, Shell Petroleum Development Company Nigeria Ltd and their affiliates between April 1996 and December, 2016. The affected banks were also asked to produce all domiciliary accounts opened and /or closed within the period specified for all crude oil and gas exported.
The Guardian, Nigeria
Chatham House report
Former warlord and UK firm linked to dodgy defence deal
Anti-corruption investigators in four countries are examining a UK firm’s links to a multimillion-pound defence deal involving a former Nigerian warlord. The Guardian reports that investigators in the UK, the UK, Nigeria and Norway are scrutinising Cas-Global after it was alleged that the firm paid a bribe to a Norwegian official as part of the sale of seven decommissioned naval vessels. In the UK, Cas-Global has been the subject of an investigation since 2014 by the City of London police’s specialist anti-corruption unit. The report says the investigation is part of an effort by the UK to improve its record on prosecuting companies who are said to pay bribes to foreign officials and politicians to land contracts overseas. The Norwegian authorities are prosecuting a civil servant, Bjørn Stavrum, over allegations that he was paid $154,000 by Cas-Global to help secure the sale of the naval vessels. Stavrum denies the claims. Ekpemupolo has denied being involved in corruption.
Committee discovers forex discrepancies worth millions
The House of Representatives ad-hoc committee on the Review of Pump Price of Petroleum, said it has discovered discrepancies in the records of the Central Bank of Nigeria, showing that $270m worth of foreign exchange (forex) remains unaccounted for. The Guardian, Nigeria reports that the latest discovery is among several others uncovered in the recent past, showing irregularities in forex handling and diversion of petroleum products by operators in the oil industry. At a recent investigative hearing, where some oil lifting and distributing companies appeared, the chair of the ad-hoc committee, the Honorable Nnana Igbokwe, blamed the companies for their unclear activities, which he said have contributed to the recent hike in the litre price of fuel.
The Guardian, Nigeria
Corruption weakens military’s fight against Boko Haram
Military corruption is weakening Nigeria’s efforts to battle the Islamist insurgency of Boko Haram, the watchdog Transparency International said in a Reuters Africa report. Its report underlines the difficulty of achieving two key promises of President Muhammadu Buhari’s 2015 election campaign: tackling endemic corruption and defeating an insurgency that has claimed over 20,000 lives and displaced millions. Last year, Nigeria’s vice president said around $15bn had been stolen from the public purse under the previous government through fraudulent arms procurement deals. Transparency International said this had left the military ‘without vital equipment, insufficiently trained, low in morale and under-resourced’. A defence spokesperson said the allegations were false for the current crop of military officers. Transparency International said Nigeria should make its defence budget and procurement systems more transparent to ensure that contracts were not inflated, or given to shell companies to conceal the true beneficiary.
Northern traditional leader investigated for corruption
Legislators in northern Nigeria have opened an investigation into corruption claims against one of the country’s leading traditional rulers, whose progressive views have caused controversy in a conservative region. Business Day reports that the legislature in Kano state has set up a committee to investigate eight allegations against the Emir of Kano, Muhammadu Sanusi II, over the ‘embezzlement of funds belonging to the emirate council’. Other claims include abuse of office and improper conduct. The eight-member committee is expected to report its findings to the state’s house of assembly within two weeks. The announcement came two weeks after the Kano state anticorruption agency began looking into the finances of the state-funded emirate council – the equivalent of a royal court. That probe centres on the use of 6bn naira ($19m) of palace funds to pay for cars, chartered flights, phone and internet bills as well as other personal expenses, according to a source familiar with the matter. The council has denied the allegations.
Ringtones boosting artists’ back pockets
In Nigeria, performing artists have long been left to their own devices because of the lack of a structured market, making them powerless against piracy, which accounts for most sales. But says a Business Day report, for the last three years, there’s been a revolution in Nigeria’s music industry because of digital sales and especially mobile phones, which are bringing in increasingly more revenue. Analysts PricewaterhouseCoopers (PwC) estimated in a report published late last year that Nigeria’s music industry was worth $47m in 2015 and should rise to $86m by 2020. ‘Nigeria’s total music revenue is dependent on ringtones and ringback tones, with the legitimate music sector being small otherwise,’ it said. MTN, which has 60m subscribers in Nigeria, says it is the largest distributor of music. ‘There are lots of talented musicians in this market who had issues with piracy; it was difficult for them to sell their music,’ says MTN Nigeria’s marketing director, Richard Iweanoge. ‘Nigerians actually wanted to buy music, they just didn’t have the means to acquire it legally.’
Village sues Eni for oil spill damage
A Nigerian village has filed a lawsuit in Milan against Italian oil company Eni demanding compensation for damage caused by an oil pipeline explosion in 2010, an Italian lawyer representing the village is quoted in Reuters Africa as saying. The village of Ikebiri in the Niger Delta is asking Eni for €2m ($2.2m) in damages along with a commitment to clean up the area covering more than 43 acres (17 hectares), Luca Saltalamacchia said. ‘The explosion that happened near a river caused an environmental disaster that polluted water and land,’ Saltalamacchia said. The report says mining and energy firms around the world have battled a spate of cases brought in international courts against their subsidiaries in other countries. Anglo-Dutch oil company Royal Dutch Shell successfully fought efforts by one Nigerian community to sue the company in British courts, but it settled another case brought in London by a Nigerian community in 2015. According to Saltalamacchia, Nigerian Agip Oil Company Limited, which is owned by Eni, has claimed it has already carried out cleaning up operations in the area.
High Court adjourns former first lady’s case
A Federal High Court sitting in Lagos has adjourned to 22 May, a suit seeking final forfeiture to the Federal Government, of the sum of $5.8m belonging to former First Lady, Dame Patience Jonathan. The Guardian, Nigeria reports that Justice Mojisola Olatoregun granted the adjournment following an argument by counsel to Jonathan, Ifedayo Adedipe (SAN), that the respondent was not given sufficient notice to file a response.
The Guardian, Nigeria
Chief justice in court for failing to recall suspended judges
An Abuja-based legal practitioner, Olugbenga Adeyemi, has dragged the Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, and National Judicial Council (NJC) before the Federal High Court in Abuja for failing to recall suspended judges, who have yet to be linked with any act of corruption. Vanguard reports that they were among superior court judges that were arrested and detained after a ‘sting operation’ conducted by the Department of State Service last year. The report says the NJC, under the leadership of retired CJN, Justice Mahmud Mohammed, initially refused to suspend the affected judges, however, it eventually succumbed to pressure from the Nigerian Bar Association, NBA, and asked the judges to temporarily step-down from the bench pending determination of corruption allegations against them.