Category: Publications

22 May 2017

GRF DALLEY NEWSLETTER 0031 – A COMPILATION OF LEGAL NEWS AND EVENTS

NIGERIA

Buhari suspends two key aids linked to corruption
President Muhammadu Buhari has suspended two key aides over an alleged contract scam and for keeping an unauthorised stash of cash in a private home. According to a Daily Mail report the presidency said Buhari ‘has ordered an investigation into the allegations of violations of law and due process made against the Secretary to the Government of the Federation (SGF), David Babachir Lawal, in the award of contracts in the north-east.’ Lawal was also suspended from office ‘pending the outcome of the investigations.’ The report says last year, Lawal, a top-ranking member of the administration and a Buhari confidant, was alleged to have awarded contracts running into millions of naira to companies in which he had interests, within the Presidential Initiative on the North East (PINE). He denied the accusations. The money was part of government funds meant to rehabilitate the victims of the Boko Haram insurgency in the northeast. The report says Buhari has also suspended Ayo Oke, the head of the National Intelligence Agency (NIA), one of the country’s spy bodies, pending an investigation into the discovery of a stash of cash in a private apartment in the upscale Ikoyi area of Lagos. This was after the country’s anti-graft agency, the EFCC, seized over $43m in cash during a raid on the apartment. The money has been claimed by the NIA, prompting Buhari to order an investigation ‘to enquire into the circumstances in which the NIA came into possession of the funds, how and by whose or which authority the funds were made available to the NIA’. The report says the suspension of the two top aides is seen as a litmus test for Buhari who came to power in 2015 vowing to stop the plunder of state funds by corrupt politicians and public officials.

PINE was set up to coordinate the government’s response to the humanitarian crisis in the northeast where 4.7m people, many of them refugees from the Islamist insurgency by Boko Haram, are on the brink of famine and survive on rations, reports Reuters Africa. Alleged corruption and mismanagement have threatened to intensify the situation, one of the world’s largest humanitarian crises, say critics of the government’s handling of the northeast.  A three-man committee, headed by the vice president, is to conduct both investigations and submit its report to the president within 14 days.

Shehu Sani, the senator heading the committee that exposed the contract frauds at PINE, has commended Buhari for suspending Lawal. Also commenting on the move, Peoples Democratic Party Senator from Edo State, Matthew Urhoghide is quoted in a Premium Times report as saying that the suspension meant both executive and legislative arms were working cooperatively to check corruption. ‘We are all complimenting each other’s effort in fighting corruption, and that is the truth,’ Urhoghide said.

The first surprise was the huge pile of cash: more than $43m in US dollars, stacked in hundreds of neatly wrapped bundles in the filing cabinets and wardrobes of an empty apartment in Nigeria’s biggest city. But, reports The Globe and Mail, the next surprise was even more shocking. After the money was discovered in a raid by Nigeria’s anti-corruption agency, it was the national spy agency that claimed ownership of it. Many tenants of the upscale apartment building in Lagos, including the unit where the massive hoard of cash was found, were reported to be high-level officials and politicians. The report says it was the latest evidence of the vast web of official corruption in Nigeria, where billions of dollars in oil revenue have been siphoned off by a politically connected elite in recent years, even as poverty and hunger have climbed to disastrous levels. The report adds that it’s also not the first report of corruption in the northeast where millions are suffering from the Boko Haram conflict. In 2015, Buhari alleged that government officials had looted more than $2bn in funds intended for weapons to fight Boko Haram, causing thousands of Nigerians to die needlessly. He said the money disappeared into ‘fictitious and phantom’ military contracts, in which the ammunition and equipment was never provided.

During his campaign for the presidency and since taking office two years ago, Buhari has reiterated his anti-corruption campaign as a pillar of his administration. But, says a Quartzreport, while his public rhetoric galvanised the Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-graft agency, his actions, when presented with a chance to mop out corruption within his own government, haven’t always matched his rhetoric. The report says, however, with two high-profile suspensions of two government officials this week, that has changed. Initially, Buhari resisted calls to sack his SGF as recommended by Nigeria’s Senate.
Daily Mail
Reuters Africa
Premium Times
The Globe and Mail
Quartz

IMF warns Nigeria of growth risks and volatile forex market
The International Monetary Fund (IMF) warned Nigeria its economy needs urgent reform in a report that highlighted the risks to growth for the recession-hit country and the dangers of a volatile foreign exchange market. Business Day reports that the document outlines a raft of failings in Nigeria’s handling of Africa’s largest economy and could affect talks over at least $1.4bn in international loans. It strikes a more critical tone than the IMF’s board recently adopted, though that also said Nigeria should lift its remaining foreign exchange restrictions and scrap its system of multiple exchange rates. The report says the Washington-based fund’s analysis came on the same day that President Muhammadu Buhari held a launch ceremony for a flagship economic recovery plan. But the IMF said the plan, criticised by economists for including few concrete measures, is not enough to drag Africa’s biggest economy out of recession. If Nigeria’s economy is to recover, ‘much more needs to be done’.

But Nigeria will easily achieve its target of $3.5bn foreign borrowing in 2017 as improved oil output helps the economy to recover from 2016’s contraction, the first since 1991. Business Day reports that this is according to Moody’s Investors Service vice-president and senior analytical adviser for Africa, Aurelien Mali, who said: ‘The international financial institutions are ready to support Nigeria.’ ‘As long as it is project-based lending, the funding will be available from lenders such as the African Development Bank, and the budget support from the World Bank will come on top of that,’ he said. Nigeria has proposed a record 7.3trn naira ($23.1bn) budget for 2017 to boost infrastructure investment and help its economy recover from a contraction of 1.5% in 2016, the first such slump in 25 years. The government has been negotiating $1.25bn in budget support from the World Bank and expects to get the remaining $400m of a $1bn credit facility from the African Development Bank, Mali said. Nigeria can raise the rest from bilateral and multilateral partners and also from lenders through commercial loans and or even a sukuk bond, he said. The report says Moody’s rates Nigeria’s debt at B1, four levels below investment grade.
Business Day
Business Day

Nigeria again raises issue of illicit capital flows at Washington meetings
Nigeria has again urged developed countries to stop providing safe havens for corrupt individuals and their illegal funds, reports The Guardian, Nigeria. The issue of the recovery of stolen funds from Nigeria was raised at the ongoing International Monetary Fund (IMF)/World Bank Group Spring meetings in Washington DC, by Minister of Finance, Kemi Adeosun. Adeosun is quoted as saying: ‘To improve non-oil revenues, we have to address illicit capital flows. When stolen money is transferred from Nigeria, or other African countries, there are too few questions asked by those countries that receive the funds, but when we identify those funds as stolen and seek to recover them, there are too many questions being asked. There is money sitting in foreign bank accounts that we have spent a fortune over a decade trying to recover. Such money could deliver significant value for Nigeria as we seek to increase spending on critical infrastructure and establish a basis for long-term sustainable growth.’
The Guardian, Nigeria

Senate to debate oil industry reform Bill
Nigeria’s senate will debate a long-awaited oil industry reform Bill after receiving the draft law, the latest step in efforts to overhaul the energy sector in Africa’s largest economy. Reuters Africa reports that the legislation is part of proposed reforms that make up the sprawling Petroleum Industry Bill, which has been in discussion for over a decade and redrafted many times but has yet to be passed into law. President Muhammadu Buhari, who took office in May 2015, made passing the legislation a priority as part of an attempt to crackdown on the mismanagement and corruption that has held back the country’s energy sector. Oil sales account for two-thirds of government revenue in the OPEC member state. The Bill’s acceptance into the upper house marks the closest it has yet come to becoming law, said Senate President Bukola Saraki. Once the senate has approved the Bill, it will be sent to the lower chamber of parliament. With the approval of both, the final version will be sent to the president to be signed into law.
Reuters Africa

Shell had knowledge of oil bribery scheme – emails show
Executives of petroleum giant Shell knew it was party to a vast bribery scheme that robbed Nigeria of $1.1bn, according to corruption watchdog Global Witness – a claim that has been denied by Shell. According to a Mail & Guardian report, Global Witness and Finance Uncovered said Shell executives knew that money earmarked for a controversial oil deal was being used to bribe senior Nigerian officials. They were referring to the 2011 purchase by oil giants Shell and Eni of OPL 245, an offshore oil bloc estimated to hold nine billion barrels of crude, for $1.3bn. The deal saw the Nigerian government act as an intermediary between the oil majors and Malabu Oil and Gas, a Nigerian company allegedly controlled by former petroleum minister Dan Etete. The report says allegations of corruption and bribery have mounted since the deal was signed, forcing Shell and Eni to maintain repeatedly that they acquired the rights to the lucrative bloc in line with Nigerian law. But email exchanges between Shell management cited in the Global Witness report suggest that Shell was aware that the OPL 245 money was probably going to be funnelled to individuals, including Etete and then-president Goodluck Jonathan. The leaked emails come as Shell and Eni are facing intense scrutiny in connection with the deal.

Nigeria’s lower house of parliament has, meanwhile, set up a committee to investigate the circumstances surrounding the award of OPL 245, Reuters Africa reports. Courts in Nigeria and Italy are investigating the purchase of the offshore block which was initially awarded in 1998 to Malabu Oil and Gas, in a disputed deal, before Royal Dutch Shell and Eni were awarded the rights in 2011. The House of Representatives mandated the committee to ‘conduct a thorough examination of the process and circumstances surrounding OPL 245 and identify culpability of any persons, groups or organisations,’ committee chairman Razak Atunwa said. ‘The committee is aware of recent information that have come to light, both nationally and internationally, indicating that former President Goodluck Ebele Jonathan may have been complicit in the controversial OPL 245 deal,’ Atunwa said. The committee was ‘considering inviting him to give evidence’ on the grounds that he ‘may well be in a position to assist it with its inquiries’.
Mail & Guardian
Reuters Africa

World Bank credit line to boost mining sector
The World Bank has approved $150m credit to help increase the mining sector’s contribution to the Nigerian economy, says a Daily Trust report. The senior communication officer of the bank, Olufunke Olufon said that the project would help to establish a strong foundation for mining sector development in the country. Olufon said that credit would also enhance competitiveness by improving information infrastructure and knowledge of mining. She said that it would equally help in strengthening key government institutions and foster domestic investments in the sector. ‘The project will help develop measures for formalising; regulating and inventorying artisan and small-scale mining; facilitate the flow of mineral transactions and facilitate access to finance. It will facilitate access to technology and equipment; increase knowledge and support the mining and processing of the minerals in accordance with best practices,’ Olufon said. She added that environmental and social protection would also be enhanced by the credit line.
Daily Trust

Abuja airport reopens
Nigeria has reopened the airport in the capital Abuja, following a six-week closure for runway repairs that disrupted international air traffic to the country, reports Business Day. During the shutdown, authorities diverted flights to Kaduna, a provincial airport 160km away, where carriers, including British Airways, Lufthansa and South African Airways, refused to fly on security grounds. The report says Abuja is the political nerve centre of Africa’s most populous nation and a major business hub in the continent’s biggest economy. There have been no official estimates of the economic impact of the closure, but Abuja International Airport handled 812 flights in December 2015, the last month for which the Federal Airport Authority of Nigeria (FAAN) has figures. The comparative figure for Kaduna was 12. Announcing Abuja airport’s re-opening, FAAN spokesperson, Henrietta Yakubu, said: ‘The rehabilitation of the runway was completed 24 hours ahead of schedule.’
Business Day

Military destroy illegal refineries in the Niger Delta
Nigeria’s military has announced that it has destroyed 13 illegal refineries in the restive Niger Delta oil hub, in an operation in which two soldiers died in clashes with ‘sea robbers’. Military authorities are quoted in Reuters Africa as saying that there are hundreds of illegal refineries in the region, which process stolen crude from oil company pipelines. The Nigerian government said earlier that it plans to legalise illicit refineries as part of an attempt to bring peace to the production heartland of crude oil, but it is unclear when it will put the plan into action. Major Abubakar Abdullahi, a military spokesperson, said troops ‘discovered and destroyed 13 illegal refineries’ while on patrol in the Iyalama Adama axis of Rivers state. The two soldiers were killed in the Ijawkiri general area, in Rivers state, he said. The report says makeshift refineries, usually hidden in oil-soaked clearings, support tens of thousands of people locally. Nigeria’s navy chief has said that 181 illegal refineries were destroyed last year, 748 suspects were arrested, and crude oil and diesel worth 420bn naira ($1.3bn) was confiscated. The military shut down around 50 bush refineries in the first few weeks of 2017.
Reuters Africa

Gasoline quality standards to increase
Nigeria will increase quality standards for its imported gasoline, diesel and kerosene from 1 July, a change health campaigners have long said is necessary to protect citizens from toxic fuel. Reuters Africa reports that according to an environment ministry official and information from the Standards Organization of Nigeria, all imported diesel from 1 July can contain a maximum of 50 ppm sulphur, while gasoline and kerosene can contain a maximum of 150 ppm. Nigeria’s current import standards are 3,000 ppm on diesel and 1,000 ppm on gasoline. The report says West African nations had promised higher quality fuel late last year as part of a UN Environmental Programme (UNEP), but details on the timeline and precise implementation had been unclear. Ghana had targeted an even earlier deadline, but sources said it had not yet finalised its new fuel requirements or issued a fresh timetable.
Reuters Africa

CBN cuts paperwork to improve ease of doing business for SMEs
The Nigerian central bank has cut the amount of paperwork small and medium-size businesses must provide to buy dollars, to improve liquidity and the ease of doing business and help narrow the gap between official and black market exchange rates, reports The Times of India. Faced with a shortage of dollars and numerous requirements to fulfil when buying hard currency from the central bank, most small and medium-size enterprises (SMEs) use the black market instead, even though the naira currency is much weaker there. To address this, the central bank said it was switching to a new application form for those seeking to buy forex at its official window that would require only an invoice and account details of the suppliers providing the goods to be bought with foreign currency. The bank said that the changes were taking immediate effect.
Times of India

Nigeria’s recession weighs on Ecobank’s results
Africa’s Ecobank, which operates in nearly 40 African countries, said a recession in Nigeria and a strong US currency had caused it to report a loss for 2016, sending its shares 5% lower. According to Business Report, Nigeria accounts for 40% of Ecobank’s revenues and is in its second year of recession, brought on by lower oil prices which has caused chronic dollar shortages, frustrating businesses and households. ‘Our group revenues remained resilient despite a tough year of macroeconomic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of our reporting currency – the US dollar,’ Ecobank said.
Business Report

IN COURT

Airline refusing to pay salary, despite court order
The troubled Nigerian airline, Chanchangi, and top officials of the National Industrial Court are at the centre of an alleged conspiracy to deny a retired pilot, Eric Adegbite, 67, his due benefits, several years after serving the company. According to a Premium Times report, Adegbite who worked for the airline for nine years resigned in 2010 after working for several months without a salary. He approached the Lagos division of the industrial court in 2012 for payment of his salary and retirement benefits. The report says according to court documents, two years after the litigation commenced, judgement was delivered in his favour. It says that the MD of the airline, Trevor Worthington, and a director, Bello Chanchangi, did not deny indebtedness to Adegbite, However, three years after the judgement and seven years after the pilot retired from the company, the victim has not been paid his dues.
Premium Times

WEST AFRICA

NIGERIA

Nigeria lags other West African countries in human development
The UN Development Programme (UNDP) has released its 2016 human development index report which rated Gabon, Ghana and a host of other countries above Nigeria. The report surveyed a total of 188 countries. According to a Nigerian Bulletin report, while Nigeria ranked 152 – the position it occupied last year, Gabon was placed at 109. Equatorial Guinea was 135 on the list, and Ghana and Zambia maintained the 139th position. Nigeria emerged the 17th most developed country in Africa, and 13th most developed country in sub-Saharan Africa. In the report, Nigeria was placed under the ‘low human development’ group out of its four levels of human development group. The 2016 human development report focused on ‘communities that have been left behind, despite development progress over the last 25 years’. Ojijo Odhiambo, the economic adviser, Nigeria and ECOWAS, UNDP, said Nigeria needs to redouble its effort in making sure that it addressed the factors that were impeding its improvement on the index. Some of these include issues of inequality, education, discrimination among women, promotion of social inclusion and accountability, as well as the upholding of human rights.
Nigerian Bulletin
Report

22 May 2017

GRF DALLEY NEWSLETTER 0030 – A COMPILATION OF LEGAL NEWS AND EVENTS

GRF Dalley & Partners

NIGERIA

Still a lot to be done to boost Africa’s biggest economies
African economies were hit hard in 2016 by low commodity prices, but a modest recovery from slow growth is forecast for 2017. Business Day reports that speaking at the Africa CEO Forum, which kicked off in Geneva on Monday, Africa CEO Forum president Amir Ben Yahmed said: ‘The two biggest economies – Nigeria and SA, which make up 45% – have been very hard hit. There’s concern for the economic situation.’ The report says the conference barometer — a survey of the about 1,000 CEOs attending the conference – showed that 62% of CEOs said their companies had experienced the effects of the economic slowdown in the past few months; 71% were optimistic about business on the continent in 2017; and 92% expressed confidence in economic growth. Yahmed said while progress had been made in the past 15 years, there was still a lot to be done. African states needed to fight against fraud and corruption while pushing for economic diversification and regional integration. The report says global foreign direct investment (FDI) increased by 9% in 2016 but Africa accounted for only 7% of global FDI.

A panel of Nigerian investors attending the meeting have expressed confidence in the country’s resurging economy saying that it is ‘very critical’ to building African companies that could join the league of the global top 500 companies in the next eight years. The Guardian Nigeria reports that the panel, that included CEOs of MTN, Honeywell, KPMG, CFAO and the Casablanca Finance City Authority, said despite the volatility in Nigeria’s economy, ‘it is still an important market’. ‘The fact that it is passing through volatility is not enough to reconsider investment of $16bn invested in the last 10 to 12 years,’ Phuthuma Nhleko, MTN’s non-executive chair is quoted in the report as saying. Chair of Honeywell Group, Oba Otudeko agreed, but added that Africa ‘has the responsibility for its survival.’ On the whole, the investors agreed that African governments needed to create the necessary business environment for companies to grow and that robust stock markets, either on sub-regional or country basis, would be central to the objective.
Business Day
The Guardian Nigeria 

Plan to sell oil assets to fund economic programme
Nigeria plans to sell portions of its oil assets to help fund President Muhammadu Buhari’s four-year programme to lift the economy from its worst slump in 25 years, and create 15m jobs. According to the proposal, selling them will ‘optimise their efficiency and reduce the fiscal burden on the government’. Business Day reports that Nigeria has an average 55% stake in joint ventures run by Royal Dutch Shell, Exxon Mobil, Chevron, Total and Eni, which produce about 90% of its crude. The government also owns 49% of Nigeria LNG, a multibillion-dollar company that operates Africa’s biggest liquefied natural-gas plant. The government has also hinted it may award concessions for airports.

Given a militancy escalation that blighted those very assets last year, and previous struggles to privatise state businesses, Business Report reports that analysts inside and outside the west African country say such sales won’t be straightforward. ‘Nigeria’s track record on privatisation and divestments has not exactly been the best, so people are probably going to greet this news with a certain degree of scepticism and I think rightly so,’ Manji Cheto, a West Africa specialist at Teneo Intelligence in London, said. ‘I don’t think this is going to be a process that’s speedy.’ Normally Africa’s biggest producer, Nigeria has been among the world’s hardest-hit supplier nations over the past year due to the militant attacks that crushed its output while prices remained half what they were in mid-2014. At the same time, its reduced flows have helped limit a global crude glut, bolstering Opec and other nations dependent on revenue from selling the commodity. The report says the oil ministry and Nigeria National Petroleum Corporation didn’t respond to multiple calls and emails requesting comment.

The plan also recommends raising the Value-Added Tax (VAT) rate on luxury items from the current 5% to 15%says a Punch, Nigeria report. The government said it would increase non-oil tax revenues by improving tax compliance and broadening the tax net by employing appropriate technology and tightening the tax code, as well as introducing tax on luxury items and other indirect taxes to capture a greater share of the non-formal economy. The plan envisages that by 2020, Nigeria would have made significant progress towards achieving structural economic change with a more diversified and inclusive economy.
Business Day 
Business Report
Punch, Nigeria

Buhari home but Osinbajo still in charge
Nigerian President Muhammadu Buhari has returned home after nearly two months of medical leave in Britain, Business Day reports. He said he would leave his deputy in charge for the time being and not immediately resume power. The 74-year-old said Vice-President Yemi Osinbajo ‘will continue’ in the role of acting-president ‘and I will continue to rest’. The report says no timeline was given for how long Osinbajo would be in charge. Buhari walked unaided from his plane after it landed at an air force base in the northern city of Kaduna – the former military ruler then boarded a waiting helicopter. Details of his condition have not been disclosed. In images released by his office, Buhari looked painfully thin but was smiling as he greeted Archbishop of Canterbury Justin Welby in London. Buhari left Abuja on 19 January for 10 days of treatment in Britain but extended his stay on the advice of doctors.

Buhari said he will continue to rest and undergo further medical tests in Britain within weeks. ‘I deliberately came back towards the weekend, so that the Vice President (Yemi Osinbajo) will continue and I will continue to rest,’ he is quoted in Reuters Africa as saying. ‘All I will need is to do further follow ups within some weeks.’

Buhari marked his return with a rare appearance at a meeting of members of the economic body that advises the government. Polity reports that Buhari attended a meeting of the National Economic Council, which is chaired by Osinbajo and whose members include state governors, the central bank governor and the finance minister. He does not usually attend NEC meetings. The report says during Buhari’s seven-week absence, when Osinbajo was acting president, the central bank devalued the naira for retail customers after the NEC called for an urgent review of the bank’s foreign exchange policy. Buhari has consistently opposed devaluing the naira since taking office in May 2015. Journalists were asked to leave before Buhari spoke.
Business Day 
Reuters Africa 
Polity

Faster processing of visas to promote ease of doing business 
As part of measures to attract foreign investors and guarantee ease of doing business, the Nigerian government has approved processing of visas within 48 hours and given waivers to some countries. Vanguard reports that speaking at the 7th meeting of the Presidential Enabling Business Environment Council, Vice President Yemi Osinbajo noted that although progress had been made in the last 30 days of implementing the National Action Plan, a lot more remained to be done to ensure a better business environment in Nigeria. The council said that the number of documents needed for export and import is higher in Nigeria that in other African countries such as Kenya, Ghana, Rwanda, Benin and South Africa. The report says that if fully implemented, the plan could potentially lead to N2.6bn savings by SMEs in registration costs to start businesses annually; 116,000 minutes of travelling time saved daily; 60% reduction in time to register property; and 23,500 hours saved by exporters annually.
Vanguard 

Retiring CBN deputy governor says bank must remain credible 
The newly retired deputy governor of economic policy at the Central Bank of Nigeria (CBN), Dr Sarah Alade, has urged the bank’s governor, to uphold the credibility of the bank. According to a Vanguard report, she said the high-point of her career came when she was appointed acting CBN governor, following the suspension of the former CBN governor, Lamido Sanusi. Alade also served on teams on major economic policy studies and was involved in the preparation of CBN’s Monetary and Credit Policy Proposals over the years. She was actively involved in the drafting of the Medium Term Economic Programme for Nigeria and the IMF Staff Monitored Programme/Standby Arrangement.
She was a member of the Technical Committee of the Vision 2010 and currently a member of the Technical Committee of Vision 2020 and the National Economic Management Team.
Vanguard

NNPC investing $15bn on power plants across Nigeria 
The Nigerian National Petroleum Corporation (NNPC) has announced that it will invest around $15bn to build several power plants across Nigeria to generate 4,000 megawatts (MW) of electricity in the next 10 years. This is according to NNPC’s chief operating officer in charge of gas and power, Saidu Mohammed, who is quoted in a Nigerian Bulletin report as saying that three of the power plants, with combined output capacity of 3,100MW, would be built in Abuja, Kaduna and Kano, along the route of its Abuja-Kaduna-Kano (AKK) gas pipeline. This would guarantee the supply of gas. NNPC also said as part of the business model for the construction and operation of the power plants, incorporated joint venture (IJV) companies would be set up involving the NNPC, international power companies and other Nigerian investors.
Nigerian Bulletin

Nigerian lawmakers to probe NNPC subsidy scheme 
Nigeria’s upper house of parliament will investigate allegations the state oil company illegally inflated funds it collected from an official subsidy scheme to 5.1trn naira ($17bn) between 2006 and 2015, lawmakers said. Reuters Africa reports that the Senate’s decision to launch an investigation followed an emergency motion raised by Senator Dino Melaye, who told the Senate there were possible irregularities in subsidies collected by NNPC from the government between 2006 and 2015 on its 51% market share of fuel imports. He did not name the source of the allegations. The report says NNPC was previously implicated in allegations of fraud in an investigation in 2012 that discovered a $6.8bn fuel subsidy scam, one of the biggest corruption scandals in Nigeria’s history. It was not immediately clear whether the new Senate investigation would include the 2012 allegations or look into entirely new ones. A spokesperson for NNPC said the company would study any allegations if it is formally notified.
Reuters Africa 

NCC and CBN step in to help Etisalat Nigeria
Etisalat is considering the sale of its stake in Etisalat Nigeria, but wants to clear-up its financial situation before making any moves, reports Mobile World Live. The business missed a repayment on $1.7bn of loans, which were raised to fund its investments and operations. This was attributed to an economic downturn in the country, currency devaluation, and a shortage of US dollars on the country’s interbank market, reports said. In the meantime, the Nigerian Communications Commission and Central Bank of Nigeria stepped in to prevent Etisalat Nigeria’s creditors taking over the business or placing it into receivership, agreeing ‘concrete actions that will bring all parties closest to a resolution’. This included securing the ‘necessary oxygen’ to enable the business to continue, with the regulator looking to protect both subscribers and potential investors in the country’s telecoms sector. UAE-based Etisalat owns 40% of Etisalat Nigeria.
Mobile World Live 

Logistical challenges facing new Kaduna terminal
Two days before Nigeria shut down Abuja’s airport for repairs to its dilapidated runway, workers still needed to fit electrics, seating and toilets to a new terminal at Kaduna, reports Business Day. International airlines that fly into Abuja have already refused to use Kaduna, a provincial city airport, because of security concerns, and domestic passengers could face major delays if the new terminal is not ready, discouraging travel and isolating the capital. Most floor and ceiling tiles have been fitted and all air conditioning units have been installed, but electrical fittings are unfinished, chairs for the arrival and departure areas lie strewn about and a car park expansion is incomplete. The report says in a sign of the logistical challenges ahead, data from Nigeria’s airport authority shows Abuja airport handled 4,859 domestic flights in December compared with the 171 that flew in or out of Kaduna.

Commercial helicopters can, meanwhile, fly in and out of Abuja airport while its runway is repaired, Reuters Africa reports Nigeria’s aviation minister has said. The capital’s airport closed for six weeks on Wednesday 8 March, with flights diverted to Kaduna, a city about 160km (100miles) north of the capital. After landing at Kaduna, passengers travel on guarded buses along a road where kidnappings have taken place in recent years. The report says Nigeria’s road network is in poor condition and more affluent travellers rely on air travel to cover long distances. ‘They have areas where there are no-fly zones but the national security adviser this morning approved that helicopters should enter Abuja airport and out,’ the aviation minister, Hadi Sirika, said. He said guidance would be issued on where they could land. Earlier in the week, the national security adviser issued a memo stating that Abuja’s airspace was subject to security restrictions and commercial helicopters could not fly over the city. Airlines including British Airways, Lufthansa and South African Airways have refused to fly into Kaduna due to security concerns. Ethiopian Airlines is so far the only foreign airline to use the alternative airport.
Reuters Africa 
Nigeria permits helicopters to use closed airport – aviation minister
Business Day
Kaduna not ready to pick up slack from shutdown of Abuja’s airport 
Reuters Africa 
Nigeria permits helicopters to use closed airport – aviation minister

Union threat to shut down Arik Air 
Unions including the National Union of Air Transport Employees (NUATE), Air Transport Services Senior Staff Association of Nigeria and the National Association of Aircraft Pilots and Engineers, have threatened to shut down the Arik Air, following management’s failure to reinstate sacked members. According to a Premium Times report increasing bad debt resulted in the Asset Management Corporation of Nigeria (AMCON) taking over Arik in February and appointing Roy Ilegbodu as manager of the airline. The general secretary of NUATE, Olayinka Abioye, has accused the new management of intolerance to unionism. He said that the new management had warned workers not to joins unions and refused to address issues affecting the workers. Staff of the airline has shut down its operations, barricading the entrance of the airline’s office at the Lagos airport. ‘We will resist all forms of intimidation,’ a staff member is quoted in the report as saying.
Premium Times 

Mixed reaction to CBN’s new bank charges decision 
There has been mixed reaction to the recent decision by the Central Bank of Nigeria (CBN) to reintroduce various charges on large cash transactions in deposit money banks, says a Premium Times report. The director, banking & payments system department of the CBN, Dipo Fatokun, said the new charges approved by the Bankers’ Committee, would affect individual and corporate deposits and withdrawals. The report quotes financial and management consultant, Uju Ogubunka as saying they were not set up to impose such charges on their customers. Ogubunka, a former registrar, Chartered Institute of Bankers of Nigeria, said charging customers for deposits or withdrawals could mean more customers not embracing the banking culture. The CEO, Global Analytics Consult Ltd, Tope Fasua, said the timing of CBN decision was wrong but MD, Cowry Asset Management Ltd, Johnson Chukwu, disagrees. He said charging customers for deposits or withdrawals could help in reducing money laundering in the banking sector as well as acting as a deterrent for people to move large volumes of cash.
Premium Times

IN COURT

Temporary seizure of Nigerian oil block set aside 
A Nigerian court has set aside its order for the temporary seizure of one of Africa’s richest oil blocks from multinationals Royal Dutch Shell and Eni. The New Zealand Herald reports that Justice John Tsoho upheld the application filed by Shell and Eni challenging a January court order ceding control of Oil Prospecting License 245 to the government while the Economic and Financial Crimes Commission investigates a $1.2bn corruption scandal. The judge ruled that the forfeiture order was irregularly filed.

Nigeria’s anti-graft agency has, meanwhile, filed new charges against the multinationals, alleging the companies ‘corruptly’ paid $801m in 2011 when acquiring an offshore oil field. Business Day reports that the European oil majors gave that sum to former Nigerian oil minister Dan Etete, his company Malabu Oil & Gas, and others in relation to the purchase of Oil Prospecting License 245, ‘thereby committing an offence,’ according to documents from the Federal High Court in Abuja. ‘Eni re-affirms the correctness of its conduct within the acquisition of the licence’ the company said adding that it hasn’t been notified of any charges relating to the deal. A 2013 report by lawmakers said the $1.1bn acquisition of the deep-water Gulf of Guinea licence – estimated to hold at least 9bn barrels of crude reserves worth $1trn – violated tax regulations and a law promoting Nigerian ownership.

Malabu Oil and Gas has filed a suit against the federal government and six others at the Federal High Court, Abuja, over the re-allocation of OPL 245 to Shell and ENI, reports The Guardian Nigeria. The Minster of Petroleum, Shell Nigeria Ultra Deep Ltd, Shell Nigeria Exploration and Production Company Ltd, Nigerian Agip Exploration Company Ltd, the EFCC, as well as Etete, were also joined as defendants.
The New Zealand Herald
Business Day
The Guardian Nigeria 

Former NNPC head charged with fraud and money laundering 
The former head of Nigeria’s state oil company has been charged in court with money laundering and five counts of fraud, the country’s anti-corruption watchdog said. Reuters Africa reports that the Economic and Financial Crimes Commission (EFCC) said last month it had arrested Andrew Yakubu and seized $9.8m from the former head of the Nigerian National Petroleum Corporation (NNPC) in the northern city of Kaduna. ‘Former GMD, NNPC, Andrew Yakubu who was arraigned today, 16 March, 2017 before Justice A R Mohammed of the Federal High Court, sitting in Abuja, on a six-count charge bordering on non-disclosure of assets, money laundering and advance fee fraud,’ the EFCC is quoted in the report as saying. Yakubu will remain in custody and reappear in court on 21 March, it added.
Reuters Africa

WEST AFRICA

Pirates release cargo ship and sailors after ransom paid
Nigerian pirates have released seven Russian and one Ukrainian sailors after they were captured last month on the cargo ship the BBC Caribbean, according to a Reuters Africa report. The sailors were released after talks between the owners of the ship and pirates. Human rights activist Pavel Butsay said that a ransom was paid but did not reveal the sum. Security experts class West Africa’s waters, especially off Nigeria where many pirates originate, as some of the world’s most dangerous, with attackers often targeting oil tankers and holding hostages for ransom.
Reuters Africa

 

03 Mar 2017

GRF DALLEY NEWSLETTER 0029 – A COMPILATION OF LEGAL NEWS AND EVENTS

GRF Dalley & Partners
NIGERIA

Demand for solutions to economic woes
Hundreds of Nigerians have recently taken to the streets in Lagos to protest against the government’s handling of the country’s economic crisis and to demand solutions to the crippling recession. Business Day reports that the protest came as the government said President Muhammadu Buhari would remain in the UK to complete medical tests. His spokesperson tried to reassure the public that there would be no disruption to government operations. Buhari, 74, was scheduled to return to Nigeria, after leaving on 19 January to undergo unspecified medical tests. Vice-President Yemi Osinbajo is serving as acting president. The report says the initiator of the protest, Afro-pop star 2Face, announced he had pulled out of the rally because of security concerns. But his call to action – a rare event from a celebrity in Nigeria – had received widespread popular support and several civil society organisations vowed to carry on with the protest. The vice-president said the government was ‘determined to give the ordinary man a fair deal’. The government heard Nigerians ‘loud and clear’ when they said things were difficult, Osinbajo is quoted as saying. ‘But years of deterioration and corruption cannot be remedied overnight.’

Nigeria’s economy is projected to have contracted 1.54% in 2016, according to a budget ministry document, with Africa’s most populous country mired in its first recession in a quarter of a century. Nigeria is heavily dependent on crude oil exports to fuel its economy, but Business Report reports that low global prices and militant attacks on the south-eastern Delta oil hub have hammered those exports and slashed government revenues. ‘The Nigerian economy, in response to both external and internal economic pressures, inevitably contracted and is currently in recession with a projected growth of -1.54percent for 2016,’ the document said. The budget ministry draft said the recession was also caused by growth dependent on consumption rather than investment and ‘huge leaks in government resources through corruption and inefficient spending’. The report says the International Monetary Fund has predicted that Nigeria’s economy would shrink 1.8% in 2016. Final official figures are due to be released by Nigeria on 28 February.

With discontent mounting and Nigeria seeking to raise international debt, lenders and investors are waiting for President Muhammadu Buhari to announce a plan that could determine whether he keeps his promises to boost the economy and create millions of jobs, reports Fin24. Buhari’s economic blueprint for the next four years, due to be released this month, will aim to lift West Africa’s biggest economy from its worst slump in more than two decades and boost the annual economic growth rate to at least 7% by 2020, Budget and Planning Minister Udo Udoma said. The recovery and growth plan for 2017 to 2020 comes after Buhari forced the central bank to maintain a currency peg for more than a year, curbing foreign investment, while the importers of certain raw materials and equipment are still banned from accessing dollars, denting manufacturing output. Ensuring macroeconomic stability, foreign-exchange availability and food and energy security are immediate priorities for the government, Udoma said.

The good news is that the recently issued Eurobond has been over-subscribed – in excess of $7.8bn compared to a pre-issuance target of $1bn, which, the government said, showed strong market appetite for Nigeria. According to a Nigeria Bulletin report it also said the development is confirming confidence of the international investment community in Nigeria’s economic reform agenda. The government said after two consecutive quarters of negative growth, the non-oil sector of the economy witnessed a modest return to positive territory, at 0.03% in third quarter of 2016. It attributed the marginal growth to the continued good performance of agriculture and the solid minerals, two sectors prioritised by the federal government.
Business Day 
Business Report 
Fin24
Nigeria Bulletin 

CBN urged to try to close foreign exchange gap
Nigerian lawmakers have adopted an official exchange rate of 305 naira per dollar for the 2017 budget but have asked the central bank to initiate measures to close the 40% spread with the black market, the deputy senate president is quoted in a Reuters Africa report as saying. Members of the upper house of parliament said during a review of the budget that they were worried about the differential, which they described as damaging to the economy and said had led to a loss of investor confidence. The naira’s official rate, controlled by the government, has hovered just above 300 to the dollar since it was devalued in June. But the gap with the parallel market is discouraging investment from overseas and leaving Nigeria starved of foreign currency. By basing its budget on the official exchange rate, even though most individuals and businesses source dollars from the parallel market, the government is at risk of struggling to fund its economic plans. ‘The sustained and widening gap between the official exchange rate and the parallel market has created several loopholes in the system,’ said the senate document, the recommendations of which were passed.
Reuters Africa 

Revenue lost as crude output cut to record lows
Nigeria said it lost out on as much as $100bn in revenue last year as attacks by militants in the oil-rich Niger Delta cut crude output to a record low. Bloomberg quotes Emmanuel Kachikwu, minister of state for petroleum, as saying that production fell by 1m barrels a day to 1.2m a day at the peak of the attacks. Last year, Nigeria suffered its first full-year recession since 1991 as a resurgence of armed conflict in the delta, combined with lower oil prices, blighted the economy. While recent peace efforts have curbed the frequency of attacks on oil infrastructure, the West African nation has struggled to boost output as one of its largest export terminals remains closed. ‘We continue to engage,’ Kachikwu said, referring to peace talks between the government and local leaders from the delta. ‘It is a difficult undertaking to try to embark on trying to resolve it once and for all, but we’re very bullish about this.’

While that is bad news for a country mired in its worst economic slump in 25 years, it is making life easier for fellow Organisation of Petroleum Exporting Countries (Opec) members, says a Business Day report. While peace efforts have curbed the frequency of attacks in the oil-rich Niger River delta, the Forcados export terminal, the country’s third largest, remains closed and shipments are down at many others. If these disruptions persist they could have an unintended consequence: helping Opec boost oil prices. ‘Bringing the Forcados loading terminal back into action is key for Nigeria’s exports,’ said Charles Swabey, an oil and gas analyst at BMI Research. If the government followed through on the peace process, then Nigeria could become ‘a drag’ on Opec’s push to rebalance the market, Swabey said, ‘and will likely slow the process down’.
Bloomberg
Business Day 

Bill asks for compulsory registration of foreign employers 
A Bill for compulsory registration of foreign employers in Nigeria by the Ministry of Labour and Productivity has passed second reading in the House of Representatives. Business Day reports that the Bill is intended to amend the Labour Act and to strengthen and review fines and punishments stipulated in the Act. Leading the debate on the Bill, Representative Femi Gbajabiamila (Lagos-APC), said the aim of the Bill was to further protect the Nigerian worker from being exploited by foreign employers operating in the country. ‘As it stands, the Labour Act allows registration of employers by the ministry but this Bill seeks to separate foreign from local employers’, he explained. Speaker of the House, Yakubu Dogara, referred the Bill to the Committee on Labour, Employment and Productivity for further action.
Business Day 

Power sector to be boosted by $1bn investment 
A US initiative to light up Africa, ‘Power Africa,’ says it’s planning to invest about $1bn on the power sector in Nigeria, according to a Nigeria Bulletin report. The programme’s coordinator Andrew Herscowitz said that the initiative that was aimed at strengthening Nigeria’s power sector had already received billions of dollars in US funding. The programme launched by previous US president Barack Obama is aimed at adding more than 30,000 megawatts of efficient energy development in sub-Saharan Africa. Herscowitz said the project would also targeting the substantial wind, solar, hydro power, natural gas, biomass, and geothermal resources on the continent. He said: ‘Since Power Africa was launched, the US Trade Development Agency has committed approximately $6.5m in funding for 10 activities supporting Nigeria’s energy sector, which could leverage up to $2.7bn in investment.’ ‘It has advanced $50m in financing from the Oversea Private Investment Corporation (OPIC) to Lumos, a Nigeria-based solar energy company, to scale up it’s off grid solar power service to about 200,000 Nigerian homes and businesses.
Nigerian Bulletin

Nigeria included in Total’s potential new production scenario
French oil major Total SA will make final decision on 10 oil and gas production projects in the next 18 months in countries including Nigeria, Angola, Azerbaijan and Argentina. The company said in its fourth quarter and full-year 2016 results that it plans to boost oil and gas production by 5% a year from 2014 to 2020. A Daily Trust report says that although there was no mention of the specific Nigerian projects, Total has bet on a string of projects such as Egina in Nigeria, Kaombo in Angola and Moho in the Republic of Congo to help it boost production to a target of 2.8m barrels of oil equivalent per day in 2017. The Egina project in Nigeria, which is the largest offshore project currently going will have a production capacity of 200,000 barrels of oil per day (b/d) and should at the end of 2017 reinforce Nigeria’s deepwater production potential. The report says Total’s exploration arm in Nigeria with joint venture partners in the OPL 223 is working on future development plans on the Owowo field.
Daily Trust 

Shell to improve production and reduce costs
Shell Petroleum Development Company of Nigeria Ltd says it plans to continue to reduce operation costs and improve production in Nigeria. The Guardian, Nigeria quotes Shell’s vice president, Nigeria and Gabon, Peter Costello as expressing confidence that the company can address the challenges in its operating environment and continue to deliver real value to all stakeholders. He said: ‘I know a lot of work has gone into driving costs down and improving our production availability and this must continue. We must understand the criticality of being competitive – we have to generate positive cash flow. No business can keep making a loss and still remain in business. If at the end of my time here, it can be said that we ran a safer, more competitive and better business than our competition, I will be a happy man.’ He said he believed the present challenges in the Nigeria’s oil and gas industry are not insurmountable.
The Guardian, Nigeria

Airport employees could strike over Abuja airport closure 
Nigerian airport employees may walk out over pay issues at the capital’s temporary airport while the main airport’s runway is being repaired, their trade union is quoted in a Reuters Africa report as saying. Nigeria’s government has said airlines will be able to use the airport at the provincial city of Kaduna, 160km north of Abuja during the six-week repair period from 8 March. ‘The federal government has to pay staff posted from Abuja to Kaduna all their entitlements before we can contemplate moving to Kaduna to give our services,’ said Olayinka Abioye, secretary general of the National Union of Air Transport Employees. ‘There have been situations in the past when such staff were owed their travel and other associated entitlements for two to three years. We do not want a repeat.’ The report says Abuja-bound passengers will have to temporarily fly to Kaduna and travel by bus under security escort to the capital on a road where kidnappings have taken place in the past few years. Kaduna airport handled just 12 international flights in December 2015, the last month for which Nigeria’s airports authority has figures, compared with 812 that used Abuja.

South African Airways and British Airways have, meanwhile, informed the Nigerian government of their final decision not to use the Kaduna airport as an alternative when the Nnamdi Azikiwe International Airport, Abuja will be closed for repair works. According to a Nigerian Bulletin report, they cited safety and security of passengers, lack of catering services as well as ‘adequate’ technology as their reason for not using the Kaduna airport.
Reuters Africa 
Nigerian Bulletin

Beleaguered Arik Air suspends flights to New York, London and SA
The Asset Management Corporation of Nigeria (AMCOM) has assumed control of beleaguered airline Arik Air saying that it requires at least $31.7m for it to resume full and uninterrupted operations, says a CH.Aviation report. The state-owned firm’s head of the corporate communications, Jude Nwauzor, said that the ‘mess’ was actually greater than anticipated. ‘It appears that unlike previously recorded, Arik has debts in excess of $951m with some banks, excluding fuel suppliers, lessors and maintenance companies.’ He said that all creditors’ claims will be addressed in due course. AMCOM says the insurance cover for Arik’s aircraft has been paid with its aircraft gradually resuming flights. AMCON said, however that the airline’s New York JFK service as well as the carrier’s flights to London’s Heathrow and Johannesburg’s OR Tambo have been suspended in favour of     focusing on the West African market.

The new management of Arik Air has appointed KPMG to undertake a forensic and diagnostic audit of the airline to ascertain the true status of its finances. A Nigerian Bulletin report quotes Simon Tumba of SY&T Communications Ltd, media consultant to AMCON as saying: ‘We have hired KPMG to look into the financial position of Arik with a tooth comb and advise us with verifiable facts on what went wrong with the airline. We need to do that because the outcome will help us plug the loopholes and stabilise the airline.’

AMCON has also taken over Odengene Air-Shuttle Services, known more as OAS Helicopters in Lagos following a court order. It was the third aviation firm to be taken over by the bad bank in four months, says a The Guardian, Nigeria report. OAS is one of the leading helicopter charter service companies in the country.
CH-Aviation report 
Nigerian Bulletin
The Guardian, Nigeria

Former NNPC head under investigation 
A former head of Nigeria’s state-run oil firm, Andrew Yakubu, is under investigation after almost $10m in cash was found at a property he owns, reports Business Day. The Economic and Financial Crimes Commission said it had seized $9.8m from a house belonging to Yakubu. A further £74,000 was found at the property in the northern city of Kaduna. The anticorruption agency’s spokesperson Wilson Uwujaren would not reveal its next steps, only saying that the matter was under investigation. The report says Yakubu has denied any wrongdoing. He admitted the money belonged to him but said it was a gift from friends. Yakubu was the group MD of the Nigerian National Petroleum Corporation from 2012 to 2014. In 2014, Central Bank of Nigeria governor Lamido Sanusi claimed the firm had failed to remit $20bn in revenue.
Business Day 

Big Brother ‘bother’ highlights difficulties in doing business
The Nigerian edition of ‘Big Brother’ has the same mix of narcissism, banality and back-stabbing found in every other version of the show. But, says an Economist report, an extra controversy was added to the fallouts and flirtations when Nigerians learned that their programme, in which contestants are locked in a house and filmed 24/7, was being made in South Africa. On 24 January, the country’s information minister, Lai Mohammed, opened an investigation into ‘the issue of possible deceit’, urging those who had ‘bombarded’ him with complaints to stay calm. The report says MultiChoice, the production company behind ‘Big Brother Naija’, was unapologetic, pointing out that it was easier and more cost-effective to stage the show in its existing house in Johannesburg. During the only previous Nigerian edition a sponsor had removed the fuses from the house’s generators in a dispute over advertising, taking the programme off-air for eight hours, says Remi Ogunpitan, a producer at the time. The report says far from being offended, many Nigerians simply see the bother over ‘Big Brother’ as a wake-up call to their government – and further proof, if any were needed, that their country is a tough place to do business.
Economist 

IN COURT

Community loses bid to have Shell pollution case heard in London
A British court has blocked pollution claims against Anglo-Dutch energy company Shell by more than 40,000 Niger Delta residents demanding action over decades of oil spills. Business Day reports that members of the Ogale and Bille communities had applied for the case to be heard in Britain, arguing they could not get justice in Nigeria. But the High Court in London said it did not have jurisdiction in the case. The firm’s lawyer, Peter Goldsmith, told Judge Peter Fraser during a hearing in November that the cases concerned ‘fundamentally Nigerian issues’, and should not be heard in London. However, Daniel Leader from legal firm Leigh Day, representing the claimants, responded that the spills had ‘blighted the lives of … thousands’. He said they had ‘no choice’ other than to seek legal redress in London. Goldsmith also argued that the case involved Shell’s Nigerian subsidiary SPDC, which runs a joint venture with the Nigerian government. The lawyer claimed that the case was aimed at establishing the high court’s jurisdiction over SPDC, opening the door for further claims. Leigh Day had argued that Shell was ‘ultimately responsible for failing to ensure that its Nigerian subsidiary operates without causing environmental devastation’.
Business Day

Nigerian chief, jailed in the UK for fraud, returns home
One of Nigeria’s most powerful men, who was jailed in Britain for money laundering and fraud in a landmark anti-corruption case, has returned home, reports MSN. Chief James Ibori who was governor of the oil-rich Delta state between 1999 and 2007, was jailed in April 2012 for fraud amounting to nearly $78.5m following a drawn-out extradition procedure and his evasion of arrest and prosecution in Nigeria. Ibori has vowed to appeal the conviction, claiming that at least one police officer involved in the investigation against him had been compromised by taking bribes. London’s Metropolitan Police has said it has investigated the claim but no charges were brought. Transparency International on Friday called Ibori’s intent to appeal ‘an affront to justice’. ‘Attempts to mask his own corrupt dealings by highlighting corruption elsewhere must not be allowed to prevail.’ The report says opinions are divided in Nigeria itself about whether Ibori should face a fresh trial on his return given the strong anti-corruption stance of President Muhammadu Buhari.
MSN

WEST AFRICA

International investment company buys into Ghanaian bank
Newly formed investment company, Arise has recently acquired a 27.7% stake in CAL Bank in Ghana from DPI, an Africa-focused private equity firm with assets under management in excess of $1bn. Fin24 reports that Arise, a collaborative partnership between international companies, Norfund, FMO and Rabobank, take and manage minority stakes in sub-Saharan African Financial Service Providers (FSPs) with the core aim of building strong and stable institutions that serve retail, small and medium enterprises (SMEs), the rural sector, and clients who have not previously had access to financial services. Arise CEO Deepak Malik is quoted in the report as saying: ‘We are excited to partner with CAL Bank, the third largest bank in Ghana based on loans advanced and a listed company on the Ghana Stock Exchange. The institution has a strong track record of delivering high growth and solid performance and with the support of Arise is well-positioned to deliver future growth in Ghana, one of Africa’s core emerging economies.’
Fin24

02 Feb 2017

GRF DALLEY NEWSLETTER 0028 – A COMPILATION OF LEGAL NEWS AND EVENTS

 

GRF Dalley & Partners
NIGERIA

Bailout funds effort has stalled
Nigeria’s efforts to secure funds from international lenders to help haul it out of recession have stalled because it has not submitted the required economic reform plans, according to one of the banks and sources close to the matter. Reuters Africa reports that the government has been in loan talks with the World Bank for a year. It had told the lender it would present its proposed reforms to make the economy more resilient and attractive to investment by the end of December, according to Western diplomats and a Nigerian official who declined to be named. But this has not happened and as a result of the delay, which the government has not explained, the Washington-based bank has not been able to consider a loan yet, the sources said. Nigerian Finance Minister Kemi Adeosun declined to comment. The report says that the African Development Bank (AfDB) is, meanwhile, holding back the second tranche of a $1bn loan for Nigeria, AfDB president Akinwumi Adesina said. ‘We are waiting for the economic policy recovery programme and the policy framework for that,’ said Adesina, without specifying when the AfDB had expected to receive the reform plans.
Reuters Africa 

Government joins with BDC traders in black market fight
Nigeria’s money-changers will introduce an exchange rate for the naira to help the central bank combat unregulated trading. Bloomberg reports that licensed dealers, known as bureaux de change, or BDCs, will post an exchange rate each Monday on their website from 16 January to ‘highlight positive rate development in the market’ and counter domains such as abokifx.com, which publishes unofficial prices daily, Aminu Gwadabe, the head of the local BDC association, said. The report says trading in the black market boomed since 2014 after the central bank strengthened capital controls and began to manipulate the interbank exchange rate as oil, the country’s top export, plummeted. The BDCs will initially quote a rate of 399, Gwadabe said. Nigerian officials have already tried to rein in the black market. In November, intelligence agents threatened to arrest any BDC operator or street-trader buying or selling the naira at a rate weaker than 400 per dollar.

The naira’s recovery in the forwards market may be deceptive, says a Bloomberg report. The currency is destined to weaken, however long policymakers hold out. The report says that in the first week of January, six-month contracts declined to their lowest level since last September as crude oil advanced about 20% after Opec agreed a production cut in November. It said a drop in forwards would be a sign of growing confidence in a nation’s economy and currency, but not this time. Even as oil prices advanced, Standard Chartered and Duet Asset Management said the nation needed to devalue the naira and loosen capital controls.

The naira’s official rate, controlled by the government, has hovered just above 300 to the dollar since it was devalued in June. But, says a Daily Trust report, that is still 40% stronger than rates on the parallel market, a gap that is discouraging investment from overseas and leaving Nigeria starved of foreign currency. The official and black market naira foreign exchange rates will be ‘unified’ this year, but there is no time frame for when it could happen, said Vice President Yemi Osinbajo. Financial institutions and others have argued that Nigeria must allow its currency to float freely to solve its foreign exchange woes, a measure which has met opposition from President Muhammadu Buhari. Nigeria aims to sell Eurobonds worth $1bn in March, said Osinbajo, rather than February as originally hoped, which could help refill the government’s coffers.
Bloomberg
Bloomberg
Daily Trust 

Bill asks for compulsory registration of foreign employers 
A Bill for compulsory registration of foreign employers in Nigeria by the Ministry of Labour and Productivity has passed second reading in the House of Representatives. Business Day reports that the Bill is intended to amend the Labour Act and to strengthen and review fines and punishments stipulated in the Act. Leading the debate on the Bill, Representative Femi Gbajabiamila (Lagos-APC), said the aim of the bill was to further protect the Nigerian worker from being exploited by foreign employers operating in the country. ‘As it stands, the Labour Act allows registration of employers by the ministry but this Bill seeks to separate foreign from local employers’, he explained. Speaker of the House, Yakubu Dogara, referred the bill to the Committee on Labour, Employment and Productivity for further action.
Business Day 

SEC and CBN issue transaction settlement guidelines
Committed to facilitating the development of efficient systems for the settlement of transactions, the Securities and Exchange Commission (SEC), in collaboration with the Central Bank of Nigeria (CBN), has issued guidelines for the settlement of all types of securities in Nigeria. The Guardian, Nigeria reports that the guidelines are expected to promote competitive, efficient, safe and sound post trading arrangements in Nigeria. This will ultimately lead to greater confidence in securities markets, boost investors’ protection and limit systemic risk. In addition, it would also improve the efficiency of the market infrastructure, which should in turn, promote and sustain the integration and competitiveness of the Nigerian securities markets.
The Guardian, Nigeria

CBN joins SEC in advising against virtual currency use
The Central Bank of Nigeria, CBN, has advised against the use of virtual currencies, including bitcoin, ripples, litecoin. The Nigerian Bulletin reports that this was after an earlier warning from the Securities and Exchange Commission. The warnings came on the heels of announcement by Mavrodi Mondial Movement (MMM) that its operations will now be via digital currency. Other ponzi schemes are asking their subscribers to start investing with digital currency. CBN said virtual currencies are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions. ‘The CBN reiterates that VCs such as bitcoin, ripples, monero, litecoin, dogecion, onecoin, etc, and similar products are not legal tenders in Nigeria. Thus, any bank or institution that transacts in such businesses does so at its own risk.’
Nigerian Bulletin

Pipeline fires continue to impact on oil output
Royal Dutch Shell has shut the Trans Niger oil pipeline after a fire, threatening to worsen a drop in Nigerian output due to unplanned disruptions. The line, which can transport about 180 000 barrels a day to the Bonny Export Terminal in the Niger Delta, was halted due to a blaze at Kpor in Ogoniland, Precious Okolobo, a company spokesman in Lagos, is quoted in Business Report as saying. Shell declined to comment on the impact on production. Nigeria’s daily output dropped by 200,000 barrels to 1.45m in December, ending three months of gains as the African nation struggled to restore capacity after a year of militant attacks on oil infrastructure. Production fell to 1.39m barrels in August, the lowest level since 1988, according to data compiled by Bloomberg.

Fires at oil pipelines in OML (oil mining lease) 30 and 34 in Nigeria’s Delta region have been extinguishedReuters Africa reports that, according to Lucky Sorue, chair of the Urhobo committee on oil and gas: ‘The fire has been put out and soldiers are there now.’ The fires were set after Nigerian Vice President Yemi Osinbajo visited the Delta for talks with militants whose attacks have crippled crude production in the region.
Business Report 
Reuters Africa 

Rail link plan revived
Nigeria’s plan to build a railway to supply iron-ore to its idle Ajaokuta steel plant could be the biggest sign yet that President Muhammadu Buhari is implementing his policy to diversify away from oil. Mining Weekly reports that the project began in 1979 with what the World Bank in 2002 called obsolete Soviet technology, and has never been finished. Authorities want to revive it as part of Buhari’s efforts to lessen the economy’s dependence on crude. Ajaokuta cost more than $4.5bn from 1979 to 1993, according to the World Bank. The 275km railroad will link the plant to an iron-ore mine in the central Kogi state, the port city of Warri to the south and Kaduna state in the north before 2019, Transport Ministry Permanent Secretary Sabiu Zakari is quoted in the report as saying.
Mining Weekly 

Forex scarcity and fuel shortage impacts on aviation industry 
Year 2016 will go down as one of the most difficult for air passengers and operators in the industry. The Guardian, Nigeria reports that the twin problem of aviation fuel shortage and scarcity of foreign exchange (forex) persisted all year round. The report says that although the foreign airlines were not untroubled by the perennial fuel scarcity, their inability to repatriate funds back to their home countries posed more serious challenge to the airlines that were already hit by low patronage. Since the current administration restricted access to forex in 2015, the airlines have been unable to repatriate funds from ticket sales. Spanish national carrier, Iberia, and its US counterpart, United Airlines, suspended operations indefinitely. Several other airlines scaled down operations; either introducing smaller aircraft like British Airways or reducing their frequencies and routes – Emirates, Delta, and Turkish Airlines and others.
The Guardian, Nigeria

2016 a challenging year for maritime operators
While only a few days into 2017, maritime operators including seaport operators, clearing agents and all stakeholders are unanimous in their assessment that 2016 was most challenging, reports The Guardian, Nigeria. They attributed these challenges to the Federal Government’s unfavourable policies, a development that saw the seaports, which used to contribute a large chunk of Nigeria’s non-oil revenue becoming less active. Recent statistics from Nigerian Ports Authority showed that container traffic inward Nigerian ports (import) dropped to 6,831,348 tonnage as at September 2016, from 9,419,672 in 2015. And the outward container (export) also dropped from 2,263,594 tonnage in 2015 to 1,485,338 in September 2016. Also, the number of vessels dropped to 11-year lows, at 3,347 against 5,014 in 2015 and 5,333 in 2014. The report says that the importation of raw materials has dropped significantly, which the importers attributed to the lack of access to foreign exchange and low patronage. Spokesperson for the Seaport Terminal Operators Association of Nigeria, Bolaji Akinola, is quoted as saying that government needs to reduce tariffs to boost activity.
The Guardian, Nigeria

Lagos property sector reflecting overall gloom
With inert cranes, deserted construction sites and empty buildings, Lagos is suffering a hangover from a construction binge as Nigeria wrestles to overcome a recession. Fin24 reports that falling global oil prices and repeated attacks on crude infrastructure in Nigeria’s south severely hit the country’s economy in 2016, hammering the naira against the dollar. ‘Perhaps the greatest constraint for businesses operating in Nigeria at the moment has been the inability to access foreign currency, notably for the importation of goods, and repatriation of profits,’ said Roddy Barclay, an analyst at the Africa Practice research firm, in a November report. ‘Companies have reduced their activities and many expatriates have left,’ said Ade Kunle, a real estate agent. The report says it is unclear when they – and the construction projects – will come back. ‘The Nigerian banking sector will remain under pressure in 2017 and as a result, will look to limit higher-risk lending, such as that to construction projects’, said Richard Marshall, an analyst at BMI Research, a market research firm. It was unlikely the economy would whet the ‘appetite’ of foreign investors over the next two years, he said.
Fin24

Entertainment industry well placed for job creation
Nigeria’s entertainment industry can serve as a platform for creating jobs for Nigerian youths. Business Day reports that this is according to movie producer Bolanle Austine-Peters, who said that that the multi-billion naira industry was capable of generating huge revenue for the nation as well. Austine-Peters, the founder of Terra Kulture, a cultural firm, said that the industry is the third largest employer of labour around the world, and it has contributed meaningfully to the development of the nation. ‘The industry is full of creativities and potential that is capable of developing a country. The industry has removed millions of youths off the streets and also contributed meaningfully to the nation’s Gross Domestic Product (GDP),’ she said. The report says she also commended Nollywood for projecting the country’s fashion and movie industry positively around the world. ‘Africa fashion, style and movie industry is trending and it is gaining world recognition.’
Business Day 

Chinese nationals arrested for the importing of fake cell phones
Standards Organisation of Nigeria (SON), working with the law enforcement agencies, recently arrested two Chinese nationals over increasing complaints about fake and substandard phones imported into Nigeria. The Guardian, Nigeria reports that according to Osita Aboloma, director general of SON, the Agency has continued to receive numerous complaints about KZG phones from unsuspecting consumers in the country. Aboloma said ‘We have information on the activities of these Chinese people who are operating this KZG mobile here in Ikeja Lagos that people are complaining about the quality of their products and SON has to ensure that the quality of products sold in Nigeria is in compliance with the Nigeria industrial standards.’ The report says the Association of Telecommunications Operators of Nigeria (ATCON), discovered that a number of them are fake, substandard or type unapproved. ATCON called for urgent measures to curb the increasing rate of dumping fake mobile phones in the country.
The Guardian, Nigeria 

Taiwan asked to move trade mission from capital 
Nigeria has ordered Taiwan to move its trade mission from the capital, Abuja, to the commercial hub, Lagos. Business Day reports that this follows a visit by the Chinese foreign minister during which his government pledged to invest $40bn in infrastructure projects in the country. Nigerian Foreign Affairs Minister Geoffrey Onyeama said Taiwan would stop enjoying privileges because it was not a country recognised under international law. The report says the foreign ministry of Taiwan strongly condemned ‘the unreasonable, rude and outrageous act of political hype carried out by the Nigerian government in complying with mainland China’s political goals’. But the report quotes a Chinese foreign ministry spokesperson as saying: ‘Nigeria has made a correct political judgement. The country had ‘promised not to have any official dealings with Taiwan.’

Nigeria’s request reiterated its support for Beijing’s ‘One China’ policy, which demands that countries break official relations with Taiwan, as Beijing pulls economic levers in Africa and elsewhere to woo nations away from the island it regards as rebel-held territory within Chinese borders, says a Business Insider report. Since the US presidential election, President-elect Donald Trump has heightened tensions between the US and China by suggesting that his administration could reconsider nearly four decades of American support for ‘One China’ – a provocation that some analysts say has spurred China’s recent actions.
Business Day 
Business Insider 

IN COURT

Fake lawyer arrested 
A man who never had legal training has been arrested for certificate and identity theft, following a petition written to the police on behalf of the Ilorin branch of the Nigerian Bar Association by its legal adviser, Oyetunji Ojuokaiye. Ghana Web reports that apart from appearing in local courts, as investigation revealed that Peter Adogun had also appeared in a number of cases in the Supreme Court. ‘It was discovered that the accused had falsely taken the credentials of one Inufin David Taiwo, an Abuja-based lawyer, under the guise of helping him to secure job in an oil company, only to come to Ilorin and start practising as a lawyer with the photocopies,’ the investigation said.
Ghana Web 

London court to decide on jurisdiction argument
A court in London will decide in coming weeks whether Royal Dutch Shell can face trial in the UK over oil spill allegations in Nigeria, a decision some legal experts predict could attract more cases against multinationals in Britain. Reuters Africa reports that the High Court will judge whether members from two communities, Bille and Ogale in Nigeria’s oil-rich Delta region, can sue the Anglo-Dutch company in British courts. The communities say Nigerian courts are unfit to hear the case against Shell subsidiary Shell Petroleum Development Company of Nigeria. Shell says the case should be heard in Nigeria because the matter is ‘uniquely a Nigerian problem’.
Reuters Africa

Ex-president denies oil corruption claims 
Nigeria’s former president Goodluck Jonathan has denied allegations that he and his oil minister received kickbacks as part of a $1.3bn deal with Italian oil company ENI and Royal Dutch Shell. The two oil giants made the $1.3bn payment to purchase the OPL 245 block, an offshore oil block in Niger Delta region, in 2011. The deal is currently under investigation in Italy, where prosecutors alleged the two oil giants illegally bought the block, breaching domestic laws, ‘without competitive tendering’ and with ‘full, unconditional exemption from all national taxes’, says an International Business Times report. In December 2016, prosecutors presented documents in a court in Milan against the two oil companies as well as 11 other people. Jonathan has denied the allegations. A statement published on his official Facebook page stated that the claims were not based on factual evidence.
International Business Times 

High Court in Lagos to hear suit over alleged crude oil theft 
A Federal High Court in Lagos will start sitting in a suit filed by the Federal Government against Shell Western Supply and Trading Limited over alleged crude oil theft on 20 March. The Nation reports that Shell Petroleum Development Company of Nigeria Ltd and its subsidiary, Shell Western Supply and Trading Ltd are defendants in the suit filed before Justice Mojisola Olatoregun. The government is claiming $406.7m from the oil company, which represents a shortfall of money paid by the company into the government’s account with the Central Bank of Nigeria for crude shipped in 2013/2014. The government accused the Anglo-Dutch company of not declaring or under-declaring crude oil shipments during the period, which was discovered following forensic analysis of bills of lading and other shipping documents.
The Nation 

GRF Dalley & Partners
03 Jun 2016

The Pension Reform Act 2014 – Nigeria

On the 1st of July 2014 the President of the Federal Republic of Nigeria signed the Pension Reform Act 2014 (The Act) into Law. The Act repeals the Pension Reform Act No.2 Laws of the Federation of Nigeria 2004 and is in force to regulate the administration of uniform contributory Pension Scheme for both the private and public sector in Nigeria. To ensure that every person who works in either the Public Service of the Federation Federal Capital Territory, States and Local Governments or the Private Sector, receives retirement benefits as and when due.

Click here to Download: Pension Reform Act 2014 – Nigeria