Video - Analysts in Nigeria call for increased new foreign investments

Nigeria faces forex shortage due to reduced capital investments, with capital importation dropping to 650 million U.S. dollars in the third quarter of 2023, prompting analysts to call for increased foreign investment efforts.

CGTN

Nigeria central bank pays nearly $2 billion towards Foreign Exchange backlog

Nigeria's central bank has paid nearly $2 billion in outstanding foreign exchange forwards in the last three months in a bid to clear a backlog of dollars, a spokesperson has said, but forex shortages continue to hobble the country's naira currency.

Africa's biggest economy has nearly $7 billion in forex forwards that have matured, a major concern for investors, but the Central Bank of Nigeria (CBN) has promised to pay up to boost confidence in the foreign exchange market.

"In the past three months, the CBN has also redeemed outstanding forward liabilities amounting to almost USD 2 billion," acting spokesperson Hakama Sadi Ali said in a statement late on Sunday.

"This underscores the Bank's commitment to the resolution of pending obligations and a functional foreign exchange market."

Nigeria's foreign currency shortages have been worsened by declining oil production, which is the country's largest export, accounting for more than 90% of dollar inflows.

Ali said the CBN had recently paid $61.64 million to foreign airlines, who sold tickets in the local naira currency but have not been able to get their money out of the country.

Foreign airlines were owed more than $700 million at the end of November.

"These payments signify the CBN's ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country's exchange rate," Ali said.

President Bola Tinubu has promised to boost foreign currency inflows into Nigeria by attracting new investment, ramping up oil production and reforming the foreign exchange market. 

By Camillus Eboh, Reuters

Central Bank of Nigeria Lifts Ban on Crypto Transactions

The Central Bank of Nigeria (CBN) has lifted a ban on transacting in cryptocurrencies.

At the same time, the bank said there is a need to regulate virtual asset service providers (VASPs), including cryptocurrencies and crypto assets, Reuters reported Wednesday (Dec. 27), citing a Friday (Dec. 22) circular issued by the bank.

The CBN imposed a ban on banks and financial institutions dealing in or facilitating transactions in crypto assets in February 2021 due to concerns over money laundering and terrorism financing, according to the report.

However, the Securities and Exchange Commission, Nigeria published regulations in May last year that aimed to find a middle ground between an outright ban and unregulated use of crypto assets, the report said.

In its circular dated Dec. 22, the CBN outlined guidelines for banks and financial institutions regarding the opening of accounts, designated settlement accounts, settlement services, and acting as channels for foreign exchange inflows and trade for firms transacting in crypto assets, per the report. The guidelines emphasize the need for VASPs to obtain licensing from the Nigerian SEC to engage in crypto business.

The circular also states that banks are still prohibited from trading, holding or transacting cryptocurrencies, according to the report.

Nigeria has witnessed a surge in cryptocurrency adoption, particularly among its young and tech-savvy population, the report said. Many individuals have turned to peer-to-peer trading offered by crypto exchanges as an alternative to traditional financial services.

The volume of crypto transactions in Nigeria grew by 9% year over year to $56.7 billion between July 2022 and June 2023, per the report, which cited data from blockchain research firm Chainalysis.

It was reported in October 2021 that despite the ban from their country’s central bank, people in Nigeria had turned to cryptocurrency to conduct business, send payments and guard their savings.

In November 2022, the Securities and Exchange Commission, Nigeria said that it had no plans to make crypto part of its digital asset trading goals until regulators agree to standards that keep investors safe.

The commission said at the time that it would promote investment in “sensible digital assets,” with investment protection while also looking into blockchain technology to drive virtual and traditional investment products.

PYMNTS

Related stories: Crypto usage growing further in Nigeria

Video - Nigeria continues to record surge in adoption of cryptocurrencies

President Tinubu says Nigeri budget offers 'renewed hope'

Nigeria's president has delivered his first budget since taking office, as the country faces a deepening cost of living crisis.

He announced government plans to spend 27.5 trillion naira ($34.85bn; £27bn) in the new financial year.

Bola Ahmed Tinubu said the plans would attract investment, offering "renewed hope" during tough economic times.

Mr Tinubu had called for patience after inflation skyrocketed following an ambitious set of reform policies.

After winning disputed elections with 37% of the vote back in May, he shocked many Nigerians in his inaugural address when, in an off-the-cuff remark, he scrapped a decades-old fuel subsidy.

The move led to a sharp rise in the price of fuel and other goods, worsening the cost of living crisis for many.

Mr Tinubu also scrapped foreign exchange controls, which also contributed to pushing up inflation to its highest levels in nearly two decades, at 25%.

The value of the naira fell, increasing the cost of imports and making it more difficult to pay off international loans.

But Mr Tinubu stood by his decision, saying the fuel subsidy had proven to be "harmful" to the economy.

He insisted the budget's impact on the cost of living crisis would be temporary and has repeated calls for patience, saying the moves would benefit the country in the long term and attract more foreign investment.

Mr Tinubu said his "Budget of Renewed Hope" would guarantee macro-economic stability, lead to "job-rich" growth and reduce the budget deficit.

The government's spending priorities included improving security and infrastructure, as well as taking measures to ease the cost of living crisis, he added.

Mr Tinubu projected higher oil production and tax collection would boost government revenues and allow his administration to borrow less.

He added that the economy was expected to grow by at least 3.76% in 2024, and inflation would be at around 21.4%.

It stood at 27.3% in October, up from 26.72% in September, according to official statistics.

The economic crisis in Nigeria has led to a huge exodus of young professionals who have struggled to find jobs.

The budget will have to be approved by lawmakers before it comes into effect.

By Danai Nesta Kupemba, BBC

Cabinet of Nigeria approves $1 billion African Development Bank loan

Nigeria's cabinet has approved a $1 billion concessionary loan from the African Development Bank (AfDB) to support financing the budget and improve foreign exchange supply, Finance Minister Olawale Edun said on Monday.

The AfDB loan will fetch an interest rate of 4.2% for 25 years with eight-year moratorium, Edun told reporters after a cabinet meeting in the capital city, Abuja.

Nigeria's cabinet on Monday revised the country's 2024 budget upwards by 1.5 trillion naira to 27.5 trillion naira ($32.76 billion), after increasing the oil price benchmark and lowering the naira exchange rate assumption.

"(Federal Executive Council) approved a $1 billion concessionary loan for general budget support and to be used to improve forex availability in the country," Edun said.

"The $1 billion loan from AfDB is a budget support fund for ongoing economic reforms. It is to support government programs ... in power sector, social inclusion and the fiscal policy reforms as a whole sector policy initiative."

The cabinet approved a limit of 2 trillion naira for use to refinance expensive government debt and save on debt servicing cost, Edun said. Nigeria has been spending the bulk of its revenue on debt service due to low tax collection.

"The view is that there will be an opportunity to save about 50 billion naira or more in debt servicing over time by giving back expensive debt, refinancing it with cheaper funding," Edun said.

President Bola Tinubu has embarked on Nigeria's boldest reforms in decades by scrapping a popular but costly subsidy on petrol and a system of multiple exchange rates that had kept the currency artificially strong, curbing trade and growth.

Tinubu is trying to rebuild Nigeria's economy and attract investors to revive growth, which has been sluggish for almost a decade, tackle a high debt burden, and lower double-digit inflation. 

By Felix Onuah, Reuters

Ex-central bank chief of Nigeria remanded in custody pending bail hearing

A Nigerian court on Friday remanded former central bank governor Godwin Emefiele in custody on charges of procurement fraud, pending a bail hearing scheduled for Wednesday.

Emefiele applied for bail after pleading not guilty to six new graft charges that accused him of "conferring corrupt advantage". Prosecutors cut the charges from a previous 20-count indictment, which he faced along with two others, so he could be tried separately and quickly.

"The matter is hereby adjourned to Wednesday, November 22, for ruling on the bail application. Meanwhile, the defendant should be remanded in Kuje Correctional Centre pending the ruling on his bail," Justice Hamza Muazu said.

The main trial is set to start on Nov. 28, the judge said.

Last week, Emefiele was granted bail by a separate judge after successfully challenging five months in detention.

Emefiele, who has not commented publicly on the case, was suspended by President Bola Tinubu on June 9 and was arrested a day later.

He resigned in August while in detention, paving the way for the appointment of new central bank governor Olayemi Cardoso in September. 

By Camillus Eboh, Reuters

Related stories: President Tinubu orders investigation of Central Bank of Nigeria

Suspended central bank governor of Nigeria denies firearm charges

 

Nigeria central bank says old bank notes to remain legal tender

ABUJA, Nov 14 (Reuters) - Nigeria's central bank said on Tuesday old bank notes that were due to be removed from circulation next month would now remain legal tender, ending months of uncertainty after an attempt earlier this year to remove them caused serious cash shortages.

The Supreme Court in March ordered the Central Bank of Nigeria (CBN) to extend until Dec. 31 the use of old 1,000, ($1.18) 500 and 200 naira notes, whose initial withdrawal from circulation became an election issue after it caused widespread hardship and anger.

The bank had defended the removal of the notes, saying new ones would be harder to counterfeit and that the process would also help control liquidity in an economy where most money is held outside banks.

On Tuesday, the CBN, which has had a new governor since September, said the old bank notes "will remain legal tender ad infinitum, even beyond the initial December 31, 2023 deadline".

During the election campaign, President Bola Tinubu had opposed the removal of the old bank notes.

By Camillus Eboh, Reuters

Related stories: Critical mistakes made by central bank of Nigeria in cash swap

Video - Supreme court suspends currency swap deadline in Nigeria

 

SUVs and Yachts in Nigeria Budget During Economic Hardship

Nigerian President Bola Tinubu’s first supplementary budget includes a fleet of SUVs for himself and his wife, a presidential yacht and the renovation of his villa amid a cost-of-living crisis for some of the poorest people in the world.

The proposal — which seeks additional funding beyond the annual budget approved by Tinubu’s predecessor — comes as the government asks Nigerians to persevere through pain caused in part by a raft of economic reforms ushered in by the new president. Africa’s most populous country faces rampant unemployment, soaring food prices and a plummeting currency.

Federal lawmakers approved the president’s request for extra spending on Thursday, but eliminated the provision of 5 billion naira ($6.01 million) to buy a presidential yacht. Instead, the doubled the allocation to a student loan fund to 10 billion naira, according Abubakar Bichi, chairman of an appropriations committee in the House of Representatives.

The lawmakers approved 1.5 billion-naira proposed to purchase SUVs for the office of First Lady Oluremi Tinubu — an amount larger than that allocated to many individual federal colleges. The supplementary budget also proposes almost 6 billion naira to purchase SUVs for the presidency — more than the amount initially allocated to fund a student loan program for poor families.

A spokesman said the president didn’t ask for a yacht and criticized coverage of the budget. The “public attack” is because of the “very simplistic way some of the line items are described by civil servants, who prepare the budget,” Temitope Ajayi said in a column posted to a local media outlet. New vehicles, he said, will be used by aides and civil servants, not Tinubu himself.

The legislature has also been slammed for buying hundreds of its own expensive SUVs.

Tinubu, who took office in May, ended a popular but costly fuel subsidy and removed currency restrictions that saw prices spike and the naira sharply devalued. That’s left many households struggling to survive in Africa’s most populous nation, where at least 40% of its more than 200 million people live in extreme poverty.

Last year, the country spent about 96% of its revenue servicing debt and the government plans to raise 9 trillion naira to help fund next year’s budget.

By Nduka Orjinmo, Bloomberg

President Tinubu seeks Senate approval to borrow $8 billion

Nigerian President Bola Tinubu on Wednesday asked the Senate to approve nearly $8 billion in new debt as part of a 2022-24 external borrowing plan to finance infrastructure, health, education and security.

Nigeria, Africa's biggest economy and top oil producer, has been relying increasingly on debt due to lower tax collections and lower oil exports, its biggest foreign currency earner.

In a letter to the Senate, Tinubu requested $7.86 billion and 100 million euros ($105.40 million) but did not say where the money would come from.

Nigeria has raised money in international credit markets, including through eurobonds, and borrowed from lenders like the World Bank and African Development Bank for budget support.

"In view of the present economic realities facing the country, it has become imperative to use the external borrowing to bridge the financing gap which will be applied to key infrastructure projects including power, railway, health among others," said Tinubu.

The government has said it wants to encourage investments rather than rely on borrowing to create jobs and build infrastructure.

The Senate and House of Assembly are considering a supplementary budget of 2.176 trillion naira ($2.8 billion) to fund "urgent issues" including defence and security.

Nigeria's cabinet two weeks ago approved 26.01 trillion naira ($34 billion) for next year's budget, of which about a third is earmarked for interest payments.

Some 40% of Nigeria's total debt is external. 

By MacDonald Dzirutwe, Reuters

Nigeria wins bid to overturn $11 bln damages for collapsed gas deal

Nigeria on Monday hailed a landmark victory after it won its bid to overturn an $11 billion damages bill for a collapsed gas project, in a case a judge at London's High Court said exemplified the ravages of greed and corruption.

Africa's most populous country had previously been ordered to pay the sum – representing around a third of its foreign exchange reserves – to Process & Industrial Developments (P&ID), a company based in the British Virgin Islands.

But Judge Robin Knowles found that P&ID had paid bribes to a Nigerian oil ministry official in connection with the gas contract signed in 2010, and had failed to disclose this when it later took Nigeria to arbitration over the collapse of the deal.

Nigerian President Bola Tinubu described the judgment as a blow against economic malpractice and the exploitation of Africa.

"Nation states will no longer be held hostage by economic conspiracies between private firms and solitarily corrupt officials," he said in a statement.

The ruling is a major boost for Africa's biggest economy, which is saddled with mounting debt, high inflation and unemployment.

"The economic prospects of an entire country have been held hostage by a tainted arbitral award that was built on bribes and lies," said campaign group Spotlight on Corruption.

In 2017, an arbitration tribunal had awarded P&ID $6.6 billion for lost profit after its 20-year contract to construct and operate a gas processing plant in southern Nigeria had fallen apart.

The sum had since swelled with interest to over $11 billion, representing 10 times the country's 2019 health budget.
 

"DRIVEN BY GREED"

However, Nigeria's lawyers went to court to overturn the award, saying P&ID had bribed senior officials to obtain the contract and corrupted the country's lawyers to obtain confidential documents during the arbitration. P&ID denied this and accused Nigeria of institutional incompetence.


But Knowles allowed Nigeria's challenge, writing that the case showed what some people would do for money, "driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others".

The judge said a further hearing would take place to decide whether to send the case back to arbitration or ditch the $11 billion award without further delay.

Lawyers representing P&ID said the firm was disappointed and considering steps available to it.

In a rare rebuke, the judge said two British lawyers who stood to receive astronomical sums had Nigeria been forced to pay the $11 billion-plus bill had misconducted themselves out of greed.

Trevor Burke, an eminent criminal barrister and a nephew of P&ID's co-founder, would have received $850 million while Seamus Andrew, who represented P&ID during the arbitration, would have received up to $3 billion.

Both received confidential Nigerian documents during the arbitration that they knew they were not entitled to see, the judge found. Their decision to say nothing and not to return the documents was "indefensible", he wrote.

They did so "because of the money they hoped to make" and gave untruthful evidence about it, Knowles added, referring his ruling to legal standards regulators.

Burke and Andrew said in separate statements they did not accept the judge's criticisms and believed they would be exonerated by the regulators.

By Sam Tobin, Reuters

Nigeria expects $10 bln in forex inflows in weeks

Nigeria expects $10 billion in foreign currency inflows in the next few weeks to ease liquidity in a foreign exchange market that has cramped growth in Africa's biggest economy, finance minister Wale Edun said on Monday.

The West African country has faced chronic dollar shortages after foreign investors exited local assets during a period of low oil prices. Since then, investors are yet to return and the central bank has not yet settled outstanding demand for dollars from foreign investors seeking to repatriate funds or airlines seeking to send money from ticket sales abroad.

As a result of the shortages, some businesses and individuals have turned to the black market, where the naira currency has hit successive record lows, widening the gap with the official rate.

Edun said President Bola Tinubu on Thursday signed two executive orders to allow domestic issuance of instruments in foreign currency and also allow all cash outside the banking system to be brought into the banks.

"There is a line of sight on $10 billion worth of inflow of foreign exchange in a relatively near future, in weeks rather than months," Edun told a business conference.

He added that liquidity would also come from state-oil firm crude sales and foreign investment firms willing to invest in Nigeria.

"These measures taken as a whole and comprehensively should lead to the flow of foreign exchange."

On Monday, the naira hit a record low of 1,200 per dollar on the black market, two days after it fell to a new low of almost 1,000 naira on the official market.

Tinubu told the conference that all forward contracts entered into by the government would be honoured while the country's central bank governor said the currency would adjust once rules for market participants were made clear. 

By Chijioke Ohuocha, Reuters

Video - Cash transfer system targets 15 million households in Nigeria

The Nigerian government says the launch of the initiative will cushion millions of people against the effects of the removal of the petrol subsidy and other economic shocks.

CGTN

Video - Nigeria eyes 36% increment in upcoming budget

Nigeria plans to inject 34 billion U.S. dollars into the economy in 2024, a substantial increase from the 25 billion U.S. dollars in the 2023 budget. Experts link the increase to efforts to combat inflation and propel infrastructure development.

CGTN

President Tinubu launches cash transfer to 15million Nigerian households

The Federal Government has announced that President Bola Tinubu will launch the new cash transfer program to 15 million households across Nigeria on Tuesday, October 17.

Nigerian Presidency made the announcement in a tweet on Tuesday.

The Minister of Humanitarian Affairs and Poverty Alleviation, Dr. Betta Edu, had disclosed the FG’s plan to commence a new cash transfer program to 15 million households by October.

She disclosed this in September during an interview on Arise Tv on the Progress Report on Nigeria’s participation at the 78th United Nations General Assembly meeting.

Edu made the disclosure while responding to questions on the FG’s presence at the UNGA 78 and what it meant for the Nigerians.

“We had meetings with the World Bank and very soon, we will announce the upscale of the national safety net program which will be putting funds in the pocket of over 15 million households in Nigeria,” she said.

“These are tangible funds that people can use to start businesses and improve their lives. This will be happening next month October.”

Edu had also revealed that the FG was ready to extend its social safety net program so as to reduce the level of poverty among households across Nigeria.

She added that the initiative is a strategic effort on the part of the FG to empower individuals and families in the country.

“We’ll initiate an expanded and upscaled social safety net program designed to reach a lot of households in Nigeria,” Edu said.

“These funds are aimed at jumpstarting businesses and helping individuals regain their footing.”

She further noted that the Federal government will partner with the state government and local communities in the verification of the national social register.

The Minister said it was geared towards ensuring that those in the current social register are still in that social category.

By Oluyemi Ogunseyin, The Guardian

Related story: President Tinubu stuns wary investors with quick reforms

Naira Drops in Four months to New Record Low

Nigeria’s naira plunged the most in almost four months to an unprecedented level in the official market as the West African nation’s move to a more flexible exchange rate puts pressure on the currency.

The naira weakened 8.9% to 848.12 to the dollar in the official market on Tuesday, according to data compiled by Bloomberg. The drop was the most since June 20.

Trades in the foreign-exchange market were executed within the range of 700 naira to 981 naira per dollar, according to an investment note by Lagos-based investment banking firm Chapel Hill. The value of dollar traded jumped 2.12 times to $133 million, the firm said.

The currency was little changed at 1,052 a dollar on the street, according to Abubakar Mohammed, chief executive officer of the Forward Marketing Bureau de Change Ltd.

The Central Bank of Nigeria eased foreign exchange controls in mid-June after newly elected President Bola Tinubu criticized monetary policy measures and pledged an end to the nation’s multiple exchange-rate regime. That saw the official rate plunge 40%, briefly aligning with the parallel market before the spread began to widen again. Until Tuesday, the official rate stayed near 800 to the dollar even as the street rate weakened past 1,000 naira.

“Illiquidity persists in the market in the absence of central bank intervention,” Tajudeen​​​​ Ibrahim, head of research at Chapel Hill, said by phone.

The widening premium between the official rate and the black market “indicates that the exchange rate has not been setting a clearing price,” the central bank said on Monday after it scrapped restrictions put in place eight years ago to manage demand for dollars.

Nigeria, Africa’s biggest crude producer, has been struggling to boost the supply of dollars for years after falling oil revenue left its foreign-exchange reserves in a perilous state. That prompted authorities to stop selling foreign currency to importers of products such as rice, vegetables and chicken in a bid to encourage local production.

The move only pushed demand for dollars to unauthorized trade.

Anthony Osae-Brown and Emele Onu, Bloomberg 

Nigeria Set To Get $1.5 billion World Bank Loan By End of the Year

Nigeria’s cabinet approved plans by the government to seek a $1.5 billion loan from the World Bank, Finance Minister Wale Edun said.

The funding will be concessionary and is expected to be secured by December, Edun told reporters in the capital, Abuja, on Monday. The West African nation will also seek $80 million of financing from the African Development Bank, he said.

Nigeria is seeking funding as it implements a series of economic reforms to accelerate economic growth and support the more than 40% of its 200 million people who live in poverty. Over the past eight years, the nation’s debt has increased almost eight-fold to more than $110 billion, and servicing those obligations consumed 96% of government revenue in 2022.

The reform initiative by President Bola Tinubu “is being rewarded by processing for Nigeria $1.5 billion of immediate financing,” Edun said. “Provided that we do everything on our own side, it will be in before the end of the year.”

Read More: Nigeria Seeks World Bank Loan as IMF Says It’s Open to Funding

The International Monetary Fund has welcomed Nigeria’s reforms, which include unifying the nation’s various exchange rates and removing a costly gasoline subsidy, and said it’s prepared to help the government.

“As every member country of the IMF, Nigeria can seek IMF financing if they see this as helpful to address external imbalances,” the Lagos-based Punch newspaper quoted the fund as saying. “The Nigerian authorities have not approached the IMF with a request for financing.”

By Ruth Olurounbi, Reuters

Nigeria looking for $1.5 Billion Loan From World Bank

Nigeria’s government is seeking a $1.5 billion loan from the World Bank to help fund its budget, Finance Minister Wale Edun said, as the International Monetary Fund welcomed recent government reforms and said it’s open to funding the West African nation.

The authorities in Nigeria have “concluded plans” to seek funding from the World Bank, including concessional financing from the International Development Association, the Lagos-based ThisDay newspaper quoted Edun as saying. The IDA is an arm of the World Bank that provides help to the world’s poorer countries.

The cabinet will discuss the proposal to seek World Bank funding at a Federal Executive Council meeting in the capital, Abuja, on Monday, ThisDay reported. The meeting, confirmed by the presidency, will be the FEC’s first since Aug. 28.

Nigeria is seeking funding as it implements a series of economic reforms to accelerate economic growth and support more the than 40% of its 200 million people who live in poverty. Over the past eight years, the nation’s debt has increased almost eight-fold to more than $110 billion, and servicing those obligations consumed 96% of government revenue in 2022.

The IMF welcomed the recent reforms, including unifying Nigeria’s various exchange rates, and said it’s prepared to help the government.

“As every member country of the IMF, Nigeria can seek IMF financing if they see this as helpful to address external imbalances,” the Lagos-based Punch newspaper quoted the fund as saying. “The Nigerian authorities have not approached the IMF with a request for financing.”

Bloomberg

Video - Naira plunges to record low against U.S. dollar

The Nigerian currency Naira weakened to record low against the U.S. dollar this week, falling to 1,000 Naira per dollar on the parallel market, 29 percent weaker than the official rate of 775.37 per dollar. So, how much is the uncertainty at the CBN driving the Naira's performance in comparison to other economic fundamentals? 

CGTN

New central bank Governor of Nigeria Cardoso pledges to clear $7 billion forex backlog

Nigeria's new central bank Governor Olayemi Cardoso said on Tuesday his top priority was to clear the bank's backlog of unsettled foreign exchange obligations to local lenders, which he estimated could be as high as $7 billion.

The Senate unanimously approved Cardoso's nomination as central bank governor after he appeared before lawmakers to answer questions. Four new deputy governors were also confirmed.

Cardoso pledged to improve transparency, fix corporate governance, and restore diminished confidence in the autonomy and integrity of the central bank.

President Bola Tinubu had promised a thorough house cleaning of monetary policy at his inauguration in May after criticizing former Governor Godwin Emefiele's handling of the currency.

Cardoso said once the central bank has verified the extent of its obligations, it will need to find a way to settle them quickly.

"We need to promptly find a way to take care of that. It would be naive for us to expect that we'll be making too much progress if we're not able to handle that side of the foreign exchange market," he said.

Cardoso said he will maintain price stability, revert to evidence-based monetary policies and discontinue his predecessor's unorthodox monetary policies to bolster the country's naira currency.

Cardoso, who began work on Sept. 22 in an acting capacity, takes office following the resignation of Emefiele, who was suspended as central bank chief by Tinubu in June and later detained by security agents and charged with procurement fraud.

Cardoso's comments come at a time when the naira has slumped to a record low, reaching the psychologically sensitive 1,000 naira per dollar on the parallel market.


The official exchange rate was quoted at 785 to the dollar as of 1710 GMT.

Unmet forex demand on the official market due to inadequate liquidity and speculation in street trading added downward pressure to the currency, widening the gap with the official market where restrictions on trading were lifted in June.

By Elisha Bala-Gbogbo, Reuters

Related stories: Suspended central bank governor of Nigeria denies firearm charges

Critical mistakes made by central bank of Nigeria in cash swap

Suspended Nigeria central bank governor Godwin Emefiele charged

Former government official to share in $11bn gas scandal damages

A former Nigerian civil servant could receive a portion of an enormous sum of damages if a British court rules against the West African nation, in a landmark case centred on a multi-billion dollar gas deal.

As part of an arrangement that Nigeria’s government calls “extraordinary” and “corrupt”, Grace Taiga, the petroleum ministry’s former head lawyer, hopes to share in the record-breaking $11.4bn awarded to the offshore company Process & Industrial Developments (P&ID) before England’s High Court.

Court filings and testimonies seen by Al Jazeera show that Taiga is one of three Nigerians who stand to make money if the court orders Nigeria to pay the award – an outcome that could severely damage the country’s economy. The other two are the businessmen Adetunji Adebayo and Mohammed Kuchazi.

In January 2017, a London-based arbitration panel ruled that Nigeria pay $6.6bn to P&ID as compensation for breaching the contract awarded in 2010. That amount has since ballooned to $11.4bn with interest. But Nigeria has refused to pay, claiming P&ID bribed officials including Taiga to secure the gas contract.

In an eight-week trial that ended in March this year, the government petitioned the High Court to invalidate the arbitration award. The court’s decision is expected within weeks.

Analysts say if Nigeria is ordered to pay the damages, its economy could be severely damaged.

“The negative shock would be monumental,” Olusegun Vincent, associate professor of finance at Pan-Atlantic University in Lagos State, told Al Jazeera. “It may take us back to the pre-1999 military era, when Nigeria wasn’t creditworthy,” he said, pointing to the risk that the government would be unable to pay its debt.
 

‘The P&ID scam’

This scandal began in the late 2000s when the administration of then-President Umaru Musa Yar’Adua planned to address Nigeria’s energy supply crisis by exploiting vast untapped gas reserves in its mineral-rich Niger Delta region.

Seizing the opportunity, P&ID pitched an ambitious project to the petroleum ministry, to build and operate a gas-processing plant near the southern city of Calabar despite having never undertaken a project like that before.

Taiga was at the centre of negotiations: She worked on the contract wording, recommended to the late Rilwanu Lukman, the petroleum minister then, that he sign a memorandum of understanding with P&ID in 2009, and witnessed his signing of the gas contract the following year.

Under the terms of the agreement, the government would provide wet gas to P&ID for free over 20 years. The two parties would then split the processed resource, with the government using its share to help power the country’s energy grid.

But the project never got off the ground. P&ID never built the plant and Nigeria never provided the company with any gas. P&ID blamed the government for the failure and convinced an arbitration panel it had been wronged.

The panel awarded the company damages equivalent to the total hypothetical profit the company would have made over the lifespan of the contract – $ 6.6bn plus interest of $1.3m per day from the time the contract was breached.

Evidence later emerged that Taiga had received close to $10,000 from individuals and companies linked to P&ID ahead of the contract signing. Before the High Court, Taiga acknowledged having received money but said that these payments were merely gifts from a family friend, P&ID co-founder Michael Quinn.

P&ID said it had done everything in its power to make the project work. However, its inexperience and Taiga’s receipt of undisclosed funds eventually led the Nigerian government to believe that it had been the victim of an elaborate fraud.

Addressing the United Nations General Assembly in 2019, then-President Muhammadu Buhari vowed to confront “the P&ID scam”, which he said was “attempting to cheat Nigeria of billions of dollars”.

Anticorruption campaigners seem to agree with him.

“The story of how a small offshore company with no meaningful track record, no website, and only a handful of employees managed to win a multibillion-dollar gas contract raises red flags for corruption that call for careful scrutiny,” Helen Taylor, senior legal researcher at the British NGO Spotlight on Corruption, told Al Jazeera.

The High Court will adjudicate these points. If Nigeria loses the case, the country would be legally bound to pay P&ID what amounts to eight times its 2023 federal health budget.
 

‘Part of the family’

How the proceeds would be divided, meanwhile, has long remained confidential. Taiga, who had previously denied in affidavits that she would receive any money from the award, finally told the High Court under oath on February 16: “I do have expectations.” Asked by Nigeria’s lawyer how much she expected P&ID co-founder Brendan Cahill to share with her, she said: “I did not put my mind on a particular ceiling.”

In one document dated October 2017, Cahill recorded a “commitment” of $200,000 to Taiga; in another, dated May 2019, the figure was put at $500,000. Al Jazeera has seen both documents, which form part of the evidence before the High Court. Cahill, an Irish businessman who founded P&ID alongside the now-deceased Michael Quinn, said that these were not firm commitments. “I sought to reassure her that she would be looked after to some degree,” he told the court. “I didn’t specify how or when.”

In court, Taiga denied having secretly helped Quinn and Cahill when she handled the gas contract at the petroleum ministry. But she added that she now saw herself as “part of the family” that is P&ID.

“It’s remarkable that this Nigerian government official who helped broker the controversial gas deal with P&ID now belongs to the close-knit beneficiaries of this opaque offshore company,” said Taylor. “Far from clearing up this conflict of interest, the obscure arrangements for paying her a cut of P&ID’s profits are deeply compromising to her credibility as a former public official.”
 

A billion-dollar promise and ‘lots of uncertainty’

For his part, Adetunji Adebayo, executive chairman of Nigerian gas company GFD Energy and middleman for P&ID during settlement negotiations with the government, could be entitled to $1.4bn. In an affidavit dated May 2022, Cahill wrote that “Mr Adebayo was promised 10 percent of the income from the arbitration” but added that there was still “a lot of uncertainty around the amount, if any, that will be paid out.”

Adebayo did not appear before the High Court.

Mohammed Kuchazi, who as P&ID’s commercial director assisted the firm in its relationship with the petroleum ministry, told the court that he believes himself to be entitled to 3 percent of the award – some $340m – as per an agreement he said he reached with Quinn. Cahill confirmed the existence of that deal in his affidavit.

In his own affidavit, Kuchazi wrote that he had been friends with Lukman, the minister, since the 1960s. Before entering business, Kuchazi had been a Nigerian politician.

Asked for further comment, Kuchazi’s lawyer Eric Ifere told Al Jazeera that his client’s entitlement to “a 3 percent commission” was supported by a written agreement with P&ID. He declined to share that document.

The Nigerian government has accused Adebayo and Kuchazi of having bribed Nigerian officials on P&ID’s behalf. The company and Kuchazi denied the accusations before the High Court.

Adebayo, Taiga, and P&ID did not respond to Al Jazeera’s requests for comment.

Al Jazeera