Nigeria’s federal government seeks US $1.5bn loans to shore up Naira, boost budget

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Africa Headlines

Nigeria’s federal government seeks US $1.5bn loans to shore up Naira, boost budget – The Nigerian government is broke and the country’s currency, the Naira, is weak. What is the solution? More borrowings in US $. The federal goevrnment is therefore seeking another US $1.5 billion from the World Bank for budget support this year, according to reports of the Minister of Finance Wale Edun’s statement. Edun also says that Nigeria may issue Eurobonds in the fourth quarter of the year. That possibility coincides with the thoughts I have expressed here and elsewhere. The yield on Nigeria’s Eurobonds is currently 11%, compared to 6.5% in 2022. The expectation is that the yields will start to decline as the US Fed begins to lower its interest rate in response to declining inflationary pressures in the country. That will lower the yields and the cost of Eurobonds for Nigeria and other emerging economies later in the year. The last time Nigeria issued Eurobonds was March 2022 of US $1.25 billion. The positive news is that no Eurobond payment is due this year, but from next year.

We are not leaving Nigeria, Shell says – Many reports erroneously suggested that Shell was leaving Nigeria (see our newsletter yesterday for the accurate interpretation), but the company is only divesting its onshore assets while it’s keeping the lucrative and less problematic offshore and gas business. The company says the divestment was in line with its plan to cease onshore production in Nigeria and focus on Deepwater and Integrated gas positions. It says it remains a long-term partner of Nigeria and will country to support the country’s energy needs and export ambitions. The company has three other significant businesses in Nigeria, namely Shell Nigeria Exploration and Production Company Limited, Shell Nigeria Gas Limited, and Daystar Power Group, which operate independently from the SPDC transaction.

MTN, IHS, and Wendel …. The beat goes on – Following the announcement by IHS that it has reached an agreement with Wendel, one of it skey shareholders, news from South Africa suggest that MTN is not satisfied. IHS has been in an embattled position with two of its largest shareholders – MTN and Wendel for about a year now and has been keen to resolve all issues. MTN is the largest shareholder with 26% and the South Africa telecoms giant seeks a seat on the board of the Nigerian company and one of the world’s largest telecoms infrastructure companies. After the agreement with Wendel, MTN says its concerns remain, according to BusinessDay South Africa. Recently, MTN signed an agreement with American Towers to manage 2500 towers despite improved terms by IHS, but MTN says the process was already concluded. Essentially, MTN is doing business with IHS competitor despite being the largest shareholder of IHS.

Africa's gold trade landscape undergoes transformation amidst global geopolitical shifts – Africa is experiencing a significant transformation in the global gold trade, influenced by several factors. The relocation of Russian gold trading to Hong Kong due to US sanctions and a crackdown in the UAE raises concerns about Africa's stability as a gold trade hub. The surge in gold prices, driven by a weakened US dollar and geopolitical uncertainty, further complicates the situation. African nations are emphasizing compliance with international sanctions and prioritizing transparency in trading partnerships. The Mali-Russia gold refinery agreement signifies a move toward economic growth and diversification. The Chinese-Russian partnership in gold trading through Hong Kong introduces new complexities. African nations must navigate this evolving geopolitical landscape to ensure that the gold trade benefits local communities. Stakeholders in the industry should focus on transparency, compliance, and sustainable economic development to adapt to these changes and ensure the continued resilience and growth of the gold trade in Africa and globally.

Global Headlines

Sheryl Sandberg to step down from Meta board – Sheryl Sandberg, the former Chief Operating Officer (COO) of Meta (formerly Facebook), is stepping down from the company's board of directors. She left the company after 14 years in 2022 and joined the board to oversee the transition, but she is now leaving the company entirely, though will remain an informal adviser, according to reports. Sandberg is now moving to focus more on philanthropic activities. She was part of the group of the company when it was a start up, building one of the most incredible social media site, and acquiring others such as Instagram and WhatsApp. Last year, it also launched Threads to compete with X (formerly Twitter). However, in her time, Facebook faced significant controversies including the misinformation saga of the 2016 US elections, the Cambrigde Analytical scandal of 2018, and the Capital riot of January 6^th 2021. 

Zelensky calls for seized Russian billions to rebuild Ukraine – Speaking at the ongoing annual meetings of World Economic Forum (WEF) in Davos, Ukrainian President Volodymyr Zelenskyy has called for the release of the over US $300 billions of Russia funds to be used for rebuilding Ukraine. He argued that Russia destroyed Ukraine with their missiles, and it does make sense to use Russian’s resources to rebuild it. If accepted, the move will be unprecedented. The US and the UK are keen on the idea but the European Union, especially Belgium which warehouses most of the funds are sceptical. They see the approach as capable of destroying the reputation of the region as a haven of financial stability. Instead, all interest accrued on the seized funds are passed on to Ukraine for its rebuilding efforts. Meanwhile, according to Moscow news, Russia is spending the proceeds of the sale of Zelensky property in Crimea on military activities. Russia sold the property for almost half a million US dollars.

Boeing groundings continue as FAA inspections proceed – Following the grounding of Boeing by the FAA in the last 24 hours, the agency says there is no timeline for the return of the embattled aircraft. The latest problems started with the broken panel of a Boeing 737 Max 9 in air on the 5^th of January. After 40 evaluations in the last week, according to Seattle Times, there is no indication yet of when the aircraft will return to the air. According to the federal airports authority (FAA), the aircrafts will remain grounded for now. The FAA is now reviewing the inspection findings on the first batch of planes. If satisfactory, the same process will be followed for all over 170 grounded planes. The consequences have been immense. Alaska and United Airlines, two carriers with the most affected planes have had to cancel numerous flights. There have also been lawsuits by passengers of the January 5^th flight, but the greatest damage has been to the reputation and integrity of Boeing. The production of the aircraft was halted in 2020. Before then, Boeing was producing 42 aircrafts monthly. On top losses running above US $20 billion, orders of the aircraft were cancelled.