Next Africa: Nigeria's radical oil reform

Next Africa
Bloomberg

Welcome to Next Africa, a weekly newsletter of where the continent stands now — and where it's going next.

Nigerian President Muhammadu Buhari has been derided by critics as inept and indecisive on the economy, with some giving him the nickname "Baba Go-Slow."

Yet the 77-year-old is on the cusp of an achievement that no other democratic leader of the country has managed: A radical overhaul of the all-important oil industry.

After 20 years of debate and delays, Nigeria's parliament is soon expected to pass the Petroleum Industry Bill. That could pave the way for a stake sale in the national crude company and allow the price of gasoline to be determined by the market. The move may also provide some environmental protection to communities near oil facilities.

A Total floating production, storage and offloading oil vessel docked at Lagos.

Photographer: George Osodi/Bloomberg

The need for reform is glaring. The Nigerian National Petroleum Corp. for decades has been a hotbed of corruption and inefficiency,  restraining an industry that accounts for about 90% of export earnings. Nigeria, Africa's biggest crude producer, still needs to import motor fuel due to a lack of refining capacity.

The bill may be just a set of proposals, but it's a strong statement of intent by Buhari, who has made clamping down on graft a tenet of his rule. Cleaning up the NNPC and improving transparency are good ways to attract much-needed investment to an economy battling the worst contraction in at least a decade.

"This is easily the most important thing the legislators have discussed since the end of military rule in 1999," said Antony Goldman, founder and chief executive officer of Promedia Consulting, a political risk advisory firm. "It's a landmark moment."

—  Antony Sguazzin

News & Opinion

South Africa Breathroughs | A flurry of announcements suggested that long-awaited economic reforms and punishments for those implicated in corruption have finally arrived. The government initiated both the auction of $500 million of internet spectrum and the sale of almost 900 vacant or underused farms. And at least eight people were arrested following investigations into state graft under former President Jacob Zuma.

Zambia Bondholders | The southern African country started talks with its Eurobond holders a day after they rejected the state's request for a six-month suspension of interest payments. Zambia had been trying to convince creditors to approve the freeze while it drafts a restructuring plan, but they say they need more detail. The government has set aside funds to pay what is due on the $3 billion of debt.

Cocoa Risks | Ivory Coast is preparing to collect a record cocoa crop, yet the market is jittery about the impact of political unrest on supplies and the demand hit from Covid-19. A bumper harvest from the world's biggest producer would add to a global surplus at a time when consumption is under pressure. Focus is also on Ivory Coast's Oct. 31 presidential election, with sporadic protests breaking out since Alassane Ouattara said he'll seek a controversial third term.

Workers harvest cocoa fruit from trees on a plantation in Agboville, Ivory Coast.

Photographer: Jose Cendon/Bloomberg

Netflix Ambition | The world's largest subscription-streaming service owes its success to popular content that's cheaper than the competition. Yet five years after it arrived in Africa, the U.S. company is struggling to grow beyond the wealthiest people, held back by poverty, piracy and limited broadband. Netflix is looking to rectify this with cheaper, mobile-only subscriptions and commissioning more locally-produced shows.

Zimbabwe's Army | The U.S. asked the country's government for help in putting down an Islamist insurgency in neighboring Mozambique that's destabilizing a region rich in natural gas. While Zimbabwe is in a state of economic collapse, its army is battle-hardened with troops having fought in the Democratic Republic of Congo and has assisted the U.S. in Angola and Somalia. Foreign Minister Sibusiso Moyo asked that the U.S. first drop targeted sanctions against Zimbabwean officials.

Past & Prologue

Data Watch

  • The number of people with jobs in South Africa fell to 14.1 million in the second quarter, the lowest in nine years. The official unemployment rate improved to 23.3% from 30.1% in the three months through March, but that didn't include those who are available to work and not looking for a job.

  • Kenyan inflation slowed to the lowest level in a year in September as food-price growth cooled further. The East African nation also held its key interest rate for the fourth straight meeting with the economy seen performing better than earlier forecasts. 

Coming Up

  • October 5 Uganda, South Africa, Kenya, Zambia, Ghana PMI for September
  • October 6 South Africa Reserve Bank to publish six-monthly Monetary Policy Review, Mozambique and Nigeria PMI for September
  • October 7 South Africa gross and net reserves, business confidence and central bank holdings of government bonds, Mauritius inflation and gross reserves
  • October 8 Nigerian President Muhammadu Buhari may present 2021 budget, Uganda and Botswana interest-rate decisions

Last Word

A company in Cameroon is illegally clearing land to start an oil-palm plantation, encroaching on a biodiversity zone in the Congo Basin, the world's second-largest tropical forest, according to Greenpeace. The firm, known as Camvert, this year began developing a 60,000 hectare site that could yield some 180,000 tons of the edible oil annually. Part of the forest borders the Campo Ma'an National Park, home to threatened animals including giant pangolins, forest elephants, chimpanzees, lowland gorillas and leopards. The project violates both Cameroonian law and international standards and threatens the livelihood of indigenous communities, Greenpeace said. The company rejected the allegations.

Aerial view of a palm oil plantation near Douala, Cameroon.

Photographer: Thomas Imo/Photothek

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