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Why UK official warned investors against investing in Nigeria

A former Secretary of State for International Development, United Kingdom, Priti Patel, has warned investors to be wary about investing in Nigeria.

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Priti Patel

A former Secretary of State for International Development, United Kingdom, Priti Patel, has warned investors to be wary about investing in Nigeria.

Patel, writing in a London newspaper, City A.M, alleged that the President Muhammadu Buhari-led administration failed to honour an agreement involving a firm, Process and Industrial Development (P&ID) and the Federal Government.

According to her, the firm had signed a 20-year contract with the government to create a new natural gas development refinery, but the project fell through after the Federal Government reneged on its contractual commitments.

She further alleged that the Nigerian Government promptly cancelled a compensation settlement, and has done “his level best to pretend Nigeria’s obligations to Process and Industrial Development do not exist.”

“Since Buhari reneged on this deal, P&ID has undertaken legal efforts to affirm a tribunal award, first decided in London. It also made several attempts in court to force the Nigerian government to respect its obligations.

“The most recent court decision at a London tribunal confirmed that the Nigerian government owes P&ID almost $9 billion for the initial breach of contract, loss of income, additional costs, and interest accrued after five years of non-payment.”

Reaction from the Presidency

Reacting to Patel’s allegations, Senior Special Assistant, Media and Publicity Mallam Garba Shehu, described her as a wicked proposition lacking in substance and devoid of merit in empirical evidence established by facts.

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He further added that before the coming of the Buhari administration, there existed in the country a racket encompassing elements in the three arms of government – the executive, legislature and the judiciary, “through the activities of which artificial, engineered and factored breaches of contract are made, judgments are obtained, appeals are delayed and the penalty imposed is paid and shared”.

Priti Patel served as the Secretary of State for International Development from 2016 until 2017 and has served as Member of Parliament (MP) for Witham in Essex since 2010.

Fikayo has a degree in computer science with economics from Obafemi Awolowo University. ITIL v3 in IT service management. An alumnus of Daystar Leadership Academy. Prior to joining Nairametrics had stinct in Project management, Telecommunications among others. Also training in Consulting and Investment banking from Edubridge Academy. He has very keen interest in Politics, Agri-business, private equity and global economics. He loves travelling and watching football. You can contact him via [email protected]

1 Comment

1 Comment

  1. Racham Matthew Anthony

    November 21, 2018 at 11:46 am

    Who made the deal? Who reneged on the deal? Why is there reference to the past?

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Coronavirus

Covid-19: Global deaths surpass 2 million

Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday.

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Nigeria blows past 40,000 COVID-19 cases

The Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday, with the United States accounting for 1 in every 5 deaths, as it has recorded over 386,000 casualties so far.

This was disclosed in a report by Reuters in its Covid-19 tally reported on Friday evening.

After the United States, Brazil, Mexico, India and the U.K contribute nearly 50% of the combined casualties.

The report also disclosed that an average of 11,900 casualties are recorded per day in year 2021, despite the fact that it took 9 months for the world to record 1 million casualties.

United Nations Secretary-General, Antonio Guterres, said the 2 million death count was “a heart-wrenching milestone.”

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  • “Behind this staggering number are names and faces: the smile now only a memory, the seat forever empty at the dinner table, the room that echoes with the silence of a loved one,” he added.

The WHO warned that 2021 could be tougher due to the nature of new variants which transmit the disease faster.

  • “We are going into a second year of this. It could even be tougher given the transmission dynamics and some of the issues that we are seeing,” WHO Chief, Mike Ryan, said.

Analysts expect the global death toll to surpass 3 million by April 2021.

What you should know 

  • Nairametrics reported that the total number of covid-19 cases in Nigeria had surpassed the 100,000 mark on Sunday 10th January 2021, according to the Nigeria Centre for Disease Control.
  • The African Union stated that it secured 270 million Covid-19 vaccine doses for the continent from drug manufacturers to supplement the COVAX programme, a step towards the commencement of the complex task of vaccinating over 1.2 billion people with limited financial resources.
  • The Nigeria Centre for Disease Control on Friday 15th January 2021, announced that 1,867 new cases of the covid-19 virus were recorded across 24 states in the country. This represents the highest number of cases recorded in a single day.

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Debt Securities

Interest rates will remain low until the end of H1 2021 – Meristem Securities

Meristem Securities has argued that interest rates will remain low until, at least, the end of H1 2021.

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Why Emefiele’s interest rate policy is ‘great’

Meristem Securities has asserted that interest rates will remain low until, at least, the end of H1 2021.

This statement was made at the recently held webinar on Global Economy and Outlook, which the company themed: Bracing for a Different Future.

Although the company acknowledged that there is mounting pressure for upward movement in yields from several stakeholders, it appears the company concurs nothing concrete is in sight.

This line of reasoning seems to have influenced their decision to advise investors to move away from Treasury instruments.

What they are saying

Meristem advises that:

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  • “Buy and hold strategy investors seeking to generate above average returns should move away from risk free Treasury instruments and focus on investment grade commercial papers and bonds which satisfy investment objectives.”
  • “Active traders with higher risk appetite are advised to focus on high-yield short duration instruments, which would be re-invested into a higher yield environment should rate reversals occur.”

The advice regarding shunning Treasury instruments appears to be in order, considering that treasury bill rate has been declining, with the latest figure — November 2020 — 0.03% as per the CBN monthly interest rate data.

Further checks from the Debt Management Office website, indicates that the latest figures for Eurobonds and Diaspora bond fall short of the fixed yield at issue for all the different categories of bonds in issue.

What you should know

Latest figures from the CBN’s monthly interest rate indicate that:

  • Treasury bill rate has been on a steady decline for six months, down to 0.03% since the last rise (2.47%) in May 2020.
  • Fixed deposit rates (one, three, six and twelve months) have also been declining – the latest figures for these indicate that in November 2020, one-month deposit rate was 1.92%, 2.9% for three months, 2.84% for six months, and 4.89% for 12 months.
  • Compared with the corresponding period in 2019, the figures indicate that these rates fell by 75%, 66%, 71% and 49% respectively.

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Corporate deals

FMDQ Securities Exchange admits Total Nigeria Plc and 2 others CPs

FMDQ has announced the admission of three new Commercial papers.

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AFEX to partner with FMDQ and Dubai Commodities Exchange

FMDQ Securities Exchange Limited has announced the quotation of Total Nigeria Plc, Mixta Real Estate and Valency Agro Nigeria Limited Commercial Papers under its platform.

According to the News Agency of Nigeria, the disclosure was made by the FMDQ Group in a corporate statement issued, sequel to the fulfilment of all regulatory requirements.

  • The statement explained that FMDQ admitted Total Nigeria Plc., N2.25 billion Series 1 and N12.75 billion Series 2 Commercial Papers (CP) under its N30 billion CP Issuance Programme.
  • It also approved the quotation of Mixta Real Estate Plc., N2 billion Series 32 CP under its N20 billion CP Issuance Programme.
  • In the same vein, the FMDQ Group also approved the registration of Valency Agro Nigeria Ltd., N20 billion CP programme on its platform.

What they are saying

Commenting on the quotation of the issue, the Managing Director of Total Nigeria, Mr Imrane Barry, explained that:

  • “The programme was set up to enable the company further broaden its sources of capital by accessing funding from the Nigerian debt capital markets, while also reducing its overall funding costs.”

In his remarks, the Managing Director, Valency International Pte Ltd., Mr Sunil Dhanuka, said:

  • “We are glad for the successful registration of Valency Agro’s, N20 billion CP Issuance Programme. In line with our vision to grow within the agricultural value chain in Nigeria, Valency Agro is committed to ensuring the growth of the agriculture sector through our deep involvement in Cashew, Sesame, Cocoa and other produce.
  • “Proceeds from this CP Programme will be used toward meeting the midterm working capital requirements of the various agricultural produce and on value addition prior to export.”

What you should know

  • Nairametrics reported the admission of Axxela N11.5 billion bond on FMDQ platform.
  • Total Nigeria Plc had earlier issued a debut commercial paper, which was aimed at supporting the sector and reactivating the economy. This CP was halted by the COVID-19 pandemic.
  • Despite the disruption, the debut issuance attracted sizeable demand from a lot of investors, leading to oversubscription.
  • The financial advisers of the debut issuance scheme are Stanbic IBTC Capital Limited and FBNQuest Merchant Bank Limited.
  • Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations (for example, payroll) and is backed only by an issuing bank or company which promises to pay the face amount on the maturity date specified on the note.

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