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Covid-19: Nigeria risks supply chain bottleneck, loss of N2.27 trillion in trade

Nigeria’s access to raw materials and manufactured goods from other regions could become greatly hampered in the coming weeks.

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Covid-19, Conditional cash transfer: FG gives reason for disengagement of 2 Payment Service Providers, President Buhari asks the Chief Justice to release prisoners due to coronavirus

A report by Verakki Business Solutions has suggested that many businesses have been badly hit by the Covid-19 pandemic, even as shortages and a global supply chain bottleneck are posing fresh problems.

The report also noted that if the current lockdowns across most parts of the world persist for another two months, about N2.23 trillion worth of trade from Nigeria’s top 5 import countries would be lost. This could ultimately lead to domestic scarcity.

According to the report, four of Nigeria’s top trading partners and import sources (i.e., China, USA, Spain, and the Netherlands) are currently implementing lockdown measures. These countries account for 45% of Nigeria’s imports.

(READ MORE: 13 new cases of COVID-19 reported in Nigeria, as 3 more people die)

Meanwhile, Nigeria’s access to raw materials, industrial components, and manufactured goods from these regions could become greatly hampered in the coming weeks. China, which used to be the epicenter of the pandemic, is still mostly under lockdown with limited economic activities. If this persists, the country may be unable to meet up with the demand for raw materials and other commodities from countries like Nigeria. And the attendant bottlenecks would give a significant dent to manufacturing operations, consumer goods, and retail operations in Nigeria.

The mentioned challenges, coupled with the issue of border closures, could also ultimately result in a spike in production costs across Africa. It would also take longer to restock raw materials, a situation that has been projected could cause panic buying, hoarding, and irregular price fluctuations. Companies would either be forced to cut production due to the lack of raw materials or offer their goods and services at high prices due to envisaged replacement costs.

In the meantime, Nigeria could be losing an estimated N2.27 trillion worth of exports due to closed borders.

READ MORE: Dufil Prima Foods to source raw material in Edo State

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COVID-19: How the tables turned on Europe, New Tech Opportunities amid COVID-19 Crisis, COVID-19: Total figure now 51 as Osun and Rivers state record first cases, Covid-19: Nigeria risks supply chain bottleneck, loss of N2.27 trillion in trade

Recall that the Coronavirus pandemic had come with its social, economic and financial challenges which will ultimately lead to a global economic recession, according to experts. Recall that there have been many lockdowns and travel restrictions around the world, as countries try to contain the spread of the disease.

The International Monetary Fund (IMF) has predicted that the global economy is expected to go into recession this year, just as the World Bank Group disclosed that Sub-Saharan Africa is about to witness its first recession in 25 years. In addition, Nigeria’s Minister for Finance, Budget and National Planning, Zainab Ahmed, recently stated in an interview that the country would go into recession if the Coronavirus pandemic persists for the next 6 months.

The pandemic has also partly caused a slump in global oil prices, shutdowns of businesses, huge drops in revenue and foreign exchange earnings, increased deficit spending, and so many other negative impacts.

(READ MORE: Kano records first COVID-19 confirmed case)

Stanbic 728 x 90

A sharp drop in global economic activities drastically reduced the demand for oil, thereby causing crude oil prices to hit a multi-year low. This situation is negatively impacting on Nigeria’s 2020 National budget, as well as revenue allocation to the three tiers of government.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Why the proposed Borno power plant may not materialise 

The glaring security challenge cannot be overlooked in considering a major power plant project in Borno State.

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Only a few days ago, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, led a delegation to Borno State to meet with the Governor of the State, Babagana Zulum.

In the conversation with Zulum, Kyari promised the establishment of a gas-fired power plant in Borno State within a maximum of 4 months to solve the recent blackouts that resulted from insurgents cutting off Borno from the national grid since January this year.

In Kyari’s words, “We have talked to each other and we think it’s very possible to establish a dedicated power plant in Maiduguri which will serve current needs of power supply not only in Maiduguri but to other parts of the neighbouring cities.”

Yet, there is a significant possibility that the power plant promised by Kyari may not materialize for many reasons, the first of which is security. In the meeting with Kyari, Governor Zulum had noted: “The ongoing insurgency has cut off the entire Borno from the national grid in the last three months. We put all our efforts and restored it back… but unfortunately, after 48 hours, the same group of insurgents went back and destroyed the main tower again.”

This glaring security challenge cannot be overlooked in considering a major power plant project in Borno State, particularly noting that the State and its surrounding communities have been the hot zone of insurgent and terrorist attacks by Boko Haram insurgents since 2009. Borno, Yobe and Adamawa have particularly been states where the insurgents have set up shop and carried out various activities, including kidnap, extermination of entire communities, burning of markets and religious buildings and the attack on the United Nations compound, in each case claiming tens or hundreds of innocent lives.

One report reveals that at least 37, 500 people have been killed by the insurgent group since May 2011, a modest number, some say. Also, till date, some of the secondary school girls kidnapped in the April 2014 Chibok incident are yet to be returned to their families. It is then bewildering how Kyari intends to see to the construction and operationalizing of this gas power plant.

Additionally, while the Minister of Petroleum for State, Chief Timipre Sylva, announced last year about the discovery of oil and gas deposits in the North, we have not seen any exploration and production kick-off. It then begs the question of where the gas for the Borno power plant intends to be sourced. The only gas pipeline that runs through the North – the AKK- is still in its first phase of construction out of three phases and has been earmarked at the earliest, to be completed in 2023 – not counting the typical delays the project will experience along the way.

Should the AKK by some stroke of luck materialize much earlier than the target date, the pipeline route is a considerable distance from Borno. It runs the route of Ajaokuta-Abuja-Katsina-Kano, its endpoint, a striking 481km from Borno State. Thus, there would have to be construction of a tie-in pipeline almost as long as the AKK from Kano to Borno State to get gas to Borno.

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Optimists may reference the oil and gas discovery in the North and how production may start soon, thus obliterating the need for a 481km pipeline. This optimism however is not well-founded, as insecurity has been shown to be a major risk to oil and gas projects everywhere in the world. One of the major reasons the Trans-Saharan Gas Pipeline proposed to run from Nigeria to Algeria was abandoned was due to security challenges posed by Nigeria’s Movement for the Emancipation of the Niger Delta (MEND), the Tuareg guerilla movement in Niger and other insurgent groups along the proposed route of the pipeline.

These increased the risks across board, including for completion and operations through the lifecycle of the project. As such, failing to fix the security threats in northeast Nigeria makes any proposed gas plant project a pipe dream. Transporting gas via LNG trucks is not a better option, given that the drivers and their cargoes would be in danger of being kidnapped, shot at or bombed. The risks for both personnel and investors are high.

In any event, promising a power plant in 4 months for the people of Borno is unconscionable, since a typical gas power plant will take between 1 to 6 years to construct in relatively peaceful regions. What the government needs to do instead of making promises it cannot keep is to work arduously to fix the security challenges in Northern Nigeria and at the same time consider using decentralised solar power to provide power supply to homes, government institutions, schools and businesses while plans to produce gas in the region or transport gas to it are underway.

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Lagos Commissioner of Police dismantles road blocks on Lagos-Badagry expressway

The Commissioner warned the concerned Area Commanders to take action on full compliance as any defaulter will be sanctioned accordingly.

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The Commissioner of Police in Lagos State, CP Hakeem Odumosu, has ordered the immediate dismantling of all illegal roadblocks by police teams from the command on the Lagos-Badagry expressway.

The directive is to checkmate the illegal activities of the police on that route which have been condemned by the government, some stakeholders and international bodies and also bring sanity and decency to their operations along that axis.

That disclosure is contained in a statement signed by the Police Public Relations Officer of the Lagos State Police Command, CSP Olumuyiwa Adejobi, on Saturday, April 10, 2021.

Adejobi in the statement said that CP Odumosu gave the order on Friday while addressing Area Commanders and Divisional Police Officers in the command on the general security situation in the state and reviewing the anti-crime strategies of the command in order to sustain its feats on crime control.

What the statement from the Lagos State Police Command is saying

The statement from the Lagos Police Command partly reads, “In his bid to restore sanity and decency to the operations of the police along the ever-busy international route, Lagos/Badargy Expressway, the Commissioner of Police, Lagos State, CP Hakeem Odumosu, has ordered for the immediate dismantling of illegal roadblocks by the police teams from the Lagos State Police Command.

The police boss, while reacting to some complaints from the general public and some security reports on the police activities along the international route, ordered the Area Commanders and Divisional Police Officers whose jurisdictions fall along the Badargy Expressway; Festac and Area K, Marogbo, to withdraw their men from the illegal roadblocks and embark on aggressive motorised patrol and surveillance to police their areas and the route.

The Commissioner of Police confirmed that the illegal police roadblocks along the route have been condemned by the government, international bodies and interest groups and they must be dismantled without delay,” he said.

The Commissioner, however, noted that other police operatives from other police formations, outside the supervision of the Lagos State Police Command who operate along the route, would be contacted to adjust and do the needful to restore sanity to their operations.

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The CP Odumosu then warned the concerned Area Commanders to desist and take necessary action on full compliance with his order as any defaulter will be sanctioned accordingly.

 

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