Let’s End This Crisis Now, Shall We? 😕

Project Eagle and the Nigerian Petroleum Industry

Hello there,

Welcome to a new month! Better opportunities and more wins this month.

For us, we’re making a slight adjustment to the schedule of our mid-week newsletter. It would now only go out once a month, on the last week of the month.

Now to the stories of the week.

Project Eagle and the Nigerian Petroleum Industry

Nigeria’s apex oil firm NNPC(Nigerian National Petroleum Corporation), the oil corporation through which the federal government of Nigeria regulates and participates in the country's petroleum industry has signed a prepayment deal worth $1.5 billion. 

This deal dubbed “Project Eagle” was led by Standard Chartered, African Export Bank (Afrexim) and United Bank for Africa and backed by oil traders Vitol Group and Matrix Energy. 

What this means: Vitol and Matrix will each get 15,000 barrels per day (bpd) of crude as repayment over five years, starting in August. Nigeria’s crude oil production is currently nearly 2 million barrels per day.

Say more

So here’s how it works. Prepayments with traders are widely used in commodity finance because banks consider them to be a secure form of lending in countries viewed as risky. For trading firms such as Vitol, these loans are ideal for securing long-term supplies and boosting razor-thin profit margins.

Why this matters

NNPC has been trying to raise cash through prepayments with traders for years. However, the firm’s opaque finances and costly gasoline subsidies have made it tough for it to secure private financing on attractive terms. The deal provided OPEC-member Nigeria with much-needed cash after its finances were hit by the oil price crash in April as the lockdown erased about one-third of oil demand.

Follow the money

There have been claims that the NNPC intends to use a large portion of the money to pay taxes owed by its subsidiary NPDC and the remainder will go towards operational expenses and capital expenditure. There have also been reports that money from the pre-payment could fund an upgrade of the Port Harcourt refinery in the oil-rich southern region of the country. 

Zooming out

Last week we wrote about the government of Africa’s largest economy finding new ways to generate revenue here and the premise still remains the same, accountability is key to effective leadership and management of resources. However, it's good to see the government making moves to recover from the economic downturn brought by the pandemic.

Rwanda and Kenya open up to International Flights

Rwanda and Kenya might have missed out on some of the tourists for the summer holiday but they sure won’t miss the end-year holiday as they resume international flights from today, August 1st. 

They join other African countries like Seychelles, Senegal, Nigeria, and neighbouring countries Sudan, Somalia who have earlier opened up to international flights.

The state of the virus 

Out of a population of 51.39m, Kenya has 20,600 cases, 8,165 recovered and 341 deaths — 0.040% infection rate. While Rwanda with a population of 12.3m has 2,100 cases, 1,106 recovered and 5 deaths — 0.017% infection rate. 

What to expect on Arrival?

Negative COVID-19 result: International travellers would have to present negative COVID-19 test results. In terms of validity of the test results, in Kenya tests have to be done latest 7 days before arrival while 3 days in Rwanda.

Re-test/Quarantine: In Rwanda, all passengers would be re-tested on arrival and quarantined (for a day) while they await results. While in Kenya, there’d be no tests or quarantine except passengers display symptoms -- high temperature, coughing -- related to being infected. 

An exception would be made for passengers from Tanzania, who will be placed in mandatory quarantine for 14 days before they are allowed to interact with the public because the rate and extent of infection in Tanzania is unknown. The government stopped announcing COVID cases results from 6th of June, saying it’s coronavirus free.

Why it matters

The opening of international borders is a risky move but a necessary one as these two countries rely heavily on tourism. Tourism is the second-largest source of foreign exchange revenue after agriculture in Kenya and Rwanda which is home to volcanoes, waterfalls and rainforests with diverse animals has seen a steady increase in tourist visits in the past few years.

Let’s End This Crisis Now, Shall We?

Anti-government June 5 protests led by influential scholar Mahmoud Dicko.                         Photo: Aljazeera

Mali is still in a deep political crisis and African leaders are rallying to see how to end the fight. 

Background story

Thousands of Malians are on the streets demanding the resignation of president Ibrahim Boubacar Keïta. This is following the June 5 movement where protesters hit the streets seeking a mass civil disobedience in continuation of their efforts to reform the country which has been under siege by the current government.  

Dating back to 8 years ago: A crisis began with rebels and jihadists taking control of the northern part of the country in 2012 and has since deepened over the years as armed Islamist groups, ethnic militias and bandits have destabilized the country. These June 5 protesters think the government of Keita has not done enough to address the corruption that has taken the lives of citizens so they stage a movement to prompt his stepping down.

Efforts to settle this

Since Keita has refused to heed to their request to leave the office and the M5 have refused to back down on their part, the fight has escalated, causing deaths of protesters. A group of five West African leaders including presidents of Ivory-Coast, Ghana, Niger, Nigeria and Senegal were in Mali seeking ways to restore peace. This comes after a mediation mission by the West African regional coalition of the Economic Community of  West African States (ECOWAS) failed to crack the insurgency.

Why does Mali’s security matter?

Questions arising about the importance of Mali’s security that could have attracted five regional presidents. 

For West Africa: This interference isn't just about goodwill, Mali’s security is pretty much important to regional neighbours like Nigeria, Northern Ivory-coast and the Niger Republic, who have also been plagued by many attacks by terrorist groups, the stability and peace of one of these countries will enhance that of the rest. Also, the crisis in Mali can influence a rise in illegal migration to neighbouring countries as well as trade and economic distortion. 

For Europe: Mali is mostly used for illegal transportation of migrants through the Mediterranean sea to Europe and is a major tunnel for human trafficking. Crisis of this nature in the region can loosen security focus on the dessert, ultimately aiding illegal activities in the area.   

Moving forward?

Not exactly, the protest is still ongoing with none of the parties involved willing to take any steps back. However, there may be further summit by ECOWAS to try to renegotiate, address the crisis and secure peace in the country but until then, thousands of lives are still in danger in Mali. 

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Quote 💭

"Take a simple idea and take it seriously." —Charlie Munger

Thank you for reading this week’s edition 💙

Written by Daniel AdeyemiDamilola Amusan Bright Azuh