Country FilesWestCountry Profile 2014: NIGERIA

Wed,22Nov2017

Posted on Sunday, 09 February 2014 16:41

Country Profile 2014: NIGERIA

The race starts early

Hastened by the split of the ruling party in 2013, the electoral wheels will gather speed in 2014, placing strain on the oil sector and regional stability. President Goodluck Jonathan’s presumed ambition to run for office again in 2015 has polarised the political field to a degree unprecedented since the return to democracy in 1999. The political jostling will test the delicate balance that has allowed some economic reforms to gain traction. The privatisation of state power plants, a key step towards ending decades of chronic electricity shortages, has gained momentum (see box).

 

 TABLE OF CONTENTS:

TOP NIGERIAN COMPANIES

TOP NIGERIAN BANKS

 

ar-infographie-nigeria-2014The race starts early

The 2015 election campaign is already heating up amid a split in the ruling party

Electricity privatisation and financial reforms will give the economy a boost

Hastened by the split of the ruling party in 2013, the electoral wheels will gather speed in 2014, placing strain on the oil sector and regional stability. President Goodluck Jonathan’s presumed ambition to run for office again in 2015 has polarised the political field to a degree unprecedented since the return to democracy in 1999. The political jostling will test the delicate balance that has allowed some economic reforms to gain traction. The privatisation of state power plants, a key step towards ending decades of chronic electricity shortages, has gained momentum (see box).

Africa’s second-largest economy grew in 2013 due to high oil prices and a healthy domestic market. The government predicts that growth in 2014 will reach 7.4%, but such economic expansion is likely to be reduced by election spending and deepening fissures in the ruling People’s Democratic Party (PDP). The 2013 PDP primaries came amid an extension to the military campaign against the Islamist militants in Boko Haram and a politically charged race to replace the independent-minded central bank governor Lamido Sanusi. Some reforms have already taken root and should not be affected by hard-knuckled political disturbances.

REBASING

During his four-year term, central bank governor Sanusi reined in inflation and shored up the banking sector following acollapse in2009. Sanusi will oversee a gross domestic product (GDP) rebasing due to take place in the first half of 2014. This updating of data from1990 is likely to raise GDP by around 40%, posing a serious challenge to South Africa’s position as the largest economy on the continent. As a sign of the attraction of Nigeria’s market, big businesses – ranging from luxury goods brand LVMH to French supermarket giant Carrefour–have signalled interest in expanding their portfolios in the country.

But observers say the rebase will also mean that the country will need to post much higher levels of output to maintain current growth figures. That puts pressure on the Jonathan government to sign big ticket infrastructure investments before the 2015 elections.

The race to replace Sanusi in June 2014 will influence the shape and pace of the ongoing and wide-ranging economic reforms. Despite restoring investor confidence, much of the bank governor’s policy changes have been made in the face of fierce opposition from business and political elites. The administration will likely look to an ally whois less likely to publicly lock horns.

Sanusi’s other reformist colleagues will start the year on the forward foot. Finance minister Ngozi Okonjo-Iweala’s budget will tighten spending by 10%, from N5trn ($31.3bn) in 2013 to N4.5trn in 2014. Based on a three-year expenditure blueprint, the conservative spending will act as a buffer to parliamentarian profligacy, which will ramp up ahead of the polls. While the government has downsized the budget, a widening web of patronage means a flurry of parallel spending.

FOOD PRODUCTION BOOST

Agriculture minister Akinwumi Adesina has also made advances in weaning the country off its oil revenue, which accounts for 80% of state receipts. There is cause for optimism in this sector that accounts for 40% of GDP. According to ministry figures, almost three-quarters of smallholder farmers now receive subsidised fertiliser and seeds, compared with only one in ten under previous schemes. Adesina plans for the sector to create 3.5m jobs and boost food production by 25m tn ahead of the elections.

But policy will inevitably take knocks from the political realm. After being watered down considerably by both chambers, the Petroleum Industry Bill has been delayed due to questions about regional revenue allocation. The bill is too politically sensitive to have much of a chance of passing before the elections.

The very public schisms in the ruling PDP are reverberating through the economy. Seven governors and a former presidential candidate formed a PDP splinter group–the New PDP – determined to stop Jonathan from running again in mid-2013.The fallout has also contributed to the draining of the Excess Crude Account – which fell from $9bn at the start of the year to $5.8bn by the fourth quarter of 2013. This leaves Nigeria vulnerable to any steep drops in oil prices.

At the heart of the fallout is a divide largely along north-south lines over the fact that Jonathan could run again in 2015. That would break an unwritten rule that the presidency rotates between north and south. But there is also opposition to Jonathan among southerners and others who are unhappy with his record on corruption and security. The emergence in 2013 of the All Progressive Congress (APC), led by former Lagos State governor Bola Tinubu and former military ruler Muhammadu Buhari, represents the biggest and best-funded threat to the PDP since its inception. The APC’s primaries will reveal whether the four party coalition can use its scattered geographical base–of competing northern factions in addition to some from the southwest – as a benefit to draw wide support across ethnic divisions.

ar-infographie-nigeria-2014-2FUELLING MILITANCY

Should Jonathan, who is from Bayelsa State in the Niger Delta, lose the PDP primaries to a northern challenger in late 2014, militancy in the oil-producing region could surge. The ceasefire Jonathan brokered in 2009 looks increasingly shaky, and politicians are likely to continue to fund and revive former rebels for political cover. Oil output slumped to a four year low in 2013 on the back of growing pipeline sabotage and oil companies declaring force majeure. Production forecasts of 2.4m barrels per day (bpd) in 2014 are optimistic given that output oscillated around 2m bpd in 2013.

It is by no means certain the New PDP will hold together as a viable alternative. The party has yet to announce a presidential candidate, and those in the running are far from unanimously popular outside their ethnic support bases. The PDP is also doing its utmost to choke the splinter faction. Lengthy court cases look set to drag on, with the ground shifting to the Independent National Electoral Commission. Either way, the ruling party will be forced to confront a growing tide of defections, particularly among northern politicians. That will also put the Jonathan government on the back foot as it continues counter-insurgency efforts against Boko Haram. Northern allies that can provide tactical cover and political support are thin on the ground. Initially, Jonathan’s intensified military campaign in May 2013 tempered the violence as soldiers wrested back control of major towns and cities, but the insurgents have proven resilient and switched to cross-border attacks. In particular, Abuja’s shaky relationship with Cameroon may hinder bilateral cooperation. There is a risk, too, of Boko Haram attacks in the Middle Belt and Abuja.

The International Monetary Fund has criticised the Nigerian government for failing to translate years of high growth into lower poverty rates. Despite averaging 7.2% annual growth between 2004 and 2010, absolute poverty in the same period fell by only 0.4% to 62.6%.

Emerging details from at least two corruption probes – one of a deal between Shell, Eni and former oil minister Dan Etete, another of collusion between the Nigerian National Petroleum Corporation and Swissand Nigerian traders – will be a boon for anti-corruption campaigners as stakes are raised. With the spotlight on a lacklustre record, Jonathan may be prodded into taking small steps that appear to curb corruption.

POPULARITY AND THE POWER PRIVATISATION

FOR THE FIRST TIME IN DECADES, Nigeria has a real prospect of ending power shortages that have crippled the economy and contributed to mass unemployment, which has fuelled militancy. In October, the government handed over five generation companies and 10 distribution firms to private owners, the culmination of an eight-year process. A further 10 power plants, all gas fired, attracted the interest of foreign players with technical know-how in the latest bidding round in November 2013.

After pouring in hundreds of millions of dollars to upgrade infrastructure, private owners are likely to push ahead with plans that could unlock huge profits. Tapping into vast gas supplies could boost gross domestic product by 4%, economists say.

But the process could still be delayed. Despite the government bringing in Canada’s Manitoba Hydro International for help, not everyone is convinced the state-owned Transmission Company of Nigeria will manage its part smoothly. Although Nigeria has the world’s ninth-largest gas reserves, both the government and oil majors have been reluctant to invest in the infrastructure. With President Goodluck Jonathan’s push to boost his plummeting popularity ahead of elections in 2015, there is hope the government will race ahead to turn on the lights.

 

 TOP NIGERIAN COMPANIES

Rank 2012Rank 2011CompanySectorCountryTurnover (Thds $)Turnover changeNet profits
3426MTN NIGERIATELECOMSNIGERIA4,283,839-14.98%0
4061OANDOPETROL. SERVICESNIGERIA3,774,72852.78%15,885
95108FLOUR MILLS OF NIGERIAAGRIBUSINESSNIGERIA1,572,85216.76%51,016
106111DANGOTE CEMENTCONST. MATERIALSNIGERIA1,436,7228.78%766,791
109118NIGERIAN BREWERIESBEVERAGESNIGERIA1,401,44917.55%231,578
121147AIRTEL NIGERIATELECOMSNIGERIA1,229,40027.79%-110,786
140134TOTAL NIGERIAPETROLEUMNIGERIA1,059,3491.17%232,224
143146JULIUS BERGER NIGERIACONSTRUCTIONNIGERIA1,031,725NA29,683
152199CONOILPETROL. SERVICESNIGERIA959,24843.13%17,959
182171GUINNESS NIGERIABEVERAGESNIGERIA753,108-6.60%109,182
191163FORTE OILPETROLEUMNIGERIA712,524-17.64%-94,907
204203NIGERIAN BOTTLING CO.BEVERAGESNIGERIA666,214NA16,020
209223DANGOTE SUGAR REFINERYAGRIBUSINESSNIGERIA648,64610.56%43,306
214208AFRICAN REINSURANCE CORP.INSURANCENIGERIA631,4900.63%69,199
227213OLAM NIGERIA*AGRIBUSINESSNIGERIA611,020NA4,090
231238NESTL NIGERIAAGRIBUSINESSNIGERIA596,58210.61%102,367
282-SEPLAT PETROLEUM DEVELOPMENT CO.PETROLEUMNIGERIA452,596NA63,156
289299PZ CUSSONS NIGERIAPHARMACEUTICALSNIGERIA439,4247.55%15,463
293260MRS OILPETROL. SERVICESNIGERIA432,098-11.38%6,309
313280DANGOTE FLOUR MILLSAGRIBUSINESSNIGERIA403,653-8.42%4,127
320338UAC OF NIGERIADIVERSIFIEDNIGERIA387,25213.53%62,131
323391LAFARGE CEMENT WAPCOCONST. MATERIALSNIGERIA380,63733.16%51,820
325314MOBIL OIL NIGERIAPETROLEUMNIGERIA378,189-0.58%22,838
333345SEVEN-UP BOTTLING CO.AGRIBUSINESSNIGERIA364,5729.43%12,600
352374UNILEVER NIGERIADIVERSIFIEDNIGERIA333,2699.20%33,440
440-ETERNA OIL & GASCHEMICALSNIGERIA250,104171.32%7,375
460473HONEYWELL FLOUR MILLSAGRIBUSINESSNIGERIA231,8584.43%16,455
497-CADBURY NIGERIAAGRIBUSINESSNIGERIA207,7309.22%22,533
 

 TOP NIGERIAN BANKS

Rank 2012Rank 2011Bank nameCountryTotal assetsNet interest incomeLoansDeposits
1420UNITED BANK FOR AFRICA GROUPNIGERIA17,634,149844,7324,351,7748,799,977
1514FIRST BANK OF NIGERIANIGERIA17,291,7871,578,7357,556,47811,862,120
1716ZENITH INTERNATIONAL BANKNIGERIA14,064,410764,9835,071,92310,070,241
1817ZENITH BANK NIGERIANIGERIA13,122,202718,3764,673,2959,597,700
2323UNITED BANK FOR AFRICA NIGERIANIGERIA10,081,782377,1053,632,4237,408,266
2442ACCESS BANK GROUPNIGERIA9,955,608368,9183,364,1266,713,178
2529GUARANTY TRUST BANKNIGERIA9,816,347963,1474,360,0996,291,382
33-UNION BANK OF NIGERIA*NIGERIA6,524,505619,4591,319,5244,211,835
3433OCEANIC BANK INTERNATIONAL NIGERIA*NIGERIA6,380,457377,5011,827,3664,291,265
3944ACCESS BANK NIGERIANIGERIA5,760,937294,3072,820,4743,182,632
4147SKYE BANKNIGERIA5,646,051256,0182,988,5883,911,863
4553DIAMOND BANKNIGERIA4,894,574338,9102,066,1363,664,327
5658FIRST CITY MONUMENT BANKNIGERIA3,664,843195,2621,945,3542,492,219
5972STANBIC IBTC CHARTERED BANKNIGERIA3,375,230181,2631,405,0061,780,552
6163FIDELITY BANK*NIGERIA3,140,123274,3361,040,3312,130,351
6291STERLING BANKNIGERIA3,071,96588,663972,7842,475,681
6474ECOBANK NIGERIA*NIGERIA3,014,992284,8371,573,7872,257,713
6954KEYSTONE BANK (EX-BANK PHB)*NIGERIA2,792,177254,951432,1772,532,529
7985UNITY BANKNIGERIA2,289,415128,794692,1991,625,522
112103STANDARD CHARTERED BANK NIGERIA*NIGERIA1,500,810160,803625,9091,003,028
119-WEMA BANK*NIGERIA1,414,73888,364279,012788,162
 


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