There is something very unusual happening in Africa, and that is what Mali, Niger and Burkina Faso are doing. These are largely landlocked countries which posits that they have inherent geographical disadvantages in international trade. But since they disconnected from ECOWAS, pockets of uncommon visions have emerged.

For everything done, I am concerned about the plan for them to have a currency union with their own currency. As I write, the 3 countries remain members of the West African Economic and Monetary Union (Uemoa), a currency union, behind the CFA franc, which is issued by the Central Bank of West African States (BCEAO).

My secondary school Commerce teacher, Mr Udeagu Jr, explained that BCEAO does deposit foreign reserves in Banque de France and the French nation is the guarantor of the CFA franc. But today, the issue is that the trio wants to create their own currency. Good People – they have done many things including a rumoured turning down an IMF loan, but this new currency will not be an easy one.

I have written extensively in the African Union working papers on the perils of currency union within heterogeneous economic structures. A supranational bank serving these three countries could be in real troubles, and that could trigger welfare losses in the countries. The relative economic stability they have right now must not be compromised with a haphazard pursuit of economic purity, which here, is absolute disconnection from France. 

Personally, I am not a big fan of a single currency because it will not remove the rascality of spending politicians in Africa. And when you lose autonomy on the national central bank to use macroeconomic tools to deal with some economic challenges, many bad things could happen. So, instead of pursuing a single currency, the trio and other African nations must work to build trade infrastructures like roads, railways, seaports, etc. 

My position is that building infrastructures and using tech to eliminate currency friction, across borders, should be prioritized.

Indeed, in Nigeria, we use the Naira but without the rail networks, the level of trade between Maiduguri and Aba has gone down. And the one between Ovim (my village in Abia State) and Enugu has collapsed. The old Ovim Railway Station served more than nine local governments, linking communities to opportunities. We continue to use Naira but with no railway system, trade has faded, destroying rural-urban linkages.

So, it goes beyond having the same currency. Jumia does not deliver packages to Ovim, even though Ovim uses the same currency as Lagos. The issue is this: the currency of commerce and the operating system of trade – supply chain – is limited in Nigeria. That is the currency we need to have in Africa and stop the illusion that because I can pay you with the same currency, all core problems will disappear.

Yes, the trio can develop their markets via infrastructure linkages and leave the currency alone, for now. The risk of a currency mess is huge.

The Nigerian National Petroleum Company Limited (NNPCL) has made significant progress in repaying a $1.036 billion loan it secured in September 2021 to finance the acquisition of a stake in the Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

As of December 31, 2023, NNPCL has repaid $625 million of the principal amount, leaving an outstanding balance of $424 million. This repayment is documented in the NNPCL’s financial statement for the year ending December 31, 2023, under the section titled “Financing of Investment in Dangote Refinery.”

Details of the Loan and Repayment

The $1.036 billion loan was secured through a forward sale agreement with Lekki Refinery Funding Limited, with an interest rate set at 3-month LIBOR plus 6.125%. Under the terms of the agreement, NNPCL committed to supplying 35,000 barrels of crude oil per day as part of the repayment plan. The financial statement reveals that as of December 31, 2023, NNPCL had repaid $625 million, with $424 million still outstanding.

“In September 2021, NNPC entered into a forward sale agreement with Lekki Refinery Funding Limited to supply 35,000 barrels of crude oil per day for the settlement of the $1.036 billion (N426.2 billion) funding received for the financing of investment in Dangote Refinery.

“The interest rate for the facility is 3-month LIBOR plus 6.125%. As of 31st December 2023, NNPC limited has paid $625 million principal, while $424 million (N324 billion) is still outstanding,” the financial statement partly said.

Initially, the loan was used to finance the acquisition of a 20% stake in the Dangote Refinery, a deal expected to cost $2.76 billion. However, NNPCL’s stake in the refinery has since been reduced to 7.25%, a significant decrease from the originally intended 20%. This reduction occurred after NNPCL failed to pay the balance of its share, which was due in June 2023. The management of this investment, originally handled by NNPC Greenfield Limited, a special-purpose vehicle wholly owned by NNPCL, was transferred to NNPC Downstream Investment Service (NDIS) following the company’s restructuring under the Petroleum Industry Act (PIA).

Allegations of Financial Recklessness

NNPCL’s financial dealings, including the acquisition of the Dangote Refinery stake, have not been without controversy. The company has been mired in allegations of financial recklessness, with critics pointing to a pattern of taking on substantial and, in some cases, questionable loans. The NNPCL is currently seeking to borrow an additional $2 billion, even as it is reportedly owing about $6.8 billion to international traders.

Against this backdrop, NNPCL has reportedly not remitted any funds to the federation account since January 2024, a situation it attributed to what it describes as a “subsidy shortfall/FX differential.”

NNPCL has informed President Bola Tinubu that due to the burden of subsidy payments, it is currently unable to pay taxes and royalties into the federation account, as required by sections 64(c) of the Petroleum Industry Act (PIA). This section obligates NNPCL to remit 70% of sales from crude oil to the federation account, keep 20% as retained earnings, and allocate 10% to the frontier basin exploration fund.

However, the company has recently declared a record-breaking net profit of N3.297 trillion for the 2023 fiscal year. This profit marks a significant increase of N749 billion, or 28%, from the N2.548 trillion profit reported for 2022. Despite this robust financial performance, the lack of remittances has sparked concerns about the company’s financial transparency and its adherence to statutory obligations.

What This Means for NNPCL and Nigeria

The NNPCL’s financial challenges, coupled with its inability to remit funds to the federation account, highlight the precarious state of Nigeria’s oil sector. Energy experts have noted that the company’s decision to reduce its stake in the Dangote Refinery, while financially necessary, may have long-term implications for its strategic position in the industry.

They further noted that while the NNPCL has made strides in repaying its loan for the Dangote Refinery stake, the broader context of financial mismanagement, mounting debt, and non-remittance to the federation account paints a troubling picture.

President Bola Tinubu’s recent departure to France aboard a newly acquired presidential jet has ignited a firestorm of controversy and criticism, following weeks of speculations that the Federal Government has quietly purchased the aircraft.

The jet’s purchase, which reportedly cost over $100 million, was intended to remain a closely guarded secret due to fears of public backlash, especially given Nigeria’s current economic difficulties. However, the plan was unexpectedly exposed following a French court’s order to seize three Nigerian aircraft over a contract dispute with a Chinese company.

The acquisition of the Airbus A330 was intended to replace the aging Boeing B737-700 (BBJ) in Nigeria’s presidential fleet. Sources within the government have revealed that the administration was acutely aware of the potential fallout from such a high-profile purchase during a time of significant economic hardship for the majority of Nigerians.

The decision to keep the purchase secret was driven by concerns that the revelation would spark public outrage, particularly as the government faces criticism for its handling of the economy and its recent disputes with labor unions over minimum wage increases.

However, the plan to keep the purchase under wrap was inadvertently exposed when a French court ordered the seizure of three Nigerian aircraft in connection with a contract dispute involving a Chinese company. The court’s decision brought the acquisition of the new presidential jet into the spotlight, forcing the government to publicly acknowledge the purchase.

Presidential spokesperson Bayo Onanuga defended the acquisition, claiming that the new jet would save Nigeria millions of dollars in maintenance and fuel costs. Onanuga emphasized that the aircraft was purchased “far below market value,” and that it was necessary to ensure the safety and efficiency of the presidential fleet.

“The new plane, bought far below the market price, saves Nigeria huge maintenance and fuel costs, running into millions of dollars yearly,” Onanuga said in a statement confirming the purchase.

The Airbus A330, which has already assumed the role of Nigeria’s Air Force One, is now registered as 5N-NGA. According to Onanuga, the new jet is equipped with state-of-the-art avionics, a customized interior, and an advanced communications system, providing enhanced safety and operational efficiency for the nation’s leaders.

Jet Purchase Not In The Budget

The secrecy surrounding the jet’s purchase extended to Nigeria’s legislative bodies. Several lawmakers have stated that they were unaware of the acquisition, as it was neither discussed nor approved during plenary sessions. This lack of transparency has only added fuel to the public’s frustration, with many questioning the government’s commitment to accountability.

A member of the House of Representatives, who spoke to Daily Trust on condition of anonymity, revealed that the purchase was not included in either the main budget or the supplementary budget presented to the National Assembly.

“We’ve not seen anything in the main budget or the supplementary budget about the purchase of a new presidential aircraft,” the lawmaker said. “So, we cannot say anything. I won’t have any comments until I see the details.”

Another source within the Senate confirmed that the matter was never tabled for discussion, further highlighting the administration’s efforts to keep the purchase under wraps.

Public Outcry and Calls for Transparency

The exposure of the secretive jet purchase has led to widespread criticism from various quarters, including opposition figures and civil society organizations. Many Nigerians have expressed outrage over the government’s decision to prioritize the acquisition of a luxury aircraft while the country grapples with severe economic challenges and workers struggle to make ends meet.

Peter Obi, a former presidential candidate of the Labour Party, was among those who called for greater transparency, urging the government to disclose the full details of the purchase.

“Now that the Presidential Jet has arrived. From all indications, despite all the denials, and back and forth over the newly acquired Presidential aircraft, the jet is now here thanks to the French court that helped Nigerians to get the information,” Obi said.

“Now that the Jet is here, Nigerian taxpayers whose money was used to purchase it need to be privy to how much it cost, how old the aircraft is, and how long it’s been in operation.”

Obi’s statement reflects a broader sentiment among Nigerians who are demanding to know the true cost of the aircraft, especially in light of the economic hardships facing the nation.

The decision to acquire a new presidential jet has been seen by many as an indication that the government is out of touch with the struggles of ordinary Nigerians. They argue that the funds used to purchase the aircraft could have been better spent on addressing pressing social and economic issues, such as improving public services or providing relief to those hardest hit by the economic downturn.