Welcome to the Sunday newsletter! I haven’t published this in a while so it feels good to be back. If you haven’t already subscribed, come on, do it now!
In October, I talked about Exxon Mobil’s drive to leave Nigeria and what it means for the future of Nigeria’s oil sector. Here’s what I wrote at the time;
“What Exxon Mobil is doing is simple; they’re selling parts of their business that’s giving them the most challenges. Nigeria is profitable for them, but operating here comes with many challenges: insecurity, community problems, persistent pipeline leaks….”
Another oil major, Royal Dutch Shell Plc, has now put up its stake in 19 onshore oil fields for sale. To be clear, Shell has been selling off its onshore assets in Nigeria since 2015 as part of efforts to “go green” and become a more environmentally friendly company. But it’s hard to look beyond the fact that Shell has been dealing with issues in the Niger Delta for almost a decade. Pipeline vandalism and a security breakdown mean it is more difficult than ever for oil majors to secure their onshore assets.
“So oil companies review their assets every year and consider the associated costs. When fields are near peak production and you get reasonable oil prices, you’ll be okay to fight any battle. But when production starts declining, companies make projections for the future and may decide to sell assets.”
It’s hard to ignore the high-profile lawsuits Shell has faced due to oil spills over the years. Nigeria’s government has typically turned a blind eye to solving many of these issues, and Shell’s exit will not mean an end to oil spills.
The local players want Shell’s stake in the 19 onshore assets to include: Seplat, Sahara Group, and Famfa Oil, but big worries over these local players remain. It is hard to ignore the November 2021 oil spill in Nembe, Bayelsa state, which lasted for over a month before the authorities intervened. Over one hundred thousand barrels of oil spilt into the environment. A Premium Times investigation claimed that Aiteo, a local player and the operator of the Nembe oil field, failed to report and respond to the incident on time causing extensive damage.
While some may find some optimism in local players taking over these assets, the real issues in the oil sector, mostly caused by an absence of political will in tackling environmental issues and the snail’s pace in passing useful legislation, still remain. Fixing these issues will be critical to making the best of Nigeria’s oil assets before the end of the oil era.
When we asked a group of people what they want in a bank, the most common answers were: great interest on savings and access to loans.
So we listened and built Kredi Bank, a digital bank that offers real returns of 17% on your savings. Want to know the best part? Kredi Bank users can get instant loans with zero collateral. We understand that sometimes you need a little extra cash fast, and there are times when waiting for approval can't wait. Kredi Bank is available whenever you need it – without long waits or paperwork.
Buhari wants us to go back to the farm.
President Buhari has remained largely consistent in how he thinks of growing the Nigerian economy: getting us to grow what we produce and cutting off dependence on ‘foreign items.’ This thinking, which is also pretty popular among many Nigerians, created policies like the Anchor Borrowers Scheme, the border closure policy, CBN’s numerous loans and interventions for farmers and over four years of a disastrous FX regime.
Those policies have led to an increase in headline inflation, uncertainty in the FX market and 19% food inflation. To call the results disastrous would be the height of kindness. Yet, one year to the end of the Buhari administration, the President had another brainwave. In an interview with Channels TV, he said his administration figured that the big problem was that not enough people were going back to the farm. He also said that too many young people who have degrees are dependent on the government for jobs. The hypocrisy of Buhari, who has never held any job outside the government, to say this is not lost on me.
Why is Buhari’s comment on ‘going back to the land’ important enough to debate? It’s mostly because it’s a theme I’ve heard over and over from social commentators. And on the back of Buhari’s statement, I saw quite a few tweets contextualising it.
Here’s the first problem: 70% of Nigerians already participate in Agriculture- albeit at a subsistence level - and the sector contributes 24% to the country’s GDP. It shows that the current problem isn’t about people getting into agriculture but that the sector needs technology, financing, education, security, efficient transportation and an overhaul of the value chain.
In a country where 70% of its population works in Agriculture, here’s what one researcher wrote about mango production in the nation’s food basket: “All in all, nothing bore any semblance to the organised production of mango in Benue. We tried our best to crunch whatever reliable numbers we got, and we still weren’t able to reliably approximate how many mangoes- or trees-were in Benue. What we can conclude is that the varieties and quantities of Mangoes in Benue are not as many as people think, and they certainly do not work for our purposes (and we suspect for any other forms of processing.).”
We can draw a straight line from the discovery of mangoes to Buhari’s idea that if Nigeria banned rice importation, the country would magically become self-sufficient. This is not to say that wanting to become self-sufficient in food production is a problem; it’s that, in the absence of other factors, it is a pipe dream. Beyond that, it only makes food more expensive and glosses over what the real problems are. So, next time you hear Buhari say we should go back to the farm, turn off your TV and block anyone on social media who amplifies the message.
That’s about it for this week. Regular programming will return to the Sunday newsletter with its more informal format in a week. See you on Friday!