Another round of fuel scarcity

You may experience heavier traffic and higher transportation costs today, no thanks to fuel scarcity.

Apr 30, 2024

If you asked God not to put you on the list of his strongest soldiers this year and you live in Nigeria, who are you kidding? Brace up, Big Brains, the fuel scarcity is probably about to get crazier in your town. Also, please save us in your contact list so you can receive our emails in your primary inbox every morning.

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Let’s get into today’s edition:

Long Lines Return Due to Fuel Supply Shortages
Tinubu Secures $600m Deal For Nigerian Ports
CBN orders four fintechs to pause new customer onboarding
Duke and Duchess of Sussex plan trip to Nigeria in May after discovering Meghan's Nigerian roots

The Big Deal

Long Lines Return Due to Fuel Supply Shortages

Why is there fuel scarcity?

Nigerians are not new to dealing with fuel scarcity, but this latest one comes right after the Nigerian National Petroleum Company Limited (NNPCL) assured everyone they had fixed the logistics issues causing the scarcity. In a statement released last Thursday, NNPCL also said fuel prices would not be increased. But some fuel stations in states like Lagos, Abuja, Kaduna, Kano, Benue, and Sokoto are charging are now as high as ₦700 per liter while black market operators are selling between ₦1000 to ₦1200.

In addition to the price increase, some stations are still holding back on selling fuel to consumers, leading to longer queues and congested roads. Stations run by the Independent Petroleum Marketers Association of Nigeria (IPMAN) are reportedly selling at ₦700 while some stations owned by the Major Energy Marketers Association of Nigeria (MEMAN) are selling fuel for ₦610 per liter and higher. NNPCL stations are currently selling fuel at the lowest price in the country with a liter being ₦568.

The cause of the scarcity is unclear as oil marketers claim the logistic issues NNPCL said they had resolved still persist, it’s probably best not to focus on what the reason behind the scarcity is.

A quick back story of the hiked fuel prices and scarcities

In May 2023, President Bola Tinubu removed the subsidy on petrol, which had been in place since 1977 under the Olusegun Obasanjo military regime. Once the subsidy was removed, the price of petrol shot up from around ₦184 to about ₦600 per liter. Tinubu believes this was the best choice for the country to avoid bankruptcy, and he recently stood by this decision when speaking to world leaders at the World Economic Forum in Riyadh, Saudi Arabia even though the decision has made life more challenging for Nigerians since then.

What to expect…

In the coming days, you might see transportation costs going up in your city. Small businesses and consumers who use petrol generators for power because of unstable electricity caused by the “band categorizations” may also face higher living costs and money troubles.

Tinubu Secures $600m Deal For Nigerian Ports

President Bola Tinubu has added another achievement to his presidential bag. This time, the President has secured a $600 million investment deal with A.P. Moller-Maersk, a Danish shipping and logistics company. The deal is expected to expand the port infrastructure in Nigeria so that it can handle more container shipping services.

Why does this matter?

Better port infrastructure can boost the economy, making it easier and faster to move goods in and out of the country. It can help create jobs, increase trade opportunities, and drive business growth. In the long run, this can lead to overall economic development and improved standards of living for many Nigerians.

Is the president really in his bag or is it just publicity?

In April, President Tinubu authorized the official takeoff of the ₦100 billion consumer credit scheme and the incoming launch of the cost-effective, eco-friendly CNG public transportation. He also appointed Jim Ovia as the chairman of the Nigerian Education Loan Fund (NELFUND), signaling progress in the plans to launch the student loan scheme. The announcement of these schemes has gained positive reactions from Nigerians, with many of them referring to the president as a “visionary leader”.

However, with a major challenge like fuel scarcity spreading across the country, the “vision” is still blurry for many Nigerians.

Mr Shittu, a bus driver, described how he waited for nearly two hours in a queue while trying to buy fuel on Monday, April 29. As he gets ready to start his trip from Lagos Island to Lagos Mainland, he reminds his passengers to “respect themselves” because he has faced enough Nigeria-related problems for one day. When it comes to the president’s recent achievements, Nigerians like Mr Shittu want to see it translate to real-life impact, starting with nationwide petrol supply.

CBN orders four fintechs to pause new customer onboarding

The CBN governor, Cardoso, has proven that he’s not one to be messed with, especially when Naira is involved. The Central Bank of Nigeria, led by Cardoso, recently stopped fintech companies Opay, Moneypoint, Kuda, and Palmpay from opening new accounts. This decision may be related to an ongoing investigation by the Economic and Financial Crimes Commission (EFCC) into bank accounts involved in illegal foreign exchange dealings.

On April 24, a Federal High Court allowed the EFCC to block 1,146 accounts linked to an investigation into illegal foreign exchange trading, money laundering, and terrorism financing. Of the blocked accounts, only 10% belong to fintech companies, while most are with commercial banks.

Commercial banks haven't been told to stop opening new accounts, but this isn't the first time Nigerian fintechs have faced sanctions. In October 2023, Fidelity Bank stopped transfers to Opay, Palmpay, Kuda, and Moniepoint due to concerns about weak Know Your Customer (KYC) processes leading to fraud. A month later, the Central Bank introduced new KYC rules for all financial institutions, which seemed focused on fintech companies.

How is this related to naira?

The federal government is working hard to strengthen the naira. On February 12, the currency reached one of its weakest points ever, valued at ₦1,534/$1. In March, Yemi Cardoso claimed the currency was being manipulated by speculators and pointed out that $26 billion of suspicious transactions were linked to Binance. Since then, two Binance executives have been accused of tax evasion and money laundering.

Illegal activities from unauthorized foreign exchange trading, which the blocked accounts traced to these fintechs were involved in according to EFCC, are weakening the Nigerian currency. This type of crime is currently the Central Bank of Nigeria's main concern.

What does this mean for the fintechs and their users?

These fintechs can still provide services to their current users, but they can't accept any new customers at the moment. This may mean lower revenue for them and could give their competitors an edge until they can start accepting new users again.

Duke and Duchess of Sussex plan trip to Nigeria in May after discovering Meghan's Nigerian roots

Nigerian women are top-tier women and it makes sense that Megan is 43% one. The Duke and Duchess of Sussex, Prince Harry and Meghan, are planning a joint visit to Nigeria in May 2024. Meghan revealed on her podcast in 2022 that she learned she was 43% Nigerian after taking a genealogy test, and she has since expressed excitement about her newfound heritage. She even received a Nigerian nickname, "Amira Ngozi Lolo," from the Nigerian team at the Invictus Games, an international sporting event that Harry founded to support wounded and sick service members.

The couple's trip to Nigeria will include meetings with service members and opportunities to participate in various cultural activities. The visit is supposed to strengthen Nigeria's presence in the Invictus Games and explore the potential of hosting the event in the future. The Defence Headquarters' Director of Defence Information, Brigadier General Tukur Gusau, noted that the trip would help strengthen Nigeria's involvement in the games and make room for the possibility of bringing the event to Nigeria in the coming years.

The Minister of Defence, Mohammed Badaru, who attended the event in Germany last year, has expressed his willingness to host the games if the time ever comes. This visit would mark one of the few international trips that the Duke and Duchess have taken since stepping back from their royal duties and is probably going to go down in Gen Alpha’s history books as iconic.

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