Nigeria: #EndSARS risk spreads to lockdown and Niger Delta oil threat
- The risks in Nigeria have risen significantly with the #EndSARS protest
- Another phase of lockdown could ensue, curtailing the recovery from the first Covid lockdown
- The threat from the Niger Delta militants indicates a worsened macro outlook for Nigeria
May all the souls lost in the protests rest in peace. We join Nigeria in mourning at this sad time.
The ENDSARS protest in Nigeria has escalated quite quickly over the past two weeks with several killings across the country. The latest has been the killings at the Lekki toll gate yesterday, where peaceful protesters were shot at by armed men in military uniforms after the state government enacted curfews. The number of deaths so far has been put at 20, with several others injured. There have also been several clashes between the police and protesters across the country.
Things are unlikely to remain the same after this. The ENDSARS movement started as a call to end police brutality but has extended beyond that narrative to the demand for better governance by leaders.
The risks are likely tended more to the downside from this point.
Another lockdown could to pan out, halting economic activities across the country. This is likely to affect recovery from the recent COVID lockdowns which drove an economic contraction of 6.1% in Q2 20 (see here). The IMF’s recent update now expects Nigeria will contract by 4.3% by the end of 2020.
Threat by the Niger Delta militants poses a key risk to Nigeria’s oil production activities and key source of FX. The militants have reportedly shown support for the ENDSARS movement. Should protests escalate, we could see attacks resume on the oil and gas facilities.
The Niger Delta militant attacks in 2016/2017 largely underpinned the recession at the time. Production dropped to as low as 1.5mbpd and the FX reserves to US$24 billion. With production already curtailed by COVID (July: 1.69mbpd, CBN), any further attacks could push production to even lower levels than we saw in 2016.
Nigeria: Deep value or deep trouble? (Mar 2020)
Nigeria: Food ban entrenches flawed FX policy (Curran, Sep 2020)
Nigeria surprise rate cut (Ogunkoya, Sep 2020)
Sub Sahara Africa manufacturing potential (Sep 2020)
- 1 Weekend Reading/Global Vaccine colonialism revisited: World’s most comprehensive data on pre-purchases
- 2 Global Themes/Global Global Investment Themes for 2021
- 3 Strategy Note/Global Emerging-Frontier Equity Monthly – November: Our top picks after the rally
- 4 Sovereign Analysis/Kenya Kenya seeks IMF funding and possible debt relief
- 5 Flash Report/Nigeria Nigeria: A recession, deepening FX woes and expectations for MPC
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