Oil Discovered Off Senegal’s Coast – link
The wave of West African countries discovering oil continues with Cairn Energy, a Scottish Oil Company, striking oil about 100km off the coast of Senegal. The company is not yet sure about the size of the discovery – a first for Senegal. When Ghana discovered oil in 2010, many looked to the country to debunk the resource curse theory. While Ghana has avoided the security issues parts of Nigeria have dealt with for the past 50 years, it has faced serious fiscal challenges since the oil discovery. Perhaps Senegal will be the leading country to show that African countries can manage their resources effectively. I’ll be watching how Senegal markets its oil in the coming years, in the wake of Nigeria not exporting oil to the U.S. for the month of July – the first time that has happened since rcords were kept in 1973.
Abraaj Takes Majority Stake in Libstar – link
The Abraaj Group, one of the more prominent private equity firms focused on developing markets, announced a majority stake it took in Liberty Star Consumer Holdings (Libstar), a company previously owned by Métier, another private equity firm. The company is a leader in the private-label and own-branded fast moving consumer goods spaces supplying customers like KFC, Pick n Pay, and Tiger Brands. The company’s latest annual revenue as reported on Metier’s website was about $405M.
Equatorial Guinea’s Second Vice President Agrees to Relinquish $30M in Assets – link
The United States Governent and Equatorial Guinea’s Second Vice President Teodoro Nguema Obiang Mangue reached an agreement for Second Vice President Mangue to relinquish $30M in assets in wake of charges that he used his influence to embezzle funds from the Equatoguinean people. As part of the agreement, $20M will go to a charitable organization in the benefit of the Equatoguinean people, and another $10M will go to the U.S. Government, which will also use the money for the benefit of the country’s people. This agreement came in the lead up to Equatorial Guinea’s Independence Day, which was this past Sunday. The U.S. Government originally sought $70M from Second Vice President Nguema.
1. The saga around the suspended Central Bank of Nigeria governor continues;
2. The Central Bank governor is handily backing up his reputation;
3. President Jonathan could get a black eye from this fight; and
4. The independence of the Central Bank of Nigeria is in the balance.
The February 20 suspension of Central Bank Governor Sanusi Lamido Sanusi for “financial recklessness and misconduct” drew many a side-eye. Two months prior to the suspension announcement, Governor Sanusi made claims that Nigeria’s National Petroleum Company had failed to repatriate 49.8 billion USD to the government, before reducing the claim to 20 billion USD.
Governor Sanusi challenged his suspension on the grounds that it is illegal for the President to suspend the Central Bank Governor under the Central Bank of Nigeria Act. This past Thursday, Nigeria’s High Court declined to rule on Governor Sanusi’s challenge. Check out Governor Sanusi’s response.
The suspension is not the only issue Governor Sanusi is dealing with. The Financial Reporting Council of Nigeria is pushing to investigate his use of 1 billion USD while CBN Governor. Nigeria’s High Court has struck down to-date and Governor Sanusi has provided a detailed response.
Governor Sanusi points to the stability of the Central Bank of Nigeria and its effectiveness in fixing the country’s banking system, controlling inflation, and stabilizing currency as wins. The global investing community has taken note and I wouldn’t be surprised if we see Governor Sanusi advising other central banks on their activities when the dust settles – unless the forensic audit of the NNPC proves the company’s financials to be in good shape.
President Jonathan, on the other hand, could be licking his wounds from this fight and the continued threat of Boko Haram in parts of the country. The results forensic audit of the NNPCs financials will serve as vindication for one or the other.
Central Bank Independence
The bottom line is that this situation has big implications for the independence of the Central Bank of Nigeria. Will future governors have Governor Sanusi’s fate on their minds when making decisions? If so, we could very well see the slow unwinding of the governance structure Governor Sanusi helped develop.