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Reuters: Baba Go-fast? Nigeria’s Tinubu Stuns Wary Investors With Quick Reforms

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Tinubu

Nigeria’s new president, in office for less than a month, is pushing to put Africa’s largest economy on a reform track that investors have eyed for decades, fuelling excitement that money could flow to a nation that many had deemed uninvestible.

President Bola Tinubu’s bold actions, including removing restrictions on the naira currency that allowed it to hit a record 790 to the dollar and subsidy removals that tripled petrol prices, could take stress off the battered finances of Africa’s largest economy.

But investors, burned by previous reforms that ultimately proved hollow, say it will take time to build trust and listed myriad questions over the final shape of the economy.

“The reaction is one of, ‘finally’,” said Tunde Ajileye, a partner at Lagos-based SBM Intelligence. “If this stays, then it would mean that (Tinubu) had been able to remove the two subsidies that have crippled Nigeria fiscally and monetarily for the last decade.”

Tinubu is from the same party as predecessor Muhammadu Buhari, dubbed “Baba Go-slow” for his pottering pace – taking six months to appoint cabinet members.

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By contrast, Tinubu lifted fuel price caps days after taking office on May 29, suspended controversial Central Bank chief Godwin Emefiele some 10 days later and on Wednesday removed FX restrictions.

The tangle of multiple exchange rates for everything from international school fees to food imports created foreign currency shortages and hobbled investment due to issues getting money out.

“Just the fact that you have seen quite a bit of movement in a relatively short space of time has gotten a lot of people in the market excited,” said Goldman Sachs economist Andrew Matheny.

Nigeria’s international dollar bonds and the country’s stock market have been boosted by the speedy reforms.

BACKLOG, AND BURNED BEFORE

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Investors, though, remained wary, citing years of damaging currency controls; Goldman Sachs pegged the backlog of FX demand at a staggering $12 billion.

“We are still to see whether this will allow the FX backlog to clear, where the new market rate will stabilise, whether this will catalyse inflows into the country and … that there will be no issues pulling money out of the country,” said John Mumo, a partner at Blakeney, an Africa-focused equities fund management firm.

Joe Delvaux, a portfolio manager at Europe’s largest asset manager Amundi, said it could take months or more to lure longer-term cash.

“Ultimately, you also have to keep in mind that the biggest provider of FX will still be the CBN,” Delvaux said.

“We need to see that the system works.”

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Tinubu will also have to tackle the perennial corruption that has hobbled the country for decades. Nigeria is ranked 150 out of 180 in Transparency International’s 2022 corruption perceptions index – and has been on a downward trend since 2016.

Investors also worry about low tax receipts and falling oil output – structural reforms that will take far longer to sort.

Some are also hoping to see a more orthodox interest rate policy. Inflation hit a near 20-year high of 22.41% in May and a weakening naira will amplify price pressures. Meanwhile interest rates, which Tinubu has said he would like to see fall, were hiked by 50 bps last month to 18.5%.

“Investors will need to see positive real rates and evidence that they will be able to repatriate their earnings before local currency debt is back in play,” said Patrick Curran, senior economist at Tellimer.

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Diphtheria: Children at risk as 7,202 cases are confirmed in Nigeria

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A staggering 7,202 cases of diphtheria, a highly contagious bacterial infection that can be fatal without treatment, were confirmed in Nigeria last week.

The outbreak has been particularly severe among children under 14, with three-quarters of cases (73.6%) in this age group.

Most cases have been recorded in Kano state, Nigeria’s second most populous state. In the past three months, there have been 453 deaths from diphtheria in Nigeria.

Diphtheria is a vaccine-preventable disease, but low vaccination rates in Nigeria have made the outbreak possible. Only 42% of children under 15 in Nigeria are fully protected from diphtheria.

Diphtheria symptoms begin with a sore throat and fever. In severe cases, the bacteria produce a toxin that can block the airway, causing difficulty breathing and swallowing. The toxin can also spread to other body parts, causing heart kidney problems and nerve damage.

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Save the Children is launching a wide-scale health response in the three most impacted states of Kano, Yobe, and Katsina. The organization is deploying expert health and supply chain staff to help overstretched clinics detect and treat diphtheria cases and to support mass vaccination campaigns.

However, Save the Children warns that a mass vaccination campaign will only be successful if the vaccine shortage is urgently addressed.

Severe shortages in Nigeria of the required vaccine and the antitoxin needed to treat the disease mean that the situation could continue to escalate, placing many children at risk of severe illness and death.

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WHO releases $16m to tackle cholera, says Director-General

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The World Health Organisation (WHO) has released 16 million dollars from the WHO Contingency Fund for Emergencies to tackle cholera.

Dr Tedros Ghebreyesus, WHO Director-General said this during an online news conference.

Ghebreyesus said that the organisation was providing essential supplies, coordinating the on the ground response with partners, supporting countries to detect, prevent and treat cholera, and informing people how to protect themselves.

“To support this work, we have appealed for 160 million dollars, and we have released more than 16 million dollars from the WHO Contingency Fund for Emergencies.

“But the real solution to cholera lies in ensuring everyone has access to safe water and sanitation, which is an internationally recognized human right,” he said.

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According to him, in the previous week, WHO published new data showing that cases reported in 2022 were more than double those in 2021.

He said that the preliminary data for 2023 suggested was likely to be even worse.

“So far, 28 countries have reported cases in 2023 compared with 16 during the same period in 2022.

“The countries with the most concerning outbreaks right now are Ethiopia, Haiti, Iraq and Sudan.

“Significant progress has been made in countries in Southern Africa, including Malawi, Mozambique and Zimbabwe, but these countries remain at risk as the rainy season approaches,” Ghebreyesus said.

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According to him, the worst affected countries and communities are poor, without access to safe drinking water or toilets.

He said that they also face shortages of oral cholera vaccine and other supplies, as well as overstretched health workers, who are dealing with multiple disease outbreaks and other health emergencies.

On COVID-19, Ghebreyesus said that as the northern hemisphere winter approaches, the organisation continued to see concerning trends.

He said that among the relatively few countries that report them, both hospitalisations and ICU admissions have increased in the past 28 days, particularly in the Americas and Europe.

WHO boss said that meanwhile, vaccination levels among the most at-risk groups remained worryingly low.

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“Two-thirds of the world’s population has received a complete primary series, but only one-third has received an additional, or “booster” dose.

“COVID-19 may no longer be the acute crisis it was two years ago, but that does not mean we can ignore it,” he said.

According to him, countries invested so much in building their systems to respond to COVID-19.

He urged countries to sustain those systems, to ensure people can be protected, tested and treated for COVID-19 and other infectious threats.

“That means sustaining systems for collaborative surveillance, community protection, safe and scalable care, access to countermeasures and coordination,” he said.

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