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After 25 years of operations that kicked off in Abuja, the African Export-Import Bank (Afreximbank) said it has mobilised no fewer than $65 billion worth of loan syndications for trade financing and the development of the continent’s economies.

Nigeria, as a major stakeholder and contributor to the pan-African largest multilateral lender, has received about 40 per cent of the bank’s interventions, covering public investments and private sector working capital, particularly, the banks.

Today, while Nigeria and the rest of the African economies are still battling with financing challenges, the question of what it would have been like for the continent, without the emergence of the bank remains at large.

Meanwhile, the bank noted that there is as much as $120 billion in trade finance gap that needs to be closed; yearly $93 billion trade infrastructure gap; and a global trade share at three per cent, that needs to be raised; while Intra-African trade is still far below aspirations.At the weekend, during the yearly meetings of Afreximbank, part of the $65 billion syndications was injected further into Nigeria’s economy, as the Bank of Industry signed for a $750 million facility for on lending to small businesses.

Also, Aliko Dangote, signed a $650 million loan facility with the for an oil refinery project in Lekki, Nigeria, on a seven-year term loan, with five years moratorium.The government received a provision of $1.8 billion to support the economy during the recent oil price shock between 2015 and 2016, while a provision of liquidity and trade finance lines of more than $800 million was made during the banking consolidation when many international banks cut credit lines to the country.

Currently, Afreximbank’s initiatives in Nigeria include the development of testing and inspection centres across the country in collaboration with the Standards Organization of Nigeria; and establishment of a Centre of Excellence for Tertiary Healthcare/Medical Park.There is ongoing talks to participate in the Nigeria SEZ Investment Company Limited being promoted by the government; the support for industrial projects through loans to strategic banks; provision of trade and letter of credit lines to all Nigerian banks, in close coordination with Central Bank of Nigeria; and development of an Afreximbank Africa Trade Centre in Abuja.

The bank’s President, Dr. Benedict Oramah, told The Guardian that the emergence of the bank was in reaction to challenge by an unprecedented debt crisis that ravaged the continent like a plague those days and as a child of necessity, was conceived for Africa and by Africans and now effectively delivered by Africans.So far, the bank has provided over $50 billion, granted in support of trade and project activities across Africa, supported the emergence of world class hotels across the continent, including upscaling facilities in Island economies like Cape Verde and Seychelles.

The bank prevented the implosion of Zimbabwe by providing an aggregate of about $4 billion to avert hunger and support critical businesses when virtually all international banks cut off the country.“Who would today have stepped in to provide trade services lines in excess of 4 billion to about 500 banks across Africa so that no country can be denied access to trade finance as a result of high compliance cost?

“Who would have supported connectivity among African markets by leveraging close to $3 billion in support of African airline operations?“How would some indigenous Nigerian entities have been able to acquire oil production acreages if the Bank had not stand by them?“Who would have financed the creation of at least 130 thousand metric tonnes of cocoa processing capacity in Cote d’Ivoire and revived processing plants in other major producing countries, namely Ghana and Nigeria?“Who would have provided $9 billion to a number of African central banks and commercial banks at the height of the commodity price induced crises of 2014-16?” he queried.Oramah said Afreximbank is powering the Collective Will of the Continent to boost intra-regional trade and export manufacturing and now about to launch a pan-African payment and settlement platform in support of intra-African trade.

Already, there are SMEs operating in export supply chains with hopes of improved access to finance as a result of the bank’s efforts to promote factoring, such that from almost nothing, Africa can today boast of 32 factoring companies sharing in near trillion dollar global market.President Muhammadu Buhari, while declaring open the bank’s yearly meetings, in Abuja, at the weekend, commended Afreximbank’s strategy in the continent through its dynamism and tenacious leadership, saying the lender had proved that Africans could come together to build something meaningful.

While delivering his keynote address, he said that those attributes had enabled the bank to record the successes so far since its establishment 25 years ago.He noted that the bank’s efforts to integrate Africa through its African Continental Free Trade Area (AfCFTA), is already undergoing a careful review, with several consultations to get the inputs of the nation’s diversed professionals, entrepreneurs and investors.South African President, Cyril Ramaphosa, who attested to the portents of AfCFTA, being driven by Afreximbank, when adopted, would provide the integrated and diversified markets that will unlock Africa’s full productive capacity.He lamented that “intra-African trade is only 15 per cent of Africa’s total trade, compared to Europe’s 67 per cent and we need a sustained strategic shift to industrialisation, increased Intra-African trade, and de-commoditisation through increased value addition and export diversification.”

Afreximbank’s Chief Economist, Dr. Hippolyte Fofack, said: “The AFCFTA must emphasise policies promoting export diversification for each member country. In addition, efforts must be increased to motivate more technology-intensive manufactured goods.“Given the current average technology and skill content in Intra-African trade, the AFCFTA seems to be well positioned to help achieve and deliver more technology-intensive manufactured goods.”

The Minister of Finance, Kemi Adeosun, said that continued infrastructure improvements and a focus on trade, particularly regional trade, would drive sustainable growth.Adeosun commended Afreximbank for its role during the last global recession when it supported many African countries with trade support and lines of credit at a time when others were withdrawing from Africa.

Credit: The Guardian

Persistent price depreciation in the shares of most highly capitalised firms on the Nigerian Stock Exchange (NSE), yesterday dragged the All-share index further by 0.07 per cent.
Specifically, at the close of transactions yesterday, the All-Share Index (NSE-ASI) shed 26.81 absolute points, representing a decline of 0.07 per cent to close at 37,226.44 points.
Also, the market capitalisation declined by N10billion to close at N13.485trillion.The decline was occasioned by losses recorded in medium and large capitalised stocks, amongst which are; Beta Glass, Forte Oil, Nigerian Breweries, Dangote Sugar, and GlaxoSmithKline Consumer Nigeria.
 
Analysts at Afrinvest Limited said: “As highlighted, we continue to see some late bargain hunting in the market, albeit, insufficient to upturn market performance. Hence, we expect to see a similar trend in today’s trading activity.”
 
Market breadth closed negative, with 15 gainers versus 30 losers. Custodian and Allied Insurance recorded the highest price gain of 8.45 per cent to close at N6.80 per share. International Breweries gained 5.61 per cent to close at N40.50.
 
Multiverse Mining and Exploration appreciated by five per cent to close at 21kobo per share.Vitafoam Nigeria added by 4.52 per cent to close at N3.24, while Japaul Oil & Maritime Services gained 3.03 per cent to close at 34kobo per share.
 
On the other hand, Beta Glass led the losers’ chart by 10 per cent, to close at N81 per share. Tantalizers followed with a decline of 9.09 per cent to close at 30kobo, while McNichols shed 8.99 per cent to close at 81kobo, per share.
 
Nigerian Aviation Handling Company (NAHCO) declined by 7.25 per cent to close at N3.71, and Honeywell Flour shed 6.37 per cent to close at N1.91 per share.However, the total volume traded rose by 22.08 per cent to 350.47 million shares worth N4.6billion traded in 3,228 deals. Transactions in the shares of NAHCO topped the activity chart with 88.13 million shares valued at N483.47million. Access Bank followed with 42.87 million shares worth N428.75million, while Zenith Bank traded 40.84 million shares at N980.23million.
Sovereign Trust Insurance traded 33.77 million shares valued at N7million, while International Breweries transacted 20.95 million shares worth N777.03million.
  
 
Source: The Guardian
The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, has said that Nigeria will rely on Nigerian Gas Processing and Transportation Company (NGPTC), a subsidiary of the NNPC, to deliver a 614km Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
 
The project, expected to be executed with about $3 billion, includes other key projects that will see the country expending over $38.5 billion on oil, petroleum products and natural gas pipelines between 2018 and 2022, according to data company, GlobalData.
 
Speaking on the sidelines of the 2017 Annual General Meeting (AGM) of the company, Baru, who also functioned as the chairman of the AGM, said the corporation was relying on the NGPTC’s competence to deliver the 614km Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
 
He said apart from the AKK gas project, the company was also busy putting together new pipelines like the OB3 projected to come into operation later in the year alongside other significant gas pipeline projects across the length and breadth of the country designed as an integral part of the bigger trans-Nigerian gas pipeline system.
 
The NNPC boss commended the management and members of staff of the company for recording a profit after tax of N6.11 billion in its first year of operation under the new structure.
 
He said the NNPC management was looking forward to a bright future for NGTPC as it continued to show great promise and positive performance despite operating in an environment laden with incessant pipeline vandalism and condensate evacuation challenges.
 
Chief Operating Officer, Gas and Power and Chairman of the NGPTC Board, Saidu Mohammed, said the NGPTC was focused on consolidating on its strength and grow to bigger levels, noting that by 2019, the company would have leapfrogged into the big league with most of its ongoing gas infrastructure projects coming on stream.
 
Also, Managing Director of the company, Babatunde Bakare, said the 2017 AGM result showcases the corporation’s resolve to align with the prime objective of the Federal Government to harness the nation’s gas resources for the overall benefit of the Nigerian economy.
 
In another development, the Minna Depot of the Nigerian National Petroleum Corporation (NNPC) in Pogo, near Minna in Niger State, was gutted by fire yesterday.
 
The fire, which started exactly at 11.00 a.m., created panic along the ever-busy Minna-Paiko road, leaving commuters stranded.
 
A resident of the area, Malam Ibrahim Paiko, who spoke with The Guardian in Minna, said the leakage started since Saturday but the scooping by the boys started around 2.00 a.m. yesterday.
 
According to him: “When the leakage started early this morning, it ran through the gutters which made black marketers scoop from it.
 
Besides, the Public Relations Officer (PRO) of the NSCDC, Malam Ibrahim Yahaya, who spoke with The Guardian, said: “For now, we have not been able to ascertain whether there is any casualty.”
 
Also, the Director-General, Niger State Emergency Management Agency (NSEMA), Ahmed Ibrahim Inga, who confirmed the incident, said: “We thank God everything has returned to normalcy. Evacuation measures have been put in place and thank God the situation is now calm.
 
Source: The Guardian

The Nigeria Federal Government is set to launch the Abuja Rail Mass Transit project later this month.

The project, which is the first light rail system in West Africa, was flagged-off by former President Olusegun Obasanjo in 2007 in an attempt to host the 2014 Commonwealth Games.

The Government had earlier disclosed that tracks, as well as 12 stations of the first phase of the projects, were already completed while procurement of rolling stock (wagons, etc) was ongoing.

Tolu Ogunlesi, the special assistant to President Muhammadu Buhari on digital media, disclosed that the trial phase took place today, ahead of the launch which has been scheduled to hold later this month.

“Today we tour #AbujaMetro, ahead of the launch. The first light rail system in West Africa. Phase 1 completed; 2 Lines, Yellow and Blue, with Connections to Abuja Airport and the National Rail Line” Ogunlesi tweeted.

“Took us about 20 minutes from Abuja Metro Station direct to Idu, where the #AbujaMetro connects to the National Rail Service (Lagos-Kano/Abuja-Kaduna). There are a couple of stations in between that we didn’t stop at, so the ideal journey will take slightly longer.”

The project would connect the city centre to Nnamdi Azikiwe International Airport and would offer a light rail transport system that would ease transport challenges in the city.

Former President Olusegun Obasanjo initiated the project with an official groundbreaking ceremony in May 2007 in order to host Commonwealth Games in 2014. But lack of funds for the project delayed its completion.

Source: The Guardian

Nigeria and India are making moves to explore opportunities in renewable energy development as part of the international agreements signed by both countries.Indian High Commissioner, Nagabhushana Reddy, at a Business meeting in Abuja, said the home government was committed to deriving at least 30 per cent of its power needs from renewable energy by 2030.

Reddy noted that exploring areas of cooperation in renewable energy would build on existing partnerships between both countries, especially as Nigeria, was member of the International Solar Alliance (ISA).

According to him, ISA intends to provide dedicated platform for cooperation among solar resource rich countries and mobilise $1 trillion funds for future solar generation, storage and technology across the world.He said: “We are opening a new chapter of India-Nigeria economic engagement by moving into the power sector relating to renewable energy. India had been present in Nigeria in the power sector mostly in the areas of distribution and transmission.”

Reddy also said that both countries would sign a Memorandum of Understanding (MOU) in the renewable sector to create a joint working group to develop projects for enhanced and effective collaboration.

Earlier, President of Abuja Chamber of Commerce and Industry, Kayode Adetokunbo, called on the Federal Government to harmonise policies on renewable energy to create single body for the implementation of relevant policies. Adetokunbo said: “There is no clarity in policies and we need all the advantages solar power and renewable energy can offer and put it in one agency that has multi-sectoral approach so that other relevant agencies can work together as a team.”

He added that promoting synergy among stakeholders would create jobs and fast track economic development in line with the government’s economic growth plan.A representative of Nigerian chapter of Associated Chambers of Commerce and Industry of India, Rajneesh Gupta, said that there are ongoing enlightenment campaigns on promoting renewable energy in Nigeria.

He said: “Simba Solar has been educating Nigerians on renewable energy technologies, and how it can deliver value. We are also training electricians and budding entrepreneurs that can key into these technologies to the end users.”“Electricity generation is fluctuating this year, peaking 5,090megawatts as government continued to show determination to produce an energy mix with 30 per cent component of renewable energy out of the gross energy produced by 2030.”

 

Source: The Guardian

Member countries of the East African Community are preparing to simultaneously table the 2018-2019 Budgets in their respective parliaments. In Uganda, finance minister Matia Kasaija will present a 30.9 trillion Uganda shilling (USD$8 billion) budget. Sarah Logan examines the economic context of Uganda’s annual budget and the associated challenges.
 
What is the context in which this year’s budget is being tabled?
 
The Ugandan government is facing pressure to deliver on many fronts. Economic growth slowed in recent years, averaging 4.5% in the five years to 2016. That’s down from an average of 7.8% in the previous five year period. Curtailed growth was due to lower commodity prices. Uganda’s main commodity exports of coffee, cotton and copper all experienced diminished world prices.
 
Other contributing factors were an increased incidence of drought and the conflict in neighbouring South Sudan, Uganda’s main export trade partner. Relatively high population growth, averaging 3.4% in the five years to 2016, eroded much of the gains from economic growth in recent years, resulting in declining GDP per capita and increased poverty.
 
Constraints to growth and productivity remain notable, particularly in agriculture and manufacturing. These sectors are hampered by infrastructure gaps, high interest rates that have made borrowing expensive, and difficulties accessing high quality inputs. These constraints have had a marked impact on micro, small, and medium enterprises, which constitute 93.5% of Ugandan firms. Such limitations pose obstacles to achieving production at scale, which is needed for firm growth.
 
In recent budgets, the government has significantly raised investment in public infrastructure (notably in transport, works, and energy) to address these constraints. It’s also tried to cater for relatively rapid urbanisation. But long project timescales, poor project selection and execution, and absorptive capacity constraints mean that maximum gains from these investments have not been realised.
 
These investments have also necessitated greater government spending in recent years, financed by increased borrowing from both domestic and external sources. As a result government debt has grown to 38.6% of GDP, up from 19.2% in 2009. But debt remains within the confines of what is considered sustainable.
 
What are the most challenging factors heading into this budget?
 
Working out the right balance between investing in infrastructure and social sectors is a key challenge. While more spending on infrastructure development is vital, it has necessitated budget cuts to arguably already underfunded social sectors, including health and education. But the right balance cannot be judged on budget allocations alone: these figures don’t take into account off-budget financing, which is common in social sectors.
 
International targets (where they exist) are also of limited value in guiding allocations as spending needs vary across countries and over time.
 
Another key challenge is how to fund the budget. The National Budget Framework Paper envisions both external and domestic borrowing, as well as the use of domestic tax and non-tax revenues. Government’s domestic borrowing has contributed to raising interest rates, making borrowing more expensive.
 
Consequently, a growing portion of government spending now goes on servicing its debt obligations, estimated at 12.3% of total revenues for 2018/19. In time, this figure should be lowered, thus opening up funds for spending on development priorities.
 
Domestic tax and non-tax revenues are generally a preferred source of budget funding as they do not incur debt. The contribution from these sources is expected to rise to 53% through anticipated improvements to tax administration and compliance. This is a positive sign.
 
What policy highlights would you want to see and why?
 
Continued investment in energy and infrastructure should be pursued, but it is necessary to improve the efficiency of these public investments. For example, up to 60% of the works and transport budget was reportedly not spent.
 
The government has recognised in its National Budget Framework Paper that issues around under-execution of development projects need to be addressed and it is working on ways to better allocate funds based on absorptive capacity. The government is also cognisant of the need to provide funds to cover operations and maintenance costs in coming years to slow infrastructure deterioration.
 
The government has acknowledged the need to raise the country’s tax to GDP ratio, which at 13.5% is relatively low. The Uganda Revenue Authority is exploring several avenues to improve tax administration and compliance.
 
More could be done to expand the tax base and minimise distortions through, for example, greater focus on value added tax – one of the more progressive tax instruments – rather than import tariffs. Imports are vital as inputs for manufacturing, and restrictions on imports reduce firms’ productivity and competitiveness.
 
Rwanda’s experience with raising value added tax through mandatory usage of electronic billing machines is valuable in this regard.
 
How are Uganda’s growth prospects looking?
 
In coming years, GDP growth is set to accelerate as recent and ongoing public investments begin to yield returns.
 
Credit: The Conversation
JOHANNESBURG - South African markets are pricing in the possibility of an interest rate hike this year as the rand falls, even though economists say this is unlikely as inflation expectations have not breached the upper end of the central bank’s target range.
 
South Africa’s rand has slumped nearly 9 percent against the dollar year to date, hurt by global risk-off sentiment and poor domestic economic data. It fell to a 7-month low last week.
 
Capital Economics senior emerging markets economist John Ashbourne said the currency fall has raised speculation that South African policymakers would follow some emerging market countries that have started raising interest rates.
 
Some have moved as a pick-up in their economy or other factors push up inflation, while others are being forced to act to steady their currencies.
 
South Africa’s forward rate agreements are implying a 25 basis-point hike in interest rates by the end of the year.
 
But a Reuters poll found last week that economists expect the South African Reserve Bank to keep its repo rate unchanged at 6.5 percent until 2020.
 
“We think that markets are getting ahead of themselves by pricing in rate hikes in South Africa... We do not think that this is likely,” Ashbourne said in a note.
 
“Policymakers have explicitly said that they will not react to currency moves until they see a lasting effect on domestic inflation. And the pass-through between currency moves and inflation is weaker in South Africa than in many other EMs.”
 
The central bank said in May it would maintain its vigilance to ensure inflation remained within the 3 to 6 percent target range, and would adjust the policy stance should the need arise.
 
The bank currently forecast CPI to average 5.1 percent in fourth quarter 2018, and 5.2 percent in the last quarters of 2019 and 2020. The next interest rates decision and inflation forecasts are due on July 19.
 
South Africa’s consumer price inflation slowed to 4.4 percent year-on-year in May as the rise in food prices eased.
 
“A weaker currency makes (the central bank) more fearful but it depends on how it impacts inflation twelve months out,” Citi economist Gina Schoeman said.
 
“We don’t think we will see rate hikes in 2018. It doesn’t mean there is no risk of it, and the market is correct to price for that.”
 
Schoeman said rate hikes over the past five years happened when the inflation forecast for twelve months out had breached 6 percent and stayed above that for two or three quarters.
 
“So it has to not only breach 6 percent, it has to also breach it for a sustainable amount of time. If it is not doing that, then we don’t have a risk of interest rate hikes,” she said.
 
Mexico’s central bank raised its benchmark interest on Thursday in a bid to counteract the effects of a peso slump and keep a downward inflation trend on track.
 
Argentina, Turkey, India and Indonesia are among the other countries hiking rates.
 
-Reuters 
Vienna - Russia on Saturday joined partner countries in backing an OPEC-led pledge to boost oil production in response to growing global demand, Angolan Oil Minister Diamantino Azevedo said.
 
"We have agreed," Azevedo told reporters after a meeting with OPEC ministers and 10 non-OPEC partner countries in Vienna.
 
The green light was widely expected after energy ministers from the 14-member Organization of Petroleum Exporting Countries already agreed on Friday to raise output by one million barrels a day from July.
 
The proposal is the result of a face-saving compromise hammered out after days of diplomacy in Vienna dominated by tensions between Iran and archfoe Saudi Arabia over amending an 18-month-old supply-cut deal that has lifted oil prices to multi-year highs.
 
Saudi Arabia, supported by Russia, was strongly in favour of pumping more oil to ease fears of a supply crunch and quiet grumbles about the higher prices in major consumer countries like the United States, China and India.
 
In the end, a vaguely-worded statement that made no mention of the one-million figure allowed all sides to save face.
 
Ministers also acknowledged that production problems in several countries meant the real number of extra barrels coming to the market would be several hundred thousand less.
 
Markets were disappointed with the modest output hike, sending crude prices soaring on Friday.
 
Brent crude added $2.50 to finish at $75.55 a barrel, while the US benchmark West Texas Intermediate gained $3.04 at $68.58 per barrel.
 
As one of the world's top producers, Russia's cooperation in the supply-cut deal is seen as crucial.
 
Moscow had long argued for a hike, feeling the pressure from domestic oil companies eager to produce more so they can cash in on the higher prices.
 
Russia's Energy Minister Alexander Novak had said ahead of Saturday's meeting that it was "timely" for OPEC and its 10 partner countries, known as OPEC+, to raise production.
 
Numbers game
 
The OPEC+ supply-cut pact struck in late 2016 and set to run until the end of the year, called on participants to trim output by 1.8 million barrels a day.
 
But production constraints and geopolitical factors have seen several nations exceed their restriction quotas, keeping some 2.8 million barrels off the market, according to OPEC.
 
By agreeing to collectively raise output by a million barrels, members are simply committing to comply fully with the deal struck in late 2016 - allowing them to increase supply without undoing the original deal.
 
"I agreed to have 100% of compliance, not more," Iran's Zanganeh said as he left OPEC headquarters on Friday.
 
Saudi Arabia's Energy Minister Khalid al-Falih said the agreement would "contribute significantly to meet the extra demand that we see coming in the second half".
 
But the joint communique did not spell out how the additional barrels would be divvied up, a key issue given Iran's insistence that cartel members should not be allowed to offset involuntary production losses in other member countries.
 
Much of the current production shortfall has come from Venezuela, where an economic crisis has savaged petroleum production.
 
In Libya, fighting between rival factions has damaged key oil infrastructure.
 
This week's OPEC talks in Vienna have been the most politically charged in years.
 
US President Donald Trump, hoping for lower pump prices ahead of November's mid-term elections, has been among the loudest critics of OPEC's supply cut pact, piling pressure on key ally Riyadh to boost output.
 
Trump weighed in again after Friday's OPEC decision was announced, tweeting: "Hope OPEC will increase output substantially. Need to keep prices down!"
 
Iran's Zanganeh earlier this week accused Trump of trying to politicise OPEC and said it was US sanctions on Iran and Venezuela that had helped push up prices.
 
Credit: News24
 
Investors looking for a haven amid the rout in emerging markets over the past two months would have found one in Nigeria’s domestic debt.
 
Naira bonds issued by the government have returned 8.4 percent in dollar terms this year, the most in the Bloomberg Barclays Global EM Local Currency Index, which includes 25 countries from Argentina to Turkey. And it’s the only local-currency debt not to have made losses this quarter.
 
Nigeria's local bonds have outperformed peers since March
 
Note: Average total return for government local debt in dollar terms
 
Franklin Templeton Investments and BlackRock Inc. are among global money managers that are bullish on Nigerian securities, enticed by average yields of 13.4 percent, which, while down from almost 17 percent in August, are still among the highest in the world.
 
They’re also confident the OPEC member will be able to keep the naira stable, thanks in part to oil prices having climbed around 60 percent in the past year. The naira’s barely budged since a devaluation last year, and held its own as other emerging currencies began to tumble in April. The Abuja-based central bank is keen to keep it that way, at least until February’s elections.
 
South: Bloomberg News

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