Libya: Sharara Oilfield Cuts Output After Workers Abducted

According to the National Oil Corporation (NOC), production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group.

The attack happened at a control station on the outskirts of Sharara, about 40 km (25 miles) from the main part of the field, engineers at the field said. One of the abducted workers was Romanian, they said.

NOC said it expected output to drop by 160,000 barrels per day (bpd), although one engineer said output at the field, which had been producing 200,000-300,000 bpd recently, had already dropped to below 100,000 bpd.

Tripoli-based NOC operates Sharara in partnership with Repsol, Total, OMV and Equinor, formerly known as Statoil.

The field, in Libya’s remote southwest, has suffered security problems in the past, including raids in which vehicles and mobile phones have been stolen.

The facility that was targeted on Saturday is called Station 186 and was also attacked last year.

The NOC said unknown armed assailants entered the station at 6.30 a.m. (4.30 GMT) on Saturday.

“Four of the station staff were initially kidnapped but two of them have been since released. Oil wells in the surrounding area have been shut down as a precaution, and all other workers evacuated,” it said.

An engineer at the field said one of the abducted workers was Romanian.

In addition to being one of Libya’s main export grades, Sharara feeds the 120,000 bpd Zawiya oil refinery on the country’s northwest coast.

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U.A.E to Invest $10 Billion in South Africa

The United Arab Emirates plans to invest $10 billion in the economy of South Africa, with a focus on tourism and mining sector.

The commitment was made during the first state visit by the President of South Africa, Cyril Ramaphosa to the Middle Eastern nation, the Presidency said in an emailed statement on Saturday. It matches a pledge by Saudi Arabia earlier this week when Ramaphosa visited that country too.

President Ramaphosa is seeking to revive a flagging economy after taking over from the former president of the country, Jacob Zuma as the nation’s leader in February and seeks to lure $100 billion in investment over the next five years.

Business and investor confidence has slumped after an initial boost following Zuma’s departure as ruling-party leader in December.

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Nigeria: Dangote to Consider London Cement Listing after Elections

The biggest producer of building material in Africa, Dangote Cement Plc may carry out its long-planned listing of shares in London after Nigerian elections early next year, as it considers expansion through takeovers.

The group executive director, Edwin Devakumar said: “We are working on it and we’ll look at it in 2019. We have grown to this extent mostly via greenfield investments. To grow much more, we’d probably have to do it via acquisitions.”

“A number of banks have approached the company to arrange the initial public offering, though none has been mandated and there’s been no decision about how much to raise,” he said.

About 15 percent of Dangote Cement’s shares are listed in Lagos, where it has a market value of 3.9 trillion naira ($10.8 billion). The stock is down 2.2 percent this year.

The firm, controlled by Africa’s richest man, Aliko Dangote, considered raising equity in London back in 2010. At the time, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley helped it prepare a sale that could have raised as much as $5 billion, before the move was abandoned.

According to Devakumar, the chief executive officer until 2015; Dangote Cement has looked at expanding outside of Africa into markets such as Brazil, Peru and Nepal.

Dangote Industries is a holding company for the billionaire’s interests, which include sugar, flour, oil refining and petrochemicals as well as cement.

The revival of the IPO plans led to Dangote Cement appointing former Xstrata Plc CEO Mick Davis and Cherie Blair, a British lawyer, to its board in April.

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S/Africa Minister Delays Finalisation of Draft Mining Charter

The South Africa’s Minister of mines, Gwede Mantashe said on Sunday he will extend by a month, the mining industry charter which lays out requirements for black ownership levels and other targets period.

Uncertainty around the charter has deterred investment into a sector that accounts for 8 percent of gross domestic product in the world’s top platinum producer.

Mantashe stated that the reason for the delay is  for public comment which will extend till the end of August.

During his closing speech at an industry summit to discuss the charter, he said: “It gives people a chance to engage more and comment more.”

ALSO READ: Ethiopia Needs $7.5 bln to Complete Major Projects, Says PM Abiy

A draft of the charter published last month extends to five years from one year the time that existing mining permit holders will have to raise black ownership levels to 30 percent from 26 percent.

It also proposes a requirement that 10 percent (a third of the 30 percent black ownership target) for new mining right applicants be granted free to communities and qualifying employees, dubbed “free carry”, which industry body, the Minerals Council South Africa has opposed.

The charter, published for public comment before entering into law, is part of South African affirmative action rules aimed at reversing decades of exclusion under apartheid.

The government and miners had been at loggerheads over a previous version of the charter, which the Chamber of Mines industry body, now the Minerals Council, criticised as confusing and a threat to South Africa’s image with investors.
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NBCC Estimates £8bn Trade Between Nigeria, UK by 2020

Trade between Nigeria and the United Kingdom is currently estimated at £4 billion, but the Nigerian-British Chamber (NBCC) expects it to hit £8bn by 2020.

Speaking at the annual general meeting of the chamber, Akin Olawore, president of the NBCC, said the chamber was determined to expose Nigerian business individuals to opportunities in the UK.

Also, he explained that the chamber was equally committed to showing British businesses vistas of opportunities in the Nigerian economy.

“The AGM is meant to inform our members and report back to them on what we have done. The takeaway is for members to see the door that is open for them through chambers of commerce relationship and Commonwealth Business of Europe,” he said.

He further said: “These two relationships enable us to match our members business-for-business with their international counterparts. We are letting our people know the opportunities available beyond the shores of the country.”

The chamber embarked on a trade mission between June 11 and 15. The trade mission featured participation at the Business-to-Business Networking Conference, International Business Festival (IBF) with an NBCC booth.

“We combined our trade mission with the International Business Festival,” he said.

“We worked on the image of the country because we needed to change the narrative on the business environment there. We had a networking event, where we presented the reformed incentives available for businesses. We were with Nigerian Investment Promotion Council (NIPC) and with all of these, we were able to generate a traction. It was through that mission that we concluded our negotiation with the Europe,” he stated.

He pointed out that Nigerian firms had what it would take to compete with UK firms in the own country, stressing the need to improve the business environment in Nigeria to attract more investors.

Olawore stressed the need to make processes easier for businesses in Nigeria, especially for new investors, adding that this would boost the confidence of the business community.

“Going forward, the Executive Committee is committed  to executing strategies aimed at improving members benefits that will ensure that we add value to the business of our members in a manner that justifies membership,” he said.

Also added that the chamber would continue to reach out top British businesses in Nigeria to bring them into the fold.

He stated that the chamber forged a strong partnership with the NIPC in 2017, assuring members that the NBCC would continue to provide value for them.

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Nigerian Apex Bank Instructs Financial Institutions to Pay Returns Through NIBSS

The Central Bank of Nigeria (CBN) on Friday directed financial institutions including microfinance banks, primary mortgage institutions that have agents, Mobile Money Operators (MMOs) and licensed Super Agents to render daily returns through the Nigeria Inter-Bank Settlement System (NIBSS), effective July 10.

The directive follows the decision of the Banker Committee to adopt and implement the shared agency network expansion fund initiative by the banking industry, aimed at accelerating the CBN’s financial inclusion program.

In a circular singed by the director, banking and payments system department, Dipo Fatokun, the apex bank issued this regulatory requirement for data rendition for effective monitoring and evaluation purposes.

The CBN said the transaction data is required daily, so as to plot the growth and type of  services being offered across the country.

On the other hand, the CBN on Friday released exposure draft of the National Financial Inclusion Strategy Refresh for comments and observations.

The CBN has been working with various stakeholders to conduct a review and refresh of the strategy.

The exercise focused on evaluating progress, identifying gaps and developing a refreshed strategy document which serves as a roadmap for implementation till the terminal year 2020.

In 2010, Nigeria made a commitment to  reduce the adult financial exclusion rate in the country from 46.3 percent to 20 percent by the year 2020. In order to attain this target the National Financial Inclusion Strategy ( NFIS) was launched on October 23, 2012.

In a circular signed by Mudashiru Olaitan, director, development finance department, the CBN said while some notable milestone has been achieved, overall financial inclusion stands at 41.6 percent based on the biennial  Access to Financial Services in Nigeria survey (EFInA 2016).

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IMF Approves $250 mln Loan Tranche to Tunisia

The International Monetary Fund (IMF) on Friday approved the payment of a $250 million tranche to Tunisia.

According to the funding agency, this is the fourth from Tunisia’s loan programme tied to economic reforms aimed at keeping its deficit under control.

The tranche brings disbursements so far under the four-year programme to $1.139 billion, IMF said in statement.

The programme agreement reached in 2016 is worth about $2.8 billion.

Tunisia has been praised as the only democratic success among the nations where “Arab Spring” revolts took place in 2011. But successive governments have failed to trim its fiscal deficit and create economic growth.

Tunisia’s central bank last month raised its key interest rate by 100 basis points to 6.75 percent, the second hike in three months, to tackle inflation that has reached the highest level since 1990.

The IMF said in May that anchoring inflation expectations through additional rate increases would be crucial if price pressures did not moderate quickly.

Inflation is expected to reach to about 9 percent for the first time by the end of this year, officials have said.

The government forecasts the budget deficit to fall to 4.9 percent of gross domestic product in 2018 from about an estimated 6 percent in 2017. It aims to raise GDP growth to about 3 percent next year from 2.3 percent last year.

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Ethiopia Needs $7.5 bln to Complete Major Projects, Says PM Abiy

The reformist Prime Minister of Ethiopia said on Friday that the country needs $7.5 billion to finish infrastructure projects such as a massive dam and roads that the government hopes will drive industrialisation.

While speaking to parliament before its vote on the 2018/19 budget, Abiy Ahmed said the government needed to be more efficient and prudent in its spending of public funds.

The Parliament passed a 346.9 billion Ethiopian birr ($12.71 billion) budget for 2018/19, marking a spending contraction in dollar terms from last year.

ALSO READ: IMF Projects 4% Economic Growth in Cameroon

He said many state-owned enterprises were heavily indebted and export earnings were a third of the $10 billion annual target.

The country is faced with a current account deficit estimated by the International Monetary Fund (IMF) at $5-$6 billion.

The government will seek $1.2 billion in external concessional loans this year, up slightly from last year. No plans for borrowing from external markets were mentioned.

The yield on the nation’s only Eurobond, issued in 2014, hit a 15-month high of 7.59 percent in June, before Eritrea responded positively to Abiy’s peace overtures.

The budget forecasts the economy will grow 11 percent in the fiscal year beginning this month.

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IMF Projects 4% Economic Growth in Cameroon

The International Monetary Fund (IMF) said that the economy of Cameroon is expected to grow 4 percent this year, 2018, up from 3.2 percent in 2017 due to the start of natural gas production and construction work for an upcoming soccer tournament.

Growth was slower in 2017 because of a sharp decline in oil output but new infrastructure projects and increased private investment should bring it to at least 5 percent in the medium term, the IMF said in a statement late on Friday.

Cameroon, one of central Africa’s largest economies, produces about 180,000 barrels per day of oil and is Africa’s fourth-biggest cocoa producer.

The IMF statement followed a decision by its executive board to approve the disbursement of $77.8 million as part of a three-year, $680.7-million financial aid package.

However, the IMF warned that the economy faces considerable risks, including deteriorating security in its English-speaking regions — cocoa and oil-producing areas where separatists are waging a deadly insurgency, and high debts.

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Threats to Shut the Nigerian Border: The Facts Beyond Mere Words

The Nigerian Minister of Agriculture and Rural Development, Audu Ogbeh, announced that the government will shut the border with an unnamed neighbouring state which he accused of illegally importing rice to Nigeria. Nigeria consumes rice in quantity; even as one of the largest producers, it is also one of the largest importers of rice in the world. In 2016, the United Nations Food and Agriculture Organisation stated that Nigeria imported 2.3 million metric tonnes of rice which was about half of the country’s estimated requirement in that period. In 2018, the minister of Agriculture announced that the total demand for the staple in the country is at about 5.5 million metric tonnes (MT) per year of which 3.3 million MT is produced locally leaving 2.3 million MT to be imported.

Rice is classified as either Asian or African with the botanical names of Oryza sativa and Oryza glaberrima respectively. The staple is a cereal grain that grows in swampy areas, in regions with high rainfall but can still be grown in areas with little rainfall through the use of water-controlling terrace system. The grain is sensitive and requires a lot of care and attention to grow well. The cultivation can be done by transplanting or direct seeding, the seeds are sprayed onto the soil after which it is ploughed into the soil by using plough. Prior to cultivation the rice seeds in soaked in water for 34 hours (1 day 10 hours) and allow to dry for 24 hours then it is ready for planting, what a process! It takes about 4 months or 6 months for the grains planted to be ready for harvest, depending on the soil type and other climatic factors. The rice is harvested by cutting the stalk directly beneath the heads and the grains separated from the stalk by a mechanised thresher.

Shutting down the Nigerian border to hinder the importation of rice will encourage more smuggling of it. The country is clamouring for self-sufficiency in rice production, the federal government hopes to reduce the importation bill of rice to 95% and likewise rice farmers by an appreciable amount. To achieve self-sufficiency is applaudable but like they say, Rome is not built in a day, a process is required.

The Central Bank of Nigeria gave small scale farmers grants and soft loans to ensure there is increase in productivity but there are many other factors that need to be considered apart from the funds being disbursed. Some farmers do not even have access to the funds and had to get loans with high interest rates from commercial banks and those that were lucky experienced a great bottleneck in administrations and protocols.

In the words of the Managing Director of AgroNigeria, Richard Mbaram: achieving self-sufficiency in the next couple of years is merely a pipe dream. Rice production is not willed into existence, it is cultivated and systematically sown. There is research, there is mechanisation, there is warehousing and storage. There is market opening and market access. You cannot drive industrialisation or agro-industrialisation without connecting the farm gate where the production is happening. Do we have that? We are far back in terms of achieving that.

Of a truth, the threats will only lead to more smuggling if the country can not achieve self-sufficiency as and when due. The country has achieved progress in rice processing so far, there has been increase in the local production of rice and the importation of rice has been reduced. The number of rice mills (both integrated and cottage) have increased by more than 50% as the government and the private sector continue to make more investment in processing. Such success is worth applauding, but the government has more to achieve to reduce rice importation and drive into self-sufficiency. Whatever way anyone views the progress so far, what to note is that the journey is still far, there needs to be more strategic plans to be injected into the rice processing industry to improve the value. The industry needs more human resource, technology (irrigation, biotechnology etc) and financing.

The challenges disrupting the industry range from sub-optimal processing capacities, insufficient storage facilities, unavailability of quality inputs to other production enhancing infrastructure. The rice processing sector can also be more valued beyond mere raw rice being processed and packaged. There are numerous chain values that can be judiciously added to the staple, like rice flour which is made from ground raw rice.

Just like Thailand and US, the country can make rice milk and this can serve lactose intolerant people in the country. What about rice bran oil? It is an oil extracted from the rice bran and rice germ; it is highly rich in vitamin E, other antioxidants and various plant sterols. The oil can be used for cooking and also to dress salad.

It is high time the government added more value to agricultural produces and move from rudiments to high technological implements. It is time to bring out the quality in our farm produce, no more ‘unleavened’ produces. Nigeria can achieve self-sufficiency in food production, we have the lands, we have the resources, the people are available; they just need incentives, advanced technologies, trainings and also the after harvest period need to be put into consideration. It is not yet uhuru for the closure of borders to prevent illegal rice importation in Nigeria if the strategics plans are not rolled out.

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How to Write a Good Business Plan

Like the popular adage which says “he who fails to plan, plans to fail”, this is also related to business. Without a plan, a business is essentially without guidance and the day-to-day activities are likely to be haphazard. A business plan gives your business direction, defines your objectives, maps out strategies to achieve your goals and helps you manage possible bumps in the road.

There are so many people out there with brilliant business ideas but no capital to finance the business ideas; putting your business ideas on paper, in form of a plan, helps to attract investors to finance your business idea. For example, if you want to apply  for a loan in a bank to finance your business, the first thing the bank will need to see is your business plan.

A business plan is not just required to secure funding at the start-up phase, but is a vital aid to help you manage your business more effectively. By committing your thoughts to paper, you can understand your business better and also chart specific courses of action that need to be taken to improve your business.

Writing a business plan is easy and doesn’t always require the services of an expert, as long as you know what your business is all about. A business plan is like a roadmap for business success. In this article, I’m going to make writing a business plan as easy and simple as possible.

Before going into writing that wonderful business plan, let’s take a look at the seven important components you must include in your business plan.

  1. Executive Summary
  2. Business/Company Description
  3. Market Analysis
  4. Organization Management
  5. Service or Product Line
  6. Marketing & Sales
  7. Financial Projection

Having known these components, let’s go into details on how to integrate them into your business plan.

  1. Executive Summary

This is considered the most important section of every business plan. This is so because it’s usually the first thing the reader or investor will see when reading your business plan and its content can either make or mar you. This component briefly discloses to your reader where your company is situated, where you want to take it and why your business idea will be successful. This section exposes your overall strength and if you’re seeking for financial support, the executive summary is the place to grab a potential investor’s interest.

For an established business, be sure to include the following information;

  • The mission statement
  • Company information
  • Growth highlight
  • Your product/service
  • Financial information
  • Summarize future plans

For a startup or new business, you won’t have much information as an established enterprise. All you need to do is focus on your experiences and the decision that lead to the establishment of that business venture.

  1. Business/Company Description

This is easy to handle provided you know the goals and objectives of your business and its unique proposition. When writing in this section, be wise to make the investor understand what the company is all about, and its goals.

What to include in your Company Description

  • Describe the nature of your business and list down your targeted audience or the marketplace that you aim to satisfy.
  • Give a detailed explanation on how your products and services meet these needs.
  • Which consumers, organisation or business does your business serve or will serve? Don’t forget to include them.
  • Make known an advantage you have which you think will be an edge in making the business a success.
  1. Market Analysis

The market analysis section is where you illustrate your enterprise and market knowledge. It should contain your industry description and outlook, information about your target market, distinguishing characteristics, size of the primary target, pricing and gross margin target, competitive analysis etc. This section should be well detailed as possible for the reader to really understand your vision about the business.

  1. Organisation & Management

This section is what exposes the overall structure of your enterprise. It includes your company’s organisational structure, details of company owners, profiles of your management team and the qualifications of your directors.

This section also delves deeper into making known all the chains of authority, functions and backgrounds of those in the board of directors or employees. You will have to convince your reader that your staffs are more than just names on a letterhead.

  1. Service or Product Line

This is usually the main purpose why businesses exist. What are your services and products like? This is the section where you explain the benefits of such products or services to potential customers.

What to include in your service or product line section

  • A description of your product/service
  • Details about your product life cycle
  • Intellectual property
  • Research and development (R&D) Activities

With all these settled, you can then move over to the marketing & sales section.

  1. Marketing & Sale

This section deals hugely on your marketing strategy. How do you drive sales? What strategy do you or will you use to compel customers into buying your products? This strategy should be part of an ongoing business evaluation process and unique to your company.

An overall marketing strategy should include four different strategies

  • A market penetration strategy
  • A growth strategy
  • Channels of distribution strategy
  • Communication strategy

After you’ve defined your marketing strategy, the next job will be your sales strategy.

Your overall sales strategy should include two primary elements:

  • A sales force strategy – What kind of people are you going to recruit in your sales unit? How would they be trained? How would their compensation be? These are the questions that will be contained in this element.
  • Your sales activities – It’s important you break down your sales strategy to activities. For example, you need to identify your prospects and make a detailed list of them. Analyse intensively all the various needs and the leads with the highest potential to buy first.
  1. Financial Projection

For an established enterprise, you’ll be requested to supply historical data, at least; for the past three to four years in other to evaluate the company’s performance.

ALSO READ: Dear EFCC: How Much Have You Recovered?

For a new enterprise, you ought to have analysed the market and set clear objectives. If perhaps, funds are needed, you will then need to include another component to your business plan, FUNDING REQUEST and in details, seek for financial help with a detailed outline on what they will be used for.

Most business plans usually contain an APPENDIX, which provides the reader with such information as credit history, resumes, product pictures etc.. It is totally up to you, whether to include it or not.

Your business plan should be more than one copy for future uses and updates. You don’t need to pass through the stress of writing another business plan in the future, all you need is to update it, unless it’s an entirely different business.

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Questions on Abacha’s Loot

Did you ever wonder why the recoveries of the so-called Abacha loot no longer excite many Nigerians? Did you ever wonder why Nigerians have lost the enthusiasm about the recovery of the much-talked about Abacha loot? The simple reason for this widespread public apathy is the fact that Nigerians cannot find evidence where these recovered funds were put into in the promotion of the welfare of the citizens. Accountability in the management of recovered funds is no less significant than fighting corruption. Can Nigerians, in all sincerity, fight corruption with lip service or half-hearted commitment? The billions recovered from the Abachas could have brought significant improvements in the social service sector and our decayed public infrastructure.

The recovery of the Abacha loot has dominated the headlines almost always; what is missing in the headlines, however, is how these recovered funds are being used for the welfare of Nigerians.

The former Obasanjo administration had recovered billions of dollars from the Abachas, but until he ended his term in 2007, the recovered funds ended up on newspaper pages.

The Abacha loot recovery process began in 1999 after former president, Olusegun Obasanjo, got into power. In July of that year, Nigeria began civil proceedings in London against Mohammed Abacha, Abubakar Bagudu and companies owned by them, which led to about $420 million in assets being identified and frozen. In May 2002, Obasanjo struck a deal with Abacha’s family so Nigeria could recover about $1.2 billion; while the Abachas would keep $100 million and bonds worth $300 million. Following that deal, in November 2003, the Nigerian government recovered $149 million from the Island of Jersey.

On August 19, 2004, the Swiss Federal Office of Justice transmitted to Nigeria, all the assets in Switzerland owned by the Abacha family, about $500 million and one year later, the then Minister of Finance, Okonjo-Iweala announced in a Switzerland press conference that Nigeria has recovered $500 million from the Abachas, and “about $2 billion total of assets with 40% interests in West African Refinery in Sierra Leone. In 2014 Okonjo-Iweala said, only $500 million was recovered  during the time she first served as Finance Minister, under Obasanjo government and they used the fund for projects.

Under the Goodluck Jonathan era, the recovery efforts continued and over $1 billion was recovered. In June 2014 Liechtenstein returned $227 million to Nigeria; on 7 August, 2014, the United States Department of Justice (DOJ) announced the return of $480 million back to Nigeria government. In 2016, Switzerland confirmed they have so far returned $723 million of Abacha loot back to the Nigerian government.

The civil society groups and the media have not shown the enthusiasm to follow up how these recovered funds are being applied to the welfare of Nigerians. It is not enough to be announcing huge recoveries of stolen funds without accountability about the use of such funds.

ALSO READ: Dear EFCC: How Much Have You Recovered?

These actually raise questions of transparency in the management of recovered funds. Can we fight corruption when Nigerians appear unenthusiastic about the management of recovered funds? Can democracy thrive when the citizens are not keen to hold government accountable about how it manages recovered funds? How effective is the Freedom of Information Act in practice to guarantee Nigerians access to the records of the recovered Abacha loot and how the monies were applied to the welfare of Nigerians?

Unless we are ready to confront these questions honestly, loot recovery efforts will end up creating a cynical and skeptical public attitude towards the country’s anti-corruption crusade. It is impossible to separate the anti-corruption war from accountability in the management of recovered funds. Any attempt to sidestep this issue will kill public enthusiasm about the war against corruption. Lest one is misunderstood, there is no attempt whatsoever to defend corruption by anybody. In fighting corruption, however, we must do so with sincerity to avoid creating a skeptical public attitude towards the anti-corruption crusade.

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Dear EFCC: How Much Have You Recovered?

In the last few months,  Ibrahim Magu, the Acting Chairman of Nigeria’s Economic and Financial Crimes Commission (EFCC) and his team have struggled to give exact figures of recoveries from alleged treasury looters.

In November 2017, Magu disclosed that the commission had so far recovered N739 billion. In yet another instance in February this year, he claimed that the EFCC had recovered about N500 billion. These inconsistencies have aroused suspicions that the EFCC has no proper records of its recoveries and thus sparking claims of abuse of assets and funds recovered from its multiple investigations.

Curiously, the Minister of Finance, Mrs. Kemi Adeosun, who should by virtue of her office know the status of the recoveries, sparked further controversy in February when she disclosed conflicting figures. Following the controversy that ensued, the Minister in a leaked memo to the EFCC boss asked the agency’s head to brief her on the exact position of the recoveries.

According to her, the Office of the Accountant-General of the Federation had only received N91.4 billion from the EFCC, meaning that hundreds of billions are yet to be accounted for by the anti-graft agency.

This article therefore highlights worries over the inconsistencies in the figures of recoveries and the inability of these government agencies in that value chain to work closely and share information. The demand for full transparency and accountability from the anti-graft agency in their operations is what the agency itself stands for, interestingly and this is a reminder. This is important, coming against the backdrop of the corruption allegations against Magu culminating in his yet-to-be confirmed appointment by the Senate as the substantive chairman of the EFCC.

There are unconfirmed reports that the EFCC claims it expended monies from the recoveries to cover some of its operational costs. If this is correct then there is a problem with that. On whose authority or statutory law did the agency do this, when they are not supposed to be in possession of the money they recover?

I believe when transparency is absent in the government ministries and agencies, it gives rise to discrepancies and corruption; in this case, the EFCC and the Ministry of Finance are not been transparent with each other, and this gives a good example of what happens between the government ministries and agencies in Nigeria: each of them operates separately without transparency, accountability and synergy. This gives rise to corrupt practices that looks undefeatable.

ALSO READ: Nigeria’s Economy: Buhari vs Jonathan

If a system in which the transparency of data and accountability is the order of the day, such disgrace would not have happened, the data would have been there for everyone to see how much the EFCC recovered from the treasury looters, and the Finance Minister would not say this is the amount recovered and EFCC comes up with another figure as the amount recovered.

All these national disgrace can be stopped through transparent database, whereby the amount recovered is recorded and made public for other ministries, agencies and even the public to see. And I’m sure this will also help fight discrepancies and corruption in the government ministries and agencies. There are computers and internet in these offices. What are they used for?

I would like to suggest that all monetary recoveries and proceeds from disposed assets should be placed in a dedicated account at the central bank and records shared with the office of the Minister of Finance and the office of the Accountant General of the federation and the public as well.

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Oil In Kenya: A Blessing or a Curse?

In the recent past, Kenya has been hit by both negative and positive news. On the downside, several corruption scandals have hit the country from various sectors of the economy. Given that most of these scandals have been happening within public institutions, it is no surprise that citizens have lost confidence in public institutions due to this misuse of entrusted authority for personal gain. On the upside, there’s also been great news as Kenya’s ambition to become one of the global oil producers was boosted, following the flagging off of the first barrels of the resource destined for Mombasa from Turkana fields. The question begs: shall the discovery of oil in Kenya be a blessing or a curse?

For most Kenyans, the long-term expectations are that the exploration of this resource will lead to economic growth, consequently assisting in poverty eradication in the country. However, studies show that many oil-producing countries do not receive the economic and social benefits expected from the wealth generated by the hydrocarbon industry either directly, through the stimulation of the local and national economy, or indirectly, through increased tax revenues, a phenomenon referred to as the resource curse.

Resource curse is a form of economic decline that can arise from conditions such as weak controls on public expenditures; increased corruption; and increased political and economic dependence on the income provided by the production and exporting of the natural resource. Africa has provided many instances where natural resource greed such as that of minerals or crude oil has led to political instability, corruption and even civil war. Instead of serving as development agent, natural resources have served as propellants of internal conflicts in Africa as it is seen in the prolonged internal conflicts in Sierra Leone, Liberia, and the Democratic Republic of Congo who are all endowed with natural resources.

Natural resources and other windfall gains lead to an increase in fighting activities if there are multiple rivaling groups. Conflict could arise in cases where certain groups are seen to prosper from these gains at the expense of others. In the case of Kenya, Turkana County – where the oil was discovered – is one of the poorest regions in Kenya with 88% of the people living below poverty levels. Illiteracy levels are also high. The national & county governments should ensure that proceeds from the oil bring tangible benefits to the locals, to avoid a situation such as the one in Nigeria’s Niger Delta.

ALSO READ: World Investment Report of 2018: Analyses of Africa’s Foreign Direct Investment (FDI)

Otherwise, with the current trend of high levels of corruption, wrangles between the national government and county governments, lack of accountability from the leaders, constant politicking that destabilises the country and decreased quality of institutions in Kenya, oil exploration is destined to be a resource curse for the country.

Unless these negative indices are sorted out, Kenya will be another example of a country blessed with resource curse like Nigeria and Angola. But if the negative indices can be checked, it will translate to greater economic development for the country. I believe the president has a lot to do in this case by providing strong and corrupt free institutions for the country.

According to the 2018 World Investment ranking, the Kenyan economy witnessed a huge boost due to high investment in technology as the government provides tax incentives to encourage investors. As African countries are trying to move to a  technology based economy, in which Kenya is showing a good example, will this discovery of oil not distract the Kenyan government from other sectors of the Kenyan economy like what was experienced in Nigeria? Even if the discovery of oil in the land is a blessing, how prepared is the kenyan government to deal with the environmental issue that will arise from the exploration?

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World Investment Report of 2018: Analyses of Africa’s Foreign Direct Investment (FDI)

Africa endured a turbulent 2016/2017 as global commodity prices crumbled. This significantly exposed the fragility of many commodity-reliant economies in Africa and crippled the growth that had been accrued in the past few years. But majorly, foreign investors have now become sceptical of the African economies.

The latest World Investment Report released by the United Nations Conference on Trade and Development (UNCTAD) showed that FDI [Foreign Direct Investment] flows to Africa slumped to $42 billion in 2017, a 21% decline from 2016. Weak oil prices and harmful lingering effects from the commodity bust saw flows contract, especially in the larger commodity-exporting economies. FDI inflows to diversified exporters, including Ethiopia and Morocco, were relatively more resilient,” according to the report that was released on Thursday.

Foreign Direct Investment Inflows to North Africa

Morocco

Strong, diversified investment into Morocco contrasted with declines in FDI to the rest of North Africa –the only sub-region yet to surpass its 2007 peak. FDI flows to North Africa were down 4% to $13 billion. FDI into Morocco was up 23% to $2.7 billion, thanks to considerable investment into new car technologies (electrical, battery, cameras). By the end of 2017, the Government had confirmed 26 auto industry investments worth $1.45 billion, including a deal with Renault (France) to increase local sourcing of components to 55%. FDI into the country’s financial sector also expanded, as banking relations with China deepened. In addition, Uber (United States) expanded operations in both Morocco and Egypt.

Egypt

Despite a decline in FDI of 9%, Egypt continued to be the largest recipient in Africa with $7.4 billion. Inflows were supported by a large increase in Chinese investments across light manufacturing industries and wide ranging economic reforms beginning to pay off. Financial liberalisation, for instance, fostered more reinvestment of domestic earnings.

Tunisia

FDI flows to Tunisia remained flat at $0.9 billion, a 1% decline from 2016. Nonetheless, improved investment incentives following the promulgation of the recent investment law, as well as new legislation on public-private partnerships, supported inflows from Belgium’s Windvision into the country’s renewable energy industry, as well as FDI in the electronics, software and IT industries from French and regional investors.

Algeria

FDI into Algeria, which depends heavily on investment in oil and gas, fell 26% to $1.2 billion, despite the bundle of incentives offered by the country’s new investment law. Diversification was supported by FDI from Huawei (China) to help with Houari Boumediene Airport in Algiers and from Samsung (Republic of Korea), which opened its first smartphone assembly plant in the country. Proposed amendments to the energy law could increase foreign participation in the country’s oil sector considerably in the future, if successfully implemented.

Sudan

FDI flows in the Sudan remained stable at $1.1 billion. The country is largely reliant on Chinese investments into its oil sector and the reaching of an agreement with South Sudan to access its once-productive oil fields. The lifting of United States sanctions on the Sudan in 2017 is expected to increase FDI.

Foreign Direct Investment Inflows to Sub-Sahara Africa

Harmful lingering macroeconomic effects from the commodity bust weighed on FDI to sub-Saharan Africa – even though debt levels, foreign currency shortages and inflation rates appear to be improving.

Nigeria

FDI to West Africa fell by 11% to $11.3 billion, due to Nigeria’s economy remaining largely depressed. FDI to that Nigeria fell 21% to $3.5 billion. With domestic demand well below investor expectations, several consumer-facing companies from South Africa exited Nigeria in 2016. A modest recovery in oil production and the general economy in 2017, as well as the introduction of an investor and export window to bid for foreign exchange, could help entice companies to return to Nigeria in the future. At the same time, new technology start-ups in Nigeria, backed by venture capitalists from South Africa and elsewhere, are helping to diversify FDI inflows. Nigeria has attracted strong market-seeking technology inflows from United States firms, including Uber, Facebook, Emergent Payments and Meltwater Group. Chinese investments in the country consisted of efficiency-seeking manufacturing FDI into the textile, automotive and aerospace industries.

Ghana

Ghana attracted $3.3 billion in FDI flows (down 7%), on the back of fiscal consolidation and self-imposed reductions in government investment spending. Until this past year, Ghana’s diversified economy had facilitated a continuous increase in its FDI flows since the 2000s. A firm price for gold and ongoing investment from Italy’s Eni to develop the large Sankofa gas field could further encourage FDI in 2018. Sankofa produced its first oil in 2017, with Eni having contributed the largest amount of FDI in Ghana’s history through its 44% stake in the company.

Côte d’Ivoire

FDI into Côte d’Ivoire, was up 17% to $675 million, reflecting supportive public investments by the government and economic diversification. As one of the two fastest-growing economies in Africa (along with Ethiopia), the country has attracted FDI into consumer goods. Heineken (Netherlands) invested $35 million in 2017 to double beer production and compete with Castel (France). Hershey (United States) is set to help the country process more of its cocoa locally, boding well for future investment prospects.

Senegal

FDI into Senegal was up 13% to $532 million. Russian producer KAMAZ will invest approximately $60.5 million in the first phase of truck assembly production in the country.

Foreign Direct Investment Inflows to Central Africa

FDI flows to Central Africa decreased by 22% to $5.7 billion.

DR Congo

FDI flows to the DR Congo fell by 67% to $1.2 billion from $3.6 billion in 2016. The deepening economic crisis in the country, volatility in oil FDI and weak FDI in non-oil sectors contributed to the decline. In contrast, the global race for cobalt used in electric car batteries supported an 11% rise of FDI flows into the Democratic Republic of Congo, reaching $1.3 billion. Glencore (Switzerland) bought two mining assets for nearly $1 billion, increasing its stake in cobalt and copper mines.

Equatorial Guinea

FDI flows rose also in Equatorial Guinea (to $304 million from $54 million in 2016) and in Gabon, a major oil producer (up 21% to $1.5 billion).

Foreign Direct Investment Inflows to East Africa

East Africa, the fastest-growing region in Africa, received $7.6 billion in FDI in 2017, a 3% decline from 2016.

Ethiopia

Ethiopia absorbed nearly half of this amount, with $3.6 billion (down 10%), and is now the second largest recipient of FDI in Africa after Egypt, despite its smaller economy (the eighth largest in Africa). Chinese and Turkish firms announced investments in light manufacturing and automotive after Ethiopia lifted the state of emergency in the second half of 2017. United States fashion supplier PVH (Calvin Klein and Tommy Hilfiger); Dubai-based Velocity Apparelz Companies (Levi’s, Zara and Under Armour); and China’s Jiangsu Sunshine Group (Giorgio Armani and Hugo Boss) all set up their own factories in Ethiopia in 2017. Several of these firms are located in Ethiopia’s flagship: Chinese-built Hawassa Industrial Park.

Kenya

Kenya saw FDI increase to $672 million, up 71%, due to buoyant domestic demand and inflows into ICT industries. The Kenyan Government provided additional tax incentives to foreign investors. South African ICT investors Naspers, MTN and Intact Software continued to expand into Kenya. United States companies were also prominent tech-oriented investors, with Boeing, Microsoft and Oracle all investing in the country. Significant consumer-facing investments by Diageo (United Kingdom) in beer and Johnson and Johnson (United States) in pharmaceuticals also bolstered FDI into the country.

Tanzania

The strong gold price and a diversified productive structure contributed to FDI inflows worth $1.2 billion into the United Republic of Tanzania. Facebook and Uber (both United States) expanded into that country while India’s Bharti Airtel continued to invest. The country’s inflows nonetheless recorded a 14% decline compared with 2016. Foreign telecommunication companies now must list, at least, a quarter of their equity on the local stock exchange, an effort by the Tanzanian Government to increase domestic ownership. In addition, a ban on exports of unprocessed minerals may adversely affect the country’s foreign mining assets.

Foreign Direct Investment Inflows to Southern Africa

In Southern Africa, FDI declined by 66% to $3.8 billion.

Angola

FDI into Angola, Africa’s third largest economy, turned negative once again (–$2.3 billion from $4.1 billion in 2016) as foreign affiliates in the country transferred funds abroad through intra-company loans. In addition, oil production declined and macroeconomic fundamentals deteriorated. Tenders for onshore oil blocks were suspended in 2017 but are to be re-launched in 2018 after a new government is appointed. A tender for oil blocks off southern Angola may also be opened in 2018 to offset declines in older fields.

ALSO READ: TOP FASTEST GROWING AFRICAN ECONOMIES IN 2018

South Africa

FDI to South Africa declined by 41% to $1.3 billion, as the country was beset by an under-performing commodity sector and political uncertainty. Investors from the United States, which remain the largest source of FDI into the country, focused on services industries. The standout project was the investment by DuPont (United States) into a regional drought crop research centre. Automotive FDI also remained significant. General Motors sold its South African plant to Japan’s Isuzu, and Beijing Automotive Group Co. announced an $88 million investment in a vehicle manufacturing plant in a joint venture with South Africa’s Industrial Development Corporation. European investors, led by Germany and the United Kingdom, remained very active in South Africa, through initiatives such as BMW’s retooling of factories. Automotive FDI into South Africa is increasingly developing regional value chains: Lesotho now produces car seats, and Botswana ignition wiring sets, for auto manufacturers in South Africa.

Mozambique

FDI into Mozambique also contracted severely, down 26% to $2.3 billion, amid austerity and debt defaults. Long-term prospects rely on the country’s liquefied natural gas potential being exploited and profits reinvested to advance domestic development. Mozambique’s coal sector attracted investor interest from a consortium of Chinese, British and South African firms, but the project is in its early stages.

Zambia

FDI into Zambia increased by 65%, to $1.1 billion, supported by more investment in copper. The government, keen to diversify the economy away from copper, announced the building of a $548 million cement plant in a joint venture between the country’s mining investment arm and China’s Sino Const., Israeli Green 2000, already active in seven other African countries, also invested in food production, further contributing to economic diversification.

Geographical sources of FDI to Africa are becoming more diversified. Investors from the United States, the United Kingdom and France still hold the largest direct investment stakes in Africa. Italy has also emerged as a major source of investment, particularly in the energy sector. At the same time, developing-economy investors from China and South Africa, followed by Singapore, India and Hong Kong (China), are among the top 10 investors in Africa. China’s FDI stock in the continent reached $40 billion in 2016, as compared with $16 billion in 2011, according to the report.

Africa’s Foreign Direct Investment (FDI) Outflows

FDI outflows from Africa increased by 8 per cent to $12.1 billion. This largely reflected a significant increase in outward FDI by South African firms (up 64% to$7.4 billion) and Moroccan firms (up 66% to $960 million). Outward FDI by Nigerian firms, in contrast, remained flat at $1.3 billion, focused almost exclusively on Africa. Major African MNEs other than South African firms have, in the last few years, expanded their international footprints both within the region and elsewhere, with extra regional FDI heading to both developed and developing economies.

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South Africa First Quarter Economic Report 2018: A Disadvantage to Ramaphosa

The coming of President Ramaphosa brought with it renewed optimism for South Africans after years of stunted economic growth and instability under the former president, Jacob Zuma. Financial markets rallied initially after Ramaphosa took over, as investors were attracted to his promises to woo overseas investments to the country. But that euphoria seems to have cleared off as investors expect execution of those promises.

So far, since his ascension to power, he has removed his predecessor’s compromised ministers, appointed a new ones, notably, the Finance Minister; he also restructured state-owned companies and galvanised state agencies like the Hawks, the National Prosecution Authority and South African Revenue Service into action.

South Africa’s economy wobbled in the first quarter of 2018 after enjoying successive expansion in 2017. The country’s real Gross Domestic Product dipped by an annualised 2.2% in the first quarter 2018 after expanding by 3.1% in the fourth quarter of 2017, Statistics South Africa said in a report released Tuesday: the biggest decline since the first-quarter of 2009. The country also recorded the largest contraction in Agriculture at 24.2% —the largest quarter-on-quarter fall since the second-quarter of 2006.

Agriculture’s relatively strong performance in 2017 is one of the positive factors that helped keep the South African economy afloat in 2017. This momentum failed to carry through to 2018, with decreased production in field crops and horticultural products contributing to the decline in the first quarter.

The only sectors of the South African economy that witnessed improvement in the First Quarter of 2018  include: transportation sector, finance sector, personnel and government service sector.

A survey compiled by Markit also showed that business activities contracted in May. Respondents to the survey cited product shortages and weaker market conditions as the causes. Standard Bank’s Purchasing Managers’ Index (PMI) slipped to 50.0 in May from 50.4 in April.

Other sectors that declined include: mining, production (lower production in gold, platinum group metals and iron ore were the main contributors to poor performance), manufacturing (due to decline in the production of petroleum and chemical products, as well as basic iron and steel).

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Trade activities contracted by 3.1%, construction industry continued to contract, experiencing its fifth consecutive quarter of decline. The industry has lost R1.7 billion in value since the fourth quarter of 2016, falling from R110 billion to R108 billion in the first quarter of 2018.  Electricity industries also recorded negative growth in the first quarter of trade.

As the country prepares for elections slated for next year, the president’s economic performance will go a long way to define the party’s chances. The African National Congress (ANC) should be conscious of the new African phenomenon of voting out political parties or persons that have held onto power for a long time.

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Nigeria’s Economy: Buhari vs Jonathan

As Nigeria’s 2019 General Elections draw nigh, President Muhammadu Buhari and his team have insisted that economic growth under his presidency “is better than it has been in many decades,” it has equally stood by the old lines like a Trump that “the Economy is raging at an all-time high, and is set to get even better,” and “It has been many years that we have seen this kind of (economic) numbers.”…If not for the last reckless administration we would have been better off.

Let us consider the graphs below:


Figure 1: Jonathan and Buhari’s Administration Economic Growth Rate

The claims by the President’s henchmen, like Kemi Adesoun, that his stewardship of the economy puts his predecessors to shame can be checked by public information that is readily available to all.

In fact, the chart above on the economic growth of Nigeria both under Buhari and Jonathan administration shows that Buhari’s record so far falls somewhere between unremarkable and substandard. Moreover, other economic data suggest that the current expansion will likely wind down before his term ends, and his boasting will ring hollow once the economy slips from recession to depression.

It is commonly said that a president deserves some credit or blame for the economy’s performance only after he’s been in office about six months. On those terms, let’s measure Buhari’s words against the record for Nigeria per capita income, which measures the standard of living of an average Nigeria and also one of the indicators of economic development of a country, over the last three years (2015-2017), and those of the last three years before taking over the mantle of leadership.


Figure 2: Per Capita Income under Jonathan and Buhari’s Administration

It can be seen clearly from the chart above that, the per capita income for the last three years keep decreasing from $2,763(it is usually measured in US dollars) in 2015 to $1,994 in 2017 compared to the increasing rate experienced before taking over power from the Jonathan administration. This means that the standard of living of an average Nigerian is lower under the Buhari administration compared to that of his predecessor.

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Like all of Buahri’s predecessors, the President promised to reform regulation and boost business investment, because such measures can stimulate faster growth. Moreover, if the new investments focus on productivity-boosting equipment, they also can help raise employment and incomes. Let’s take a look at the rate of unemployment under Buhari’s administration compared to that of his predecessor.


Figure 5: Unemployment Rate under Jonathan and Buhari’s Administration

From the chart above, the rate of unemployment under the Jonathan administration was at a decreasing rate from 10.6 in 2012 to 7.8 in 2014, which means unemployment was under check during Jonathan’s administration but the same cannot be said for the Buhari administration which has seen the rate of unemployment increasing from 9 in 2015 to 16.5 in 2017, which means many Nigerians have lost their jobs under the present administration.

The economic data has said it all, the economic situation of the country is far worse than what is been portrayed by the presidency. The highly sung economic achievements do not reflect on the lives of the people of the country. Job loss is on the increase, commodity prices are on the increase, inflation is still in double digit. It’s time to stop the talks and focus on a strategy that will foster economic development rather than focusing on the 2019 election: the people are the economy and the development of the economy means the development of the people.

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Ghana’s Food Sufficiency Project: Obstacles

According to Bethenny Frankel, a television personality, author and entrepreneur, your diet is your bank account, good food choices are good investment. Food has become the only common thing that brings people together. Knowing these facts the president of Ghana, Nana Akufo Addo said that plans are underway to make the country food self-sufficient and reduce the huge food import bills. This statement sounds wahoo and intriguing but one should ask what are the possibilities of the plans? what are the prospects involved?

The agricultural sector in Ghana consists of a variety of produces and is an established sector that provides employment on a formal and informal bases. The agricultural produces are a variety of crops in various climatic zones which range from dry savanna to wet forests, running in eastwest bands across Ghana. The produces include: yams, grains, cocoa (which computes the largest exports), oil palms, kola nuts and timber.

However, in the past years, the Ghana witnessed short falls in profit from  produce exports due to illegal sellers sieving into the makeup, selling unofficially and illegitimately. Agriculture is a major contributor to the country’s export earnings and source of inputs for the manufacturing sector. It is likewise a major source of income for a majority of the population. In 2013, the sector employed 53.6% of the total labour force in the country but overtime the progress of the sector is retarding and needs restrengthening.

The sector has experienced its lowest growth (0.8%) in more than two decades in 2011, the same year Ghana started its oil production in commercial quantities. Another oil craze! If they are not careful, they will forget the sector just as the governments of their African giant-brother forgot theirs -you can guess the country.

Diversifying the economy is wonderful but the mother sectors should not suffer in a bid to diversify. If the agricultural sector is weak, manufacturing will fall, leading to more importation bills for the country. The country is blessed with vast arable lands yet, every year, millions of dollars are spent to import food into the country, this is what an economy that neglects agriculture gets as a reward. It is never too late to make amends!

Ghana is a net importer of basic foods (raw and processed) including rice, poultry, sugar and vegetable oils while its top exports are crude petroleum, gold, cocoa beans, cocoa paste and cocoa butter. The country has grown to be a larger importer of finished products, after exporting the raw produce. This will hamper the growth of the manufacturing sector overtime. The president and his team have to involve measures to add value to the produce, the cocoa butter can be produced into chocolate, ointments, toiletries and pharmaceuticals. They also import medication, which can be done away with if the agricultural sector is revamped and utilised.

The new programme to make Ghana food self-sufficient is ‘Planting for food and jobs’. The flagship programme is to help address the declining growth of the country’s agricultural sector, it is a clarion call on every single citizen to take farming as a full time or part time activity. It gears towards improving food productivity and ensuring food security, as well as reducing food import bills to the barest minimum. How does the programme seeks to achieve all?

The programme employed: Supply of improved seeds to farmers at subsidized prices (50% subsidy), free extension services to farmers (1200 extension officers from the five main agric colleges already enrolled onto the programme; an additional 4,000 extension assistants to be mobilised), marketing opportunities for produce after harvest (arrangements have been made to offer ready markets for farmers who will be participating in the campaign) and e-Agriculture (a technological platform to monitor and track activities and progress of farmers through a database system).

The condition to be selected for the programme is quite tight: a farmer will require a minimum of 2 to 3 acres to be part of the campaign. With this condition, the fate of small scale farmers that cannot afford 2 to 3 acres is anything but positive and this has an effect on the programme.

ALSO READ: Rethinking Buhari’s ‘Success’

Despite all the incentives the programme provides such as market opportunities for produce and others, a poor farmer might not be able to enjoy them. Of what use is a programme that does not reflect in the live of the peasants who make up huge part of the farming? The government of Ghana has to review this part of the programme, it should be extended to the smallest farmer in the country; after all, it is sufficience, enough food for all that they want. Provided the government seeks to achieve the UN Sustainable Development Goal 2, zero hunger, by 2030 (for everyone, everywhere should have enough good quality food to lead a healthy life) they should improve the productivity and income of small scale farmers. This improvement can mainly be achieved by promoting equal access to land, technology and markets, sustainable food production systems and resilient agricultural practices.

Another failure the programme did not address is the storage facilities of agricultural produce. According to the World Food Programme Regional Director in charge of West and Central Africa, Adbou Deing, the agriculture production of the country has increased overtime but the losses after the production is huge. About 40% of food being produced is lost and this is the average in Africa. The major problem of Ghana being food self-sufficient is wastage after production; there is little issue with production because of the increase that has being experienced so far. So, what are the plans to stop the losses of agricultural produce? The wastage experienced in Ghana can only be reduced by investing in food processing and storage facilities across the country.

The world bank also suggested that instead of devoting a large chunk of agricultural sector to cocoa production through investing in diversified productivity, beyond a single crop. The bank also called for more investments in research to increase farmer technology uptake as well as irrigation infrastructure to increase productivity and mitigate the impacts of climate change. There has to be an improvement on the public expenditure allocation and management as well as budget coordination in the sector; it needs more funding to be revived. The Ministry of Food and Agriculture has to improve on the method of collecting data for proper analysis in order to improve the planning process, thereby enacting contextual policy in the sector.

Ghana cannot be food self-sufficient if oil still gets topmost priority to the neglect of the others. There should be value addition to the sector in such a way that raw produces are not the exports but processed products. Mr President, talk, they say, is cheap but action speaks louder!

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Rethinking Buhari’s ‘Success’

As Nigerians celebrated their Democracy Day on the 29th of May 2018, the presidency released a document on what the administration has achieved since 2015. Nigerians voted in President Buhari under the platform of All Peoples Congress (APC) as a result of loss of trust in the former President, Goodluck Jonathan.

In the document, the presidency highlighted the achievements on the economy, infrastructure and others, concluding that there has been a huge success, with more progress to be made. The presidency has given their report, the scorecard of the president, which shows a lot of success with no misfortunate, of course, they ought to blow their trumpets if no one cares to blow it for them. Let’s critically look into the report.

According to the report, the Nigerian economy is back and is on the path of growth after the recession of 2016-2017. It said the Muhammadu Buhari administration’s priority sectors of agriculture and solid mineral maintained consistent growth throughout the recession. This administration can laud themselves for getting the country out of recession, but the country went out of recession the same way it dabbled into it. The economy healed itself, there was no magic or special principles enacted by the government to take the country out of recession.

The root cause of recession turned out to be the messiah of the country, the recession came in abruptly, unplanned for, as a result of the sudden fall in crude oil prices in 2015, likewise, the growth experienced in 2017 was as a result of the appreciation in the price of crude oil. This is to say, the economy is on a table with uncomplete legs, the moment oil prices fall again, the nation might go down the drain, if we are yet to really diversify beyond just talks.

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Although, the scorecard report indicates agriculture and solid minerals as its priority, yet it failed to talk about billions the president spent in search of oil in the north-eastern part of the country. No one is criticising the efforts of looking for oil but it would be more rational to observe what each region has and explore them instead of searching for what is not there at the detriment of the nation’s development. The funds wasted to search for the oil in the region could have been channeled properly. It is laughable: Nigeria survives on oil; a leadership comes and says we’ll diversify, then turns around to spend so much in search of the same oil! This is not how to prioritise agriculture. The sector is still as vague as it is, providing 48% jobs for the people compared to the over 70% jobs it created before the craze for oil exploration.

In the aspect of inflation, this administration is getting closer to the desirable rate of inflation. The inflation has fallen the fifteenth consecutive month while the nation’s external reserves are at their highest levels in five years, currently double the size of October 2016. This is an achievement that is obvious and achievable as a result of the strict principles of the monetary authorities. I think the government deserves some accolades for that, yet, the nation is not at the state of desirable inflation rate. The recent rate of inflation is yet to meet with the budgeted rate of inflation, the economy needs to strategise the more.

In the power sector, the report states that there was transmission expansion and rehabilitation programme which has resulted in a 50% expansion in grid capacity since 2015, from 5,000MW to 7125MW as at December 2017. It also launched the distribution expansion programme (DEP) which has approved by the Federal Executive Council in February 2018 to deliver 2,000 MW of unused power capacity to consumers in need. The presidency has failed to address the issue of the high rate of exploitation faced by consumers. The electricity is being claimed to have been generated, yet, Nigerians still run on generators. There are still shady dealings that make reluctant to come into Nigeria to invest in this area. The bills for electricity in the country is throat cutting; the exploitation experienced by consumers is high. These are the issues needed to be addressed in the power sector, hence, no achievement can be said to be earned. Electricity is a social welfare affair, so, if consumers cannot enjoy the service, it can’t be termed successful. Yet, I would say the progress is appreciable but we can do better.

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The presidency also went ahead to list their achievements in investing in people. Any form of achievement engaged in should be result oriented and specific returns should be expected. Under the Social Investment Programme (SIP), government said 200,000 N-Power beneficiaries are currently participating and receiving NGN30,000 in monthly stipends. The report also said another 300,000 new enrollment are being processed, to take the number to 500,000 this year.

The N-Power has absolved many youths in the country, but not all those absolved are working, especially those ‘teaching’ in schools; they just receive payment. Of a truth, the government pay the seemingly unemployed youths but at the long run, no impact on the economic growth. What is the usefulness of a programme if there is no impact on the economy.


They talk about school feeding with such sense of satisfaction. But feeding few children in the large country
once in a day, with some teachers unpaid is an improper arrangement. Such programmes should be done in a balanced economy as it is merely an avenue for expenses. The chefs are ‘employed’ but they are still sucking from the same exhausted purse. This is not the kind of employment that drives an economy; it is like placing the cart before the horse. Meanwhile, some of these children have parents who are not being paid; what will they eat after school?

The questions the presidency should look into before counting their unhatched chicks are: what have the programmes and plans translated into the economy? What are the feedback from such programmes? Are they worth spending millions on? If the answers to these questions are not on the positive, it is sad to note that the country is recording a cyclical success; a success that is aimed at ‘proving they are working’. Success should be upward, something projected into the future and bringing returns into the economy.

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TOP FASTEST GROWING AFRICAN ECONOMIES IN 2018

The year 2018 has been forecasted to be a promising one for the African countries with an economic growth outlook in the region projected to continue to rise to 3.2 percent. The growth is likewise forecasted to increase to 3.5 percent in 2019, on the back of firming commodity prices and gradually strengthening domestic demand, according to World Bank Reports. The Brookings Institution points out in its Foresight Africa 2018 report that half of Sub-Saharan African economies will grow at a rate similar or higher than the years of the ‘Africa rising’, which was the run-up to the commodity price cash of 2004.

GHANA

Ghana, a West African country that shares borders with Togo, Cote d’Ivoire and Burkina Faso, sits on the Atlantic Ocean and has a population of about 29.6 million (2018). According to a World Bank report, the Ghana macroeconomic performance improved in 2017 after a turbulent 2016. The country’s economy expanded in September 2017, at a rate almost double that of 2016. The Ghana Economic Update reported that the service sector bounced back and the fiscal consolidation is paying off. The inflation rate has declined to 10 percent. The report also predicts a continuous fall in inflation within or close to the Bank of Ghana’s medium term target range of 6-10 percent in 2018.

The fiscal deficit dropped to 6 percent of gross domestic product (GDP) in 2017 from 9.3 percent in 2016, this was achieved because of serious fiscal consolidation efforts. It was predicted that the fiscal deficit could fall within the government’s target of below 5 percent of GDP from 2018 onwards. The West African country is expected to see a 8.3 percent growth rate in 2018.

 

Despite the promising outlook, the country still has some challenges it has to solve to sustain. Restrengthening the falling Agriculture sector which provides 750 jobs for every additional $1 million outputs. However, the progress of the sector is retarding overtime. The country has to improve the financial sector to control the expenditure incurred in the country and like get involved in domestic resource mobilisation.

ETHIOPIA

The country is one the second fastest growing economies in Africa and likewise the second most populous country in the continent. It’s economy is a mixed and transition economy with a large public sector. However, Ethiopia is gradually moving towards market economy because it is in the process of privatising many of the state-owned businesses. The landlocked country shares borders with Eritrea, Somalia, Kenya, South Sudan and Sudan. Its main port is in neighbouring Djibouti.

According to an official statistics, the country’s gross domestic product (GDP) was estimated to be 10.86 percent in 2017. The expansion in the economic growth was as a result of the expansion in some sectors which include: agriculture, construction and services. The manufacturing sector likewise experienced growth, with the private and public consumption also playing an important role.

Ethiopia’’s main challenges are sustaining its positive economic growth and accelerating poverty reduction which requires progress in job creation and improved governance.

COTE D’IVOIRE

The economy is stable and currently growing, in the aftermath of political instability in recent decades. The economy is majorly market based and relies on agriculture for its economic growth. Although, the country experienced a severe political unrest that hampered the growth of the economy, the stability has been restored in 2015. From 2016 and the early months of 2017, the country’s economic growth ranked among the most robust in the continent.

Despite the growth however, the economy still wallows a in high rate of inequality. The government must ensure redistribution of income to the most vulnerable sections of the country. The government also needs to diversify the economy from mainly cocoa to adding value to the cocoa produce.

SENEGAL

Senegal is a West African country bordered by Mauritania in the north, Mali to the east, Guinea to the southeast and Guinea-Bissau to the southwest. The population is over 15.4 million (2016). About a quarter of the population is concentrated around the capital of Dakar and up to half in urban areas. The country is one of West Africa’s key economic hubs. The primary sector of the economy is the most dynamic, growing over 7 percent, yet, the secondary sector is also picking up and expected to take the lead in a few years’ time. The budget deficit is expected to drop from 3.7 percent in 2017 to 3 percent in 2018, the current account balance is projected to drop to 5.2 percent in 2018. The improvements are achieved because of large exports, especially of phosphate, peanuts and zircon.

The public debt acquired by the country has increased though, at a slower pace. It increased to 60.8 percent of the GDP in 2017, while debt servicing also increased from 24 to 30 percent of government revenues between 2014 and 2017. According to the Debt Sustainability Analysis carried out by International Monetary Funds (IMF) and World Bank, the public debt of the country remains at low risk of distress, although, this may be problematic if debt indicators worsen.

TANZANIA

An East African country known for its vast wilderness, Tanzania has a population of about 55.57 (2016). It borders Kenya and Uganda to the North, Rwanda, Burundi and the Democratic Republic of Congo to the West, Zambia, Malawi and Mozambique to the South and the Indian Ocean to the East. The Africa’s highest mountain, Mount Kilimanjaro is in the northern-eastern part of Tanzania. The economic growth of the country has declined since the last quarter of 2016; the estimated growth of 2017 was 6.5 percent. Construction, mining, transport and communications were key growth drivers in 2017.

Tanzania has largely completed its transition to a market economy, though the government retains a presence in sectors such as telecommunications, banking, energy, and mining. The economy depends on agriculture, which accounts for more than one-quarter of GDP, provides 85% of exports, and employs about 65% of the workforce.

The fiscal deficit is forecasted to expand slightly in 2018 to 4.4 percent of GDP. The public debt of the country is sustainable, the debt servicing has increased in recent years, reducing the fiscal space. In 2017, inflation rate was 5.3 percent and it is projected to remain around 5 percent through 2019.

The countries listed above are the fastest growing economies in Africa, though not fully developed, they are progressing and emerging. So, investors can consider these countries for business.

The graph representation above is the 2018 forecast of these economies according to World Bank Reports.

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The Economy of Uganda: Expectations, Opportunities

Uganda, or the Republic of Uganda, is an Eastern Africa country. The landlocked economy has 42.82 million population. The economy is majorly an agricultural economy, coffee being its most export. Nonetheless, it has untapped reserves of both crude and natural gas. The country has been experiencing a consistent economic growth until 2014 when the country recorded a real GDP growth of 4.6%. In 2013, prior to the fall the country recorded a growth of 4.7%, in 2015, 5.7% growth was recorded but in 2016 there was another drastic fall, 2.3% was recorded and in 2017 there was an appreciable increase, the growth was 4.5%. Although, the recent growth rate did not attain the level it was before the drastic fall, yet, the economy was reported to have reduced their poverty rate. Nonetheless, the economy still have some woes to deal with, like access to electricity, improved sanitation, education, child malnutrition, etc.


Other endowments possessed by the country include; gold, copper, cobalt, fertile soil, regular rainfall and the recent discovery of oil. Since the economy is predominantly an agricultural one, agriculture is the biggest employer of labour in Uganda as, the sector absolves over 80% of the work force in the country. Prior to 2017, the sector had been a larger contributor to the country’s GDP. The GDP from Agriculture in Uganda however decreased to 3110.66 UGX billion in the fourth quarter of 2017, from 3257.83 UGX billion in the third quarter of 2017. The success was hampered as a result of underinvestment and the over reliance on crude farm tools. This reduction in the agricultural sector led to an overall decline in productivity because agriculture is the main source of raw materials for other sectors in the economy.

Uganda also has an industrial sector that contributes over 20% of the GDP and employs only 5% of the country’s population. This sector also has its own woes; the growth of the sector is impeded by high costs due to poor infrastructure, low levels of private investment, and the depreciation of the Ugandan shilling.

Uganda is a mixed economy of both private and government institutions combining to determine how it works. Both decision makers partake in the ownership, allocation and distribution of resources in the economy which is an open economy, thereby allowing imports and exports of products/services. The major exports of the nation are agricultural products while manufactured products and petroleum products are imported. There are services sectors like banking, transport, communication but they are still growing and striving to achieve maturity. The government of Uganda depends on indirect taxes as a major source of revenue.

The country faces many economic challenges. The political unrest in South Sudan has led to more refugees in the country, thereby disrupting the its major export market. The currency of the country (Uganda Shilling) has depreciated 50% against the dollar from 2015-2017. The insufficient budgetary discipline and corruption hinder economic development and reduced investors’ confidence.

The economy is yet to evolve agricultural diversification; it is still predominantly coffee and cotton, resulting to small production composition. The economy is yet to employ the methodology of adding value to their agricultural products, it still exports raw products, importing the processed ones. This is one reason the agricultural sector began to lose its stance after several decades of prosperity. The global market has moved from rudiment to value adding.

The economic structure of Uganda reveals the unhealthy reliance on majorly agriculture and its imports is more than the exports, making the balance of trade unfavourable for the economy. The imports are largely dominated by consumer goods, this indicates that Uganda is a consuming nation and not a contributing nation. The government have to employ measures that will make the economy more industrialised, there should be training of local men to carry out industrial activities. There should be economy diversification, the government should also establish import substitution industries to reduce the importation bills. The agricultural products should be promoted from raw products to high stages to add more value to the exports. The real GDP is of course an appreciable one for the economy, yet, more needs to be carried out for the it to drive into maturity.

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Is Inflation Totally Undesirable?

The term inflation has been seen by many as an incessant increase in prices of goods in a country, yes, it is an increase in price, but the word continuous increase is needed for it to be an inflation. The word ‘inflation’ is coined from a latin term inflare which means ‘to blow up or to inflate’. Therefore, inflation can properly be defined as a continuous increase in price over a specific period of time while the value of money declines.

Inflation has been one of the major factors considered by monetary authorities to change interest rate in any given economy. The control of inflation is a ‘crucial responsibility’ of the monetary authorities, hence, it must be properly monitored to avoid an economic disaster. Nonetheless, inflation is not totally an undesirable economic factor, a relatively low or no inflation will likewise harm the economy. So, no matter how horrible inflation has been preached to a lay man, it is necessary to understand that when it comes to inflation, there is a silver lining in the dark cloud. What any economy should target is a stable and a low (2%) rate of inflation.

ALSO READ: The Effect of Wage Increase on Inflation

Many an individual dislikes inflation, wants to get things at a very cheap price. It is beautiful to note that when a country do not have inflation at all, there exist a fall in prices, this will lead to a bad period for the economy. Businesses might collapse, thereby leading to unemployment, low productivity,  it also causes macroeconomic variables to be unstable. Negative inflation also causes shortage in revenue thereby leading to a decrease in government spendings.

The idea or desire of not wanting inflation in an economy should not be the bone of contention, What should concern an individual is that the nominal income should be higher than the nominal prices purchased by such individual. Wishing for a zero inflation economy will  only lead to more fall in incomes even as prices fall drastically.

So, next time you hear about inflation, do not be quick to see it as something totally undesirable, check for the percentage. The rate determines the effect in any given economy. A low inflation is the real deal but never wish for an inflation free economy, trust me it is a devil on its own.

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The Effect of Wage Increase on Inflation

According to News24, on the 19th of May, Deputy General Manager Tahir Maepa an official of the Public Servants Association of South Africa, which represent about 238,000 workers, “revealed they want an above inflation increase of 12% which all unions initially demanded and furthered revealed the association would not sign the deal”. While the Central Bank governor of South Africa, Lesetja Kganyago has warned that “the inflation rate will start rising due to tax increases and high salary demands, inflation will stay close to 5% until at least at the end of 2020, according to the regulator”.

In the debate over minimum wage, people often become distracted by their inner altruism and ignore the logic behind the economic laws that govern labour markets and the macro-economies of a country.

Is the perennial agitation for minimum wage increase justifiable? This is the question many people have been asking. From an economic point of view, continuous wage increase is not justifiable. In fact it is detrimental to the economy. There are two main consequences of continuous wage increase, general and persistence rise in the price of good and service, and reductions in the number of jobs available. Frequent increases in wage have the tendency to become an inflationary shock that is associated with sudden increase in the general price of good and services. This is what has been happening since the agitation for wage increase becomes an annual event. At one hand, the demand for wage increase force producers to increase the price of good and services in order to cover the cost of wage increase, what economist called wage-cost push inflation. On the other hand, the mere expectation of increase in wage makes traders’ mouth to salivate on the coming prospect of increase purchasing power on the part of workers. Therefore, makes traders to move the prices of good and service up.

Advocates argue that raising the minimum wage would help poorer citizens provide for their families and lift them out of poverty. It is true that minimum wage regulations typically apply only to poorer, lower-skilled workers. It is not true that raising the minimum wage will help them. The money that companies use to pay higher wages would reduce profit margins of the companies.

Maintaining profit margins is a serious pursuit for firms because profits allow firms to innovate, expand and stay alive in a competitive market. When confronted with a mandatory minimum wage, companies must often increase the price of their goods or services to preserve profit margins and so ensure their continued existence. Therefore, broadly raising the minimum wage would increase consumer prices, that is, inflation.

Inflation, unfortunately, hurts the poor far worse than it hurts anyone else. The poor are more likely to live from salary to salary, and inflation means that prices would rise. Prices would certainly rise much faster than wages will adjust — especially a minimum wage set by the government. This means that the poor are able to buy less of what they need to survive as inflation rises. What good are higher wages if purchasing power falls?

Consequently, the very people who were supposed to benefit from an increase in the minimum wage are the ones who are most hurt by the ripple effects of this policy. This seemingly progressive price floor set by the government then turns into a very real regressive consequence for the poor.

Second, let me say that raising the national minimum wage does not increase Gross Domestic Product (GDP). If it did, you would no longer be able to see a “minimum” wage at all, because every country in the world would be continuously raising this minimum in an effort to stimulate economic growth.

We have all heard the claims that a higher minimum wage would benefit the economy by giving workers more money to spend, thereby increasing aggregate demand and GDP. Raising the minimum wage does not increase aggregate demand at all, because any extra money paid to workers would have merely come from the firms or consumers in the form of higher prices.

Finally, raising the minimum wage would put a strain on South Africa’s already thin labour market. By the laws of supply and demand in the labour market, settling a wage above the current inflation rate will cause some people to be forced to work fewer hours or lose their jobs.

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Simply put, as labour becomes more expensive, companies are more likely to substitute technology for workers, more likely to hire fewer workers for longer hours, more likely to offer fewer benefits, and/or limit training in an effort to control other costs associated with labour. It is also worth noting that the workers most at risk of being let go or having their hours reduced are lower-skilled workers.

Truly workers deserve something better than what they are getting under the present circumstance. But should that be only through increase in money wage? Why should workers not demand for improve working condition so as to boost workers’ productivity? Continuous issuing of threat of strike on wage increase without commiserate demands for government to do things that will help people that are not on government pay will undermine unions causes in the long run. South Africa’s labour needs to work harder to represent themselves as champions of public services rather than simply as defenders of their pockets.

Instead of focusing on raising the minimum wage, government should focus on improving the structural problems in South Africa that have caused the market equilibrium wage to be so low: poor education and training, low population mobility and regulations on investment and innovation. As the economy grows, so too will wages.

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2018 Budget: Matters arising

Nigeria’s Assembly has accented to the proposed 2018 bill of appropriation, it was finally passed on Wednesday, 16 May 2018 after six months! The 2018 budget was presented to the house by the president, Muhammadu Buhari on 7 November, 2017. The budget was dubbed “Budget of Consolidation”. According to the President: ‘The 2018 Budget Proposals are for a Budget of Consolidation. Our principal objective will be to reinforce and build on our recent accomplishments. Specifically, we will sustain the reflationary policies of our past two budgets. In this regard, the key parameters and assumptions for the 2018 Budget are as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).’

After several criticisms and analyses carried out by the lawmakers of the country, the house saw the need to pass the budget, raising the proposed budget by N500 billion. But there had to be a special meeting of the president and two leaders of the both chambers. One will be quick to ask if the country can accommodate such raise without much effect. Nonetheless the Senate President saw it as a bid for Nigerians to benefit from the objective of the budget and opportunities it opens. Despite the increment in the budget, it is yet to meet up with standard; the recurrent expenditure is still higher than the capital expenditure. The economy budgetary woes have become recurrent expenditures, and we are not learning from the past, yet more is being budgeted to that effect. Although, this time, the budget met the threshold of reserving at least, 1% of total budget to health, thereby fulfilling the mandate of the National Health Act.

A budget that took such a long time and strict scrutiny should have been more painstakingly drafted to enhance institutional capacities, provide an enabling environment for both domestic & foreign investment, industrialise the economy, strengthen corporate governance and increase strategic infrastructure project investment with adequate provisioning for strong monitoring of these projects. Without all these in view, the budget might fail just as the previous ones.

ALSO READ: Questions on Nigeria’s 2017 Budget

Some sectors’ allocations were increased: health, education, security, power, works and housing. The questions that one need to know is that what efforts will be made to ensure that this increment don’t end on paper work alone. What are the measures put in place for proper implementation of projects? What are the procurement methodology? Hope the funds won’t be swept away by corrupt officials? What are the measures to block all loopholes? These are many more are matters arising in my mind. The 2016 and 2017 budgets have gone without much being achieved, one can only hope this budget will not end the same way?

Unfortunately still, oil has the highest percentage of the projected revenue source at 37%; Value Added Tax (VAT): 3.1%; Tax Amnesty: 1.3%; Independent revenue: 12.8%; Grants and Donor Funding: 3%; Others: 5.5%. From this, the government still bases the budget on oil revenue, hanging the economy in a balance if the oil price experiences a fall once again. Without a well diversified economy, the country can not achieve the set objectives of the budget. The government must give the economy diversification the attention it requires. How are they focusing on helping the Agricultural sector become competitive in an era of GM foods and mechanised farming? What measures have been put in place to industrialised the economy to drive her to maturity? What are the methodologies employed to revitalise the art and make the sector attractive? How ready is the government to take advantage of technology in improving the country?

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Investing in Africa Agricultural Sector: the Solution to Importation

The crazy level at which African countries import things was reiterated by the president of Zimbabwe, President Emmerson Mnangagwa, while addressing the delegates at the Southern African Confederation of Agricultural Unions (SACAU) annual meeting in Victoria Falls. Hear him: ‘it is regrettable that African countries spend between $30 billion and $50billion annually on imports of agricultural products, instead of developing the productive capacities necessary for trade’.

According to the United Nations’ 2015 World Population Prospect Report, 2.4 billion people are projected to be added to the global population between 2015 and 2050, with 1.3 billion in Africa alone. Which means by 2050, Africa will house more than half of the world’s population and as at now no preparation is being made on how it will feed its 1.3 billion population by 2050. What about the now? 2050 is still some years ahead; what are the African leaders doing to stop, or at least, reduce the importation of finished agricultural products. Currently, Africa is still unable to feed itself and depends on importation of products to feed its people. What will happen by 2050, if a stop is not put to this trend?

The potential for growth in Sustainable Agriculture in Africa is well understood, but has not been realised. Currently, the agro-allied industry (in primary processing) accounts for nearly half of all economic the activity in sub-Saharan Africa. At the same time, the continent spends $30bn to $50bn each year importing food and still has significant food risk and nutritional deficiencies in many parts of the region.  This is despite the fact that the continent holds much of the world’s potential agricultural land (Africa has 65% of the world arable land).

According to the United Nations Food and Agriculture Organisation (UN FAO), Africa spends $35 billion in importing food, and it is projected that the number will grow to $110 billion by 2025. Africa is importing what it should be producing, creating poverty within the region and consequently creating jobs for the people in other continents while its people lack opportunities.

It is interesting to note that African countries import numerous agricultural products which are also, ironically, produced locally. The rise of imports for these Agricultural products has been attributed to the inability to produce enough to satisfy growing local demand, due to low yields and relatively low levels of productivity.  Furthermore, over 80% of Africa’s agricultural products are being produced by smallholder farmers who produce 70% of the continent’s food supply, according to FAO.

Taking a look at Agricultural exports, one discovers that African countries mainly export cocoa, edible fruit and nuts, coffee and tea and vegetables to the rest of the world. The main agricultural importing countries of the African export are the United States, China, Germany, Netherlands and the United Kingdom.

African countries do not feature under the top supplying countries for any of these markets. If Africa is serious about changing from agricultural product importers, then addressing the following issues are of paramount importance: innovation in production technology, the cost of inputs (energy and fertilisers), management of changes in climatic conditions (e.g. access to water through irrigation), knowledge transfer and capacity building, investment in agriculture and agriculture-related infrastructure (credit facilities, transportation networks, cold-storage facilities and communication networks) and access to information.

ALSO READ: Questions on Nigeria’s 2017 Budget

Governments and leaders in Africa (past and present) should (have) know(n) that if there is one thing the continent should not be found lacking in, it is food. It is shameful that, with the large arable fertile land, expansive body of waters and other enviable endowments, Africa cannot feed itself. That such a humongous amount of foreign exchange is being expended in importing food is a serious minus for the leadership of the component countries in Africa.

Agriculture is also a major component for Africa becoming an industrialised continent, in the sense that its raw materials are needed in production of other commodities. Africa has come of age and its agricultural practices should be driven by research, mechanisation and modern technology to steer it away from remaining rudimentary.

Becoming a net-exporter of agricultural products should be the worthy vision of African governments and leaders. Of course, diligent planning, development of appropriate strategies, deployment of sufficient resources and unflinching commitment by the governments and the citizenry will be the game-changers for the realisation of multiple objectives of food security, industrialisation and foreign exchange earnings. Thus, African leaders should henceforth stop using agriculture as a mere propaganda tool. They should put their hands on the plough and never look back. All those foreign long sleeved shirts, locally made agbadas and tunics need to be rolled up for work; the continent cannot remain hungry when there are seeds, lands and technology around.

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Questions on Nigeria’s 2017 Budget

Nigeria’s Minister of Finance, Kemi Adeosun, was so overjoyed on Sunday that she took to her twitter account to say the Nigerian Federal Government will be closing the 2017 budget with an excess of N1.5 trillion on capital expenditure.

The 2017 budget was the second budget to be presented by the President Muhammadu Buhari administration, tagged budget of recovery and growth. It was based on  crude oil benchmark price of US$42.5 per barrel; an oil production estimate of 2.2 million barrels per day and an average exchange rate of N305 to the US dollar; a target Gross Domestic Product (GDP) growth rate of over 2 per cent and a target inflation rate of single digit. Additionally, there was a deficit of N2.36 trillion (about 2.18 percent of GDP. A total of N2.24 trillion was budgeted for capital expenditure.

Having said that, I would like to state that Nigeria’s problem is not the budgets; the problem is in the implementation. It is one thing to roll out a budget, it is another thing to implement it and achieve positive results. National development is predicated on effective implementation of national budgets.

It might be necessary, at this juncture, to ask how far the 2017 budget went in alleviating some of the endemic problems in Nigeria. When I say the 2017 budget, I don’t just mean the federal budget but all the state budgets put together. As a matter of fact, every year, 38 budgets are rolled out including the Federal Government’s, the 36 states’ and the Federal Capital Territory’ (FCT).

To what extent did the budgets alleviate the problem of poor electricity, water supply, healthcare, education, dilapidated roads, unemployment, insecurity, etc? Are Nigerians faring better now compared with last year before the 2017 budget was passed? What systematic changes have occurred? What systematic solutions have been provided or are ongoing? What difference has occurred in the life of the Nigerian in the street?

The chronic failures of budgets across the country is heart-breaking. That is why pessimists call budgeting in the country an ‘annual ritual’. That has been the case since 1999, when the present democratic dispensation began and it was thought that the era of military impunity was over. Indeed, our rogue budgets are merely rituals; they seem not to be made to change anything, but to simply recycle a government to-do.

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And really, how can there be any improved change when on an annual average, 70% of these budgets go for recurrent expenditure while only 30% is for capital expenditure? How can a developing country like Nigeria develop when only a fraction of the annual budgets is put for capital projects? Faced with corruption, neither the recurrent budget nor the capital spending achieves its target. The inability of many state governments to pay salaries, pension benefits and other entitlements to workers underscores the failure of recurrent expenditure.

Every year, budgets are rolled out by the federal and 36 states governments, including the FCT. Each level prepares budgets based on what suites its purpose. There is no common ground for integrated national development. Nigerians hear about the trillions of naira earmarked for expenditure but hear nothing again about how the money was spent. The same governments that announced the budgets with fanfare at the beginning won’t utter a word at the end about what happened to the money. So where is the accountability on the part of the president with the highest level of integrity?

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Somalia’s Charcoal Industry: Economic and Environmental Implication

The UN Security Council has noted on several occasions that ‘charcoal exports from Somalia are a significant revenue source for Al Shabaab and also exacerbate the humanitarian crisis’. Recent estimates by the Monitoring Group on Somalia and Eritrea show that upwards of 40% of Al Shabaab’s funding comes from various forms of involvement with the illegal Somali charcoal trade. There are indications that this has not substantially changed.

Charcoal is made by burning wood in an enclosed area at high temperatures. In Somalia, this is usually done in small space dug out of the earth and enclosed with concrete blocks and brush piled on to seal in the air. This is either done by local Somalis who have no other economic options, or sometimes by local militias with chainsaws. They then sell the charcoal in bags usually weighing about 25kg each to militias to transport to a port.

However, considering the charcoal industry has been behind deforestation in other parts of Africa, one can assume that, with the lack of any oversight or restrictions, the charcoal trade will have a devastating effect on Somalia’s forests. This is also likely to increase the occurrence of desertification in Somalia, depriving pastoralists of grazing land and farmers of cultivatable areas. Income from the charcoal trade also provides important financing for some warlords and faction leaders, enabling them to maintain their strength and continue their predatory regimes. While predatory militias profit from the charcoal industries, it is the more powerful businessmen that are the real power behind the industry. This section of society is powerful enough to hold a veto over any political arrangement that threatens their interests. Thus, any attempts to halt the charcoal industry must court the very businessmen that profit the most from it.

Unfortunately, as forests become sparser but demand in the Gulf States continues or even rises with other fuel costs, intense competition may ensue over controlling the remnants of Somalia’s charcoal industry. There has already been conflict between clans over the charcoal trade, and this will only become more likely as competition intensifies. As deforestation and desertification limit the availability of other natural resources, conflict around these is likely to rise, as well. Somalis who rely on the acacia forests for their livelihood will see their opportunities for supplementing their income decrease, as game dies out, desertification hurts farming, and the eventual destruction of the acacia groves will also end their ability to supplement their income by participating in the charcoal trade. With charcoal supplies shrinking, the cost of fuel for domestic use will also continue to rise, raising the cost of living for Somali families.

The charcoal trade in Somalia takes a heavy toll on the acacia forests of southern Somalia, as traders’ clear-cut entire swaths of forest for shipment to Gulf States. The process of turning cut wood into charcoal is also a rough, dirty process that pollutes the air, although in a very local fashion. While the impact on the global environment and global warming is negligible at best, the ramifications of the charcoal trade on the local environment and the livelihoods of Somalis are drastic.

The Gulf States consumption of charcoal affects Somalia because of its unique political situation, it is unable to handle the increased demand for charcoal in an environmentally sound way. This situation has risen because of the confluence of several factors. First, the Gulf States banned the destruction of their local forests in the late 1980s and early 1990s, creating demand for charcoal imports. Additionally, they also banned Somalia’s primary export at the time, cattle. This dealt Somalia’s economy a tough blow, and pushed many into the charcoal trade. Second, Somali descended into a situation of statelessness where, after 1996, it was possible to export charcoal without concern for the environmental impact. Finally, systems for conducting business without a state have emerged in Somalia that makes their role in international commerce possible.

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While the deforestation occurs in Somalia and Somalis feel the environmental impact exclusively, this situation would not be present without the demand for charcoal from Gulf States. Somalis have relied on charcoal as a source of energy for centuries, but have been able to balance domestic consumption with environmental preservation. This increased demand, combined with the lack of a central authority in southern Somalia, has led to the recent environmental crisis.

The conflict over Somalia’s coal is indirect as it deals with the issue of the increasing scarcity of sources of charcoal. As climate change increase rates of desertification in arid and semi-arid areas like Somalia, and populations grow, they will continue to put pressure on the forested areas in southern Somalia. However, the charcoal industry, obviously, has an even more rapid and devastating effect. What contributes to how much charcoal is produced is a complex interaction between several factors. First, without the demand from Gulf States, the opportunities for such huge profits would not drive actors in the charcoal industry. Compounding this is the lack of other economic opportunities, making participating in the charcoal industry an even more attractive option. Finally, what has the power to control the charcoal industry are governments and regional authorities that have power and legitimacy. Only an effective ban encompassing all of Somalia’s important ports and charcoal producing areas will be able to counter the destructive short-term logic of exploiting Somalia’s acacia groves for charcoal exports.

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Nigeria’s Currency Swap with China: Prospects and Implications

For diverse stakeholders in the Nigerian economy, the Federal Government’s recent currency swap deal with China holds both bright prospects and grave implications for Nigeria, even as the naira inched up against the dollar at the weekend parallel market.

President Muhammadu Buhari, during his official trip to the world’s second largest economy, struck a naira and yuan swap deal, scripted to ease trade transactions between both countries and devoid of current exchange challenges with the United States dollar.

The currency swap deal consists of an agreement between two central banks, at least one of which must be an international currency issuer, to swap their currencies. The central banks party to the swap transaction can lend the proceeds of the swap, against collaterals they deem adequate, to the commercial banks within their jurisdiction, to provide them with temporary liquidity in a foreign currency.

The news of the currency swap agreement between Nigeria and China seems to have, immediately, captivated the public attention. Basically, the swap implies that China would set aside billions of dollars equivalent of its currency (the Renminbi) from which Nigerian importers could directly exchange their naira at pre-determined exchange rates, without first procuring dollars to complete the transaction. Regrettably, Nigeria has not published the amount, nor tenor and applicable exchange rates for transactions and settlements under the swap arrangement.

Nonetheless, while briefing State House correspondents on the gains of the China trip, Foreign Affairs Minister, Geoffrey Onyeama, suggested that the celebrated agreement was not a ‘currency swap’ as widely reported, but a recruitment of Nigeria into a partnership ‘that would facilitate China’s drive to internationalise its currency’. So, for Nigerians, according to Onyeama, it has given them (their economy) greater opportunities so that those wannabes who cannot readily access dollars can now also import, notwithstanding the shortage of dollars.

However, Lin Songtian, a senior official of the Chinese Foreign Ministry, also noted that the deal on Yuan transactions ‘means that the Renminbi is free to flow among different banks in Nigeria, and the Renminbi has been included in the foreign exchange reserves of Nigeria’.

In order to facilitate rapid Yuan acceptance in our sub-region, Nigeria as hub, will invariably host a clearing house with affiliation to the People’s Bank of China to allow the Renminbi to become a common settlement currency which can be used for bilateral loans or aid. Ultimately, a new bank with affiliation to the China bank will be established and dedicated to intermediate Yuan transactions in the sub-region, as a product of the currency swap.

Furthermore, China’s official news agency reported that President Xi Jinping had expressed interest in economic co-operation with the Nigerian delegation, particularly in areas like oil refining and mining. However, it is not yet clear if the currency swap deal also implies that China will pay for Nigeria’s crude oil in naira or Yuan.”

Ultimately, this currency deal will bolster our Renminbi reserves, but this may lead to a corresponding drop in our dollar reserves; ironically however, China may readily depreciate its Yuan to promote the export price competitiveness of its products in the United States and other dollar denominated markets. Unfortunately, therefore, Nigeria’s increasing Renminbi reserves would also become devalued and would buy less and less dollars than before. It is instructive that China is already in similar bilateral currency swap agreements totalling RMB 3.137tn (about $500bn) with 31 Central Banks, including the UK and South Africa, and the trade volume with these countries has since exceeded RMB 11tn after the swap agreements.

Nonetheless, according to the CBN Governor’s observation, ‘‘we are working to encourage our exports of raw materials to China in order to reduce the trade imbalance’ which is presently, clearly, heavily skewed against Nigeria with an annual import bill of about $15bn payable to China. However, it is not yet clear how Nigeria’s industrial production and output will ever become internationally competitive enough to reduce this trade imbalance, particularly when domestic inflation rate is trending at over 12 per cent while cost of funds to industries and other businesses presently exceeds 20 per cent”.

Expectedly, this arrangement would increase the value of Chinese exports to Nigeria well beyond the present $15bn, but will unfortunately, also challenge Nigeria’s desire to diversify its economy by adding value to its local agricultural and raw materials output.

ALSO READ: Ten Worst Countries to Start a Business in Africa

The downside is that the Chinese buying agencies with surplus naira liquidity in Nigeria will outbid local industries to monopolise supply sources of the local agricultural and raw materials and subsequently cart these away to China as exports for processing into a multitude of finished products which will be ultimately re-exported to Nigeria at much higher cost. In contrast, this may be counterproductive to Nigeria’s abiding desire to become a robust industrial economy by adding value to our agricultural and raw material products before export.

The Central Bank of Nigeria should put some measures in place to guide the naira against the yuan because in the short run, the deal is beneficial to Nigeria but on the long run, if certain measures are not put in the place, the economy might see the negative impact of the deal.

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Ten Worst Countries to Start a Business in Africa

There are many business moguls or small scale business entrepreneurs who love to go to different places to pitch their business tents in countries across the African continent. Such one need to know the economies that are a ‘no-no’ for businesses, based on certain realities.

Economies are ranked on their ease of doing business from 1-190. A high rank (low numerical value) indicates the better, usually simpler, regulations for businesses and stronger protections of property rights. This shows that the regulatory environment is more conducive to the establishment and operation of a local firm.

Despite the vast opportunities in Africa, it remains a daunting place to start and run a business. Credit facilities are limited, electricity costs a fortune, overhead costs are throat cutting. The continent is blessed with numerous natural resources; yet, and so far, little have been achieved with such blessedness. The overall success of any country can be linked to the ability of the country to provide an enabling environment and ample opportunities for its citizenry. Majorities of the countries with least opportunities are suffering from political unrest, war, poverty e.t.c.

So, here comes the dreaded list…

  1. Somalia

Somalia, a country with a population of 14.3 million, has a land mass of 637,657sq km completes the list of the worst countries to start a business in the world, ranking the least with a large numerical value of 190. The Horn of Africa, which was known as an important commercial centre, has recently become a shadow of itself. After several political unrest and a prolonged civil war, the country has been inching towards stability, but the new authorities still face a challenge from Al-Qaeda-aligned Al-Shabab insurgents. The country is popularly known for it various natural disasters ranging from, tsunami and flood to drought and others. It takes 187 days to start a business in the country, including getting electricity and 150 days to register for property. The US and Western nations have warned individuals to avoid travelling to Somalia because of the high level of unrest and attacks in the country; currently, the country is not an ideal place to start a business despite the land being viable and virgin.

  1. Eritrea

Eritrea won independence from Ethiopia in 1993 after a 30-year war. Bordered by Sudan, Ethiopia and Djibouti, it occupies a strategic area in the Horn of Africa but remains one of the most secretive states in the world.The Horn of Africa is disturbed by prolonged periods of conflict and severe drought which have adversely affected the economy and it remains one of the poorest countries in Africa. Eritrea has a numerical value of 189 in ease of doing business in the world rank, it takes 184 days to start a business with 187 days to get electricity and 178 days to register a property before any business can kick-off in the country.The economy with a population of 5.6 million has seen hundreds of thousands of citizens fleeing the country because of human right abuse. Eritrea has faced many economic problems, including lack of financial resources and chronic drought, worsened by restrictive economic policies. For any business to thrive in any environment there must be an enabling environment in terms of amenities and security, unfortunately Eritrea has failed in such perspectives.

  1. South Sudan

A  country of more than 13 million people, Sudan also makes up the list of the worst economies to start a business. South Sudan is known for their prolonged civil war in the country which  is disrupting what remains of the economy. The country has a high numerical value of 187 in doing business world rank; days needed to start business is 181, with 187 days needed to get electricity and 181 days to register for property in the country. The  market structure of the economy is not well-organised, therefore, property rights are insecure and price signals are weak. The country has little infrastructure, about 10,000 kilometers of roads, but just 2% of them are paved. Electricity is produced mostly by diesel generators which costs a fortune. Without the needed amenities business will be a struggle in that part of the world, so, for now South Sudan is a no go area for business minded individuals.

  1. Libya

Libya is mostly desert and known to be an oil-rich country but did not make the list of best countries to start a business despite its richness, call that a resource curse? The country has a value of 185 in ease of doing business world rank: 167 days to start a business, 130 days to get electricity and 187 days to register a property in the country. The country which started well after the discovery of oil has experienced a stalling in development as a result of political chaos and insecurity. The leaders have hindered economic development by failing to use its financial resources to invest in national infrastructure. Libya suffers from widespread power outages in its largest cities, caused by shortages of fuel for power generation. Many governments advise against traveling to Libya due to its serious state of political and social instability. So, safety first before business.

  1. Central African Republic

Central African republic which is predominantly a subsistence agriculture, forestry and mining based economy, has been prone to conflict since independent from France. The country is rich in diamonds, gold, oil and uranium but enlisted among the worst countries to start a business in Africa, with a numerical value of 184. It takes 188 days to start a business, 183 days to get electricity and 169 days to register for property. The high rate of abuse of human rights and conflict put the economy among the list of worst places to start a business venture.

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  1. Congo DR

Despite being a vast country with numerous resources the country is clouded with civil war and corruption. The country sees itself placed among the worst countries in the Africa to start a business with a numerical value of 182 ease of doing business world rank. 62 days are needed to start a business with 175 days to get electricity and 158 days to register for property in the country. Recently, the economic conditions slowly began to improve as the government reopened relations with international financial institutions, international donors and implementing reforms. However, the progress of the economy remains slow because of political instability, bureaucratic inefficiency, corruption, and patronage. These menaces have dampened international investment prospects in the country.

  1. Chad

The Central African nation also made the list of worst economies to start a business in Africa. The landlocked nation appears on the list due to some economic disadvantages: taxes, freedom (personal and trade), technological readiness and red tape. The ease of doing business world rank is 180, the days needed to start a business is 185 with 177 days to get electricity and 159 days to register a property in the country. The rapid falling prices of energy have further hindered Chad, which relies on oil for more than half of its exports. The country has been marked by instability, inadequate infrastructure, and internal conflict.

  1. Congo Republic

The  sub-Saharan Africa country which is sometimes referred to as Congo-Brazzaville has been plagued with civil wars and militia conflicts, little wonder the country couldn’t escape being tagged as one of the worst countries in Africa to do business in. The country is 179 in ease of doing business world rank, has 177 days to start a business, 181 days to electricity and 177 days to register property in the country. There is a serious bottle-neck in administration when a business venture is to be established in the country. The social and political unrest also contributed to the difficulty in having a conducive environment in the economy.

  1. Guinea Bissau

The country has rich natural reserves in gold, diamonds, bauxite and iron ore, but GDP per capita is one of the lowest in the world at $1,300 and the trade deficit is 24% of GDP. The economy ranks poorly on taxes, monetary freedom, investor protection and innovation. The country has a value of 176 in doing business world rank, 178 days to start a business with 180 days to get electricity and 120 days to register for property in the country. The economy is disadvantaged by limited economic prospects, weak institutions which results in low investments prospects.

  1. Angola

Angola is one of Africa’s major oil producers, yet it was not left out in the horrid list of worst economies to start businesses in. The ease of doing business world rank is a huge numerical value of 175 with 134 days needed to start a business, 165 days to get electricity and 172 days to register a property in the country. With a population of about 29 million people, Angola is striving to tackle the physical, social and political legacy after being ravaged with 27-year civil war. The continuous fall in oil prices has slowed down the improvement in the economy, thereby, making investment and business struggle to thrive in the country.

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Oando Plc Records Full Year after Tax Profit of N20bn

Oando Plc has consolidated on its 2016 gains by recording a higher profit for the year ended December 31, 2017. The indigenous integrated energy company, on Friday, announced its audited results for 2017, showing revenue of N497.422 billion, compared with N455.746 billion in 2016.

The company reduced cost of sales from N426.99 billion to N409.341 billion in 2017. Also, administrative expenses declined from N109 billion to N77.89 billion, while net finance cost reduced from N51 billion in 2016 to N33.78 billion in 2017.

Consequently, profit after tax soared from N3.913 billion to N19.77 billion in 2017, showing an increase of 405 per cent. Oando Plc’s net debt reduced to N217.1 billion from N230.6 in the comparative period of 2016.

This comes in the wake of oil prices on an upward trajectory, an improved operating environment, the exit of a 13 month long recession and most importantly the continued strengthening of their business model through the effective implementation of the company’s strategic initiatives of growth through their dollar earning upstream portfolio; deleverage through asset divestments and the expansion of in-house oil export trading business.

OER (Oando Energy Resources) recorded an average production of 39,556 boe/day in the 3 months ended March 31, 2018 compared to 38,125 boe/day in the comparative period of 2017. Improved production was primarily due to increased production at Ebendo as a result of the Trans Forcados pipeline, which was down in the same period in 2017; therecwas also an increased production at OMLs 60 to 63 as a result of reduced sabotage and crude theft activities, which necessitated a shut-in on production lines in the comparative period of 2017.

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This was primarily due to significant reductions in gas production and delivery caused by the rupturing of Gas Transmission System (GTS-4) gas line and pipeline and terminal constraints at its OMLs 60 to 63. The upstream business recorded a net profit of N26.33 billion ($86.1 million) compared with N91.83million ($0.3 million) in the comparative period of 2016.

Oando’s affiliate, Axxela, recorded an 11 per cent increase in natural gas deliveries in 2017. This achievement, according to the company, was in spite of restricted gas supply in H1 2017 due to the sabotage of upstream gas supply facilities by militants.

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Ethiopia to Host Ministerial Conference on African Free Trade

The capital of Ethiopia, Addis Ababa, will host a ministerial conference on African Continental Free Trade Area (AfCFTA).

The conference which will consist African Ministers of Finance, Planning and Economic Development is to kick start May 11-15, 2018.

The conference will center on the theme: “African Continental Free Trade Area; creating fiscal space for jobs and economic diversification.”

ALSO READ: Rwanda, Netherlands Pledge to Bolster Economic Ties

Key topics like: agriculture and Africa’s transformation, financing and an integrated strategy for the Sahel priorities for tackling Illicit Financial Flows in Africa will be deliberated on during the conference.

There are hopes that the ministerial conference will enact a workable road-map to set the deal rolling and implementable beyond paper works.

Recall that the African Continental Free Trade Area (AfCFTA) was signed by 44 countries in Kigali, Rwanda, March 21.

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World Bank Supports Djibouti to Improve Public Service Through Tech

World Bank has announced support for the ongoing efforts of Djibouti to leverage digital technology to bring government closer to citizens and improve the impact, transparency and efficiency of its public administration.

With a $15 million credit from IDA, the fund of World Bank for the poorest countries, the new project will help the roll out of digital systems to make it easier for citizens to access services, and for more efficient tax and customs administration to boost government revenues.

The four-year Public Administration Modernization Project will help the government implement the reforms, establish the legal framework and adopt the technologies necessary for digital transformation.

A principal goal will be to unify the current variety of social registries into a single, integrated national identity system (e-ID) which citizens can use to access all public services.

By the end of the project, the aim is to enroll half the population in the e-ID system, with women, who are significantly underrepresented in current identity systems, representing half of the enrolled.

The Minister of Economy and Finance of Djibouti, Ilyas Moussa said: “Djibouti has heard the call for improved services, and is committed to using the tools of e-government to respond to it.”

“Working in partnership with the World Bank, we have developed a strategy for modernising our public administration and reaping the benefits of greater transparency, inclusion and efficiency offered by digital technology,” he stated.

Along with supporting the publication of and access to available services through the government’s portal, the project will fund the piloting of a Citizen Service Center (CSC).

The CSC will offer broadband connections and function as a one-stop-shop for knowledge of and how to access services. Citizens will be consulted on the design of the CSC, to ensure they are accessible to vulnerable populations such as women, the disabled and those in rural areas.

The World bank Country Director for Egypt, Yemen and Djibouti, Dr. Asad Alam stated: “Djibouti is putting its citizens at the heart of its digital transformation. Giving citizens access to information, and the tools for holding government accountable are critical steps toward improving public services, and are central goals of the public administration modernization project.”

The project will also support the use of digital technology to increase the efficiency of tax and customs administration. The development of e-Tax and e-Customs will promote fairness and predictability, while mobilizing domestic revenues.

Digital systems remove the need for physical interactions between citizens and officials, which can often be an opportunity for corruption.

The World Bank’s portfolio in Djibouti consists of nine IDA-funded projects totaling US$105 million. The portfolio is focused on social safety nets, energy, rural community development, urban poverty reduction, health, education, governance and private sector development, with particular emphasis on women and youth.

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Trump Secures First Major Trade Deal with South Korea

President Donald Trump of the United State of America has secured his first major trade deal with South Korea ahead of planned nuclear talks with North Korea.

The Trump administration said on Tuesday that the United States and South Korea had agreed to revise their six-year-old trade pact.

Officials said the revised deal widened US access to South Korea’s car market while providing American manufacturers protection from South Korean imports.

Trump had previously called the original South Korea pact a job killer.

The new deal doubles -to 50,000- the cars each US automaker can export annually to South Korea, reduces bureaucratic barriers to American products and extends a 25 percent US tariff on South Korean pickup trucks until 2041.

South Korea escapes the new 25 percent tariff on imported steel but must accept quotas on steel shipments to the United States.

The agreement, cobbled together quickly with only a few rounds of negotiations under Trump’s threat of withdrawal, will include a side-letter that requires South Korea to provide increased transparency of its foreign exchange interventions, with commitments to avoid won devaluations for competitive purposes.

The currency deal, final details of which are still being negotiated between the U.S. Treasury and South Korea’s Ministry of Strategy and Finance, is considered a ‘side letter’ that will not be enforceable with trade sanctions.

ALSO READ: China to Retaliate Against US with $3bn Tariffs

Many US lawmakers, particularly Democrats, had opposed the 2015 Trans-Pacific Partnership trade deal because it had a similar currency manipulation side-agreement that could not be enforced.

Nonetheless, the revised US-South Korean Free Trade Agreement, known as KORUS, would be the first US trade deal in force with a currency side-deal, and would not need congressional approval, the officials said.

The officials confirmed that South Korea agreed to cut its steel exports to the United States by about 30 percent in exchange for the rest being excluded from steel tariffs. Korean aluminum producers would still be subject to Trump’s 10 percent tariff on aluminum.

Other countries also must agree to similar quotas to escape tariffs, but the size of the limits would vary. The United States is negotiating with Canada, Mexico, Brazil, the European Union, Australia and Argentina.

One official said it was ‘not a one-size fits all kind of thing’ and added that the South Korean quota was agreed due to its ‘unique’ position in steel exports. South Korea imports and processes significant amounts of Chinese-made steel, much of which is under anti-dumping and anti-subsidy tariffs.

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Economic Diversification to be Highlighted at Africa CEO’s Forum

Still basking in the euphoria of successes recorded in its last six editions, the 2018 Africa CEO Forum, recognised as the biggest and most important meeting of Africa’s private sector, is scheduled for Monday and Tuesday, March 26 and 27, 2018, in Abidjan, Cote D’Ivoire.

The focus of the event, which brings together more than 1,200 personalities, all key industrial, financial and political decision-makers from over 60 countries, including Nigeria, will be on the opportunities offered by disruptive technologies to stimulate growth and employment in the continent, thereby sparking a new era for the private sector.

For the first time, the forum is devoting an exclusive panel discussion to the Nigerian economy, during which the diversification model that has given the country’s economy a shot in the arm will be analysed in-depth, as well as, how it can inspires other African economies.

In a statement by the Forum’s Communication Manager, Abdoul Maïga, he said African countries’ past attempts at diversification have not always been successful, which is why the Africa CEO Forum will shed light, not only on the reasons for this, but also on the reforms needed to overcome economic stagnation, as well as revitalise growth prospects.

ALSO READ: DR Congo: Govt to Shun Donor Conference in Geneva

He said: “At a time, when Nigeria is still struggling to break free of its dependence on oil, which still accounts for more than 90 per cent of its export earnings, its economy is starting to see an improvement and prospects are looking better for the country’s businesses.

Numerous companies have emerged in the finance, technology, agriculture, entertainment and industrial sectors.

From Yaba district startups to rice mills in Kano and the burgeoning automotive sector, there is a growing list of companies, whose performance is no longer tied to oil prices.

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US President Signs Chinese Trade Tariff Memo

United States’ President Donald Trump has signed an executive memorandum enacting a range of tariffs on trade partner China in a move which could have a serious impact on the technology industry.

The Memo was signed into effect late yesterday following what the US government has described as ‘an investigation of China’s laws, policies, practices, or actions related to technology transfer, intellectual property, and innovation’

The tariffs described in the presidential memorandum are claimed to be payback for the nation’s pressure tactics in transferring technology outside the US, restricting US firms’ abilities to licence Chinese technology, systematic investment in and acquisition of US companies with a view to large-scale technology transfer, and -most tellingly- that it ‘conducts and supports unauthorised intrusions into, and theft from, the computer networks of U.S. companies which provide the Chinese government with unauthorised access to intellectual property, trade secrets, or confidential business information, including technical data, negotiating positions, and sensitive and proprietary internal business communications, and they also support China’s strategic development goals, including its science and technology advancement, military modernisation, and economic development.’

ALSO READ: China to Retaliate Against US with $3bn Tariffs

The tariffs cover an estimated $60 billion of Chinese imports, including numerous products related to the technology sector which, given the amount of material produced in China for consumption in the US, could be a major blow for technology companies around the world.

China, meanwhile, has suggested that it could hit back with tariffs of its own, with the Chinese Ministry of Commerce stating that ‘China will certainly take all necessary measures to resolutely defend its legitimate rights and interests,’ though it prefers to ‘sit down and talk calmly’ first.

If a trade war erupts, the cost of various goods and services will rise -not just in the US, but globally. For some nations, however, it could prove an opportunity to get a foot in the door and take over importation and exportation of goods and materials which are now too expensive to source from China or the US.

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China to Retaliate Against US with $3bn Tariffs

Chinese authorities on Friday proposed higher tariffs on 128 United State’s products with a value of $3 billion, as a response to recent US tight measures against China.

The proposal suggested around 15% tariffs on US goods like wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol, and ginseng and 25% on US pork and recycled aluminum goods, a statement by China’s Ministry of Commerce showed.

This move came after US President Donald Trump on Thursday signed up to $60-billion tariffs on Chinese imports.

ALSO READ: Economic Recovery Could Be Hit if US-China Trade War Escalates – Rajan

China’s decision to impose $3-billion tariffs is “very cautious” and does not suggest a global trade war, US Trade Representative for China Affairs, Timothy Stratford said, indicating that US exports to China total $115.6 billion

“They want to show that they have taken note of U.S. actions and are going to be strongly resisting, but they don’t want to be seen as escalating things further,” Stratford added.

Furthermore, data analysis firm Complete Intelligence CEO, Tony Nash noted that China’s response is significant, but does not represent “a lot in terms of the total US-China relationship.”

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South Africa Makes Formal Request for Exclusion from US Metals Tariffs

South Africa’s Trade and Industry Minister, Dr Rob Davies, has made a formal submission to the United States of America, requesting the exclusion of South Africa from the imposition of tariff on steel and aluminium products.

A provision allowing for country-based exclusions from a 25% increase in the steel tariff and a 10% duty on aluminium product imports to the US was included in a proclamation signed by President Donald Trump on March 8.

The proclamation immediately excluded Canada and Mexico from the protective measures, implemented on 23 March. The US President subsequently granted exemptions for the European Union, Argentina, Brazil, South Korea and Australia, while announcing a new set of additional tariffs against China.

“South Africa notes with concern that it is not excluded from the application of the duties on steel and aluminium,” the Department of Trade and Industry said in a statement on Friday.

The imposition of the duties, the department added, would have a negative impact on productive capacity and jobs in a sector already suffering from global steel overcapacity.

“In addition, South Africa notes with concern the different treatment of trading partners, which will have an effect on the competitiveness of South African steel and aluminium products in the US.”

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA), meanwhile, expressed concern that South Africa, and other developing countries, could become casualties in a “proxy trade war between the US and China”.

SEIFSA chief economist, Dr Michael Ade, said the exclusion of South Africa, as well as several other countries from the initial list of countries to be exempted on the basis of being close “allies”, was suggestive that the Americans were using protectionism as a weapon to threaten and intimidate certain countries or a bloc of countries.

“While the world anxiously awaits China’s response to the US trade restrictions within the next 15 days before the proclamation becomes effective, there is no denying the fact that the ripple effect on the global economy of a belligerent tit-for-tat response from China will be huge,” Ade said.

In its submission, South Africa argued that its exports of primary mineral and metal products, such as ferroalloys, vanadium, manganese, base and precious metals, had been a source of key input materials for the “exceptional technological development in the US advanced manufacturing industries”.

It also emphasised that the country’s yearly exports of aluminium products were equivalent to only 1.6% of total US aluminum imports. These products, the submission added, consisted of specialised aluminium sheet, coil and plate for processing in the US automotives, battery and aerospace industries.

In addition, it highlights that, of the 33.4-million tons of steel imported into the US in 2017, imports from South Africa amounted to only 330 000 tons, or less than 1% of total US imports and 0.3% of total US steel demand of 107-million tons.

“As such, South Africa does not a pose a threat to US national security and to the US steel and aluminium industries, but is a source of strategic primary and secondary products used in further value-added manufacturing in the US contributing to jobs in both countries.

ALSO READ: Economic Recovery Could Be Hit if US-China Trade War Escalates – Rajan

South Africa also assured the US that inputs for all steel and aluminium product exports to America were sourced from local producers and that South Africa’s robust customs-control system prevented circumvention.

South Africa acknowledged the adverse effects of global steel overcapacity and noted that its domestic steel sector had been severely impacted by low-priced steel and steel-product imports, which had led to the imposition of duties on primary steel imports into South Africa and as a result, they has implemented a number of trade remedy measures.

“In addition, South supports and participates in the Organisation for Economic Cooperation and Development and G20 multilateral process to achieve outcomes of a fair, sustainable and viable steel industry in the future.”

The DTI (Department of Trade and Investment) states that various direct engagements had already taken place with the US, including a meeting between Ambassador Mninwa Mahlangu with the White House National Security Council Staff, the State Department and the Office of the US Trade Representative in this regard.

In addition, Davies held a teleconference with Ambassador CJ Mahoney, the Deputy United States Trade Representative for Investment, Services, Labor, Environment, Africa, China and the Western Hemisphere on 22 March.

“The Department of Trade and Industry continues to engage the industry on the matter and will pursue further discussions with the US on this issue,” the DTI added.

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Kenya Govt to Lift Uganda Poultry Ban

The government of Kenya will lift the ban on poultry products from Uganda after 15 months embargo, allAfrica reports.

The 15-month embargo which led to the prohibition of chicken and eggs from accessing Kenya’s Ksh500 million ($5 million) market after outbreak of a viral disease.

The Deputy Director of Veterinary Services, Michael Cheruiyot, stated that the move to lift the ban preceed talks with Uganda and an assessment that ascertained the neighbouring country is now free of avian influenza disease.

In August 2017, the Ministry of Agriculture allowed three Ugandan firms to export their products to Kenya having met the safety conditions that would allow them to sell their eggs and chickens locally.

ALSO READ: Forty-Four Countries Sign the Free Trade Deal

Dr Cheruiyot, while speaking yesterday in Nairobi during the launch of a report on Business Benchmarks on Farm Animal Welfare by World Animal Protection, said:  “We have been in discussion with Uganda and agreed that we are going to lift the ban completely following eradication of the virus in Uganda.”

He explained that the two countries had agreed to fast track the process of lifting the ban so that trade can go back to normal.

The report focused on global food companies including international brands operating in Kenya such as Dominos, Subway, Burger King and Carrefour, which have committed to improvement of the welfare of chickens.

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Economic Recovery Could Be Hit if US-China Trade War Escalates – Rajan

Raghuram Rajan, Professor of Finance in the University of Chicago, Booth School of Business, advised that one should stay away from trade war particularly at a time when the economy the world over was in the process of recovery.

The global economic recovery could be hit if the trade war between the US and China escalate, the renowned economist and former Reserve Bank of India Governor Professor Rajan said today.

“There are very worrisome scenarios here. I think we should not take this lightly. I do hope that better sense sort of prevails and we move off from a full-fledged process of one country doing it and the other country reacting and so on.

“I don’t want to use the word trade war. I don’t think they are there yet. But I do think that it is very important that we stay away because it could harm the current recovery which has been beneficial all over the world significantly.

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“And for it to do that at a time when the US is quite strong and has got full employment is going quite reasonably, it seems to me that this is not the time that we should do it,” the former RBI governor told reporters in response to a question related to trade war.

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Egypt: Foreign Minister Travels to India to Discuss Bilateral Relations

The foreign minister of Egypt, Sameh Shoukry travelled to India on Wednesday to lead the country’s delegation in the seventh round of the joint committee between the two countries.

The foreign minister spokesman, Ahmed Abu Zeid mentioned in an official statement that the joint committee will commence its meetings on Thursday, followed by ministerial level meetings on Friday.

The spokesman explained that the visit aims to address bilateral relations in all fields and means to develop them, in addition to regional and international issues of mutual interest.

ALSO READ: Forty-Four Countries Sign the Free Trade Deal

The visit comes within the framework of historical relations between the two countries and Egypt’s keenness to develop cooperation with India in all areas, which Abu Zeid said was reflected in a series of meetings between President Abdel-Fattah El-Sisi, the leader of Egypt and Indian Prime Minister Narendra Modi since 2015.

The foreign minister will meet with the PM Modi during his visit to deliver a message from President El-Sisi on means of reinforcing bilateral relations between the two countries.

He will also participate in the economic forum organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) in cooperation with the Egyptian Commercial Office in New Delhi

The spokesman valued the mutual cooperation as one that holds special importance especially in light of around 451 Indian companies investing in Egypt with total investments exceeding $3 billion.

Trade between the two countries totalled $4 billion in 2017.

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DR Congo Govt to Hold Meeting With Mining Companies

The government of DR Congo has decided to hold open talks on Friday with mining companies about implementing some of the most contentious provisions in a new mining code that hikes taxes and royalties in the face of objections from industry.

The president of the country, Joseph Kabila signed the new code earlier this month, replacing the previous 2002 law.

Foreign investors in DR Congo, which include Glencore, Randgold, China Molybdenum and Ivanhoe, said it would scare off investment and violate existing agreements.

President Kabila, in a meeting before signing the code, assured the companies their concerns would be discussed in follow-up talks to draft regulations for the sector.

Martin Kabwelulu, the country’s Minister of Mines told reporters on Wednesday that the talks with major companies present in DR Congo, which is Africa’s top copper producer and mines more than half the world’s cobalt, would begin on Friday at 0900 GMT.

According to a work plan Kabwelulu sent to the companies, the negotiations will be divided into six “pillars” running from March 16 to April 24, with a preliminary draft of the regulations to be completed by May 2. Government officials have already begun work on pillar 1.

The regulations must be adopted by the government within 90 days of the code’s signing, precisely on June 7.

The work plan sets aside 25 days, from March 27 to April 24, for discussions on the fiscal and customs regimes, including the new code’s so-called stability clause, which is the most contentious point between the government and industry.

Miners enjoyed a 10-year protection under the former code’s stability clause against changes to the fiscal and customs regime but those were annulled by the new law, which says that its provisions enter into effect immediately.

The companies still hope the government will honor the 10-year exemptions but Congolese officials have said no compromises reached in the talks can contradict provisions in the code.

The work plan refers only to “the guarantee of stability of the revised mining code (five years for new mining rights)” and not to protection for mining titles that existed under the previous code.

It also calls for discussions about royalty increases, which would raise payments up to five-fold on metals designated “strategic substances” by the government.

The Prime Minister, Bruno Tshibala appeared to preempt those discussions last week by saying cobalt, whose price has more than tripled in the past two years due to rising demand for electric vehicles, would be declared a strategic substance and that copper could be as well.

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Forty-Four Countries Sign the Free Trade Deal

Nothing less than 44 African countries have signed the free trade deal aimed at paving the way for a liberalised market for goods and services across the continent.

The African Continental Free Trade Area (AfCFTA) which is an agreement cast in the mold of the European Union’s version was signed during the 10th Ordinary Session of African Union Heads of State summit held in the Rwandan capital, Kigali today, Wednesday.

The AfCFTA gives birth to the world’s largest free trade area since the World Trade Organisation which was formed in 1995.

Nineteen presidents were present whiles a number of Prime Ministers and government representatives also signed for their respective countries.

“This agreement is about trade in goods and services. These are the kinds of complex products that drive high income economies,” Rwanda’s President, Paul Kagame said in a remarks on Tuesday.

ALSO READ: President of Rwanda Hosts African leaders to Sign Free Trade Deal

The theme of the AU Extraordinary Summit was: “Creating One African Market,” which falls under the Agenda 2063 of the continent.

According to estimates, if all 55 members states of the AU ratify it, the agreement will bring together 1.2 billion people with a combined gross domestic product (GDP) of more than 2 trillion US Dollars.

Uganda’s Yoweri Museveni did not attend the summit but the Foreign Affairs minister attended and signed the deal, while Nigerian president Muhammadu Buhari failed to attend and did not sign.

Concerned analysts said President Buhari may have caved under pressure from local labour unions and big corporations who have opposed the treaty saying it would harm the local economy.

An analyst, Alpha Sy said: “If Nigeria does not join, it will have an impact definitely. Nigeria is 190 million population country, it’s a large economy. So we hope that Nigeria will not pull out of it.

“Nigeria had already been part of the process of building it, we think it’s just maybe one step back that they are taking to review.”

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