Oil hits highest since mid-2015 as OPEC and rivals agree to historic deal – CNBC

Oil rose by as much as 6.5 percent on Monday to an 18-month high after OPEC and some of its rivals reached their first deal since 2001 to jointly reduce output to try to tackle global oversupply and boost prices.

Brent crude futures were up $1.81, or 3.3 percent, at $56.14 per barrel by 10:45 a.m. ET (1545 GMT), having hit a session peak of $57.89, the highest since July 2015.

 

The price is 50 percent higher than at this time last year, marking the largest year-on-year rise on any given day since September 2011.

 

U.S. crude futures were up $1.75, or 3.4 percent, at $53.25 a barrel. They earlier touched $54.51, also a high going back to July 2015.

 

Russia and Oman likely to agree to production cuts: Expert  

“OPEC have taken a very important step towards stopping the relentless build up in global stock levels and speeding up the rebalancing process, as long as compliance is strong, Libya and Nigeria fail to rebound and U.S. producers take time to respond,” PVM Oil Associates strategist David Hufton said.

“As things stand today, no cuts have been made and production is in fact still rising … from a fundamental point of view, it is difficult to justify the front-end price surge other than that is where the liquidity is and where speculative players, moving in herds, always prefer to place their bets.”

After nearly a year of wrangling, the Organization of the Petroleum Exporting Countries agreed on Nov. 30 to cut output by 1.2 million bpd for six months from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd to curb the oversupply that has dogged markets for two years.

On Saturday, producers from outside OPEC, led by Russia, agreed to reduce output by 558,000 bpd, short of the target of 600,000 bpd but still the largest contribution by non-OPEC ever.

But for the deal to be effective, all parties must stick to their word, analysts said.

 
Saudi Arabia helped boost OPEC’s credibility: Nigerian oil min

Saudi Arabia helped boost OPEC’s credibility: Nigerian oil minister  

“We believe that the observation of the OPEC-11 and non-OPEC 11 production cuts is required to sustainably support… oil prices to our 1H17 WTI price forecast of $55 a barrel,” Goldman Sachs said.

“This forecast reflects an effective 1.0 million barrels per day (bpd) cut vs. the 1.6 million bpd announced cut and greater compliance to the announced cuts is therefore an upside risk to our forecasts.”

Goldman Sachs forecast full compliance would be worth an extra $6 per barrel to its price forecast.

Higher prices raise the chances of other producers increasing output.

“There are too many moving parts for OPEC’s new policy to be sustainable in the long term. The strategy is bound to overshoot, in our view. leading to lower prices in the second half of next year,” Barclays said in a note on Monday.

— CNBC’s Tom DiChristopher contributed to this report.

Oil deal will stick as ‘everybody is hurting’, says Nigerian oil minister – CNBC

By Sam Meredith

 

Want oil prices to stay close to $60: Nigerian oil min

Want oil prices to stay close to $60: Nigerian oil minister  

As OPEC and non-OPEC nations agreed to jointly cut oil production in alandmark global pact on Saturday, Nigeria’s oil minister told CNBC he believed there is more than enough incentive for all involved to adhere to the deal.

Eleven oil producing countries, that are not members of OPEC, said on Saturday they are to cut production by 558,000 barrels per day (b/d), just short of the 600,000 targeted by OPEC in November

“I think (this deal) is different… this time there is a major consensus. Everybody is hurting, everybody realizes you need to do this,” Emmanuel Ibe Kachikwu, Nigeria’s oil minister, told CNBC on Monday.

“Both the OPEC and non-OPEC groups understand that both sides would have to keep to the deal otherwise it falters so I think the urgency of now and the criticality of the economy they have to protect is enough incentive for everybody to align this time,” he added.

Oil prices rally

Russia pledged to cut its oil production by 300,000 b/d with the remaining 10 non-OPEC countries combining to cut a further 258,000 b/d in an agreement that represents the largest ever non-OPEC production cut.

OPEC announced last month at its headquarters in Vienna, Austria that it would reduce oil production by 1.2 million b/d in order to prop up oil prices and combat global oversupply.

Investor sentiment has been buoyed by the pact with non-OPEC nations, the first time oil producing members have agreed with non-members for 15 years.

Brent crude traded at around $56.59 a barrel on Monday morning, up 4.12 percent, while U.S. WTI was around $53.75 a barrel, up 4.37 percent.

 
Saudi Arabia helped boost OPEC’s credibility: Nigerian oil min

Saudi Arabia helped boost OPEC’s credibility: Nigerian oil minister  

Kachikwu targeted an oil price of around $60 a barrel moving forwards but stressed OPEC could be poised to take further action to rebalance the market next summer.

“I think this is just the beginning of the momentum itself, (the deal agreed) in Vienna wasn’t just a one off.

“In six months’ time when (this OPEC deal) will be due for another review, if we feel that the market hasn’t balanced enough, more cuts might be coming,” he concluded.

 

Nigeria’s Investment Opportunities – Market Mogul

By Olakale Lipede

Compelling Growth Potentials In Nigeria

he fall in global oil prices, which began in 2014/2015, has to some degree negatively impacted emerging oil exporting economies. One of these economies is the Federal Republic of Nigeria, located in the Sub-Saharan Africa region and Africa’s largest economy. As a result of the decline in global oil prices, the country has witnessed a number of effects, some of which can be seen in the chart below.
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Some notable investment opportunities are fixed income and small and medium-sized enterprises (SMEs). Investments in fixed income provide investors of all calibre the opportunity to earn high returns benchmarked against inflation rate and thus prevents erosion in the purchasing power. SMEs, on the other hand, offer an interesting alternative with a long-term view for investors with excessive cash flows looking for relatively higher returns associated with some level of risk.

Fixed Income Investments

Given the bearish run in the Nigerian stock market as obvious in the chart below, coupled with the current state of the economy, the fixed income market offers interesting investment opportunities with reduced risk and relatively high-interest rates permitted by the monetary policy committee (MPC) as seen in the interest rate chart below. Fixed income market comprises of two main categories namely bonds and money market securities.

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The Appeal For Bonds

The bond market is a financial market where participants buy and sell debt securities. When debt securities are purchased, it implies the lending of money by investors to a government, corporation, federal agency or other entity known as an issuer or borrower. In return for the money lent, the issuer provides the lender with a bond in which it promises to pay a specified rate of interest during the life of the bond as well as repay the face value of the bond (the principal) at maturity.

The current issuance of bonds in Nigeria according to FMDQ, are the 4.8 trillion naira Federal Government of Nigeria (FGN) bonds, 100 billion naira First City Monument Bank (FCMB) corporate bonds and 30.5 billion naira United Bank for Africa (UBA) corporate bonds. It is important to note that the issuance of bonds (request for lenders) is one of the ways through which companies and governments raise money to fund their growth, development and day to day activities. Given the current economic state of Nigeria, one should expect to see more of these issuances especially in the financial sectors at relatively high-interest rates.

Money Market Security

Money market securities comprise of a certificate of deposits (CD), Treasury bills (T-bills) and commercial papers. Treasury bills are short-term debt instruments considered by many to be the most risk-free investment. They are government securities with one year or less maturity, issued by the Central Bank of Nigeria. T-bills provide short-term funding for the deficit and are by nature the most liquid money market securities backed by the guarantee of the Federal Government.

Commercial papers are unsecured short-term promissory notes issued by financial and non-financial companies. Transactions volume for commercial paper according to Investment One Financial Servicesexceeds the amount of any money market instrument other than T-bills. It is typically issued by large, creditworthy corporations with unbiased lines of bank credit and therefore carries a low risk of default. An example of a recently issued commercial paper would be that byCoronation Merchant Bank.

A certificate of deposit is also referred to as time deposit issued by commercial banks with maturity periods ranging from three months to five years. The return on the certificate of deposit is usually higher than T-bills because it assumes a greater degree of risk. Given the current Nigerian economic situation alongside the government’s need for finances, T-bills possess a higher interest rate of about 17% when compared to the certificates of deposits (9%) and corporate bonds (14.5%).

Why Invest in Fixed Income Securities:

  • Predictable income stream
  • Preservation of capital
  • Suitable for retirement plans
  • Support financial goals and security

Investments In SMEs

SMEs play a very vital role in the Nigerian economy and are broadly defined as businesses with an annual turnover of less than 500 million naira or businesses with less than 300 employees. They account for over 70% of the country’s labour force and contribute approximately 50% to the country’s GDP (compared to the 1% in 2006).

Over the past ten years, SMEs have displayed significant growth potential with strong export and employment potentials. They have arguably closed up the infrastructure gap, invested tremendously in human capital, and received funding from local and foreign investors (e.g. Mark Zuckerberg’s investment in the Co-Creation Hub, an incubator in Nigeria’s Silicon Valley).

SMEs in Nigeria are currently distributed along sectors and regions, thus creating potential operations and cost synergies. Major corporations such as Guaranty Trust Bank and Heineken, alongside the Nigerian government, have shown a consistent commitment to the continuous improvement of SMEs, through the implementation of adequate legal and regulatory frameworks, basic and technological infrastructure, access to finance and financial incentives, and commitment to building domestic expertise and knowledge.

Despite the recent events in the Nigerian macroeconomic environment, SMEs still possess compelling growth potential and the ability to drive the country towards an economic recovery stage. In addition, they offer one of the best investment opportunities during a recession with limited risk and high returns for not only corporations but high net worth and regular individuals.

Oil Surges as Saudis Eye Deeper Cuts While Non-OPEC Joins Deal – Bloomberg

  • Largest producers strengthen commitment to tighten supply
  • Non-OPEC countries agree to trim output 558,000 b/d next year
 

Oil rose to the highest since July 2015 after Saudi Arabia signaled it’s ready to cut output more than earlier agreed and non-OPEC countries including Russia pledged to pump less next year. 

Futures jumped as much as 5.8 percent in New York and 6.6 percent in London. Saudi Energy Minister Khalid Al-Falih said Saturday the biggest crude exporter will “cut substantially to be below” the target agreed on last month with members of OPEC. His comments followed a deal by 11 non-OPEC countries to join forces with the group and trim output by 558,000 barrels a day next year, the first pact between the rivals in 15 years.

U.S. oil futures have gained almost 20 percent since the Organization of Petroleum Exporting Countries agreed on Nov. 30 to cut output for the first time in eight years. Saudi Arabia, which initiated OPEC’s decision in 2014 to pump without limits, is leading efforts to regain control of the market. The OPEC and non-OPEC plan encompasses countries that produce about 60 percent of the world’s crude.

“The non-OPEC cut was expected but nobody foresaw the Saudi statement,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “The market’s giving bonus points because the Saudis are willing to do whatever has to be done to balance the market. We wouldn’t be up anywhere near as much on the agreement alone.”

West Texas Intermediate for January delivery rose $1.61, or 3.1 percent, to $53.11 a barrel at 12:01 p.m. on the New York Mercantile Exchange. Futures touched $54.51, the highest level since July 6, 2015. Total volume traded was more than double the 100-day average.

Brent for February settlement climbed $1.67, or 3.1 percent, to $56 a barrel on the London-based ICE Futures Europe exchange. The contract reached $57.89, the highest since July 16, 2015. The global benchmark crude traded at a $1.95 premium to February WTI.

Market Balance

“The main impact of the non-OPEC collaboration is to pull the global market into balance, if not in deficit, in the second quarter of 2017, rather than in the third quarter,” said Sarah Emerson, managing director of ESAI Energy in Wakefield, Massachusetts. “On an annual average basis, this pushed the global balance into a 200,000 to 300,000 barrel-a-day deficit for the year.”

Oil and gas companies advanced in the U.S. and Europe. Exxon Mobil Corp. and Chevron Corp., the biggest U.S. energy producers, climbed 2.5 percent and 1.8 percent, respectively, at 12:06 p.m.

“I can tell you with absolute certainty that effective Jan. 1 we’re going to cut and cut substantially, to be below the level that we have committed to on Nov. 30,” Al-Falih said Saturday in Vienna. The Saudi minister added that the country was ready to take production below 10 million barrels a day, a level it has sustained since March 2015.

Al-Falih and his Russian counterpart Alexander Novak also revealed Saturday that they have been working for nearly a year on the agreement, meeting multiple times in secret. OPEC two weeks ago agreed to reduce its own production by 1.2 million barrels a day, and Saudi Arabia has long insisted that any cuts by the group be accompanied by action from other suppliers.

Oil prices at $60 a barrel would be “ideal” for OPEC as higher levels risk sparking a recovery in competing supplies from the U.S., Nigerian Minister of State for Petroleum Emmanuel Kachikwu said in a Bloomberg Television interview.

Oil-market news:

  • U.S. explorers rushed back to the shale patch with the largest weekly addition of oil rigs since July 2015, according to Baker Hughes Inc.
  • U.S. crude inventories probably dropped by 1.5 million barrels last week, according to the median estimate in a Bloomberg survey before EIA data Wednesday.
  • OPEC output rose last month to 33.787 million barrels a day on increases from Libya, Nigeria and Angola, according to independent estimates known as secondary sources, said a person familiar with the data.

Emerging-Market Currencies Climb as Ruble Jumps With Crude Oil – Bloomberg

  • Oil surges as Saudis eye deeper cuts while non-OPEC joins deal
  • China stocks, bonds, yuan slump in unison on liquidity concern
The rally in crude oil to the highest level since July 2015 lifted currencies of producers from Russia to Colombia. Chinese assets tumbled.

Traders pushed up the value of currencies in developing nations as crude surged after Saudi Arabia signaled it’s ready to cut output more than earlier agreed and non-OPEC countries including Russia pledged to pump less next year. The outlook for central-bank policy is also on investors’ radar, with the market pricing in 100 percent odds of a rate hike by the Federal Reserve this week, and a two-in-three chance of additional tightening by June.

  • The MSCI Emerging Markets Currency Index rose 0.3 percent, erasing earlier losses
  • Russia’s ruble led gains while Colombia’s peso climbed toward a one-month high
  • Brazil’s real also joined the rally, shrugging off an earlier decline that was propelled by political concern
  • Earlier losses were led by Turkey’s lira, which slumped after data showed the nation’s economy unexpectedly shrank
  • The MSCI Emerging Markets Index of stocks extended a two-day decline
  • The Shanghai Composite Index sank 2.5 percent, the yuan fell toward an eight-year low, while government bonds tumbled
  • Analysts had a long list of reasons for the synchronized selloff in China, from President-elect Donald Trump’s questioning of the decades-old One China policy, to a regulatory crackdown to insurers’ stock investments, higher money market rates and concern that property prices are poised to fall.
  • Investors added more than $1 billion to exchange-traded funds that buy emerging market stocks and bonds last week after declining in four of the past five weeks

Analysts:

  • “The OPEC news helped curb the losses in Asian shares today as energy companies were up,” said Jingyi Pan, market strategist at IG Asia in Singapore. “Overall, sentiment is cautious ahead of the Fed.”
  • Local currency bonds in emerging markets are showing value compared with their equivalent dollar debt on the prospect that central banks in these nations will further ease monetary policy, according to JPMorgan Asset Management
  • Selling pressures for EM currencies will likely continue amid a rising DM rate environment, Brown Brothers Harriman strategists led by Marc Chandler and Win Thin write in note

FOREX-Dollar retreats, euro steadies as Fed nerves prevail – Reuters

(New throughout after start of European trade)

* Fed expected to hike at two-day meeting beginning Tuesday

* Market worried Fed may hint at concern over dollar gains

* Oil price rally lifts Canadian dollar, Norwegian crown

* Long dollar positions continue to rise – IMM data

* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh

By Patrick Graham

LONDON, Dec 12 The dollar dipped against the euro and a basket of currencies on Monday, an oil-driven rise in inflation expectations not enough to push on its broader rally as traders worried about the outcome of Wednesday’s Federal Reserve policy meeting.

The U.S. central bank is widely expected to raise interest rates this week and market concerns have turned to what signal it will send on further policy tightening and the dollar’s 7 percent gain against a basket of major currencies since early October.

The euro gained almost half a percent in morning trade to push back above $1.06, pushing the dollar index a third of a percent lower – an indication the market is not convinced the Fed will promise much in rate rises for next year.

“They (the Fed) really don’t want to scare the market,” said Alexandre Dolci, a strategist at Spanish bank BBVA in London.

“I think they will remain quite cautious in their forecasts for next year. They may not be as hawkish as the market currently prices.”

Another factor in the fall in the dollar index was a robust gain for the Canadian dollar on the back of the weekend deal by OPEC and non-OPEC producers to curtail output.

That drove crude prices up by around 5 percent to their highest levels in a year and a half. The other major developed world oil-dominated currency, the Norwegian crown, gained 0.7 percent against the greenback.

Expectations that would drive global inflation higher have generally supported the dollar above other major currencies in the past month and it was broadly stronger against the yen, topping 116 yen for the first time since early February.

But traders said signs Italy was ready to bail out its troubled third-largest bank, Monte dei Paschi, was also feeding into a recovery for the euro after hefty losses following last week’s European Central Bank meeting.

While the ECB did announce a reduction in the amount of new money-printing it will do from April next year, by extending the programme for longer than expected and tweaking other rules, it knocked more than 2 cents off the currency on Thursday.

That brings the dollar close to highs from last year at which Washington began to express concern.

“It’s going to be hard to have the energy to make new lows (on the euro) before the Fed,” said Richard Benson, co-head of portfolio investment at currency fund Millennium Global in London.

“An explicit mention of the currency in either the statement or the news conference and it might become more difficult for the dollar.” (Editing by Catherine Evans)

Speediest Traders Becoming Less Welcome in Currency Markets – Bloomberg

  • Aggressive, short-term arbitrage strategies are ‘saturated’
  • Speed bumps may have thwarted some types of fast trading

The most aggressive high-frequency currency traders are showing signs of losing steam, suggesting platforms have succeeded at thwarting some speedy strategies.

Electronic specialists are making waves by eclipsing major banks in foreign-exchange trading. But some strategies — focused on fast execution and short-term arbitrage — have reached a “saturation point,” according to the Bank for International Settlements. At the same time, platforms have adopted so-called speed bumps to blunt advantages of the savviest firms, which have been blamed for sniffing out trader intentions to bet against them.Those factors are behind a drop in buying and selling by hedge-fund and principal-trading firms, which fell to about $390 billion per day from $580 billion three years ago, according to a BIS report published Sunday.

As aggressive strategies wane, firms are increasingly confined to supplying quotes for market making. That’s seen as a passive and potentially more benign style of trading. That shift has winners: BIS says firms like XTX Markets Ltd. and Virtu Financial Inc. have grown their share of territory that used to only be the domain of banks.

“These firms have expanded their business to become top liquidity providers in FX markets,” the BIS report said.

Executives at major electronic trading firms say the easy money has already been made. In the U.S. stock market, for example, speed-trader revenue fell to $1.1 billion this year, down from $7.2 billion in 2009, according to Tabb Group estimates.

Principal traders are especially prevalent in spot foreign-exchange, where volume has fallen 19 percent to $1.65 trillion in the past three years. High-frequency strategies are often used in the spot market because it’s highly standardized, making it better suited to algorithms. Trading in foreign-exchange derivatives for corporate hedging and other purposes rose.

“A small number” of electronic trading firms are becoming more like traditional market makers, according to Paul Clarke, head of venues at Thomson Reuters Corp. The company’s currency platform introduced randomization, also known as a speed bump, earlier this year. Bloomberg LP, the parent of Bloomberg News, also operates a foreign-exchange venue.

Some on the buy side, however, still need convincing that trading has gotten safer.

“Everyone’s guard is still up for some of this predatory type trading,” said Michael O’Brien, director of global trading at mutual-fund company Eaton Vance Corp. “It’s hard to tell whether it has changed. It’s still something I’m concerned about.”

Electronic firms account for at least 6 percent of market making, according to a rankingthis year by Euromoney Institutional Investor Plc. But the BIS says their share is probably higher because many don’t report volume. While such firms used to primarily transact on anonymous, exchange-style venues, they’re increasingly trading directly with customers.

“The buy side is increasingly looking at direct relationships with principal trading firms,” O’Brien said. “It’s not going to eliminate the banks, but it certainly will compete with them.”

BIS points to a sign that high-frequency strategies have stalled: trade sizes have plateaued. Automated firms tend to thrive in buying and selling small orders. After declining for several years, the average size of trades on interdealer platforms have been roughly flat, at about $1.5 million to $2 million, since 2008.

Some firms may have worn out their welcome at banks. Principal traders generally use credit lines to buy and sell currencies — a bank service known as prime brokerage. Those brokers have been shedding some customers as they reassess profitability and customer risk profiles following the 2015 Swiss franc shock. According to BIS interviews, banks have kept big clients and electronic market makers while dumping retail brokers and some speed traders.

Non-oil economy off the floor – Businessday

The national accounts for Q3 2016 from the National Bureau of Statistics (NBS) show a headline-making, third successive quarter of recession. The contraction of the economy picked up from -2.1% y/y in the second quarter to -2.2%. Not for the first time, the swings in oil sector output make the more striking headline.

So the oil economy shrank by -22.0% y/y in Q3. We had not thought the figure could be worse than the previous quarter (-17.5%) but then we made the mistake of taking at face value one-off official statements about the level of crude output. We recall a series of suggestions that pipeline sabotage had peaked in June and July. A lesson has been learnt.

A different take on the direction of oil output has been provided by an indigenous producer. The managing director of Shoreline Natural Resources told the local media last month that production of 2.20 mbpd would only be attained if the industry made new annual investments of US$14bn for five years. He added that it is currently investing about US$9bn. The macro significance of the statement to us is that the 2016 budget is based on an assumption of average production of 2.20 mbpd.

The GDP figures on the oil sector tell us again what we already know: that the FGN has to find a way of ending the sabotage and restoring production to earlier levels so that the additional tax revenues are generated to fund infrastructure spending and other measures (which are designed to bring about the diversification of the economy away from oil).

In contrast, the non-oil figures surprised a little on the upside. The non-oil economy was flat y/y, compared with contraction of -0.4% the previous quarter. Drilling down to sectors, we see steady growth of 4.5% y/y in agriculture for the second successive quarter. Reforms initiated by this and the last administration are paying dividends. There has been a pick-up in investment in commercial agriculture, not least by manufacturers in pursuit of backward integration, and we also note initiatives by the more forward-looking state governments.

Government at all levels can help to revive construction, which contracted by -6.1% y/y, in the capacity of customer/consumer. The FGN has recently said that it has released N800bn year-to-date for capital projects, most of which will have a construction component. While far short of the projection for the full year of N1.6trn, the releases are ahead of N660bn in 2015 (according to CBN data). We would expect a gathering of momentum as earlier capital releases are translated into orders for construction companies.

For manufacturing, the impact of FGN policy is its capacity to boost household demand. (The latest national accounts from the NBS on an expenditure basis show private consumption growth of 1.0% q/q and -6.0% y/y in Q2 2016.) Manufacturing segments tell different stories. The largest is food, beverages and tobacco, which contracted by -5.8% y/y in Q3. It has a high import requirement, and its operators are struggling to access the necessary fx for imported inputs.

In contrast, textiles, apparel and footwear contracted by -0.9% y/y in Q3. The second largest segment has outperformed the largest for seven successive quarters. An obvious explanation is elusive. We suspect that the pressure on incomes has led more and more Nigerians to buy products made from domestic materials such as cotton and leather. Rather than buy an imported product, for example, they could employ a tailor to make a suit. Anecdotal evidence points to the growth and success of unlisted manufacturing companies. These companies have the advantage of private operations across the world: less regulation, less scrutiny and more flexibility. In Nigeria they are responding to the new realities of the market in recession better than their listed competitors.

The fourth segment we cover is education. It was the fastest growing segment y/y throughout 2015 on the back, we assume, of new private universities and schools. In Q3 2016 it contracted by -0.1% y/y as parents have fallen behind on payment of fees and the expansion has ground to a halt.

Finally we turn to the government’s own contribution. Public administration contracted for the seventh successive quarter. Last year the decline was consistently double digit, and has improved to -3.6% y/y in Q3. In principle, we welcome the shrinkage in government for fiscal reasons. We just have to hope that its lower output is more productive. This is critical since we see the FGN’s expansionary fiscal stance as the largest single driver of Nigeria’s emergence out of recession.

We see that step in Q4, for which we forecast GDP growth of 0.6% y/y. In addition to the fiscal stimulus, we view positive base effects for the oil sector and the usual seasonal boost to household demand for the holiday season, albeit more subdued than usual, as reasons for the tentative recovery.

 

Gregory Kronsten

 

Sachet water price soars – The Sun

Stories  by Charles Nwaoguji

Sachet water that used to be for the common man in the street is now beyond his reach as the price has soared due to lack of foreign exchange to import machinery and other production materials.
The difficulties in getting foreign exchange and the steep fall in the value of the naira are seriously affecting the sachet water production in the country.
Daily Sun investigation revealed that the unprecedented fall in the value of the naira has made importation difficult and expensive, thereby resulting in high cost of production of sachet water.
Those who spoke to Daily Sun recently said if the situation continues, the country may be heading for epidemics as producers will not be able to produce quality sachet water for consumption.
The Chairman of the Association of Table Water Processors (ATWAP), the Ondo State branch, Mr. Jeff Agboola, lamented that a bag of the product, which usually contains 20 sachets and which was initially sold for N100, now goes for N150 as the wholesalers attributed the increased cost to the scarcity of dollars and the resultant depreciation of the naira, which means it has increased from N10 to N20  per sachet.
He further stressed that if the situation was not addressed urgently, it might lead to epidemics if the producers cannot have foreign exchange to import their materials.
According to Agboola, the prices of the materials, which are basically imported, have gone up because the dollar exchange rate has gone higher. He expressed displeasure against the hike in the price of the nylon used to package the sachet water, noting that the Port Harcourt-based nylon manufacturing company has been shut down due to its inability to import the required materials for packaging the product.
He said a kilogramme of the nylon, which was sold at N520 in January 2016 now costs N1,000. His words: “The product we use is nylon and it is very scarce now. The material was produced in Port Harcourt but the company has shut down production presently. As the company has closed down, there is no way we can get the material.
“The company is shut down and the Indian workers in the company have returned to their country. They will return when the dollar stabilises. Those of us that have paid for the product since last week are being refunded,” he said.
The country is in a big problem, if epidemics is allowed to occur in any part of the country. The fear among experts is that these waterborne diseases, if allowed to occur, may spread like fire and many people may die as a result of this.
The Executive Secretary of Association of Food, Beverage and Tobacco Employers, Mr. Aderemi Adegboyega, said waterborne disease may be the worst if it is allowed to occur in any part of the country.
“We pray it doesn’t occur but if it occurs, it will spread like fire, which means many people may die as a result of these epidemics.”
He said the price of sachet water should be brought down so that people can have access to it, adding that many consumers may resort to drinking anything they see, if it is made cheaper for them.
On how to control waterborne diseases, he said that outbreak of waterborne disease can be checkmated by the provision of potable water, which is often regulated to keep public health, owing to the fact that it is an important determinant of health.


 

Stakeholders task FG on ways to stimulate economy

Stakeholders in credit industry are demanding that the Federal Government take urgent steps to stimulate economic activities in the country, particularly in the use of credit to create employment opportunities for the youths.
The Chief Executive Officer/Registrar, Institute of Credit Administration (ICA), Prof. Chris Onalo, who spoke recently at the Nigeria Credit Industry Awards in Lagos, said that no economy grows without the use of credit, adding that credit at whatever level of sector, if not properly managed, could spell doom for an economy.
“As we are all aware, for the economy to grow to the point of providing desired jobs and creating wealth, there must be credit extension at all levels of industrial and commercial activities. But credit business extended or granted under a sloppy arrangement is an evil worse than an economy driven by a cash-and-carry regime,” he said.
He noted that all over the world, businesses extend credit to each other but successful management of these credits has been hampered and abused, to a large extent, following lack of standards, unethical conducts and insider’s abuse resulting to sharp practices in the industry.
He stated that in other countries of the world where economy is driven by credit system, national institutes for credit are in place to regulate, set standards, moderate ethical conducts and build capacity of the people involved in managing, controlling and monitoring credits at all levels of commercial or business credit activities.
He said the incidence that triggered the world economic and financial meltdown some years back stemmed largely from lack of proper attention to sound and disciplined credit management system, thus re-enforcing the need for every country to provide necessary safeguards and infrastructure to protect local credit market economy.
One of the major ways to improve the economy, he said,  is to strengthen the credit market for economic prosperity, especially at a time of impending recession, the effect of which is to improve or reduce unemployment market through real sector lending and foster economic expansion, particularly through adequate credit support for Small and Medium Enterprises (SMEs).
Also speaking at the event, the President of Institute of Credit Administration (ICA), Dr. Adetunji Oyebanji, said the use of credit is a vital necessity to the survival of any economy.
“We believe that an economy without the availability of credits is destined for failure or stagnancy.”
He noted that the institute was keen on equipping Nigerians and the world with professionals who will be able to steer their countries to the right direction.
He explained that Postgraduate School of Credit and Financial Management (PSCFM) has made a significant mark in Nigeria’s credit industry, having turned out for the economy huge number of highly skilled and qualified credit management professionals currently working in different sectors of the economy.
“We are happy to say without any doubt that PSCFM has done Nigeria proud by putting the country on the world map of nations considered credit management light bearers,” he said.
Commenting on the award to the 2016 awardees, he said the institute was recognising the individuals and corporate bodies who have excelled in the sector for their contributions toward the development of the credit industry in Nigeria.
Over six categories of awards were presented, including Credit Management Director of the Year, Credit Relationship Manager of the Year, Provider of Credit to SMEs of the Year, Credit Recovery Professional of the Year, Corporate Credit Provider of the Year and Customer Credit Integrity of the Year.


 

SMEs Development Bank to commence operation soon

Plans are underway to establish Development Bank of Nigeria (DBN) by the government to cater for the needs of the manufacturing sector in the country, the President of Manufacturers Association of Nigeria (MAN), Mr. Frank Jacobs, has said.
Jacobs, who stated this at the 49th annual general meeting of Ikeja branch of MAN, held recently in Lagos, said that when the bank is fully operational, it will cater for the credit needs of the manufacturing sector, adding that the bank is expected to reduce interest rate of over 25 per cent charged by the commercial banks to manufacturers to single digit of not more that 5 per cent.
He said although the manufacturing sector is passing through difficult times, there is still hope for the sector to bounce back. He called on members of MAN to key into the resource based industrialisation policy, which the Federal Government has adopted.
He noted that the policy will help to reduce the demand for forex to import essential raw materials for production, which has been a major challenge in recent times.
Jacob explained that resource-based industrialisation policy, which involves the utilisation of the nation’s abundant natural resources in producing the products the country needs would not come without a cost for some manufacturers as they may have to retool existing technologies and production processes.
He stated that government has a lot to do to make this new orientation of resource-based industrialisation successful. “Government should create attractive incentives for investors who would engage in the processing of abundant agricultural and mineral resources from primary produce to secondary or intermediate products.
According to him, this would go a long way in attracting potential and  current manufacturers into the use of local raw materials input.
In the meantime, he said government has to continue the search for viable options of making forex available for manufacturers as they remain in production.
He commended the recent efforts of government through the Central Bank of Nigeria (CBN) to give preferential forex allocation to manufacturers.
He called on the government to design strategies to achieve diversification and growth that is pro-competition, wealth-creating and regulated for private and public sector interests, insulated from external and domestic shocks.
Also speaking at the event, the Chairman of Ikeja branch of MAN, Prince Oba Okojie, said the way to get the economy back to its proper position is for the government to invest in tourism.
Okojie noted that tourism is another money earner while the prowess of mining of abundant mineral resources the country is endowed with is limitless, stating that the small and medium scale industries should be used as catalysts to drive the economy as this will help in employment generation.
On his part, the former Chairman of Economic Summit, Mr. Mazi Sam Ohuabunwa, urged government to pay attention to agricultural sector.
He said agriculture should be seen as a serious business and not as a vocation or a hobby, adding that to make agriculture contribute meaningfully to the economy, government must invest heavily in it.
“Most of our agric exports are mere commodities with little value addition that become easily susceptible to global market price volatilities,” he said, noting that the major economic challenge Nigeria has is not shortage of dollars or foreign exchange but low productivity.
“We export rubber and import tyres, export cocoa and import  chocolate, export hides and skin and import shoes and handbags; export crude oil and import PMS, DPK, Diesel and JET A1,” he added.
He stated that the way out of the current economic recession is for the government to focus on the manufacturing sector – productivity through value addition.
“If our country pursues a determined manufacturing policy, most of our current economic challenges – high unemployment, high inflation, high exchange rate – will abate,” he said.


NB lifts 30 entrepreneurs in South-East with N7.5m

From Jeff Amechi Agbodo, Onitsha

The Nigeria Breweries through its Life Continental Lager Beer at the weekend gave out N7.5 million to 30 budding entrepreneurs in the South-East.
The 30 entrepreneurs were presented with cheques of N 250,000 each in an event held at the Sweet Garden, 7, Park Road, GRA, Onitsha in Anambra State.
The gesture, according to the organizers of the event, was aimed at reducing unemployment, as well as empower youths in the region. Life Progress Booster show, an entrepreneurial talent hunt and mentoring radio programme, which started in 2015 is targeted at helping innovative businessmen and women in the South East.
The Assistant Brand Manager, Regional Mainstream Brands of NB Plc, Mr Josiah Akinola, speaking at he event, noted that the Life Progress Booster Show was aimed at nurturing and encouraging entrepreneurs from the South East, while also creating a platform for budding businessmen and women to present their proposals and transform their ideas to realities.
According to him, “the Progress Booster Show was initiated to raise more entrepreneurs and self-dependent individuals in South East Nigeria. The average South East person is driven by business and commercial opportunities, and the region is highly regarded as an excellent environment for businesses.
“Throughout the year, the Life Continental Beer brand has focused on empowering our consumers, and we have shown willingness and dedication to contribute to their successes and achievements.”
He described Life Continental Lager Beer as a fine quality lager beer from the stables of NB Plc, saying that the brands are made from choicest grains, hops and the purest of waters.
Akinola explained that the brand was expertly brewed to give that rich, crisp distinctive taste and well-rounded aroma in true quality fashion of the master brewers, adding that “Life is better when shared and when it is shared, there is progress. This is what forms the core brand value of great-tasting Life Continental Beer, promoting and refreshing a life-long tradition of sharing a heritage of progress”.
In his appreciation, one of the lucky winners, Chibueze Usulor, said he was overwhelmed with joy when his name was mentioned as a winner, adding that he would use the money to expand his photocopying business at the Ebonyi State University, (EBSU) CAS Campus.
According to Usulor, “I am already running the business with only one photocopying machine and a rickety generator, but with this money, I shall buy more machines and electric generators to sustain the business”.

    Oil prices soar to $58 on global output cut deal – Punch

    Oil prices shot up over four per cent to their highest level since 2015 early on Monday after OPEC and other producers over the weekend in Vienna reached first output cut deal since 2001 .

    They jointly reduced output in order to rein in oversupply and prop up the market.

    Brent sweet crude futures, the international benchmark for oil prices, soared to 57.89 dollars per barrel in overnight trading between Sunday and Monday, its highest level since July 2015.

    U.S. West Texas Intermediate crude futures also hit a July 2015 high of 54.51 dollars a barrel.

     

    With the deal finally signed after a year,the market’s focus will now switch to compliance with the agreement.

    ANZ bank said that Saudi Aramco, Saudi Arabia’s state-controlled oil company, had informed customers that their allocations would be reduced in January 2017, in line with the recent OPEC production cut agreement.”

    OPEC has said it will slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd in a bid to end overproduction .

    Oversupply has dogged markets for over two years and pushed the economies of many oil exporting countries into crisis.

    On Saturday, producers from outside the 13- country OPEC group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd .

    NAN