Nigeria Beyond Oil - THISDAY
Obinna Chima writes on the need for Nigeria’s policy makers to prepare the economy for a post-crude oil era
A 2017 study that was published by Stanford University suggested that fossil-fuelled cars would vanish within eight years – and citizens will have no choice but to invest in electric vehicles or similar technologies.
This, according to the report, would bebecause the cost of electric vehicles – including cars, buses, and trucks – will ultimately decrease, resulting in the collapse of the petroleum industry.
Led by Stanford University economist, Tony Seba, the report had caused spasms of anxiety within the oil industry, when it was released.
Entitled “Rethinking Transportation 2020-2030,” it had detailed how people will ultimately switch to self-driving electric vehicles, stating that they would be ten times cheaper to maintain than cars that run on fuels.
According to the report, in less than a decade, it would become very difficult for consumers to find petrol stations, spares or mechanics knowledgeable enough to fix combustion engines. His ultimate premise was that modern-day car dealerships would disappear by 2024 as the long-term price of oil.
Clearly, while the advent of electric cars may not be embraced in Africa in the coming years as estimated by Seba, this innovation coupled with shale oil as well as other technologies in crude oil production is going to disrupt the sector.
Indeed, it is going to have an attendant effect on the demand for crude oil from Nigeria and other oil producing economies.
In Nigeria, oil accounts for almost 90 per cent of the country’s export and 95 per cent of revenues, respectively.
In fact, when the economy slipped into recession in 2016, it was because of the collapse in crude oil revenue and an increase in oil production saw the country exiting recession. But the oil industry contributes little in direct employment relative to its contribution to government revenues.
The foregoing therefore was the reason why experts that spoke at the Nigeria Economic Outlook Conference (NEOC) 2018, stressed the need for government to genuinely pursue its much talked about drive for economic diversification.
No doubt, the country’s abysmal low tax base, as well as the internally generated revenue are all because of laziness on the part of the country’s political leaders since the discovery of oil.
In addition, the political tension and civil arrest in the country have in most cases by traced to the fight for share of the revenue accruing from oil revenue.
Nigeria has been projected to be the world’s third most populous country by 2050, according to the United Nations Department of Economic and Social Affairs. With that, the country would have a median age of 22, making Nigeria the third most populous country in the world, after India and China
Also, there have been outstanding and rapid developments in the field of robotics, leading to the emergence of robots that can replace human in many manufacturing process.
As a result, the manufacturing activities that were typically outsourced to developing countries in the past due to high labour cost.
To the President of Times Economics, an economic consulting firm and the organiser of the NEOC, Dr. Ogho Okiti, there need for policymakers in the country to start preparing for a Nigeria that is not driven by activities in the global crude oil market.
He noted that for five decades, Nigeria’s relationship with the global economy was shaped by the sale crude oil and the attraction of investment to the sector.
Okiti, however, pointed out that in the last decade, two important features have continued to threaten the allure to the country’s oil sector.
“First, we have seen and continue to see, very aggressive development of alternative sources of energy.
“Secondly, we have also seen the development of technology that made previously inaccessible crude oil available at reasonable cost.
“Combined, the implication is that today, the world thinks more about when there would be a peak in the oil demand, compared to about 20 years ago, when the thought was about whether the world would run out of oil,” Okiti explained.
These, he also noted would have severe implications for the Nigerian economy and its future relationship with the global economy.
“If development continues at this pace, the manufacturing route to prosperity which was once open to Asian tigers, could be closed to Nigeria.
“The shift towards nationalisation as seen in United States and the Brexit referendum has also influenced hostility towards international trade and migration,” he warned.
Human Capital Development
To the founder and chief executive of the Computer Warehouse Group (CWG), Mr. Austin Okere, there is need for increased investment in human capital to drive activities in the country, especially the non-oil sector of the economy.
Okere noted that the issue about crude oil is that it dominates so many other sectors and makes it difficult for policymakers to take their eyes away from it.
“Crude oil prices would go up and down and nothing is going to hold it stable. There are other areas such as media, entertainment, agriculture, that we can develop and even export.
“I think we should start looking at the fourth industrial revolution and how we can leapfrog on it. But I think we shouldn’t be too fixated on crude oil prices,” he added.
Also, the chief executive, Rise Network, Mrs. Toyosi Akerele-Ogunsiji, urged Nigerians to disregard the notion that the country is an oil-rich economy, saying that countries are not adjudged to be rich because of what they have, but because of their know-how.
She expressed disappointment that since the discovery oil in the country several decades ago, it has remained only at the stage of primaey production with no value addition.
“At the end of the day, oil will not refine itself, you need the human capital of those countries to be able to refine the oil.
“If you really appraise the parameters you measure to know whether countries are successful or not, Nigeria does not feature in any of it. But the challenge is the amount of energy we spend discussing issues around oil. There is need for the country to prepare for a post-oil economy.
“We need to start thinking about how to move on from a country that is so oil dependent to a country where we can begin to create wealth. The truth is that economies that consume are superior to economies that produce,” she argued.
On his part, the chief economist at Macroafricaintel Investment LLC, Dr. Rafiq Raji, noted that less demand for crude oil as a result of electric car and other innovations in crude oil production means that any supply management by the organisation of petroleum exporting countries (OPEC) in the future may not succeed.
“Our vulnerability extends to the fact that we are not preparing for that future. The best we have been able to do is to talk about how agriculture can help us.
“Now, if developed economies can produce goods with less human needs and in a cheaper manner, that means there is nothing we can do to be competitive,” he explained.
The Minister of Finance, Kemi Adeosun, recently pointed out that the federal government was no longer bothered by fluctuations in the price of crude oil.
According to Adeosun, the federal government has learnt to live with a low crude oil price.
“We have gotten to a point where we don’t care whether oil prices will be sustained at the level that they have recently risen to.
“We have been able to balance our budget at $45-$46 per barrel and we’ve got to learn to live comfortably at that level,’’ she said.
She said the government’s diversificationefforts include pushing for agricultural expansion to reduce a heavy food-import bill and boost exports. Adeosun while noting that the government was seeking to plug an infrastructure gap of $25 billion, said “the infrastructure gap is significant, it is far bigger than anybody had imagined, in power, in roads, in rail.”
For Raji, there is need to increasingly encourage activities in the non-oil sector, especially as regards to innovation, as well as make sure there is adequate policy around credit.
“When you don’t resolve some of the structural challenges, like power for instance, there is not much that can be done.
Unless we resolve some of these constraints, we are not going to extract wealth from the real sector,” he advised.
Also, Okere pointed out that the biggest employers of labour in the country presently are the entrepreneurs, stressing the need for capacity building and other incentives that would encourage business owners.
“Many of them can do better if they are empowered with technology and inclusiveness. The human capital development is extremely important, because that is where the wealth is.
“Power is the fundamental for industrialisation. Another thing that very important is broadband,” he added.
The foregoing shows that there is an urgent need for the country to fast-track its transition to a post oil economy. Government at all levels need to start thinking and encouraging creativity and innovation. All over the world, there are resource rich countries that are not dependent on commodities and have been able to transform their economies. What the country requires today is to enhance its investment in infrastructure, education and manpower development, which would in turn drive competitiveness.
Guide to Doing Business in Nigeria Makes a Debut - THISDAY
The federal government’s drive to improve the ease for doing business has received a boost as investors and would-be-business owners now have a handbook on how to obtain licences and permits when doing business in selected sectors in the country.
Publishers of the handbook, A&E Law Partnership, in a statement yesterday in Abuja, said it was part of their contribution to improving the environment for doing business in Nigeria.
The foreword to the handbook written by Peter Ntephe, said the Guide is “a one-stop-shop handbook on the rules for entry into various sectors of the Nigerian economy. Key processes and procedures are outlined in as much a succinct way as possible, along with the fees for obtaining licences and registrations.”
This handbook which is a product of the knowledge gained by the law firm over the years in “its core competences” is a praiseworthy compendium and guide to the rules and regulations for doing business in the ‘commanding heights’ of the Nigerian economy.”
According to the Managing Partner of A&E Law Partnership, “The Doing Business Handbook adopts a sectoral approach, respectively explicating the requirements for operating in insurance, aviation, cabotage, banking, energy and power, solid minerals, telecommunications, entertainment, food and beverages, private security, oil and gas, among others. There is also coverage of matters that are applicable across sectors, such as immigration, environmental standards, intellectual property and capital markets.”
Beside these, there is a section devoted to foreign investors, providing an advisory on organisational forms available as well as other subjects of potential interests, such as repatriation of profits and tax exemptions.
He said the handbook is a “must have table-top business advisory for professionals, including lawyers, accountants and bankers as well as to investors, entrepreneurs and firms doing or seeking to do business in Nigeria. Students and academics whose disciplines require knowledge of matters within the remit of the guide will also find it a useful library reference.”
Nigeria: Passengers Panic As Dana Airline's Door Falls Off - PREMIUM TIMES
Some passengers of Nigerian air carrier, Dana Airline, expressed fear when the door of an aircraft belonging to the airline fell off upon landing.
One of the passengers on the flight, Dapo Sanwo, said the door panel was loose all through the flight,a situation he described as an indication of "lack of maintenance."
Another passenger, Ola Brown, who took to his twitter page to vent his frustration, said the experience was scary.
Mr. Brown narrated that the exit door of the aircraft was unstable all through the flight, adding that it fell off as soon as the aircraft landed.
"Flew Dana. Exit door was unstable throughout flight. As we touched down, it fell off. Scary stuff," he wrote on twitter.
"I was closer to the front so when I heard the sound, (I) thought it was an explosion. (I) couldn't quite comprehend that it (the door) had just fallen off."
Details of the incident and its causes were not immediately clear.
When PREMIUM TIMES contacted the corporate communication desk of Dana Air Wednesday morning, the airline said it would need to be briefed by its engineers before reacting to the development.
"We need to also get the engineers to give their report," a staff of the airline's corporate communication desk told PREMIUM TIMES Wednesday morning.
Details later... .
Wall Street FX Strategists Hit Reset After Euro Calls Fall Short - BLOOMBERG
By Alexandria Arnold
7 February 2018, 00:00 WET
Euro up more than 3% in 2018, above prior targets for year-end
Some analysts now predicting move toward $1.30 area for euro
Wall Street’s top currency strategists had the right idea when it came to the euro -- they just weren’t right enough.
Foreign-exchange forecasters are headed back to the drawing board less than six weeks into the new year after the euro blew straight past most of their predictions for 2018. Europe’s common currency has already advanced more than 3 percent since Dec. 31, easily topping the median survey forecast of $1.22 from back then. It’s currently trading closer to $1.24, even after a pullback over recent days, and its advance has prompted a swath of analysts to lift their projections.
The euro’s rally comes as the region’s economy picks up steam and the European Central Bank plans its stimulus-exit strategy. Meanwhile, the market is already pricing in several more interest-rate increases this year by the Federal Reserve, and the dollar may face headwinds as America embarks on a debt-financed fiscal expansion and protectionist rhetoric increases.
“We were prepared for some euro appreciation, but not the aggressiveness of the move,” said Valentin Marinov, global head of G-10 FX research at Credit Agricole SA. “The common denominator in the case of euro-dollar and also cable is really dollar weakness.”
Marinov is far from alone. Goldman Sachs Group Inc., JPMorgan Chase & Co., HSBC Holdings Plc, ING Groep NV and UniCredit SpA have all raised their euro-dollar forecasts this year. Credit Agricole is now expecting the pair to reach $1.26 by year-end, while JPMorgan is targeting $1.29 and Goldman and ING are forecasting the common currency to finish 2018 at $1.30.
Only two firms who contribute to Bloomberg currency forecast data had fourth-quarter euro-dollar projections at or above $1.28 at the beginning of the year. Now, that number has ballooned to 18. And comparing the same periods, the median forecast for end-year has risen from $1.22 to $1.25, already near where the common currency is currently trading. The euro was at $1.2377 as of 5 p.m. in New York.
The 19-nation currency is likely to remain bid for at least the first half of the year, according to Canadian Imperial Bank of Commerce North American head of foreign-exchange strategy Bipan Rai.
While ECB bond-buying is scheduled to last until at least September and President Mario Draghi has said rates will remain on hold “well past” the end of asset purchases, some policy makers are saying the central bank needs to be more specific in how long it will stand pat. Tightening the language on rates would be welcomed by more hawkish officials, who want to set a definite end-date for asset purchases.
“A lot of what we’ve seen in euro-dollar price action has caught us a bit off-guard,” Rai said. “It’s been a lot swifter than we expected. We didn’t envision the hawks on the ECB board would be this vocal and there’d be growing signs of schisms within the governing body of the ECB.”
While the Federal Reserve’s policy normalization efforts are significantly ahead of the ECB’s as U.S. unemployment hovers at the lowest since 2000 and rising wages signal a potential rebound in inflation, strategists say those would-be dollar positives are largely priced in. Brightening economic outlooks abroad along with prospects for scaled-back stimulus are overshadowing U.S. rate hikes and the Fed’s asset-purchase wind-down.
“Given the return of U.S. protectionism, the persistent flatness of the U.S. Treasury yield curve, plus the fact people are now speculating about reserve diversification out of the dollar, a more cautious view of the dollar may be warranted,” Marinov said.
Even as strategists expect the euro to continue strengthening, the move will likely be a slower grind in the second half as net-long wagers appear elevated and expectations for the ECB might be overly optimistic. Euro positioning among hedge funds and other large speculators is the most bullish on record in Commodity Futures Trading Commission data that goes back to 1999, according to figures for the week through Jan. 30.
“We’re in a structural bear trend for the dollar and our gauge shows that the dollar is around 8 to 10 percent overvalued still," Rai said. “Even if the Fed is raising rates, that’s something that needs to be corrected.”
South Africa's net foreign reserves rise to $43.6 bln in January - REUTERS
JOHANNESBURG, Feb 7 (Reuters) - South Africa’s net foreign reserves rose to $43.588 billion in January from $42.927 billion in December, the Reserve Bank said on Wednesday.
Gross reserves, however, fell to $50.501 billion from $50.722 billion, the central bank data showed.
The forward position, which represents the central bank’s unsettled or swap transactions, increased to $2.024 billion from $1.196 billion. (Reporting by Mfuneko Toyana; Editing by Gopakumar Warrier)
Kenya targets 2021/22 to begin oil export - NAN
Kenya will start exporting oil on commercial scale in the next five years, Africa-focused oil and natural gas producer Tullow Oil said on Wednesday.
Tullow said extended well tests, water injection tests, well interference tests and water-flood trials have proved helpful for planning the development of the oil fields.
“The exploration and appraisal campaign in Kenya has confirmed the presence of substantial oil resources in the South Lokichar Basin.
After over six years of hard work, we can now move forward to commercialising these low cost resources through a phased development of the basin involving a central processing facility and an export pipeline to the Kenyan coast,” said Mark MacFarlane, Executive Vice President for East Africa.
“In 2018, we will focus on taking the project towards Final Investment Decision (FID) in 2019 with a prudent and flexible plan of execution that can take advantage of low oil services costs and deliver first oil and cash flow as soon as possible.
“ With good progress being made in Uganda towards FID, East Africa is on the verge of becoming a major oil exporting region.”
We are ready to offer Nigerians affordable education – Netherlands - VANGUARD
The Embassy of the Kingdom of the Netherlands in Nigeria on Wednesday announced the readiness of Dutch universities and other higher educational institutions to offer qualitative and affordable education to Nigerians.
The embassy’s Advisor for Trade and Economic Affairs, Mrs Sonia Odije, disclosed this to newsmen in Lagos ahead of the Second “Study in Holland Fair’’ in Lagos. Odije said that following the First Study in Holland on June 10, last year, a delegation of Dutch universities and other institutions would soon be visiting Lagos for recruitment of Nigerians.
“The Netherlands on June 10, last year, held her maiden Education Fair in Lagos, which attracted about 500 Nigerians. “That first fair was meant to create awareness among Nigerians of the internationally-recognised over 2000 English Language taught courses in her higher educational institutions.
“This forthcoming second fair, scheduled to hold on March 3, at the Federal Hotel, Victoria Island, from 9: 00 a.m. to 5: 00 p.m., is now meant for the recruitment of Nigerian students into Netherlands universities for qualitative and affordable education. “We really want more Nigerians to the Netherlands because it is a top notch country for international education,’’ she said. Odije, who enjoined parents and wards to bring their children to the fair, added that the exhibition would give their children the opportunity to interact directly with representatives from the various institutions.
She said that their participation at the fair would also give them the platform to ask the right questions before making their choices among the visiting Netherlands universities and colleges. “There is the need for parents and guardians to take advantage of this second fair for their children and wards for them to study in these internationally-recognised institutions.
“There will be opportunities of study/work for would be Nigerian students. What this means is that after their studies, they can immediately be working in the Netherlands,’’ Odije added. NAN
Read more at: https://www.vanguardngr.com/2018/02/ready-offer-nigerians-affordable-education-netherlands/
US firms invest $8.1bn in Nigeria – Envoy - PUNCH
The United States Consul-General in Lagos, Mr. John Bray, has said that the private investments of US companies in Nigeria are more than $8.1bn.
He stated this in Lagos on Tuesday during the Lagos Chamber of Commerce and Industry’s Security Meets Business Dialogue.
According to him, in spite of the security challenges in the country, some American companies have thrived, while some that cannot cope have left the country.
He said that to address the issue, the US Department of Commerce, Ministry of Trade and Industry and its Nigerian counterpart would hold dialogue sessions to identify impediments in the business environment.
The consul-general stated that the dialogue sessions would forge collaboration between the public and private sectors to improve on security in the country.
In his opening remarks, the President, LCCI, Mr. Babatunde Ruwase, noted that there was no better time to consider the business dimension of security challenges than now, adding that food security was at risk as agricultural production was being threatened by security concerns.
He said, “No meaningful business can be done in an environment that is insecure. Security of life and property is a very critical factor in the investment environment and a major consideration in investment decisions.
“The impact of these security challenges on business and investors’ confidence is phenomenal. Not much investment activities are taking place in the north-eastern part of the country. Attacks by herdsmen on farming communities across the country are not abating, resulting in increasing loss of lives.”
He added, “Many rural farmers are holding back from the current planting season because of the fear of attacks by herdsmen.
NEXIM Bank urges SMEs to access N500bn export facility - PUNCH
BY Ifeanyi Onuba, Abuja
The Nigeria Export-Import Bank on Tuesday called on export-oriented Small and Medium Entrepreneurs in the South-East and Niger Delta region to access the N500bn Export Stimulation Facility and the N50bn Export Development Fund being managed by the lender.
The funds are expected to boost the SMEs, create more jobs, and contribute to the foreign exchange revenue earnings of the country.
The call was made by the Managing Director of NEXIM Bank, Mr. Abba Bello, during a one-day seminar on export potential.
The facilities were made available to NEXIM Bank last December by the Central Bank of Nigeria and it is expected to lend at a maximum of nine per cent interest rate.
Bello said the funds would address the declining export credit to the SMEs and reposition the non-oil sector to increase its contribution to the country’s revenue generation and economic development.
The improved export financing for non-oil exporters, according to him, will enable them to upscale and expand their businesses and improve their competitiveness.
Bello, who was represented at the event by the Head of NEXIM’s Enugu Regional Office, Mr. Chinedu Moghalu, stated, “NEXIM Bank is determined to ensure that these funds achieve the desired impact of triggering non-oil export development, growth and economic progress in line with its mandate as the trade policy bank of the Federal Government and the applicable CBN guidelines for the implementation of the facilities.”
He said under the ESF facility, the transaction that could be funded were export of goods wholly or partly processed or manufactured in Nigeria; export of commodities and services permissible and excluded under existing export prohibition lists; and import of plants and machinery, spare parts and packaging materials, required for export oriented production that could not be produced locally.
Other businesses eligible under the ESF are export value chain support services such as transportation, warehousing and quality assurance infrastructure; and resuscitation, expansion, modernisation and technology upgrade of non-oil exports industries. Stocking facility and working capital can also qualify for funding under the ESF.
“The overall aim of the ESF and EDF is to lower the costs of Nigerian exporters so that their products can be priced at a level where they can compete with other products around the world,” Bello added.
The Special Assistant the Enugu State Governor on SME Development, who represented his principal, Anayo Agu, stated that the fund would help to unlock the export potential of SMEs in the state.
He stated, “The invitation to the SMEs to access affordable non-oil export facilities had been the missing link in the efforts of various governments in the region to derive maximum benefits from their investments in the SME value chain, especially in the agriculture and other non-oil sectors.
“It provides us the platform to reach heights we could only dream about before now.”
Macron to Visit Nigeria, Address National Assembly - THISDAY
President Emmanuel Macron of France is billed to visit Nigeria in early July this year and is expected to address the joint session of the National Assembly, Ambassador of France to Nigeria, Denys Gauer, has said.
Speaking when he paid a visit to the Speaker of the House of Representatives, Yakubu Dogara, at the National Assembly, Gauer said President Macron has interest in the future and development of Nigeria.
According to a statement issued by the Speaker’s spokesperson, Turaki Hassan, Gauer revealed that Macron had worked in the French embassy in Abuja early in his career for six months, ”some years ago.”
He also said whereas relations between the two countries in the last few years have centred on security, Macron hoped to use the visit to further deepen relations with Nigeria especially in areas such as youths, culture and creativity.
Responding, Dogara said members of House of Representatives and indeed the National Assembly would want to listen to the French president whom he described as “a man of our generation.
“He has brought a lot of youthful zest, dynamism, charisma and appeal to French politics and we will want to yield the floor to him,” Dogara said.
The Speaker also commended the French Government for assisting Nigeria in the fight against Boko Haram terrorists and pledged to give expeditious passage to all bilateral agreements that will be signed between Nigeria and France during Macron’s visit.