Economic activities in the country could witness a further uptick in the last quarter of the year as crude oil exports are forecast to hit a 5 month high of 1.73 million barrels per day in October.
Increased crude oil imports impact the economy in the following ways.
Increased crude oil sales mean the country would be able to maintain foreign exchange reserves at their current level. Data from the Central bank of Nigeria(CBN)’s website place the foreign reserves at $46.2 billion as at August 23, 2018.
This, in turn, provides the necessary liquidity for the Central Bank of Nigeria (CBN) to keep the exchange rate at its current band, as well as keep the country within a stable import cover. The CBN has kept the Naira trading at N360 to the dollar through weekly sales of foreign exchange.
Import cover is the number of months imports can be covered with foreign exchange reserves. Nigeria is a largely import-dependent country both for finished goods and inputs required by industries.
The 3rd quarter of the year tends to witness higher imports as businesses stock up in preparation for the festive season.
Political tensions in Nigeria and crisis in other emerging countries have led to foreign portfolio investors pulling out of the capital market. This, in turn, could pressure on the exchange rate.
More revenue for the government
Increased crude oil sales also translate to more revenue across all tiers of government. The last two Federal Account Allocation Committee (FAAC)meetings were deadlocked due to protests by the states pertaining to the drop in allocation shared.
Companies operating in the oil sector as well as those servicing them also benefit. These include those with upstream activities such as Seplat, and Oando as well as construction firms like Julius Berger which are heavily dependent on large-scale contracts mostly funded by the government.
Investors in these firms could thus expect a better dividend payment, compared to 2017 and as well as returns in terms of capital appreciation.
FG meets group to access AfCFTA’s $650 billion market
AfCFTA is aligned to the ministry’s twin national objectives of industrialization and export based diversification.
The Ministry of Industry, Trade and Investment has met with executives of the Nigerian Agribusiness Group (NABG) on the implementation of the African Continental Free Trade Area (AfCFTA) and access the continent’s market worth $659 billion, in mostly manufacturing goods and services.
This was disclosed by the Minister of Industry, Trade and Investment, Otunba Niyi Adebayo during the meeting on Monday.
The minister emphasized on the importance of AfCFTA, as it is aligned to the ministry’s twin national objectives of industrialization and export based diversification. It provides us with a preferential access to African market worth over $650bn, in mostly manufactured goods .
Back story: Nairametrics had reported when Aissata Koffi Yameogo, ECOWAS’ Programmes Officer in charge of implementing AfCFTA rules of origin in the continent, said that the implementation will expand market for the manufacturing industry to 1.3 billion West African citizens, without additional duties and fees.
“It will build production capacity in the region and develop the value chain, and increased export to other African states” she added.
The benefits would also encourage member states to specialise in the production of a certain good where they have a comparative advantage, thus enhancing the quality and quantity of local production and creating more jobs.
He said, “This would improve our competitiveness and the perception of our products and services in the African market. Intra-African trade in Agro products and services will develop our local value chain, create jobs and increase our GDP.”
Today, the Honourable Minister @NiyiAdebayo_ , had a meeting with executives of the Nigerian Agribusiness Group(NABG), on the implementation of the African Continental Free Trade Area (AfCFTA) Agreement. pic.twitter.com/GOhVzLVJb2
— FMITI Nigeria (@TradeInvestNG) August 10, 2020
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According to International Monetary Fund (IMF), the elimination of tariffs could boost trade in Africa by 15-25% in the medium term, and once fully implemented, is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion.
INEC to introduce election results viewing portal
INEC says the policy would be tested at the Nasarawa State Constituency Bye-Election.
The Independent National Electoral Commission, INEC, has announced the introduction of a dedicated public portal called the INEC Result Viewing (IreV), which would enable Nigerians to view real-time results in polling stations.
This was announced Thursday evening in a statement signed by Festus Okoye, INEC’s Commissioner and Chairman of Information and Voter Education Committee.
— INEC Nigeria (@inecnigeria) August 6, 2020
“ The Commission is aware that result management has remained a major source of mistrust in our electoral process. INEC is determined to address any source of this concern through enhancing the level of transparency in the conduct of elections,” INEC said.
INEC also said that it is an important principle for votes during elections to be correctly counted. This new initiative is a major step towards achieving that goal. However, INEC said this does not constitute electronic collation of votes just yet. Instead, “the collation of election results shall remain as provided for by law, a manual process of completion.”
IreV would be tested during the Nasarawa State Constituency Bye-Election scheduled for August 8th, INEC said.
Concerned Nigerians are advised to visit inecresults.com, create an account, and fill in their details which will lead them to the portal to oversee the collation of votes.
Chinese Loans: Clauses are international standard terms – Amaechi
The probes into Nigeria’s use of foreign loans could negatively affect how foreign lenders perceive the country.
Nigeria’s Minister of Transport, Rotimi Amaechi, said the clauses contained in Nigeria’s Chinese loans for infrastructural development are standard international commitment clauses. In other words, such are regular, applicable clauses whenever a country goes into a trade agreement with another country.
The Minister revealed this while on Channels Television’s evening political talk show, Politics Today.
I have said that these are standard clauses in international commercial agreements. We have been keeping to our repayment plans and we will repay our loans. pic.twitter.com/XGnakdgQsq
— Chibuike.R. Amaechi (@ChibuikeAmaechi) August 5, 2020
Back story: The Nigerian Senate called a hearing last week, asking the Minister to explain the clauses on Chinese-funded infrastructure projects in Nigeria. Instead, the Minister argued that the probe into Nigeria’s use of foreign loans to finance infrastructure projects could negatively affect how foreign lenders perceive the country and also impact further financing for future projects.
Later during his recent Channels TV interview, the Minister said Nigeria is not Madagascar or Sri Lanka and has been keeping up with payment plans for the loan. “ No country has complained about Nigeria’s loan obligations,” Amaechi said.
Although he acknowledged Nigeria has debt over revenue problems, he made it clear that “that does not mean we have at any point in time refused to pay our loans.”
Amaechi then claimed that only a criminally-minded person would have issues with the loan terms. “Only those who don’t want to repay are worried about the clauses. If we repay our loans we won’t get arbitration,” he said.
The Minister also disclosed that the Ministry of Finance has repaid up to $98 million of the loans, adding, “those are standard international commitment clauses” and that no loan can be taken by the government without the approval of the National assembly.