Economy & Politics
UBA’s Tony Elumelu offers final solution to terrorism in Nigeria, other African countries
The Chairman, United Bank for Africa Group (UBA), Tony Elumelu, has proposed a final solution to security breakdown and terrorism.
The Chairman, United Bank for Africa Group (UBA), Tony Elumelu, has proposed a final solution to insecurity and terrorism which has ravaged the Northern part of Nigeria and some other parts of Africa, affecting trade and economic development in those areas.
To put an end to terrorism and stop the continuous recruitment of the youths by terrorists and violence sponsors, Elumelu said there’s the need for government to create jobs and the private sector to invest in the youths. He said the lack of employment opportunities serves as a recruiting tool for those benefiting from the violence.
Elumelu, who is also the founder of Tony Elumelu Foundation (TEF) said poverty is a threat to mankind globally as it results in extremism. He made this comment while speaking at Dakar International Forum on Peace and Security in Africa, with the President of Senegal, Macky Sall and President of Mauritania, Mohamed Ould Ghazouani in attendance. Others who attended the forum include Defence Minister of France, Florence Parly and former President of Burundi and representative of the African Union, Pierre Buyoya.
Job creation, not seminars, is the panacea for insecurity
While speaking at the event, Elumelu said regardless of the number of seminars held to discuss insecurity in Africa, if jobs were not created and poverty was not curbed, extremists would continue to brainwash the youths. According to him, deliberating on weapons to defend against insurgency is not enough and not the lasting solution.
“To tackle insecurity, we must tackle poverty, which is the root cause. We must do this by: 1. Prioritising our young ones by creating economic opportunities for them 2. Driving inclusive growth 3. Involving our women in the development agenda of the continent. While it is no doubt important to discuss weaponry and other means to deal with insurgency, lasting peace can only be attained in the long run by investing in our people across Africa,” Elumelu said.
[READ MORE: Tony Elumelu gave a keynote address at the Invest for Growth in Africa Conference…]
To tackle insecurity, we must tackle poverty, which is the root cause. We must do this by:
1. Prioritising our young ones by creating economic opportunities for them
2. Driving inclusive growth
3. Involving our women in the development agenda of the continent— Tony O. Elumelu, CON (@TonyOElumelu) November 19, 2019
Private sector has a role to play
Elumelu said companies also have a role to play in job creation. He made reference to the Tony Elumelu Foundation’s $100 million Entrepreneurship Programme as a method to create employment opportunities. The foundation, with the United Nations Development Programme (UNDP), plans to empower 100,000 young Africans in 10 years.
“At TEF, we transform the lives of young Africans by providing them with seed funding & business training. Now, we are beginning to see how their success is translated into better & secure communities.”
"At TEF, we transform the lives of young Africans by providing them with seed funding & business training. Now, we are beginning to see how their success is translated into better & secure communities." – @TonyOElumelu at #DakarForum2019 #TEF2019 pic.twitter.com/5LI89wlT7M
— tonyelumelufdn (@TonyElumeluFDN) November 18, 2019
He added that, “There is a lot we all can do – the private sector, government, and development partners – in making sure that we focus on winning the war on terrorism. We believe in Africapitalism and the fact that by investing in key sectors of the African economy, we can tackle the issue of extremism.
“When there’s no peace and security, there can be no business & when there’s no business to a large extent, there will be no development. It is therefore in everyone’s interest that there is peace & security especially on the African continent.”
"When there’s no peace and security, there can be no business & when there’s no business to a large extent, there will be no development. It is therefore in everyone’s interest that there is peace & security especially on African continent." – @TonyOElumelu at #DakarForum2019
— tonyelumelufdn (@TonyElumeluFDN) November 18, 2019
[READ ALSO: Tony Elumelu discloses the impact of Japanese funds on Africa]
Why this matter?
The rise in terrorism activities affects the growth of businesses and the ease of doing business. It forces companies to relocate to peaceful areas, thereby, leading to loss of jobs for the former host communities. He said terrorism attacks affect infrastructure which is needed to support business growth in those areas. It also discourages capital investment from banks and venture capitalists or private equity firms.
“To transform Africa, we must prioritise peace & security. Business cannot flourish where people are afraid for their lives. It will be even harder to attract the global private capital needed for large infrastructure projects & long-term projects which can help fix our economy.”
To transform Africa, we must prioritise peace & security. Business cannot flourish where people are afraid for their lives. It will be even harder to attract the global private capital needed for large infrastructure projects & long-term projects which can help fix our economy pic.twitter.com/0igWW9DOwO
— Tony O. Elumelu, CON (@TonyOElumelu) November 19, 2019
Business News
FG seizes Dan Etete’s luxury private jet linked to Malabu oil deal
Dan Etete is alleged to have paid a total of $57 million for the jet in 2011, which was part of the spending spree that the former petroleum minister was alleged to have embarked on after allegedly receiving $336 million from the OPL 245 deal.
The Federal Government has tracked down and grounded a luxury private jet which is owned by the country’s former Petroleum Minister, Dan Etete, over his alleged involvement in the $1.1 billion Malabu oil scam. The luxury private jet was alleged to have been purchased with proceeds from that oil deal.
This seizure was confirmed to Finance Uncovered by the legal counsel to Nigeria, Babatunde Olabode Johnson, who was appointed by the Nigerian government in 2016 to recover assets from the OPL 245 deal.
Johnson said that the order was served on the jet’s owner, a company called Tibit Ltd, which has until Tuesday next week (June 9) to file court papers opposing the seizure. Tibit is an anonymously owned company incorporated in the British Virgin Island.
The asset recovery lawyers acting on behalf of the Nigerian government swooped last week, after the Bombardier 6000 jet, tail number M-MYNA, touched down at Montreal Trudeau International Airport in Canada on Friday May 29.
A Quebec judge is understood to have granted a seizure order for the aircraft in the early hours of Saturday morning.
Giuseppina Russa, who was named on the Montreal court order, is Tibit’s sole director according to records of the British Virgin Island firm.
READ ALSO: JP Morgan responds to FG’s Malabu court case
Dan Etete is alleged to have paid a total of $57 million for the jet in 2011, which was part of the spending spree that the former petroleum minister was alleged to have embarked on after allegedly receiving $336 million from the OPL 245 deal.
Etete, during his days as the petroleum minister, awarded the prospecting rights to the huge OPL 245 block to Malabu Oil and Gas, a company he secretly controlled. After the death of the then head of state, Sani Abacha, he retained the rights to the oil block as a private citizen until he offloaded them to oil giants, Shell and Eni in 2011, who both paid $1.3 billion to the Nigerian government.
READ MORE: Italian court postpones Aliyu Abubakar’s prosecution in Shell, Eni trial
The entire OPL 245 deal is now subject to a corruption trial in an Italian court, where Etete is an accused, together with alleged middlemen and some top executives from Shell and Eni. All parties in the Milan trial have denied the charges against them.
The Nigerian government has also charged Etete and several others linked to Malabu with money laundering in connection with the onward flow of funds from the OPL 245 deal. However, they have denied any wrongdoing, dismissing the allegations as political propaganda.
It was uncovered that Johnson had made a deal with an American litigation funder, Drumcliffe Partners, to help fund the recovery of OPL 245 assets. They are to receive 5% of any funds successfully recovered and returned to Nigeria.
Economy & Politics
NNPC diversifies into housing, power; plans to beat crude production cost to $10 per barrel
The Nigerian National Petroleum Corporation (NNPC) has announced that it is building up business portfolios in the housing, power, and medical sectors.
To cushion against the volatility in the global crude market and strengthen profitability, the Nigerian National Petroleum Corporation (NNPC) has announced that it is building up business portfolios in the housing, power, and medical sectors.
This is one of several measures the corporation is taking to sustain revenue generation for Nigeria, and cope with the boom and bust cycles which are gradually becoming a feature of the global crude oil market.
NAN reports that this was contained in a statement from the Corporation Chief Operating Officer, Ventures and Business Development, Mr. Roland Ewubare, and signed by NNPC Spokesman, Kennie Obateru.
According to Ewubare, the NNPC will establish Independent Power Plants using the Ajaokuta-Kaduna-Kano (AKK) pipeline network, and consolidate its presence in the power sector.
(READ MORE: COVID-19: Nigerians react as CBN partners NNPC to feed, accommodate Nigerian returnees)
The statement reads in part; “NNPC is creating an energy company that would have portfolios in renewable energy; we have initiatives on solar that is ongoing.
“We have got biofuels agreements with some state governments that would soon be activated. We do have a lot of non-core businesses that are aggregated under the Ventures and Business Development Autonomous Business Unit of the NNPC.
“This would be expanded through effective collaboration and partnership with the private sectors,”
Lower costs, more profits
As part of moves to improve profitability, the NNPC also announced plans to drive crude oil production cost down to 10 dollar per barrel by Q4 2021,
This according to the statement would be done by systematically and gradually beating down logistics costs.
The Corporation’s revenue took a major hit in 2020 due to the slump in global oil prices, and this in turn affected the Nigerian budget given that oil proceeds account for a significant fraction of her income.
“When you have a low commodity price regime, as the case now, the only way we are able to squeeze out some reasonable cash and financial gain to the nation is by curtailing and constraining our costs in line with the GMD’s aspiration to push for a 10 dollar per barrel cost of production,” Ebuware said.
(READ MORE: NNPC pipeline vandalism up by 50% in January, may suspend crude oil production)
There is also an ongoing collaboration with selected partners to commercialise flared gas in order to preserve the flora and fauna of the country.
This would be done by converting it to Compressed Natural Gas (CNG) and Liquefied Natural Gas, for sale to consumers.
The NNPC is partnering with private developers to reduce the housing deficit in the country and also partnering with medical centres to provide innovative healthcare for Nigeria.
Business News
The conundrum in the retail pricing of PMS
Considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol.
The decision of the Petroleum Products Pricing Regulatory Agency (PPPRA) to reduce the pump price of Premium Motor Spirit (PMS), also known as petrol, to N121.50 per litre from N123.50 per litre has been met with stiff resistance from oil marketing companies (OMCs). The Independent Petroleum Marketers Association of Nigeria (IPMAN) have also stated that it impossible for its members to sell petrol at the new price floor of N121.5 per litre.
We recall that on 18 March 2020, the Federal Government (FG) reduced the retail price of Premium Motor Spirit (PMS) by c.14% to N125/litre from N145/litre, following the global pandemic which led to an unprecedented decline in oil prices and by extension a reduction in the landing cost of petrol. Subsequently, the FG announced a further reduction to N123.50 which took effect on April 1, 2020. Earlier this month, the FG directed a reduction in the pump price of Premium Motor Spirit (PMS) for the third time to N121.50 per litre. We note that the adjustments in the retail price is in line with the directive from PPPRA on a monthly review of the pump price, depending on prevailing market realities.
READ MORE: The good, bad and ugly of low oil prices for Nigeria
In our view, considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol. With the gradual relaxation of lockdown measures by countries who are starting to reopen their economies alongside the historic production cuts of OPEC+ which took effect last month (a 9.7mb/d oil production cut for May and June), we think the risks to oil prices are tilted to the upside in the near term.
Since hitting a two-decade low of US$19.33 on 21 April when the retail price of petrol was pegged at N123.50, brent crude prices have gained c.105% to close at US$39.54 on 3 June. Against this backdrop, we expect that the retail price of petrol should rather be adjusted upwards to reflect current market realities. The current situation appears no different from historical trends where the FG becomes reluctant to effect an upward adjustment in the retail price of petrol during periods of rising crude prices. This has often resulted in the renewed payments of the age-long fuel subsidy. We also think oil marketing companies (OMCs) who have only recently begun to import petrol alongside the Nigerian National Petroleum Corporation (NNPC) due to more favourable pricing could halt importation once again if domestic retail prices become unfavourable.
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