Speaking during a summit in Lagos, the Managing Director/CEO, Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) disclosed that the institution had provided insurance cover worth N6.5 billion to protect farmers in the country. He also disclosed that NIRSAL developed and launched the Area Yield Index Insurance product and protected over 37,399 farmers, with over N121 million paid out as compensation.
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc.) is a Non-Bank Financial Institution wholly-owned by the Central Bank of Nigeria (CBN), established in collaboration with the Federal Ministry of Agriculture and Rural Development (FMARD) and Nigerian Bankers’ Committee in 2013.
The core mandate of NIRSAL is to stimulate the flow of affordable finance and investments into the agricultural sector by de-risking the agribusiness finance value chain, building long-term capacity, and institutionalizing incentives for agricultural lending through its five (5) strategic pillars, namely: Risk Sharing, Insurance, Technical Assistance, Incentives and Rating.
With respect to the insurance pillar, the establishment of NIRSAL was expected to encourage banks to improve direct lending to the agricultural sector while NIRSAL stands as a guarantor. However, we understand that banks are still reluctant to lend to the sector, suggesting that the sector is still considered highly risky.
In our view, socio-economic/structural issues which range from insecurity particularly in the northern parts of the country (evidenced in Fulani- Herdsmen clashes), inadequate infrastructure (especially power and good road networks) and the dearth of technical skills among farmers will continue to deter banks from extending credit to the sector.
The reluctance of banks to extend credit to the agricultural sector has led the CBN to establish alternative financing schemes such as the Anchors Borrowers Programme (ABP) and Commercial Agriculture Credit Scheme (CACS) to provide finance for the planting and cultivation of crops locally.
Despite these initiatives, we note that the fortunes of the agricultural sector is yet to show any remarkable improvement as the supply gap across a number of commodities has continued to widen in the face of faster population growth.
While we applaud the initiatives of the CBN towards improving domestic agricultural output, we believe the federal government needs to complement the efforts of the apex bank by tackling those long-standing structural barriers that have hindered the productivity of the sector. Improvement in agricultural output is crucial considering Nigeria’s growing population.
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Why I am now buying Bitcoin
Gold was the go-to asset class to hold cash in times of uncertainty but cryptocurrencies are now seeing big utility enhancements.
On November 26th by 4.30 am, according to trading records from Coinbase, an online market for Cryptocurrencies, Bitcoin (BTC) was trading at $17,331. By 9.30 am BTC prices had fallen to a low of $16,299, on December 1st when I wrote this article, Bitcoin was now trading at a high of $19,915.
If an investor has bought 1 unit of Bitcoin by 9 am on Thursday 26th, and sold at 3 am December 1st, his gain would be $3,616 or a 22.18% return. According to a report by the NASDAQ, BTC return this year has been like a Space X rocket, this year alone bitcoin is up 166%, gold is up 24%, US Bonds 7%, US Stocks 5.5%.
Cryptocurrencies have been up cumulatively 5,000% (yes Five thousand) but I have not personally considered them an investment. The reality is even as BTC surged to $19,000 in 2017, there was still essentially a bet on someone else buying them from you, what in finance is called the “greater fool theory” (it’s a real theory, google it). Bitcoin for instance has a fixed supply, so as long as demand increases, the price will go up.
Cryptocurrencies have no inherent value, if you had left 100 units of Bitcoin bought for $200 units in a vault in 2015 and returned in 2017, the value would still be $200 but the price you would sell it for would be $19,000. Why no inherent value you ask? well because Bitcoin has limited use except for speculating. A Bloomberg article in May 2019 based on data from blockchain researcher Chain analysis found, “only 1.3% of economic transactions came from merchants in the first four months of 2019, with little change from prior 2 years”. This was why I never considered investing in BTC, it was a game of chicken to see how high it could rise.
However, in November, I changed my strategy. I have now added cryptocurrencies as a viable investment in my portfolio.
Three reasons why I have now decided to buy cryptocurrencies:
- The world is awash with cash and low output, inflation cometh. Even before the COVID-19 hit, most of Europe and Japan were already offering negative rates and using monetary quantitative, then Biden won. Biden also nominated Janet Yellen as his Treasury Secretary. Yellen is a proponent of deficit spending, i.e. a Keynesian. All this translates to the fact that a lot of cash is going to pour into the Western economies soon and remain there to keep rates low, and the dollar low. Thus, any cash holding in US currency will see yields fall
- Global fixed-income rates are going to remain low, and Covid-19 has taken property funds off the table. Fixed income investing across the spectrum will see flat rates. This will mean all short to long-duration fixed income funds plus fixed income funds tied to income from rentals will see a fall in yields.
- There is now much greater acceptance and regulation of cryptocurrencies especially in the key market of the US. Facebook Libra ran into headwinds with his plan for a global cryptocurrency, but today the regulatory landscape has improved. US banks now can provide custody services for cryptocurrencies and the US Department of Justice policy enforcement for digital coins as well.
The summary of those three points highlighted above is this, investors seeking outlets to park cash that will at least hold value until there is clarity on inflation fears will buy cryptocurrencies. Gold was the go-to asset class to hold cash in times of uncertainty but cryptocurrencies are now seeing big utility enhancements. Paypal for instance will issue cards based on bitcoin to allow everyday buying and selling based on a bitcoin account. I am yet to see a gold-backed debit card. These enhancements mean bitcoin and other cryptocurrencies now can come out of the speculative space and into retail, again boosting demand.
That is a game-changer.
What is the risk to this? That Cryptocurrencies become so widely accepted that the US Treasury introduces her own Fed Coin. This move will draw away many who are buying Bitcoin and other cryptocurrencies and reduce demand for bitcoin, bringing down the price.
OPEC+ agree to raise oil production
For Nigeria, a combination of both higher oil prices and lower production cuts is needed to fund the country’s 2021 budget.
Following yesterday’s meeting, OPEC and other oil-producing nations led by Russia reached a deal to modestly increase production in January amidst a raging second wave of the coronavirus pandemic though with the prospect of vaccines offering some hope.
Based on the agreement, members of the Organization of the Petroleum Exporting Countries along with Russia and other countries will raise production gradually by 500,000 barrels a day over a 3month period starting in January. The increase, though less than 1% of the global oil market, comes amidst a second wave of coronavirus which is currently weighing on demand.
According to reports, the agreement was a compromise between countries that wanted a much larger increase of two million barrels a day, which was previously agreed on, and others that would prefer to maintain current production cuts of c.7.7mbp. The latter are considering the many uncertainties around the pandemic and the possibilities that demand will remain low. That said, the disagreement between both groups suggests that agreed quotas may not be adhered. Looking ahead, we expect the modest increase in OPEC+ production and the prospects of the discovery of effective vaccines to remain positive for oil prices in the short term if production cuts are adhered to. We however expect the rally in oil prices to be capped by subdued growth in the global economy which would continue to limit
the pace of recovery in oil demand.
Coming home to Nigeria, a combination of both higher oil prices and lower production cuts is needed to fund the country’s 2021 budget which is predicated on a production volume of 1.86mpd and oil price of US$40 per barrel. Amidst a recession, the hope of an economic rebound is largely hinged on sustained rebound in crude prices as the country has suffered a significant slump in revenue largely due to weak oil revenue. Furthermore, the economy continues to face severe dollar shortages due to lower oil receipts which continues to pressure the nation’s FX reserves.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.
6 Things to consider when looking for suppliers for your business
By putting these 6 things into consideration, you’ll tailor your supplier-selection process to your unique business needs.
Great suppliers are a fundamental part of your business. They allow you to produce and get your products and services to your customers. But finding reliable suppliers for your business takes real effort. It requires much more than just skimming through a series of price lists. Here are 6 things to consider when looking for suppliers for your business.
1. Your Overall Budget
Your overall budget is one of the most important things to put into consideration when you’re searching for the best suppliers for your business. While you may not know the accurate cost of certain things, you need to have a clear idea of the amount of money you’re able and willing to spend before approaching potential suppliers. And one good way to do that is by researching how much some of the products and materials you need will cost you.
Assuming your business offers HVAC installation, maintenance, and repair services. You’ll need to know the prices of various HVAC parts, including air filters, belts, capacitors, fan motor, and coil condenser cleaners. The best way to do that is to visit the site of HVAC suppliers in your area and see how much they sell these parts. This information will help you create a reasonable budget. If you’d like a suggestion, you can take a look at Cold Air Central for quality HVAC parts and other products.
Reliability is another important factor to consider when picking suppliers. Reliable suppliers provide quality products and materials in a timely manner. It’s always a good idea to work with reputable and well-established suppliers, as they have adequate resources and resilient systems that enable them to deliver without hiccups. But you can still work with small suppliers, especially if you cultivate a meaningful relationship with them.
When looking for the best suppliers for your business, go for those who are experienced, and have a stellar record of accomplishment. Stability is crucial, particularly if you’re looking for a long-term partnership with a specific supplier or there is only one supplier of a specific product or material that your business requires. You must also ensure the supplier is financially stable before entering any contract with them. A great way to do that is to request the credit history of a potential supplier.
Another great way of finding out if a prospective supplier is stable is to check out review websites for testimonials from previous clients. You can also visit their official social media pages to see how they engage their followers and how they address complaints. If there are so many negative reviews and comments from customers, there is a high likelihood that they’re not going to be the best option for you.
Consider location when searching for competent suppliers. Working with distant suppliers may sometimes result in longer delivery times and additional freight expenses. But if you want something fast, dealing with local suppliers might be a wise decision. That doesn’t mean you should overlook distant suppliers. Be sure to review freight policies of far-off suppliers. You may discover that bulk orders might attract free shipping. Or better yet, you can merge different orders to lower costs.
5. Production Capabilities
Look for suppliers who can produce the items you want. To verify the production capabilities of a potential supplier, you must do more than just speaking to a representative. A good one should consistently supply items that meet your standards. Visiting the supplier is the only sure way to confirm their production capabilities.
An in-person visit will give you a chance to audit the quality management system of the factory. If you don’t know what to check for during the visit or you want to do away with the cost of traveling overseas to the factory, working with a third-party can be a great option.
6. Cultural Fit
Check whether the goals and values of a potential supplier are aligned with yours. If they are, then partnering with that supplier would be a great idea. Some of the things that will help you tell whether a potential supplier is a cultural fit include:
- The type of companies they work with.
- A detailed quote that meets your specific requirements.
- Minimum order quality.
- A deep understanding of your business.
By putting these 6 things into consideration, you’ll tailor your supplier-selection process to your unique business needs. That way, you’ll choose the right supplier who will consistently deliver quality products and materials that your business requires. It could also enable you to cultivate long-term mutually beneficial relationships with your suppliers and reduce stress in selecting partners.
Rachel Eleza, Growth Marketing Director at UpSuite and a part-time writer.