Crude oil price crashed below $30 on Sunday evening’s market-opening after Saudi Arabia launched a price war in reaction to Russia’s decision not to cut output. This represents a 30% drop in one day – the worst trading day since the thirties and the lowest price in four years.
Oil Benchmark: Brent Crude Oil, which Nigeria’s 2020 budget is benchmarked against, fell from $45 per barrel to $31.52 as at the time of writing this article. The oil price crash is still an unraveling situation and could get worse as markets react. Stock markets are likely to continue its sharp fall during the week as the raging coronavirus heightens uncertainty amidst the oil price war started by Russia and Saudi Arabia.
Why the crash: The crash started over the weekend after Russia refused to bow to OPEC’s pressure for a cut in crude oil output. OPEC believes that by cutting supplies, it will force prices to rise. This is a move that has been used in the past to support crude oil prices from falling below OPEC’s target price. However, Russia wasn’t having any of it.
The Russians believe that a higher oil price supports investment US-led shale oil production further eroding any gains they may have obtained by a cut in supplies. The Americans have risen to the top of oil producers in the world since they started producing oil through shale oil in 2013. The US was a major destination of Nigeria’s bonny light crude but has since seen its demand from Africa’s largest economy drop to nearly zero.
The Russians, backed by their oil producers, believe a price war is the only solution to curtailing the rise and spread of Shale oil. They are also not happy with the increasing reliance on sanctions by the Trump-led administration to move against countries like Russia and China.
The spread of the Coronavirus, which has also negatively affected supply chain and manufacturing in China and Europe, has cut demand for oil around the world.
What this means: This is a very dire situation for Nigeria. With crude oil prices crashing and financial markets nose-diving, demand for Nigeria’s oil will wane while future deals will close at a price much lower than Nigeria’s crude oil benchmark.
There are also fears from some circles that the prices could fall below $30 a psychological floor thought to be a trigger from a devaluation. Nigeria’s CBN has kept the exchange rate at the Investor & Exporter window at M360/$1 since 2017 when it last devalued.
Be Smart: Investors have exited the stock market in droves, fearing a global contagion could cause a flight to safety from foreign portfolio investors and trigger even more sell-offs. History also suggests now might be the time to rebalance portfolios and possibly hold a basket of currencies. It may also be wise to front-load costs and investments while major investment decisions and deals may have to be reviewed especially if it is linked to the exchange rate.
TikTok’s 38 year-old founder is worth $35.5 billion – Here’s what we know
At 38 years old, Zhang Yiming is the 39th richest man in the world.
TikTok a video sharing app was named the most downloaded app of the first quarter of 2021 but not much is known about its founder. The app now has over 689 million active users worldwide according to statistics from oberlo.com. It has also been downloaded over 2 billion times on App Store and Google Playstore. It is arguably the most popular video-sharing app out there and the numbers keep growing.
TikTok was able to grow at a faster rate than Facebook and Instagram since its startup. The man behind this massive success is currently worth $35.5 billion and he is our person of interest today.
Meet Zhang Yiming, the founder of Bytedance
38-year-old Zhang Yiming is the CEO and Founder of ByteDance, the parent company of TikTok. Zhang Yiming majored in microelectronics and software engineering at Nankai University. He worked for various tech startups including Microsoft before settling to start his own company.
The billionaire leads a very secretive lifestyle. He founded ByteDance back in 2012 and steered it all the way to financial success. He is currently worth $35.5 billion but his net worth is well on its way to doubling based on recent valuations.
ByteDance has two main flagship products – Toutiao, an AI-backed news aggregator and TikTok which he founded later after the success of Toutiao.
Revisiting the success of TikTok
Last year Zhang Yiming’s ByteDance was regarded as the most valuable startup in the world. TikTok became the most downloaded iOS app worldwide in the first quarter of 2019, according to the US research app Sensor Tower.
TikTok is available in 155 countries and in 75 languages.
Bytedance’s first major valuation was in 2018 where it was valued at $75bn according to Forbes. This was followed by another valuation which put it at $140bn according to CB Insights.
The latest 2021 valuation places ByteDance at over $250bn according to the South China morning post.
Zhang Yiming owns a quarter of ByteDance and with this recent valuation, his net worth is set to grow to $60bn according to experts in the field.
Donald Trump scare
The former president of the United States was on the verge of banning TikTok in the country. He claimed the App has ties to the Chinese government. This would have been a setback giving that the application is quite popular among US millennials and Gen Z. Donald Trump lost his re-election bid and very little has been said by the Biden administration on the issue.
What you should know
- At 38 years old, Zhang Yiming is the 39th richest man in the world. His parents were civil servants.
- The popularity of TikTok in the United States has raised concerns from US regulators.
FG explains why the loan amount for youth investment fund is limited to N300,000
At N300,000 per beneficiary, only 41,000 beneficiaries would be covered in the first tranche of N12.5bn.
The Federal Government has explained why it limited the loan amount for the current beneficiaries of the N75 billion Nigeria Youth Investment Fund (NYIF) to N300,000.
The government said that it had to place a limit of N300,000 for individuals and eligible businesses who meet the conditions and guideline in order to ensure that it gets to as many beneficiaries as possible.
This disclosure is contained in a statement signed by the Director of Press, Federal Ministry of Youth and Sports Development, who noted that the disbursement of the fund is being done in phases.
What the statement from the Federal Ministry of Youth and Sports Development is saying
The statement explained that the ministry had received more than 3 million applications for the initial N12.5bn made available adding that at the current cap of N300,000 per beneficiary, only about 41,000 beneficiaries could be covered.
The statement from the ministry partly reads, “The Ministry of Youth and Sports Development has been following with interest the reaction of some beneficiaries of the NYIF, particularly those expressing disappointment at the N300,000 cap on disbursement under the first tranche of N12.5bn.
Firstly, the framework specified N250,000 as the maximum for individuals and eligible businesses that are critical can access up toN3m subject to meeting key criteria set in the guideline and conditions.
Considering the number of applications received, there was the need to ensure spread and enable more beneficiaries enjoy the facility.”
The ministry assured beneficiaries that higher loan thresholds would be possible once additional funds were available in subsequent phases.
The ministry in the statement also noted that it is ideal to start and gradually increase, considering that there are lots of first-time borrowers as well.
The ministry reaffirmed that NYIF was not a grant, but a loan, targeted at supporting the youth to start small businesses or to inject funds into existing small businesses.
What you should know
- It can be recalled that the Federal Government had on October 15, 2020, launched the N75 billion Nigerian Youth Investment Fund, which was set up for investment in the innovative ideas, skills, and talents of Nigerian Youth.
- It is to also institutionally provide the Nigerian youth with a special window for accessing much-needed funds, finances, business management skills, and other inputs critical for sustainable enterprise development.
- The Federal Ministry of Youth and Sports Development is the lead implementation entity and is responsible for budgetary provisions and for funds mobilization.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- 2020 FY Results: Unity Bank Plc posts profit after tax of N2.09 billion.
- Guinea Insurance Plc reports a loss of N142.13 million in 9M 2020.
- Unilever Nigeria Plc set to hold Annual General Meeting on 6th of May.
- UBA Plc posts profit after tax of N38.16 billion in Q1 2021.
- PZ Cussons Nigeria Plc appoints Ifueko Okauru as Independent Non-Executive Director.