Business News
U.S dollar gains, America sanctions Chinese Airlines from flying into the U.S.
Nigerians hoping for transactions via the U.S dollar to countries like France would have the need to pay fewer dollars to fulfill such transactions.
The American dollar was up on Thursday morning based on global investors returning to the safe-haven asset as America-China tensions strengthened exponentially.
The American Dollar Index that checks the U.S dollar against a basket of other major currencies such as (Japanese yen, Euro, British pounds sterling, Swedish krona, Canadian dollar, Swiss France) was up 0.21% to 99.46 by 5:30 am Nigerian local time.
The U.S dollar index also helps to track the strength of the currency in correlation to the biggest forex trading partners around the world.
What it means: Nigerians hoping to meet foreign exchange debt or payment obligations, transactions via the U.S dollar to countries like France, United Kingdom, Australia, Germany Japan, would have the need to pay fewer dollars to fulfill such transactions.
READ ALSO: Bulls boost global financial markets as gold hits 7-year high
The political fundamentals among these major powers turned ugly as the U.S government suspended Chinese airlines’ flight from flying into the U.S coming to effect from June 16 after the Chinese barred U.S carriers from re-entering China.
Relations between the two countries soured after China’s approval of the enactment of national security laws in Hong Kong and Macau last month.
Hong Kong’s Legislative Council passed a national anthem bill, a precursor to the national security laws, earlier in the day.
READ MORE: Nigeria’s food security, GDP growth hinge on financial inclusion of farmers
According to a recent poll conducted by Reuters, the majority of currency experts believe that there was an elevated risk that the US-China tensions will renew safe-haven bets in the next 6 months, meaning the dollar could resume its bullish momentum in the mid-term.
The report from the poll concluded that:
“More than 70% of 57 currency analysts said the risk was “high” that the U.S.-China standoff would renew bets in favor of safe-haven currencies over the next six months.
“International rates to borrow dollars on cross-currency basis swaps, which were extremely high in mid-March, have hit low levels, with the latest euro-dollar three-month swaps rate suggesting it has become more costly to borrow the euro instead.”
Economy & Politics
Buhari to finally send Petroleum Industry Bill to National Assembly next week
Sources in the Presidency have disclosed that the President may be presenting the bill to the National Assembly.
President Muhammadu Buhari is expected to present the long-awaited Petroleum Industry Bill (PIB) to the Senate as early as next week.
According to Reuters, who were quoting 4 sources familiar with the development, the presentation of the bill to the National Assembly, follows its official approval by the president late last week. This is as the National Assembly has already formed teams of members that will work most closely on the individual portions of the bill.
Both chambers of the National Assembly must have to pass the bill after deliberating on it before it can then be passed on to the president for his final signature.
The PIB which is an oil reform bill has been in the works for about 20 years, is key to the repositioning of Nigeria’s Oil and Gas Industry under its post-COVID-19 agenda as the main laws governing oil and gas exploration have not been fully updated since the 1960s due to some contentious issues like taxes, payments to local communities, terms and revenue sharing within Nigeria.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), had disclosed that the delay and non-passage of the bill has made international investors to start losing confidence in the country’s oil and gas industry.
While revealing last month that the PIB will be presented to the National Assembly in the next few weeks, the Minister of State for Petroleum Resources, Timipre Sylva, also said that the executive arm will be requesting the lawmakers to specially reconvene to receive and start deliberations on the bill.
These oil reforms and regulatory certainty became more pressing this year as low oil prices and a shift towards renewable energy made competition for investment from oil majors tougher.
The draft copy of the bill which was prepared by the Petroleum Ministry is a product of series of consultation between the federal government, oil and gas companies and other industry stakeholders.
Excerpts from the bill reported by Reuters include provisions that would streamline and reduce some oil and gas royalties, increase the amount of money companies pay to local communities and for environmental clean-ups alter the dispute resolution process between companies and the government.
It also included measures to push companies to develop gas discoveries and a framework for gas tariffs and delivery. Commercializing gas, particularly for use in local power generation, is a core government priority.
Business
UK-based group to investment $245 million in 100 Nigerian businesses
A UK based organization is to partner local investment funds to disburse $245 million to 100 Nigerian businesses.
A UK-based development finance institution, CDC Group, has finalized plans to invest US$425 million as an aid to 100 businesses and 38,000 jobs in Nigeria.
This is sequel to its partnership with 40 investment funds such as Afreximbank, African Capital Alliance and Indoram, NAN reports
In a virtual visit to the country by the board of the organization led by Chief Executive, Nick O’Donohoe and Chairman, Graham Wrigley, the UK Government-funded organization stated that all earnings from its investments are ploughed back to improve the lives of millions of people in Africa and South Asia.
CDC Group noted that it paid a virtual visit to the Vice President of Nigeria, Prof. Yemi Osinbajo, and British High Commissioner to Nigeria, Catriona Laing, to discuss and ascertain the impact of CDC’s aid to its investees through the COVID-19 crisis and understand how to stimulate recovery and growth.
The discussions also focused on CDC’s own response to the pandemic through its preserved, strengthen and rebuild programme, the statement said
(READ MORE: WHO to secure initial COVID-19 vaccine for 20% of Africans)
Commenting on the rationale of the aid, the Chief Executive of the CDC Group, Nick O’Donohe said that, “Nigeria plays a key part in our strategy of partnership and investment for economic growth in West Africa. “Hosting our 2020 board trip– albeit virtually – in both markets is a testament to our commitment.
“Looking forward, we will continue to prioritise the post-COVID-19 recovery as part of the Build Back Better agenda.
“We are committed to supporting a deeper and more strategic bilateral partnership between the UK and Nigeria that is based on enhancing economic development, job creation, inclusion, trade and investment,” O’Donohoe further remarked.
In a glowing tribute and commendation to the group, British High Commissioner to Nigeria, Catriona Laing CBE said CDC has been pivotal to creating jobs and supporting the growth of businesses by investing in the poorest countries across Africa, including Nigeria.
“CDC’s commitment to the country signals to other UK investors that investing in Nigeria is possible and should be prioritized in order to help Nigeria and indeed, Africa, mitigate the impact of COVID-19,” the envoy said.
Business
Just-in: Nigeria’s manufacturing sector contracts for 5th consecutive month – CBN
The CBN disclosed in its September PMI report that the manufacturing sector contracted.
The Manufacturing Purchasing Managers’ Index (PMI), in September 2020, has witnessed a contraction for the fifth consecutive month, as it stood at 46.9 index points.
This was disclosed by the Central Bank of Nigeria (CBN), in its September PMI report released on Wednesday.
The report stated that, out of the 14 subsectors surveyed, 4 subsectors reported expansion (above 50% threshold) in the review month in the following order:
- Electrical equipment
- Transportation equipment
- Cement, and
- Nonmetallic mineral products
The paper product subsector was stable.
While the remaining 9 subsectors reported contraction (below 50% threshold) in the review month in the following order:
- Petroleum & coal products
- Primary metal
- Furniture & related products
- Printing & related support activities
- Food, beverage & tobacco products
- Textile, apparel, leather & footwear
- Chemical & pharmaceutical products;
- Fabricated metal products and
- Plastics & rubber products
The Non-manufacturing sector PMI stood at 41.9 points in September 2020, indicating contraction in nonmanufacturing PMI, for the sixth consecutive month.
Buhari to finally send Petroleum Industry Bill to National Assembly next week
UK-based group to investment $245 million in 100 Nigerian businesses
MTN, Seplat, Mobil record gains, ASI up by 0.50%
Just-in: Nigeria’s manufacturing sector contracts for 5th consecutive month – CBN
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