Economy
AfCFTA: Nigeria Will Increase Export Value to Africa—Awolowo
By Modupe Gbadeyanka
Next year, the much-anticipated African Continental Free Trade Area (AfCFTA) will commence and Nigeria is expected to use the platform to increase the value of its export to the continent.
In 2018, the export value of Nigeria to Africa totalled around $6.99 billion, while to the rest of the world stood at $45.92 billion, the CEO of the Nigeria Export Promotion Council (NEPC), Mr Segun Awolowo, said.
Speaking at the Ecobank Digital Series virtual Africa Trade Conference 2020, Mr Awolowo stated that Nigeria’s export is majorly crude oil and natural gas which constitute 91 per cent.
But he said with the activation of AfCFTA, the export value of the country, the largest economy in Africa, should rise exponentially.
According to him, efforts would be made to explore the market of 1.2 billion people and combined Gross Domestic Product (GDP) of $3 trillion Africa boasts of.
He said with these figures, there is huge potential for Nigeria to increase its export to Africa, noting that before now, the exports had been informal exports, but with platforms like Ecobank, it is going to be formal and add real value to the economy.
Mr Awolowo informed participants of the event that NEPC has identified areas of untapped potential for Nigeria in Africa such as fertilizer, ginger and sesame, as these are what other African countries are buying.
“Nigeria must, and can, live in a world where it no longer sells oil. Nigeria is working on key game changers in infrastructure in order to achieve this, especially in the area of ease of transportation and also in the area of incentives, export expansion grant like pre-shipment incentives and export development fund, which serve to prepare, facilitate and support exporters to the global market,” he stated.
Another speaker at the event, Mr Tei Konzi, who is the Commissioner, Trade, Customs and Free Movement at ECOWAS, explained that AfCFTA is a comprehensive trade agreement that seeks to create a single market for goods and services and free movement of persons through the progressive liberation of the market for goods and services and also contribute to the movement of capital to facilitate investment.
“We can bring these trades back to Africa and increase activity in the continent in agriculture, mining amongst others.
“We are yet to conclude our tariffs, but at the moment, ECOWAS trade more with outside countries than it does with African countries and this is why we are bent on making sure the AfCFTA succeeds,” Mr Konzi, who was represented by Mr Kolawole Sofola, the Acting Director, Trade ECOWAS, stated.
In his presentation, the CEO of Ecobank Transnational Incorporated (ETI), the parent firm of Ecobank, Mr Ade Ayeyemi, reiterated that African countries must adopt a continent-wide approach to business and also focus on wealth creation to be relevant in the global value chain.
For AfCFTA to become a reality, Mr Ayeyemi said there must be commitment and readiness for trade facilitation by the individual nations.
He noted that African governments must unequivocally commit to the agreement and their preparedness as individual nations with their implementation strategies, commitment to free movement-signing and ratification of the protocol on the free movement of people and country’s visa openness, readiness for trade facilitation – the quality of trade infrastructure and efficiency of ports/Customs, which is still work in progress in nearly all countries.
Mr Ayeyemi noted that Ecobank is fully committed to Africa as the foremost Pan-African Bank to Unequivocal support for the implementation of AfCFTA, readiness to use its unique pan-African platform to facilitate trade, payment and business and deployment of its strong Africa knowledge to support governments and businesses.
The Ecobank CEO emphasized that “no country is so poor that it has nothing to give and no country is so rich that it has nothing to receive. All of us must come together to become better.”
The Ecobank virtual Nigeria Africa Trade Conference 2020, which is part of the Ecobank Digital Series, is to showcase the bank’s unique intra-Africa trade solutions that enable settlements of international transactions and mitigation of payment risk while providing regional solutions to exporters.
Ecobank trade products and solutions are designed around two broad areas; Trade Finance and Trade Services. Trade Finance enables customers to benefit from adequate and well-mitigated credit facilitation in the area of Import finance, export finance, bill discounting, trade loans, distributor finance, payables and receivables finance, structured trade and commodity finance amongst others while trade services, offer our customers the advantage of speedy turnaround and error-free processing of their import letter of credits, import collections, avalised bills, customs bonds, export collections as well as their local purchase orders and payment invoices, via its electronic trade platforms OMNI e-Trade and OMNI eFSC (electronic financial supply chain.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
By Aduragbemi Omiyale
The federal government has been advised to consider exploring other funding sources to finance its budget deficits.
Speaking with Punch recently, the chief executive of CSA Advisory, Mr Aliyu Ilias, said the current appetite for borrowing by the government cannot be sustained because it elevates debt-servicing costs.
The economist suggested the sale of some public assets and the involvement of the private sector in infrastructure financing for economic growth.
According to him, running to the debt markets to raise funds for the government is not the best route to take, as the reliance on borrowing always leads to higher debt-servicing obligations.
“The more you borrow, the more you are also incurring more debt services,” he said, tasking the government to also capitalise on increased oil revenues stemming from ongoing geopolitical tensions in the Middle East.
“The government can actually sell off some of their assets to raise more money. The government can also, if you look at the revenue we are getting from oil, it’s getting more, especially with this war. It’s another opportunity for us to actually not borrow again,” Mr Ilias submitted.
He also pointed to ongoing tax reforms as another avenue to improve government finances and narrow the fiscal gap.
“The government can also look at tax reform. The fact is that the government does not have money. The only chance for getting more money is to address the financial deficit,” he added.
By Adedapo Adesanya
Crude oil was up by $1 on Monday as Iran and Israel said they had halted attacks on each other following an appeal from US President Donald Trump.
Brent crude futures gained $1.16 or 1.3 per cent to trade at $94.25 a barrel, while the US West Texas Intermediate (WTI) crude futures were up 76 cents or 0.8 per cent to $91.30 per barrel.
Iran’s military said Monday it halted attacks on Israel after the two countries exchanged their most intense strikes in months, further straining an already shaky ceasefire as well as the US-Israeli relationship. Iran, however, said it would resume strikes if Israel continued to hit Hezbollah in Lebanon.
Israel also halted attacks on Iran, Israeli Prime Minister Benjamin Netanyahu said, stopping short of acknowledging a ceasefire that US President Donald Trump said the countries were aiming for.
President Trump said earlier that the US blockade, which was introduced in April, would remain in place “in full force” until a final peace agreement between the two warring nations is reached.
Prices gained more than 5 per cent earlier on Monday after renewed Israeli strikes on Iran and attacks on Lebanon had reduced hopes of an imminent end to the wider war.
Market analysts noted that because of the strikes, investors were concerned that flows through the Strait of Hormuz might remain restricted for longer. Roughly a fifth of the world’s daily supply of oil and liquefied natural gas passed through the waterway before US-Israeli airstrikes at the end of February unleashed the latest escalation of the Middle Eastern conflict.
Yemen’s Iran-aligned Houthis said on Monday they would ban ships linked to Israel from the Red Sea after Israel renewed its military attacks on Iran, adding to concerns about global shipping and energy flows.
In the face of the supply crisis, a sub-group under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday agreed on its fourth oil output target increase in four months. The seven members decided to increase targets by 188,000 barrels per day from July, the same as the June hike, which was adjusted down from monthly increases of 206,000 barrels per day in May and April to take into account the exit of the United Arab Emirates (UAE).
On paper, the sub-group has increased its output quotas from April to June by almost 600,000 barrels per day, but in reality, the group’s production has collapsed due to export cuts by Gulf members, averaging 33.19 million barrels per day in April compared with 42.77 million barrels per day in February.
Saudi Arabia has cut its official selling prices for crude oil to Asia in July for a second month.
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