Economy
Brexit, China’s Economic Deceleration Threatens Africa’s Growth—ECA Director
By Dipo Olowookere
Africa’s economy is set to feel the effects of Brexit following Britain’s formal trigger Wednesday of the two-year exit process from the European Union after last year’s historic referendum vote to leave the EU.
Director Adam Elhiraika of the of Economic Commission’s Macroeconomic Policy Division says Africa’s economic growth declined from 3.7 percent in 2015 to 1,7 percent in 2016 due to weak global economic conditions, persistent low oil prices and adverse weather conditions and may further be affected by Brexit.
“The effects of Brexit may slow the global economy with spillover effects into Africa, mainly through trade and financial channels,” Mr Elhiraika said as he spoke about the ECA’s Economic Report on Africa (ERA) 2017 which was launched Saturday in Dakar.
He added; “Economic deceleration in China, subdued performance of the euro area and low commodity prices also pose risks for Africa’s growth. Rising debt levels also pose a concern for continental long-term growth.”
Mr Elhiraika said although Africa’s medium-term growth prospects remained positive despite risks and uncertainties, growth continued to decline regardless of a sluggish recovery in global commodity prices.
He said weather-related shocks remained a regional risk, in particular in parts of eastern and southern Africa and could lead to poor harvests and heightens the risk of inflation.
Ultimately Africa’s growth is expected to rebound despite global headwinds even after feeling the effects of Brexit and all but Mr Elhiraika said also of concern was the fact that security remained a risk in some African countries affecting economic growth in the process.
He said progress in combating poverty and addressing inequalities on the continent remained slow raising the need for countries to embrace the rapid urbanization on the continent and coming up with policies that will spur sustainable, inclusive growth.
“The high level of initial inequality, rapid population growth and delayed demographic transition and the sectoral composition of growth are some factors responsible for the limited impact of economic growth on poverty reduction,” he said.
ERA2017 urges governments in Africa to implement urban and industrial policies in a coordinated manner and to instigate and coordinate investments in urban infrastructure, particularly in electricity and transport, both to support industrial enterprises and to meet urban populations’ needs.
Titled; “Urbanization and Industrialization for Africa’s Transformation”, the ERA looks at recent economic and social developments in Africa and offers policy recommendations to Member States and the 2017 edition specifically calls on Africa to take advantage of rapid urbanization being experienced throughout the continent.
Africa is expected to be predominantly urban by 2050 with the average annual rate of urban growth over the period 2010-2015 estimated at 3,6 percent, much higher than the rest of the world.
However, close to 60 percent of people in Africa still live in rural areas.
“Unlike global trends, urban-rural differential in welfare and living standards in Africa do not converge with increasing urbanization,” said Mr Elhiraika.
He said recent developments in the global economy have demonstrated that Africa’s dependence on commodity exports is not sustainable and suggested the continent diversifies and emphasizes value addition through commodity-based industrialization.
“Volatility in commodity prices calls for prudent and counter-cyclical macroeconomic policies and strategies,” said Mr Elhiraika, adding; “There’s need also to boost productivity and competitiveness by building the continent’s infrastructure and increased investment in research and development.”
He said Africa also needs to enact policies that promote agricultural growth and increase its global competitiveness, adding this is crucial to reducing poverty and overall income inequality and enhancing structural transformation in Africa.
The policy response to urbanization, he said, needs to cover the entire rural-urban continuum, including secondary cities.
By Dipo Olowookere
Transactions on the floor of the Nigerian Exchange (NGX) Limited rallied on Tuesday by 0.75 per cent after investors intensified their demand for local stocks.
It was a tough battle between the bulls and the bears during the session, but the former overcame by a whisker after the bourse recorded 29 appreciating equities and 28 depreciating equities, indicating a positive market breadth index and strong investor sentiment.
The growth posted by Customs Street yesterday could be attributed to the appetite for MTN Nigeria shares, which chalked up 10.00 per cent to settle at N256.30.
SCOA Nigeria appreciated by 9.93 per cent to N2.99, Omatek grew by 9.88 per cent to 89 Kobo, Universal Insurance rose by 8.70 per cent to 75 Kobo, and CAP gained 8.52 per cent to trade at N47.75.
Conversely, Secure Electronic Technology lost 9.88 per cent to quote at 73 Kobo, Abbey Mortgage Bank declined by 9.09 per cent to N3.30, Sunu Assurances tumbled by 8.21 per cent to N6.15, Deap Capital slumped by 7.08 per cent to N1.05, and C&I Leasing depreciated by 6.82 per cent to N4.10.
A total of 440.3 million equities valued at N12.0 billion exchanged hands in 13,087 deals compared with the 1.3 billion equities worth N17.7 billion transacted in 13,891 deals on Monday, representing a decline in the trading volume, value and number of deals by 66.79 per cent, 32.20 per cent and 5.79 per cent, respectively.
Lasaco Assurance ended the session as the most traded stock after it sold 108.1 million units valued at N338.7 million, Access Holdings traded 44.0 million units for N1.1 billion, UBA exchanged 27.9 million units worth N945.7 million, Zenith Bank transacted 26.7 million units for N1.3 billion, and Universal Insurance traded 22.7 million units valued at N16.7 million.
On Tuesday, the insurance, banking and industrial goods sectors jumped by 1.03 per cent, 0.30 per cent, and 0.03 per cent, respectively, and the consumer goods and energy counters lost 0.38 per cent and 0.36 per cent apiece.
The All-Share Index (ASI) went up yesterday by 767.63 points to 103,137.99 points from 102,370.36 points and the market capitalisation increased by N472 billion to N63.333 trillion from N62.861 trillion.
By Adedapo Adesanya
Nigeria ranked as Africa’s leading destination for upstream oil and gas investment in 2024, new research from market intelligence firm, Wood Mackenzie, has shown, accounting for three out of four Final Investment Decisions (FIDs) announced by global oil and gas majors, totaling $13.5 billion.
The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project valued at around $5 billion.
According to the Special Adviser to President Bola Tinubu on Energy, Ms Olu Verheijen, these investments reflected Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.
Last year, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments.
Nigeria, which is Africa’s largest oil producer, also offered tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.
Other policies include the Presidential Directive on Local Content Compliance Requirements 2024 to address the reduction in oil and gas investments caused by high operating costs compared to global markets.
Also, the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024 reduces the time spent to award contracts for oil and gas projects.
In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.
Market analysts note that with this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.
It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.
However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.
The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.
At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.
Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.
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