Economy
Forex Inflow Solution to Nigeria’s Liquidity Problem—Economist
By Modupe Gbadeyanka
To solve Nigeria’s liquidity problem, she needs foreign exchange inflow, a leading economist and the Chief Executive Officer of Economic Associates, Dr Ayo Teriba, has suggested.
Dr Teriba, who further advised the country to open its economy, contending privatization stimulates foreign direct in-flow, disclosed that Nigeria’s annual export revenue has been halved.
“Nigeria’s problem is that other problems are symptoms of the (liquidity) problem. Recession is reflecting liquidity shortage,” the economist stressed.
He added that, “Privatisation is the tool which most countries use to check their liquidity issue and beef up the economy and Nigeria can also do the same by privatizing some of her key sectors,” pointing out that a macro-economic approach to privatisation was ideal.
Speaking as a Guest Lecturer at a two-day retreat with the theme Rediscovery and Repositioning organised by the Bureau of Public Enterprises (BPE) in Abuja on August 18-19, 2017, Mr Teriba explained that illiquidity remains the country’s main challenge.
He pointed out that privatisation is now the trend the world over; and cited Saudi Arabia and India which plan to privatise some of their critical sectors to raise funds to develop their countries.
Mr Teriba explained that Saudi Arabia avoided recession because of its huge foreign reserves. Saudi Arabia plans to raise about $200 billion through the privatization of 16 sectors ranging from healthcare, airports to education.
The renowned economist noted that Nigeria relies almost exclusively on volatile export revenue and neglecting opportunities to attract massive and much more stable diaspora and foreign direct investment inflows whereas, “non-resident Indians and Chinese invest massively at home to fund economic recovery and growth efforts of their respective countries” and queried why it did not occur to Nigeria to do the same before now.
He recalled that Nigeria used to attract more Foreign Direct Investment (FDI) than India, South Korea, South Africa and UAE but noted that these countries have overtaken Nigeria and called for the opening up of the vents for investment to flow by breaking all government monopolies as has been done in telecoms and power sectors.
“China’s inwards FDI stocks rose from $20bn in 1990 to $1.08trillion in 2015 and Nigeria held nearly half of what China held in 1990 but held only nine percent of what China held in 2015. Where did we get wrong?” he asked.
The renowned economist revealed that though Nigeria has about N100 trillion in her economy, it was not evenly distributed and suggested that instead of the present agitation for political restructuring, those in its vanguard should agitate for sectoral, resource and revenue restructuring.
Declaring the retreat open, the Director-General of the Bureau of Public Enterprises, Mr Alex Okoh, said the aim is to help the Bureau in applying a different kind of thinking by involving every member of the BPE family in a strategic episode where “we can together build a bridge between the dream of a new BPE and the actions that we must collectively take to make that dream a reality”.
He said it was hinged on the two pillars of the new vision of the Bureau—Rediscovery and Repositioning.
For the rediscovery pillar, he said it would lead the Bureau to retrace and redefine its core values and reclaim its culture of professionalism, knowledge, competence, integrity and transparency.
On the other hand, the repositioning pillar aims to set the Bureau on a path that would help it engage with the future effectively and with confidence, to guarantee that the objectives of the Bureau are achieved.
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) has once again trimmed its 2024 and 2025 oil demand growth forecasts.
The bloc made this in its latest monthly oil market report for December 2024.
The 2024 world oil demand growth forecast is now put at 1.61 million barrels per day from the previous 1.82 million barrels per day.
For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, which is 900,000 barrels per day lower than the 1.54 million barrels per day earlier quoted.
On the changes, the group said that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.
The oil cartel had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.
OPEC and its wider group of allies known as OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.
Eight OPEC+ member countries – Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – decided to extend additional crude oil production cuts adopted in April 2023 and November 2023, due to weak demand and booming production outside the group.
In April 2023, these OPEC+ countries decided to reduce their oil production by over 1.65 million barrels per day as of May 2023 until the end of 2023. These production cuts were later extended to the end of 2024 and will now be extended until the end of December 2026.
In addition, in November 2023, these producers had agreed to voluntary output cuts totalling about 2.2 million barrels per day for the first quarter of 2024, in order to support prices and stabilise the market.
These additional production cuts were extended to the end of 2024 and will now be extended to the end of March 2025; they will then be gradually phased out on a monthly basis until the end of September 2026.
Members have made a series of deep output cuts since late 2022.
They are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand. Russia also announced plans to reduce its production by an extra 471,000 barrels per day in June 2024.
By Aduragbemi Omiyale
A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.
This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).
Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.
Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.
As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).
The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.
In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.
The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.
“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.
“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.
“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.
“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.
By Adedapo Adesanya
Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.
As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.
But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.
The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.
During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.
However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.
Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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