Economy
Nigeria Can Boost FX Earnings by 70% from Leather—Osinbajo
By Aduragbemi Omiyale
The decline in crude oil prices caused by the COVID-19 pandemic in 2020 put the Nigerian economy under pressure as foreign exchange earnings slumped significantly.
At a point last year, the price of the Brent crude, under which Nigeria’s crude oil is graded, was selling at $20 per barrel and this caused a plunge in revenue as most of the country’s earnings are from the sale of the commodity.
As a result, the nation slipped into another recession in the third quarter of 2021 after the gross domestic product (GDP) contracted by 3.62 per cent after a 6.10 per cent decline in the second quarter of the year.
It was the second time the economy was sliding into a recession in four years after it had one in 2016. However, unlike the previous one, last year’s recession was short-lived as the nation exited in the fourth quarter of the year after a 0.11 per cent GDP growth.
Despite the country out of recession, there is still an FX liquidity crisis in Nigeria and the Vice President, Mr Yemi Osinbajo, is of the view that the leather products value chain can be of great assistance if well harnessed.
Speaking on Tuesday in Abuja at the formal launch and sensitisation workshop on the National Leather and Leather Products Policy Implementation Plan, he said the nation can boost its FX earnings from the sector by 70 per cent.
He noted that by 2025, the leather products industry will generate over $1 billion and create employment for over 700,000 people.
The Vice President, who described the implementation of the leather products policy as holistic, added that it will also provide a more sustainable infrastructure development plan and guaranteed access to credit facilities for business people.
According to him, countries like Spain, Italy, China and the West African sub-region are prime destinations for Nigerian leather products.
In his keynote address, Mr Ogbonnaya Onu the Minister of Science and Technology, hailed the leather products policy as the first strategic implementation plan for the leather and leather products policy in Nigeria.
“The Federal Ministry of Science and Technology is supporting this important initiative through offering leadership in the transformation of our economy from a resource-based to a knowledge and innovation-driven one,” he said.
The Minister further said the policy will help the effective and efficient exploitation of Nigeria’s natural resources, earn and conserve foreign exchange, create jobs and help promote the country’s drive for self-reliance.
He called on all relevant stakeholders to facilitate both foreign and domestic investments, saying, “We need to transform our plan into action, we need all stakeholders to work together, we need to involve the Organised Private Sector, we need to bring in more investment, both domestic and foreign into the leather industry.”
The Minister of State for Science and Technology, Mr Mohammed Abdullahi, said the implementation plan was delicate and vital to reposition Nigeria for socio-economic growth and development, saying that the implementation plan covers eight thematic areas which are; Research and Development, Governance, Intellectual property Rights, E-Leather, Compliance, Environment and social best practices, standards, marketing and patronage, Funding as well as fiscal measures and critical infrastructure.
He also noted that if the leather policy is fully implemented, it will create an enabling environment that will sustain all-inclusive growth for local and small enterprises as well attract and protect investments, improve production output and promote innovation in the country.
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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