Economy
OPEC Mulls Further Cuts: What Does This Mean for Nigeria?
By Adedapo Adesanya
One of the greatest challenges currently facing the Nigerian economy is the dwindling prices of crude oil, which, using the Brent Crude standard, traded around the $54 dollar mark, $3 below the $57 per barrel benchmark set in the 2020 Budget.
Already, the country is faced with challenges regarding the contribution of the commodity to the country’s revenue and the new talks about the possibility of further production cap by Organisation of the Petroleum Exporting Countries (OPEC) on its members, including Nigeria, may further worsen the situation for Africa’s largest oil producer.
OPEC is considering this new measure as a result of the effect of the deadly coronavirus on prices of crude oil at the global market. It is believed that if the volume of crude oil production is reduced, prices will pick up again.
At the OPEC meeting with allies led by Russia in Vienna, Austria in December last year, Nigeria had pledged with other members of the cartel to contribute to the 500,000 barrels per day cut to bring down production to 1.7 million barrels till the end of March.
However, with the continuous impact of the coronavirus from China, one of Nigeria’s crude destinations, it is evident that there might be more aggressive oil output cuts of up to one million barrels than previously considered, after reviewing new data on Tuesday that showed coronavirus’ deepening impact on global oil demand, officials at the cartel said.
The impact would be felt by Nigeria if oil prices don’t go up to at least $65 despite cuts because this would mean that at the current 1.774 million barrels per day (bpd) cap, Nigeria may be forced to produce lower volume of oil, which could lead the country’s economy into another recession and shortage of foreign exchange, which is affecting the nation’s external reserves, currently below $38 billion.
In the 2020 budget, Nigeria put its average crude oil production at 2.18 million barrels per day at $57 per barrel.
Market analysts noted that OPEC and a 10-nation group of allies led by Russia had initially considered cutting 500,000 barrels a day, but a handful of scenarios up for discussions at the gathering on Tuesday foresee a need for much larger production cuts.
The virus, which originated in the Wuhan City of China last year, has already contributed to a sharp decrease in demand for crude, driving oil prices further down the budget cap of many countries, and with this OPEC officials are set to issue recommendations at the meeting scheduled for both Tuesday, February 4 and Wednesday, February 5. Following whatever recommendation is given, a final decision then would come after OPEC and its allies meet next week.
On Tuesday, OPEC’s research department presented two models with different estimates of how the virus may affect oil consumption. According to the models, the worst-case scenario estimated that if the virus lasts for six months, this could lead to about 400,000 barrels a day of demand, before a market rebound to pre-virus growth levels in the second half of the year.
However, if the cartel were to maintain its current output reductions throughout that period, there would be a surplus of 600,000 barrels a day in the first quarter and 1 million in the second, the analysis showed.
While a recommendation has not been reached, oil prices on Wednesday morning have resumed pointing north with the Brent Crude closer to $55 per barrel while and the US West Texas Intermediate (WTI), which fell below $50 was trading at $50.45 per barrel.
By Adedapo Adesanya
Nigeria’s maiden shipment under the African Continental Free Trade Area (AfCFTA) has successfully arrived at the Mombasa Port in Kenya.
According to the Nigeria AfCFTA Coordination Office in a statement, the development marks a historic moment for Africa’s trade landscape.
The Senior Trade Expert at the Nigeria AfCFTA Coordination Office, Mr Olusegun Olutayo, said in line with its mandate under the leadership of the National Coordinator, Mr Olusegun Awolowo, the office had coordinated the landmark event.
He said the achievement marked a significant milestone for Nigeria in realising the vision of increased intra-African trade and economic integration championed by the agreement in line with the decision of the AU Assembly at the 31st Ordinary Session of the Assembly.
“In times of escalating geopolitical tension and looming geo-economic fragmentation, AfCFTA presents a perfect opportunity for Africa to leverage trade as a strategic instrument for enhanced market access among state parties.
“This is a historic moment, a realisation of the vision of our continent’s founding fathers and mothers.”
He also said the first consignment which was a synthetic filaments product of Nigeria’s Lucky Fibres Limited (Lush), a subsidiary of the Tolaram Group, was exported under AfCFTA preferential terms.
Mr Olutayo lauded the bold economic reforms of President Bola Tinubu, emphasising their catalytic role in enabling the country’s active participation in AfCFTA, fostering continental economic integration and industrialisation goals.
He also commended the seamless cooperation and commitment from Kenyan authorities, which exemplifies the true spirit of AfCFTA.
He acknowledged the pivotal leadership role of the AfCFTA Secretariat in fostering the success and emphasised the collaborative efforts of the Kenya AfCFTA Implementation Committee and the Kenya Revenue Authority (Customs).
According to him, the shipment, exported under AfCFTA preferential trade terms, underscores partnership, shared vision, the agreement’s potential to transform Africa’s economic landscape and pave the way for a new era of trade-driven prosperity.
The AfCFTA seeks to create a single market across Africa by reducing barriers to trade, investment, and labour.
The agreement’s goal is to increase socioeconomic development, reduce poverty, and make Africa more competitive globally.
On March 21, 2018, the AfCFTA agreement was adopted and opened for signature in Kigali, Rwanda. The agreement entered into force on May 30, 2019 and officially commenced on January 2021
Former President Muhammadu Buhari established the National Action Committee on AfCFTA (NAC) in December 2019.
By Adedapo Adesanya
The Nigerian Securities and Exchange Commission (SEC) has fixed January 31 as deadline for all Capital Market Operators (CMOs) to renew their operating licence.
In a circular to the operators on Sunday, the apex regulatory agency in the country’s capital market said the annual registration renewal would last between January 1 and 31, 2025.
SEC said the annual registration renewal enforcement for CMOs was aimed at ensuring that only “fit and proper” persons operate in the capital market, warning that CMOs without valid registration will be penalised and may be excluded from capital market activities.
”This is to inform all CMOs and the general public that the annual renewal of registration of CMOs for the year 2025 will commence from January 01.
“All CMOs applying for renewal are required to include their 2025 annual subscription receipt from their respective trade groups as part of their application.
“In line with the commission’s Rules & Regulations, all CMOs are to complete the process of renewal of registration for 2025 on or before January 31 via registration renewal portal at www.eportal.sec.gov.ng,” it said.
The commission added that CMOs desiring to make enquiries or get support to complete the process should contact [email protected].
The regulator said it had in 2021 re-introduced periodic registration renewal by CMOs to create a reliable active operators’ data bank in the country’s capital market.
It said the renewal arrangement aimed at updating operators information on capital market for official use by local and foreign investors, other regulatory agencies and the public.
The agency added that the renewals would drastically reduce incidences of unethical practices by CMOs which may affect investors’ confidence and impact the capital market negatively, noting that the exercise will strengthen supervision and monitoring of CMOs by the commission.
By Adedapo Adesanya
The third trading week of 2025 ended on a positive note at the NASD Over-the-Counter (OTC) Securities Exchange, with seven equities on the platform inspiring a 1.24 per cent growth.
Consequently, the market capitalisation of the bourse increased by N21.56 billion during the five-day trading week to N1.075 trillion from the N1.053 trillion quoted in the preceding week (Week 2) as the NASD Unlisted Security Index (NSI) expanded by 37.98 points to 3,111.91 points from the 3,073.93 points it ended in the preceding week.
In the period under review, the volume of transactions went down by 42.1 per cent to 9.45 million units from the 16.30 million units in the previous week, as the value of trades declined by 53.1 per cent to N48.4 million from the N104.11 million, with these transactions completed in 122 deals involving 15 different stocks.
Industrial and General Insurance (IGI) Plc gained 50 per cent in the week to close at 36 Kobo per share versus 34 Kobo per share, Mixta Real Estate Plc increased by 20 per cent to end at N2.58 per unit compared with the previous week’s N2.15 per unit, and Okitipupa Plc rose by 10 per cent to N39.59 per share from N35.99 per share.
Further, UBN Property Plc grew by 10 per cent to N2.20 per unit from N2.02 per unit, Newrest Asl Plc jumped by 9.9 per cent to N31.38 per share from N28.53 per share, FrieslandCampina Wamco Plc surged by 3.7 per cent to N39.65 per unit from N38.22 per unit, and 11 Plc advanced by 0.3 per cent to N256.00 per share from N255.31 per share.
FrieslandCampina Wamco Plc topped the activity chart last week by value with with N0.030 billion, 11 Plc recorded N0.009 billion, Central Security Clearing System (CSCS) Plc raked in N0.004 billion, IGI Plc followed with N0.002 billion, and Geo-Fluids Plc recorded N0.002 billion.
However, IGI Plc was the most traded instrument by volume with 7.5 million units, FrieslandCampina Wamco Plc transacted 0.77 million units, UBN Property Plc recorded 0.38 million, Geo-Fluids Plc traded 0.37 million units, and CSCS Plc posted 0.16 million units.
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