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Economy

Soybean Trades Decline as Harvest Season Approaches

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Soybeans Production

By Ashemiriogwa Emmanuel

The total contracts traded on Nigerian soybean in the commodity market declined by 86 per cent week-on-week, according to data harvested from Afex Nigeria.

In the data, the volume of contracts traded on the legume commodity dropped to 297 at the close of last week from 2,225 recorded at the preceding week.

Within the period under review, the exchange price of the grain marginally dropped 1.8 per cent to N34,053 per contract from N34,664 per contract of the previous week, but the value of the crop in the open market slightly went up by 0.1 per cent from N37,756 to N37,790.

According to Afex Nigeria, the flooding and damage of the United State’s busiest agricultural port, caused by Hurricane Ida, resulted in limited global supplies as it accounts for approximately 60 per cent of the country’s exports. The harvest season for soybean is fast approaching.

On global supplies, the agribusiness firm said Argentine farmers are expected to harvest 48.8 million tonnes of soybean in the 2021/22 season, which is slightly below the previous estimate of 49 million.

Observing the international markets, the ginger prices dipped by 2.7 per cent as some importers got dried ginger from China at a discount to the actual price.

In the same manner, the value of maize and soybean also fell by 2.4 per cent and 1.5 per cent respectively, while that of paddy rice and cocoa appreciated by 0.2 and 0.7 per cent accordingly as the price of other grains closed flat.

Meanwhile, apart from maize, which recorded an 8.3 per cent rise in its exchange price, other valuable export grains, including paddy rice, sorghum, cocoa, ginger, sesame, and cashew all closed flat at the end of the trading week, but recorded varying price movement in the open market.

The value of paddy rice in the open market dropped week-on-week from N21,878 to N21,287 per contract, representing a 2.7 per cent decline, while sorghum went up by 4.3 per cent to N25,169 from N24,138.

Similarly, the price of the country’s leading agricultural export, cocoa, increased in the market by 0.6 per cent from N99,013 to N99,563, while sesame also went up by 2.8 per cent as it traded at N55,388 from N53,512/contract.

However, ginger’s price dropped 2.8 per cent to N89,823 as that of cashew stood flat at N47,417/contract.

For the second straight week, the total trades recorded at the exchange last week went down by 26 per cent to 1,946 contracts.

The indices of the markets reflected a muted performance week-on-week from the Afex commodity Index (ACI) and its Export Index (AEI), while the Standard & Poor’s Goldman Sachs Commodity Index (S&P GSCI) Agriculture indices declined by 0.8 per cent and 2.7 per cent respectively.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Economy

Nigeria’s Debt Profile Jumps 17% to N46.25trn in 2022

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debt profile

By Adedapo Adesanya

Nigeria’s total public debt stock increased by 17 per cent to N46.25 trillion or $103.11 billion as of December 2022 from N39.56 trillion or $95.77 billion in 2021.

This information was revealed by the Debt Management Office (DMO) on Thursday.

This means that the country’s debt profile precisely increased by 16.9 per cent or N6.69 trillion or $7.34 billion within one year, as the government borrow funds from various quarters for its budget deficits.

The agency said the new figures comprise the domestic and external total debt stocks of the federal government and the sub-national governments (36 state governments and the Federal Capital Territory).

The DMO statement partly read, “As of December 31, 2022, the total public debt stock was N46.25 trillion or $103.11 billion.

“In terms of composition, total domestic debt stock was N27.55 trillion ($61.42 billion) while total external debt stock was N18.70 trillion ($41.69 billion).

“Amongst the reasons for the increase in the total public debt stock were new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.

“On-going efforts by the government to increase revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilization initiative are expected to support debt sustainability.”

“The total public debt to gross domestic product (GDP) ratio for December 31, 2022, was 23.20 per cent and indicates a slight increase from the figure for December 31, 2022, at 22.47 per cent.

“The ratio of 23.20 per cent is within the 40 per cent limit self-imposed by Nigeria, the 55 per cent limit recommended by the World Bank/International Monetary Fund, and the 70 per cent limit recommended by the Economic Community of West African States,” the debt office said.

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Economy

12-Month Treasury Bills Now 14.74% as Appetite Falls

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Treasury Bills

By Dipo Olowookere

The 364-day treasury bills stop rate was raised by the Central Bank of Nigeria (CBN) at the primary market auction (PMA) on Wednesday by 5.25 per cent as appetite for the asset class waned.

The central bank, which conducted the exercise, did not record the usual hunger for the debt instrument by investors yesterday, ostensibly because of how the bank had tinkered with the rates in the previous exercises.

But the apex bank surprised subscribers at the PMA on Wednesday when it jerked the rate higher to 14.74 per cent from the 9.49 per cent it cleared in the previous PMA.

According to details of the exercise, the CBN auctioned the one-year bill worth N139.96 billion and received subscriptions valued at N165.28 billion, allotting N142.16 billion.

Business Post reports that it was not only the 12-month dated instrument that enjoyed the rate hike yesterday as the two others benefitted.

The central auctioned N3.34 billion worth of the 182-day bill during the session but had investors stake N1.56 billion on it, with N1.56 billion allotted to successful bidders at 8.00 per cent compared with the previous session’s 5.00 per cent, indicating an increase of 3.00 per cent.

As for the 91-day bill, the rate cleared at 6.00 per cent after it was moved higher by 3.45 per cent from 2.55 per cent. This was after the apex bank allotted N1.75 billion to subscribers, the same amount of bids it received from the N2.16 billion taken to the market on Wednesday.

Recall that some days ago, the Monetary Policy Committee (MPC) of Nigeria’s central bank increased the Monetary Policy Rate (MPR), which is the benchmark interest rate in the country, by 0.50 per cent to 18.00 per cent.

The team explained that the rate hike was mainly to tame rising inflation in Nigeria, which the National Bureau of Statistics (NBS) said stood at 21.91 per cent in February.

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Economy

China’s Investment in Africa Has Cut Need for Loans from World Bank, IMF—Osinbajo

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China's investment in Africa

By Adedapo Adesanya

The Vice President of Nigeria, Mr Yemi Osinbajo, has lauded China’s investment in Africa, saying it has reduced dependency on loans from Bretton Woods, which consists of the World Bank and the International Monetary Fund (IMF).

In a statement seen by Business Post, the VP, at an event at King’s College London on March 27, 2023, stated that “China shows up where and when the West will not and or are reluctant.”

He said this was evident in the investment of the Asian giant in Africa, which he said stood at $254 billion in 2021, about four times the volume of US-Africa trade.

He also noted that, “China is the largest provider of foreign direct investment, supporting hundreds of thousands of African jobs. This is roughly double the level of U.S. foreign direct investment, adding that, “China remains by far the largest lender to African countries.”

He also noted that Chinese companies had taken the lead in exploiting minerals in Africa, many now in lithium mining in Mali, Ghana, Nigeria DRC, Zimbabwe and Namibia.

The Nigerian second-in-command said that China has always shown up for African countries while outrightly condemning Western countries in that regard.

He said, “Most African countries are rightly unapologetic about their close ties with China. China shows up where and when the west will not or are reluctant.”

He added, “And many African countries are of the view that the beware of the Chinese Trojan loans advise forming the west is wise but probably self-serving,” explaining that, “Africa needs the loans and the infrastructure. And China offers them. In any case, the history of loans from Western institutions is not great.”

Taking a step further, Mr Osinbajo sent a salvo to the World Bank and the IMF over the conditions attached to their loan facilities.

“The memory of the destructive conditionalities of the Bretton Woods loans is still fresh, and the debris is everywhere.

“And the preoccupation of western governments and media with the so-called China debt trap might well be an overreaction,” he added.

“I recommend an eye-opening lecture by Professor Deborah Brautigam about two weeks ago at Jesus College Cambridge.

“The truth, as she points out, is that all of the Chinese lendings to Africa is only 5 per cent of all outstanding public and publicly guaranteed debt in low and middle-income countries, compared to 23% held by the World Bank and other multilaterals.”

He alluded that Chinese lenders account for 12 per cent of Africa’s private and public external debt.

“And the Chinese have also been there when the debts cannot be paid. In early 2020 as COVID battered African economies, China came together with other G20 members to launch the Debt Service Suspension Initiative (DSSI).

“About 73 low-income economies benefited from the suspension of principal and interest payments. Chinese banks provided 63 per cent of the total debt relief while being only owed 30 per cent of the debt service payments due,” he quipped.

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