The massive drop in global oil prices impacted negatively on the performance of the Nigerian oil and gas sector, which recorded a decline of N3.6tn in output in the 2015 fiscal period, according to punch report.
A report showing the performance of the sector, which was obtained by our correspondent from the National Bureau of Statistics, revealed that in monetary terms, the sector recorded a huge decline of 37.5 per cent from N9.61tn in 2014 to N5.99tn at the end of last year.
Further analysis of the report showed that since the second quarter of the 2014 fiscal year, the petroleum sector had been recording steady decline in output
Between the first and second quarters of 2014, the sector witnessed an increase in output from N2.61tn to N2.63tn.
However, due to the drop in oil prices, which began in June 2014, the sector’s contribution to the economy could not be sustained as it started declining steadily from the third quarter.
It dropped to N2.32tn in the third quarter of 2014 and further went down to N2.04tn in the fourth quarter.
In 2015, the sector witnessed its worst performance in recent times, contributing the sums of N1.39tn, N1.74tn, N1.53tn and N1.31tn to the economy in the four quarters of the year.
The report stated that the dismal performance of the oil and gas sector also impacted negatively on the contribution of the mining and quarrying sector to the economy.
There are four main activities that make up the mining and quarrying sector. They are crude petroleum and natural gas, coal mining, metal ore and other minerals.
The NBS report put the growth in the mining and quarrying sector at 5.18 per cent for the fourth quarter of 2015 as against 8.56 per cent recorded in the corresponding quarter of 2014.
It stated, “On a nominal basis, the sector slowed in the fourth quarter of 2015 by 35.12 per cent (year-on-year) during the quarter.
“This was substantially below the growth recorded in the corresponding quarter of 2014. This drop is attributable to the falling oil prices.”
Speaking on the low output of the sector, financial experts told our correspondent that the inability of the government to effectively diversify the economy away from oil was responsible for the drop in performance.
For instance, a former Managing Director, Unity Bank Plc, Mr. Rislanudeeen Mohammed, said the country should have built enough fiscal buffers when crude oil sold for as high as $140 per barrel.
He said, “Nigeria is a mono product economy basically. We export only crude because 70 per cent of our income is derived from oil; 94 per cent of our foreign earnings is derived from oil, and oil contributes only about 10 per cent of our Gross Domestic Product.
“When the price of oil was going up, when it was in the region of $140, Nigeria was making a lot of money for years. What Nigeria should have done is to build fiscal buffers. But this didn’t happen owing to constitutional challenges.”
UNGA 2021: The World has the Resources to End Hunger, African Development Bank Head tells UN Food Systems Summit
“The world has the resources to end hunger,” African Development Bank President Dr. Akinwumi A. Adesina said in a message on the first day of the United Nations Food Systems Summit.
Convened by UN Secretary General António Guterres, the event is billed by its organisers as “a historic opportunity to empower all people to leverage the power of food systems to drive our recovery from the COVID-19 pandemic and get us back on track to achieve all 17 Sustainable Development Goals (SDGs) by 2030.”
The summit brings together thousands of youths, food producers, members of civil society, researchers, the private sector, women and indigenous people, all of whom are participating both physically and virtually in the summit. It is taking place on the sidelines of the 76th UN General Assembly in New York.
In his opening address, Guterres said the participants represented “energy, ideas and the willingness to create new partnerships,” and was a time to celebrate the dignity of those who produce and create the world’s food.
Decrying the 246 million people in Africa who go to bed daily without food and the continent’s 59 million stunted children as “morally and socially unacceptable,” Adesina said that delivering food security for Africa at greater scale called for prioritising technologies, climate and financing.
“The $33 billion per year required to free the world of hunger, is just 0.12% of $27 trillion that the world has deployed as stimulus to address the Covid-19 pandemic. I am confident that zero hunger can be achieved in Africa by 2030,“ Adesina said.
The African Development Bank’s Feed Africa Strategy, through its Technologies for African Agricultural Transformation program – widely known as TAAT – has provided 11 million farmers across 29 African countries with proven agricultural technologies for food security. Food production has expanded by 12 million metric tons while saving $814 million worth of food imports.
“We are well on our way to achieving our target of reaching 40 million farmers with modern and climate-resilient technologies in the next five years,” the African Development Bank chief added.
At a meeting on food security in Africa organized by the Bank and the International Fund for Agricultural Development (IFAD) earlier this year, 19 African heads of state called for the establishment of a facility for financing food security and nutrition in Africa.
“The Facility for Financing Food Security and Nutrition in Africa should be capitalized with at least $ 1 billion per year,” Adesina said.
The welfare of the 70% of Africa’s population working in agriculture and agribusiness is a barometer of the state of the continent’s health. “If they aren’t doing well, then Africa isn’t doing well,” Rwandan president Paul Kagame said in a message at the official opening.
The many other heads of state and government who spoke on Thursday included, Prime Minister Mario Draghi of Italy, President Felix Antoine Tshisekedi of the Democratic Republic of Congo, Prime Minister Sheikh Hasina of Bangladesh and Prime Minister Jacinda Arden of New Zealand.
AfCFTA: Nigeria-South Africa Chamber Advocate Single Africa Passport, Free Visa
The Nigeria-South Africa Chamber of Commerce (NSACC) has called for a single Africa passport and a free visa to ensure the success of the Africa Continental Free Trade Area (AfCFTA) agreement.
Speaking on Thursday in Lagos during the chamber’s September Breakfast Forum, with the theme: `Perspectives on the Africa Continental Free Trade Area in Relation to Nigeria’, its President, Mr. Osayande Giwa-Osagie noted that AfCFTA would boost intra-African trade by 22 percent, adding that its implementation would impact positively on the Nigerian economy.
AfCFTA is a single continental market that adopts free flow of goods, services, and capital, supported by the free movement of persons across Africa.
Giwa-Osagie however said Nigeria must diversify its economy in order to harness the gains of the agreement.
“Current intra-African trade rated at 15 to 17 percent is low and the AfCFTA is expected to boost intra-African by 22 percent. Challenges to its implementation are lack of infrastructure, political instability and lack of economic diversification.
“This gives rise to the need for Nigeria to diversify its economy to harness the gains of the agreement. Given the importance of the free movement of people, there is a need for a free visa for Africa and a single Africa passport.
“While the implementation would help boost the Nigerian economy, the impact would be limited if there are no free movement of people,” he said.
Mr Jesuseun Fatoyinbo, Head, Trade and Transactional Services, Stanbic IBTC Bank, said the business community needed more clarification on tariff reduction or elimination under the agreement.
According to him, the little information available to corporate organisations with regards to tariffs may lead to holding back on investments.
“We have noted increased interests from global multinationals and other corporates in setting up facilities in Africa aimed at serving the continent and exporting abroad.
“So more transparency around tariff reductions both in terms of timelines and details of goods could prompt companies to act,” he said.
Fatoyinbo also called for more attention to the digitisation of trade processes across the continent. “Currently, trade in Africa is largely reliant on physical documentation and this is a major impediment. Policymakers need to prioritize regulatory amendments that allow for the digital signatures, a digital certificate of origin, digital bills of lading, and other documentation,” he added.
Nigeria Borrows $4 Billion Through Eurobonds as Order Book Peaked at $12.2 Billion
The Federal Government of Nigeria has raised a fresh $4 billion through Eurobonds, according to the latest statement from the Debt Management Office (DMO).
Nigeria had set out to raise $3 billion but investors oversubscription peaked at $12.2 billion, enabling the Federal Government to raise $1 billion more than the $3 billion it announced.
DMO said “This exceptional performance has been described as, “one of the biggest financial trades to come out of Africa in 2021” and “an excellent outcome”.
Bids were received from investors in Europe, America, Asia and several local investors. The statement noted that the quality of investors and the size of the Order Book demonstrated confidence in Nigeria.
The Eurobonds were issued in three tranches, details, namely seven years–,$1.25 billion at 6.125 per cent per annum; 12 years -$1.5 billion at 7.375 per cent per annum as well as 30 years -$1.25 billion at 8.25 per annum.
The DMO explained that the long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020 –2023.
The Eurobonds were issued as part of the New External Borrowing stipulated in the 2021 Appropriation Act. DMO noted that the $4 billion will help finance projects state in the 2021 budget.
Nigeria’s total debt stood at $87.239 billion as at March 31, 2021. However, with the $4 billion new borrowing, the nation’s debt is now $91.239 billion. A serious concern for most Nigerians given the nation’s weak foreign revenue generation and rising cost of servicing the debt.
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