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Nigeria Leads Africa, Israeli Negotiations on SMEs Growth

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Small and Medium Enterprises

Nigeria is leading in a new trade and commerce cooperation between African countries and Israel, which will see small and medium scale enterprises (SMEs) based in Africa benefit from the economic competencies of Israel.

According to the facilitators of the partnership, the Africa Leadership Summit (ALS), a new platform, the Africa-Israel Chamber of Commerce (AICC) was inaugurated recently in Abuja to oversee the planned economic relationship between the continent and Israel.

The Convener of ALS, Mr. Olusegun Olanipekun told journalists at a leadership conference where AICC was formally unveiled that AICC would concentrate its efforts

and resources on tapping from Israel key and tested start-up knowledge with which SMEs in Nigeria and other African countries can use to re-invent themselves and grow their profitabilities.

Olanipekun equally noted that other than helping SMEs grow their economic values, the AICC will impact in owners of such ventures, quality and time-tested ethical values which they can apply in relating with and adding values to their business environments.

He explained that platform would not immediately be seeking for big multinationals to come on board, adding that its priorities will be on SMEs which have the capacity to immediately impact on the lives of local citizens.

“The African Leadership Summit (ALS) is about raising the standard of leadership on the continent of Africa and benchmarking ourselves with the best in the world, particularly Israel.

“You know that Israel is the number one start-up nation in the world, it is not only Nigeria or Africa that is learning from them, the whole world is learning from them.

“Israel supplies the highest percentage of patents to the world. Europe buys patents from Israel, America does and we are saying, why do we always buy from America and Europe when we can go directly to the source – Israel,” said Olanipekun.

He further stated: “Israel also imports from other parts of the world but not from Africa because the systems are not in place for that. The ALS is developing application tools like the Africa-Israel Chamber of Commerce (AICC) where people of like mind can meet and connect and a highway of business can be built between the various cities of Africa and Israel.”

He said on the decision to concentrate on SMEs: “Africans have had to wait for investors to come and invest and we observe that the result of that is that profits are repatriated maximally and communities are not developed. But if we partner with a nation like Israel where in 60 years, they have developed their economy and made the desert to blossom like a rose, and developed their communities through their businesses, then we can also learn that it is not enough to have big businesses with big financials but their communities of operation is not developed.”

Olanipekun’s partner, Dr. Ike Neliaku also explained that the AICC will be driven by Nigeria which he said has the capacity to take Africa along the path holistic prosperity if she gets it right.

Neliaku noted that modalities on how the AICC will operate from Nigeria have been designed, with relevant stakeholders already hooked to the platform for prompt delivery of set goal.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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SEC In plans To Embrace Crypto Investment, Set Up Fintech Unit For Regulations

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The Securities and Exchange Commission (SEC) has set up a fintech division to study crypto investments and products in order to come up with regulations, the Director-General of the commission, Lamido Yuguda said on Thursday.

“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain,” Yuguda was reported to have said by Reuters in a virtual interview in Abuja.

He did not provide a time frame for issuing regulations but said the SEC will step in with regulations once crypto is allowed within the Nigerian banking system.

The SEC has sought to regulate crypto on the grounds that they qualify as securities transactions.

Nigeria is one of the biggest markets for crypto trading, but in February the Central Bank of Nigeria (CBN) banned banks from transacting or facilitating deals in cryptocurrencies.

The use of bitcoin, the original and biggest cryptocurrency, has boomed in Nigeria in recent years, driven by payments from small businesses and a weakening naira currency, which makes it difficult to get the U.S. dollars needed to import goods or services.

Yuguda said the commission has been in talks with the CBN, part of which led to the plan by the regulatory bank to launch the country’s digital currency, e-naira.

The commission is seeking to work with fintech firms to boost the marketing of domestic securities to prevent capital flight.

The central bank this month blocked the accounts of six firms for allegedly sourcing funds from illegal foreign exchange operators to buy foreign securities and cryptocurrencies.

He said the SEC is looking to boost savings through investment schemes, which currently have over N4 trillion under management split between public and private fund managers.

Yuguda said the regulator has asked private managers to put in place custody arrangements to protect investors.

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In 4 Years 92 Percent Of Investment Opportunities Lost in Nigeria

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Within the period of 2017 and 2020, Africa’s largest economy, Nigeria has lost over 92 percent of investment available to the country. The loss in investment sums up about $188.29 billion.

According to the report of the Nigerian Investment Promotion Commission (NIPC) on “Investment announcements versus FDI (Foreign Direct Investments) Inflow in Nigeria, 2017 – 2020” the discrepancies between the FDI announcement and actual FDI inflow were revealed. The commission stated that the actual inflow of FDI into Nigeria was 7.65 percent of the total FDI announcements.

This is an affirmation that the FDI announced by the commission did not materialize or translate to actual investment inflow.

In the period 2017 to 2020, the NIPC FDI announcement stood at $203,89 billion, however, the actual FDI within the same period was $15.6 billion and unmaterialized FDI announced was $188.29 billion.

In 2017, statistics obtained from NIPC revealed a total of $66.35 billion FDI announcement but only $3.5 FDI inflow was recorded. For 2018, 2019 and 2020, $90.89 billion, $29.91 billion and $16.74 billion FDI were announced in each year respectively. However 2018 FDI inflow was $6.4 billion, 2019 inflow was $3.3 billion and 2020 FDI inflow was $2.4 billion.

With this report, the commission asserted that its report was based solely on Investment announcements which may not contain exhaustive information on all investment announcements in the country within the said period.

According to NIPC, the gaps between announcements and actual investments demonstrate investments potentials that were not fully actualised.

The Commission stated: “A more proactive all-of-government approach to investor support, across federal and state governments, is required to convert more announcements to actual investments.”

Reacting to the situation, Director General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Ambassador Ayoola Olukanni, noted that the gap may not be unconnected to the economic recession and COVID-19 pandemic events within the period, aggravated by policy instability.

Olukanni stated: “Numerous studies have established that Foreign Direct Investment is dependent on the market size of the host country, deregulation, level of political stability, investment incentives, openness to international trade, economic policy coherence, exchange rate depreciation, availability of skilled labour, the endowment of natural resources and inflation.

“You will agree with me that the four years spanning 2017 and 2020 are characterized by the struggle to exit from economic recession, a period of slight recovery, the COVID-19 pandemic, and another period of recession. These circumstances may or may not be responsible for the political and economic reaction that can be witnessed in the uncertainty in the foreign exchange market, increased inflation, increased unemployment, increased political unrest and insecurity and so on.

“What can be established is that Foreign Direct Investment is averse to risk and uncertainty, especially the kind of uncertainty brought about by policy instability and economic policy. An obvious example is the closure of the land borders in 2019, while justifiable through the lens of national security is certain to have a negative impact on Foreign Direct Investment which has a long-term planning horizon.

“In summary, to seek to increase actual FDI is to promote the factors that have been shown, empirically, to positively impact FDI. While the Nigerian economy checks the boxes of most of these factors, economic policy coherence, foreign exchange market stability and insecurity are issues that are currently the bane of FDI inflows.”

Also commenting, an economist and private sector advocate, Dr. Muda Yusuf, who is also the immediate past Director-General of Lagos Chamber of Commerce of Industry (LCCI), said the development reflects the low level of investors’ confidence occasioned by structural problems of infrastructure and worsening security situation.

His words: “It is investors’ confidence that drives investment, whether domestic or foreign. Investors are generally very cautious and painstaking in taking decisions with respect to Foreign Direct Investment (FDI). This is because FDIs are often long-term and invariably riskier, especially in volatile economic and business environments. Uncertainties aggravate investment risk.

“Investors in the real sector space are grappling with structural problems, especially around infrastructure. There are also worries around liquidity in the forex market; there are concerns about the accelerated weakening of the currency. There are issues of heightened regulatory and policy risks in many sectors.

“Investors’ confidence has also been adversely affected by the worsening security situation in the country. Meanwhile, the economy is still struggling to recover from the shocks of the COVID-19 pandemic. These are the likely factors impacting investment decisions.

“Our ability to attract FDI will depend on how well we position ourselves. The critical question will be around expected returns on investment. Overall, it is the investment climate quality that will make the difference. We need to ensure an acceleration of necessary reforms to make Nigeria a much better investment destination. We need policy reforms, regulatory reforms and institutional reforms, among others.

“We should accelerate the ongoing foreign exchange reforms; we need to undertake trade policy reforms to liberalise trade in sectors of weak comparative advantage; we need regulatory reforms to make regulations more investment-friendly. We need to create new opportunities in the public-private partnership (PPP) space, especially in infrastructure. We need to see more privatization of public enterprises.

“It is important as well to quickly fix the ravaging insecurity in the country. All of these are crucial to boost investors’ confidence.”

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Afghanistan Turmoil Adds to Investors’ Worry List

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Taliban - Investors King

The fast-evolving situation in Afghanistan must be added to investors’ growing list of global issues to track as stock markets digest that the Taliban are back in power, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The warning from Nigel Green, chief executive and founder of deVere Group, follows the Taliban quickly seizing the capital Kabul where thousands of civilians desperate to flee thronged the airport.

It came after U.S. President Joe Biden’s controversial decision to remove troops from Afghanistan after Donald Trump’s concessions to withdraw U.S. forces as part of a conditional agreement between the U.S. and Taliban leaders.

Mr Green says: “Despite the news coming out of Afghanistan, there is not likely to be an immediate shockwave rippling through global stock markets.

“Investors are currently more focused on other key factors that could impact returns.

“These include the fallout from the delta variant of Covid, concerns about peak earnings, disappointing Chinese economic data, slowing growth, and this week’s publication of the minutes of the Federal Reserve’s latest meeting which could hint at a shift in policy.”

He continues: “However, the major geopolitical turbulence triggered by the Taliban’s effective power grab will certainly be added to investors’ growing list of global issues to track as it could have longer-term implications for markets.

“There will be questions regarding stability in the Middle East, the global influence of the U.S. and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi.”

Early in trading in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%. European markets are set to open lower on Tuesday as investors monitor the Afghanistan crisis.  On Wall Street, U.S. stock index futures were slightly lower after the Dow and S&P 500 on Monday closed at record highs.

The deVere CEO concludes: “Investors will be monitoring the Afghanistan situation carefully as it could very likely have implications down the road.

“As ever, investors’ best tool to avoid risk and seize opportunities is to remain invested and ensure proper diversification across asset class, sectors, currencies and regions.”

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