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Osinbajo: Farmers to Secure Credit at Single Digit from Bank of Agriculture

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Vice President Yemi Osinbajo

Vice President Yemi Osinbajo monday said efforts were being made to ensure that farmers secure financing from the Bank of Agriculture (BoA) at single digit interest rate in a determined move to boost agriculture as part of government’s diversification strategy.

He said the Federal Ministry of Finance had practically concluded plans to recapitalise and re-engineer the BoA adding that the bank should be ready to give single digit rates by the end of the quarter.

He said with the current double digit interest rate and reluctance by commercial banks to lend to agriculture, there was need to develop alternative model for financing the sector in the short term.

He said the Central Bank of Nigeria’s (CBN) Anchor Borrower programme has been useful and had recorded huge successes in local rice and wheat production through the provision of loans at single digit.

Speaking yesterday in Abuja at the unveiling of the “Green Alternative: the Agriculture Promotion Policy 2016-2020” which is a four-year blueprint on growing the sector, he said repositioning agriculture was critical for economic transformation.

He said the sector would not only be revived to achieve food security but also have the capacity to produce and export to earn foreign exchange.

He said the inability of past administrations to adhere to policy direction and the unbridled importation of items which ought to be produced locally, coupled with high interest loans to farmers were some of the major drawbacks to the development of the sector.

He said the current administration inherited a near colapse economy and had to take far reaching decisions to reposition it.

According to him, one of the most critical component of the plan was to position agriculture as arrow-head of its recovery efforts.

“There’s no question at all that if we get agriculture right, we will get our economy right,” he said.

He added that the roadmap identified the inability to meet domestic requirements which is more of productivity challenge as well as inability to export at levels required or market success adding that the Green Alternatives will solve the challenges.

He said: “You cannot have a policy of encouraging local production of food and on the other hand, have a high tarrif on imported agricultural equipment. There’s no way that we can encourage local production when we allow unbridled importation of the same thing that we are trying to produce.

“There’s no way we can do the scale of agricultural production both for domestic consumption and export without ensuring local improved seedling development alongside those that we import. And of course, encouraging the works of the agents of the ministries of science and technology who have been making great breakthroughs in local development of agricultural equipment.”

Osinbajo said as part of the 500,000 teachers that federal government plans to recruit, about 100,000 will be trained as extension workers for the farms.

He commended the Minister of Agriculture and Rural Development, Mr. Audu Ogbeh, for what he described as his unbridled advocacy for a new policy on agriculture and for also spearheading the policy development within a short period.

Nevertheless, Ogbeh thanked both President Buhari and Osinbajo for their support in ensuring that a blueprint on agriculture was developed.

The minister said the new document was not entirely new as it was built upon the Agricultural Transformational Agenda (ATA) of the previous administration.

He maintained that the present administration had no intentions to jettison good ideas from the past regime noting that policy summersaults were often costlier than new initiatives.

He said adjustment would be made to past administration’s policies where necessary.

He expressed confidence that with the recent interventions, “It won’t be long before we begin to cruise to reasonable altitude.”

He said government would work with state governments to put over 200 dams located across the country into use.

He added that stakeholders would now be expected to use only duly certified fertilizers by government as well as adhere to advisory of soil conditions for bumper yields.

The federal government has already invested massively in soil mapping/testing aimed at increasing crop yields.

He said adequate security arrangement was being put in place to shield local and foreign investors into agriculture from the snares of armed robbery and kidnapping.

On the new policy document, Ogbeh said there had been no alternative to oil and gas in the past 30 years while agriculture had totally been relegated, a situation which according to him led to annual food import bills at a historic $22 billion.

He said given Nigeria’s population projection, the government cannot continue to subsidise feeding, adding that “We have to feed or perish.”

He said tales of widespread hunger will be brought to an end as government expects bumper harvest this year, bouyed by innovations in fertilizer utilisation and education of farmers on new ways of doing things.

Essentially, the new 129-page policy document produced by the ministry of agriculture after extensive consultations with stakeholders, among other things, targets three key pillars including productivity enhancements, crowding in private sector investment and institutional strengthening/realignment.

The key objectives is to grow the agricultural sector to between six to and 12 per cent annually; doubling agricultural household incomes in 6 to 12 years and integrating agricultural commodity value chains into the broader supply chain.

Other immediate targets are to drive job growth and wealth creation as well as ensuring enhanced capacity for foreign exchange earnings.

The six focal areas of intervention include institutional setting and roles, youth and women, infrastructure, research and innovation, and food and national security as well as climate smart agriculture.

He said currently, government’s drive towards food security is in progress particularly for rice, maize, sorghum, millet, wheat, and animal products and tomato paste.

The minister added that the new policy would further educate the people on how to keep bees which are critical for pollination of farm produce particularly tomatoes.

He also said government is presently addressing the issues around cattle rearing and the incessant conflicts with farmers, adding that it is also working with state governments to secure the grazing reserves for herdsmen, a situation that could limit movement and reduce confrontations.

Ogbeh said government’s focus was also to promote commercial agriculture to go side by side with subsistence farming in order to boost exports.

He said a lot of investments would go into palm oil and lemon grass oil productions for export.

He said the new document will also require all undergraduates in tertiary institutions to own farms on campus.

The minister lamented that the 774 local government areas in the country have almost collapsed when it comes to agriculture, stressing that they all must be brought back into the system.

He said whatever the problems of local government are they must be productive or better scrapped.

He, therefore, enjoined every Nigerian to take to farming to save the ailing economy while assuring them of government support.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Markets

A Nervy Start to the Week

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Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

What could have been a really positive week for equity markets is off to a much more nervy start, with stocks in Europe treading water and US futures slightly lower.

The inflation report on Friday was red hot once more, extinguishing any hope that investors could hop aboard the Fed pivot train and ride stock markets higher into year-end. Perhaps it’s not quite so dramatic but it was a real setback, something we should be used to by now.

The wages component was the killer blow. That was not just a beat, it obliterated expectations and came in double the forecasted number. It may be a blip, but it’s a huge one and it will almost certainly take more than one much cooler report in January to comfort those that still fear inflation becoming entrenched.

That’s ultimately where we’re now up to in the inflation story. Many accept that base effects and lower energy prices will drive the headline inflation figure much lower next year, among other things, while a slower economy – maybe recession – will eventually hit demand and contribute to the decline. But what the Fed fears now is fighting entrenched inflation and these wage numbers won’t make for comfortable reading.

An economic victory for China amid gloomy PMIs

Chinese stocks were the clear outperformer overnight as authorities continued to work towards a softening of the country’s zero-Covid stance with the end goal seemingly being the end of it altogether. It’s thought that it will be downgraded to category B management as early as next month with officials claiming it’s less threatening than previous strains, a huge move away from the rhetoric and approach of the last few years.

This came as the Caixin services PMI slipped to 46.7, much lower than anticipated. That said, I’m not sure anyone will be shocked given the record Covid surge, but the more targeted – albeit seemingly confused – approach being taken has ensured less disruption, as evidenced by how much better the PMI has performed compared with earlier this year.

And it’s not just China that’s seeing surveys underperforming and, in many cases, putting in sub-50 readings. Europe is either already in recession or heading for it and the surveys highlight just how pessimistic firms are despite the winter getting off to a warmer start.

Japan is among the few recording a growth reading, although having slipped from 53.2 in October to 50.3 last month, you have to wonder for how long. Input prices are punishing firms, with some now raising prices in order to pass those higher costs on. That won’t help activity or convince the BoJ to declare victory, as higher energy and food costs are also hitting domestic demand. The one major outlier is India where the services PMI accelerated higher to 56.4 buoyed by domestic and external demand. An impressive feat in this global environment.

Oil higher as China looks to ease Covid restrictions

Oil prices are higher on Monday, rallying 2%, after the G7 imposed a $60 price cap on Russian oil and OPEC+ announced no new output cuts. Both bring a degree of uncertainty, with the details of the cap and the impact on Russian sales still unclear.

From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective. The decision to leave output unchanged was probably the right one for now and there’s nothing to stop the group from coming together again before the next scheduled meeting should the situation warrant it.

A major setback

It goes without saying that the jobs report on Friday was a big setback for gold as it leaves huge uncertainty around where the terminal rate will land. Of course, we should be used to bumps in the road by now, having experienced many already this year. There’s no reason why the path back to 2% should be any smoother.

But the yellow metal did recover those jobs report losses and even hit a new four-month high today. Perhaps the big difference now is momentum. It’s run into strong resistance around those August highs around $1,810 and simply doesn’t have the momentum it would have had the report been cooler. We’re now more than four weeks into the recovery rally in gold and a corrective move of some kind may be on the cards.

Silence is bliss

Bitcoin continues to enjoy a mild relief rally and has even moved above $17,000 to trade at its highest level in almost a month. It’s probably too early to celebrate yet though as these are very cautious gains that could be quickly and easily wiped out by more negative headlines related to FTX. Silence is currently bliss for the crypto community.

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Crude Oil

Nine Oil Producing States Pocket N625bn in 2 Years

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Oil - Investors King

The federal government has revealed that Nine oil-producing states pocket N625.43 billion as 13 percent oil derivation, subsidy, and SURE-P refunds in just two years.

This was made known in a statement released on Friday by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu.

According to the statement, the states that benefited from the refunds include Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers States. Garba Shehu, however, added that the states still have about N1.1 billion as outstanding benefits due to them. He added that the refund has been accumulated since 1999.

Making reference to the comments made by the Governor of Rivers State, the Presidency noted that the Buhari-led regime will continue to render equal service to all the states regardless of affiliation, Investors King learnt. 

Between October 2, 2021, and January 11, 2022, the presidential spokesman disclosed that the states were paid in eight instalments, while the ninth to 12th instalments are still outstanding. 

Meanwhile, Garba recalled that data obtained from the Federation Account Department, Office of the Accountant General of the Federation,  showed that a total of N477.2 billion was released to the nine states as a refund of the 13 percent derivation fund on withdrawal from Excess Crude Account (ECA), without deducting derivation from 2004 to 2019, leaving an outstanding balance of N287.04 billion.

“Abia State received N4.8 billion with an outstanding sum of N2.8 billion, Akwa-Ibom received N128 billion with an outstanding sum of N77 billion, Bayelsa with N92.2bn, leaving an outstanding of N55 billion”.

“Cross River got a refund N1.3 billion with a balance N792 million, Delta State received N110 billion, leaving a balance of N66.2 billion, Edo State received N11.3 billion, with a balance of N6.8 billion, Imo State, N5.5 billion, with an outstanding sum of N3.3 billion, Ondo State, N19.4 billion with an outstanding sum of N11.7bn while Rivers State was paid 103.6 billion, with an outstanding balance of N62.3 billion” the statement read. 

According to the presidential spokesperson, states also got N64.8 billion as a refund of the 13 percent derivation fund on deductions made by Nigeria National Petroleum Company Limited without payment of derivation to Oil Producing states from 1999 to December.

Garba concluded that the president has approved the outstanding payment of N860.59 billion from the refunds which will soon be released to the benefiting states. 

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Markets

Flashing Green

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude

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Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.

While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.

And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.

Positive signals

The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.

We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.

A huge few days for oil markets

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.

Gold testing range highs

Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.

Some relief for cryptos

The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.

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