- Africa Accounts for $4.1b Non-oil Export Under AGOA
The United States Government has stated that Nigeria and other African countries accounted for $4.1 billion worth of non-oil trade under the Africa Growth and Opportunity Act (AGOA).
According to the Assistant U.S. Trade Representative for Africa, Florizelle Liser, the scheme has resulted in a four-fold increase, from $1.4 billion in 2001 to $4.1 billion in 2015, in the continent’s non-oil trade with the country.
Worried by the infrastructural deficit impeding trade growth, the U.S. recommended that African countries should focus on infrastructure development, in particular, electricity and transportation, and should build new roads, bridges and railways to link major trade hubs that would improve economies of scale.
Liser added that African governments should also support the ability of commercial banks to modernize and finance small and medium-sized businesses and should strategically identify sectors that could benefit from AGOA and develop them, she said.
In a presentation at the headquarters of the African Export-Import Bank (Afreximbank) during the maiden edition of the Afreximbank Trade and Development Seminar Series, Ms. Liser said that sectors that had benefitted most from AGOA included automobiles, apparel, footwear, prepared fruits and vegetable, nuts and cut flowers.
“AGOA has had success in helping many African countries diversify their export portfolios,” continued Ms. Liser, who added that hundreds of thousands of jobs had been created as a result of the Act.
Noting that Africa currently accounts for only two per cent of U.S. trade, she said that supply-side constraints, including unreliable electricity and transportation, poor ports, lack of transnational highways, and poor access to the internet were among the impediments to trade development on the continent.
Other factors included low intra-Africa trade, which result in low economies of scale, and the difficulties faced by African producers in meeting U.S. agricultural and other standards, she added.
Ms. Liser identified other Africa-focused trade development initiatives by the U.S. to include the Millennium Challenge Corporation, which had set aside $7.9 billion, or 68 per cent of the total compact portfolio, for Africa.
According to her, the Corporation, which, at $3 billion, is the lead contributor to the U.S. Government’s trade capacity building assistance to AGOA-eligible countries, has dedicated 20 of its 33 compacts to African countries.
Other initiatives included Power Africa, the trade-related capacity programme administered under USAID and unveiled by U.S. President Barack Obama in 2013; Trade Africa, the USAID’s initiative to increase internal and regional trade and expand trade and economic ties; and the U.S. Overseas Private Investment Corporation, the government’s development finance institution which mobilizes private capital to address critical development challenges and which provides investors with financing, political risk insurance, and support for private equity investment funds, when commercial funding cannot be obtained elsewhere.
Earlier, Afreximbank President Dr. Benedict Oramah said that the fact that despite the size of the U.S. market and the preferential access granted to African countries for 15 years under AGOA, the continent had remained a marginal player in that market, raised questions about why Africa had been unable to better penetrate the market and about what could be done for it to take full advantage of the opportunity presented by AGOA.
The President noted that a deficit of product diversification had been singled out as a key hindrance to Africa’s access the U.S. market, and announced that Afreximbank, had identified the development of industrial parks and special economic zones as a strategic path to accelerating the industrialization of African economies and diversifying their exports.
Oil Holds Near Highest Since 2018 With Global Markets Tightening
Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.
Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.
China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.
Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.
“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.
Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.
At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.
Unlocking Investments into Africa’s Renewable Energy Market
The African Energy Guarantee Facility (AEGF) is launching a virtual roadshow of free webinars allowing a deeper understanding of risk issues for renewable energy projects on the continent, and conversations around risk mitigation solutions. The first webinar will take place on Thursday, 23 September from 14:30-16:00 hrs. EAT.
The session will be oriented on how to get more energy projects from the drawing board to the grid. While the energy demand in African economies is expected to nearly double by 2040, and although the potential for renewable energy is 1,000 times larger than the demand, only 2GW out of almost 180GW of this new renewable power were added on the African continent.
Clearly not good enough! To improve the situation within the next two decades, new solutions need to be implemented urgently. De-risking and promoting private sector investments will play a crucial part of it.
In this 90-min interactive session, AEGF partners: the European Investment Bank (EIB), KfW Development Bank, Munich Re and the African Trade Insurance Agency (ATI) will share their experience and provide valuable insights on how they were able to come together and design practical solutions for investors and financiers of green energy projects in Africa aligned with SDG7 objectives.
Across Africa, the complexity of renewable energy projects and their long tenors hold back crucial energy investment. Tailored to the specific needs and risk profiles of sustainable energy projects, AEGF will tackle the investment challenge by providing underwriting expertise and capacity tailored to market needs.
The AEGF will significantly boost private investment in sustainable energy projects, both expanding access to clean energy and contribute to achieving UN Sustainable Development Goals. The scheme supports new private sector investment in eligible renewable energy, energy efficiency and energy access projects in sub-Saharan Africa.
Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips
Shell Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Permian business to ConocoPhillips, a leading shales developer in the basin, for $9.5 billion in cash. The transaction will transfer all of Shell’s interest in the Permian to ConocoPhillips, subject to regulatory approvals.
“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director. “This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”
Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.
The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30 percent of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.
Shell has been providing energy to U.S. customers for more than 100 years and plans to remain an energy leader in the country for decades to come.
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