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Africa Accounts for $4.1b Non-oil Export Under AGOA

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  • 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.

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

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Gold

Gold Steadies After Initial Gains on Reports of Israel’s Strikes in Iran

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Gold, often viewed as a haven during times of geopolitical uncertainty, exhibited a characteristic surge in response to reports of Israel’s alleged strikes in Iran, only to stabilize later as tensions simmered.

The yellow metal’s initial rally came on the heels of escalating tensions in the Middle East, with concerns mounting over a potential wider conflict.

Spot gold soared as much as 1.6% in early trading as news circulated regarding Israel’s purported strikes on targets in Iran.

This surge, reaching a high of $2,400 a ton, reflected the nervousness pervading global markets amidst the saber-rattling between the two nations.

However, as the day progressed, media reports from both countries appeared to downplay the impact and severity of the alleged strikes, contributing to a moderation in gold’s gains.

Analysts noted that while the initial spike was fueled by fears of heightened conflict, subsequent assessments suggesting a less severe outcome helped calm investor nerves, leading to a stabilization in gold prices.

Traders had been bracing for a potential Israeli response following Iran’s missile and drone attack over the weekend, raising concerns about a retaliatory spiral between the two adversaries.

Reports of an explosion in Iran’s central city of Isfahan further added to the atmosphere of uncertainty, prompting flight suspensions and exacerbating market jitters.

In addition to geopolitical tensions, gold’s rally in recent months has been underpinned by other factors, including expectations of US interest rate cuts, sustained central bank buying, and robust consumer demand, particularly in China.

Despite the initial surge followed by stabilization, gold remains sensitive to developments in the Middle East and broader geopolitical dynamics.

Investors continue to monitor the situation closely for any signs of escalation or de-escalation, recognizing gold’s role as a traditional safe haven in times of uncertainty.

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Commodities

Global Cocoa Prices Surge to Record Levels, Processing Remains Steady

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Cocoa futures in New York have reached a historic pinnacle with the most-active contract hitting an all-time high of $11,578 a metric ton in early trading on Friday.

This surge comes amidst a backdrop of challenges in the cocoa industry, including supply chain disruptions, adverse weather conditions, and rising production costs.

Despite these hurdles, the pace of processing in chocolate factories has remained constant, providing a glimmer of hope for chocolate lovers worldwide.

Data released after market close on Thursday revealed that cocoa processing, known as “grinds,” was up in North America during the first quarter, appreciating by 4% compared to the same period last year.

Meanwhile, processing in Europe only saw a modest decline of about 2%, and Asia experienced a slight decrease.

These processing figures are particularly noteworthy given the current landscape of cocoa prices. Since the beginning of 2024, cocoa futures have more than doubled, reflecting the immense pressure on the cocoa market.

Yet, despite these soaring prices, chocolate manufacturers have managed to maintain their production levels, indicating resilience in the face of adversity.

The surge in cocoa prices can be attributed to a variety of factors, including supply shortages caused by adverse weather conditions in key cocoa-producing regions such as West Africa.

Also, rising demand for chocolate products, particularly premium and artisanal varieties, has contributed to the upward pressure on prices.

While the spike in cocoa prices presents challenges for chocolate manufacturers and consumers alike, industry experts remain cautiously optimistic about the resilience of the cocoa market.

Despite the record-breaking prices, the steady pace of cocoa processing suggests that chocolate lovers can still expect to indulge in their favorite treats, albeit at a higher cost.

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Crude Oil

Dangote Refinery Leverages Cheaper US Oil Imports to Boost Production

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The Dangote Petroleum Refinery is capitalizing on the availability of cheaper oil imports from the United States.

Recent reports indicate that the refinery with a capacity of 650,000 barrels per day has begun leveraging US-grade oil to power its operations in Nigeria.

According to insights from industry analysts, the refinery has commenced shipping various products, including jet fuel, gasoil, and naphtha, as it gradually ramps up its production capacity.

The utilization of US oil imports, particularly the WTI Midland grade, has provided Dangote Refinery with a cost-effective solution for its feedstock requirements.

Experts anticipate that the refinery’s gasoline-focused units, expected to come online in the summer months will further bolster its influence in the Atlantic Basin gasoline markets.

Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, noted that Dangote’s entry into the gasoline market is poised to reshape the West African gasoline supply dynamics.

Despite operating at approximately half its nameplate capacity, Dangote Refinery’s impact on regional fuel markets is already being felt. The refinery’s recent announcement of a reduction in diesel prices from N1,200/litre to N1,000/litre has generated excitement within Nigeria’s downstream oil sector.

This move is expected to positively affect various sectors of the economy and contribute to reducing the country’s high inflation rate.

Furthermore, the refinery’s utilization of US oil imports shows its commitment to exploring cost-effective solutions while striving to meet Nigeria’s domestic fuel demand. As the refinery continues to optimize its production processes, it is poised to play a pivotal role in Nigeria’s energy landscape and contribute to the country’s quest for self-sufficiency in refined petroleum products.

Moreover, the Nigerian government’s recent directive to compel oil producers to prioritize domestic refineries for crude supply aligns with Dangote Refinery’s objectives of reducing reliance on imported refined products.

With the flexibility to purchase crude using either the local currency or the US dollar, the refinery is well-positioned to capitalize on these policy reforms and further enhance its operational efficiency.

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