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Afreximbank to Unveil Initiative Against Africa’s $50b Illicit Flows

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President, AfreximBank, Dr. Benedict Oramah
  • Afreximbank to Unveil Initiative Against Africa’s $50b Illicit Flows

African Export-Import Bank (Afreximbank) has said it would soon unveil an online tracking scheme that would help to fight the perennial illicit financial flows in the continent now estimated at $50 billion yearly.

Tagged: “African Customer Due Diligence Repository Platform”, the regional trade bank said the initiative would provide a centralised source of primary data required to conduct customer due diligence checks on African counterparties.

The platform would also allow subscribers to conduct due diligences at a low cost, thereby decreasing the cost of trade finance in Africa.

The Minister of Finance and Economic Planning of Rwanda, Claver Gatete, at the third yearly Customer Due Diligence and Corporate Governance Forum organised Afreximbank, in Kigali, raised the alarm over the rising level of illicit flows from the continent.

The forum, which gathered bankers, regulators, and representatives of financial institutions and corporate entities from Africa, also attracted the International Anti-Corruption Academy in Vienna, the International Finance Corporation.

The minister said the yearly loss to the beleaguered region should be a source of concern to everyone, especially as access to finance and capital was a key constraint to growth and economic development.

According to him, over the last 50 years, Africa had lost in excess of $1.7 trillion to illicit financial flows and that amounted to roughly equalled all the official development assistance the region had received during the same period.

He stressed that illicit activities had significant implications for growth and economic development and for the financial soundness of banks and corporates.

Gatete pointed out that these activities undercut legitimate economic activities, discourage investments, breed suspicion and undermine government legitimacy.

He urged African financial institutions, regulatory bodies and governments to work together to establish mechanisms that would ensure a healthier financial landscape and help prevent financial crimes as well as strengthen investors’ confidence in the continent.

However, Afreximbank Executive Vice-President, Corporate Governance and Legal Services, Dr. George Elombi, affirmed that the high cost of conducting customer due diligence adversely affected the stability of the African financial sector and the productivity of corporate entities.

“Financial crimes, compounded by weak corporate governance capacity, have the potential to derail legitimate economic activity and slow down the development of financial markets essential for optimal allocation of capital to support the structural transformation of resource-constrained African economies,” he said.

Unveiling the plans of Afreximbank to support the fight against illicit financial flows, he said the institution was increasing awareness on the need to look inward for financial resources through its Africa Direct Investment Initiative.

The move, he said, was in addition to promoting the use of African credit rating agencies by African entities as a way to commoditise corporate and banking-related information for greater access to credit at reduced compliance costs.

Meanwhile, the bank has said that Africa must institute stronger financial control mechanisms and capacity building for customer due diligence and corporate governance.

This, it said, was to attract capital competitively and ensure greater financial stability and sustainable development.

Besides, strong corporate governance was unanimously assessed by participants, as critical to ensuring the integrity and credibility of systems, as well as reduction of vulnerability of African economies to instability and shocks.

Again, boards and senior management of African financial institutions were advised to assess the adequacy and accuracy of information, while government bodies and institutions are to foster initiatives that promote good corporate governance practices.

The Governor of the National Bank of Rwanda, John Rangombwa, recalled that previous global financial crises had shown that weaknesses in governance contributed to systemic vulnerability and failures.

Given the fast-changing business dynamics and the growth of online banking, mobile payments and other electronic platforms, he said the need for a strong technology-driven approach to corporate governance and customer due diligence has become necessary.

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.

Crude Oil

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Crude oil

Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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opec

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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