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Government Stalls Revision of 41 Restricted Items’ List

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  • Government Stalls Revision of 41 Restricted Items’ List

Over a year after the Federal Government promised to review the 41 restricted items from accessing foreign exchange (forex) from the interbank rate, the interest charged on short-term funds among banks, indications have emerged that a revised list may not be released anytime soon.

This emerged despite assurances by the government to reduce pressure on the parallel market, an unofficial market for trading currencies, to encourage local production.

The restricted items include Rice, cement, palm kernel/palm oil products/vegetables oils, meat and processed meat products, vegetables and processed vegetable products, poultry chicken, eggs, turkey, private airplanes/jets, cold rolled steel sheets, wood particle boards and panels, textiles, plastic and rubber products, polypropylene granules, cellophane wrappers, soap and cosmetics as well as tomatoes/tomato pastes.

The Central Bank of Nigeria (CBN), the lender of last resort, justified the action saying that such imports led to manufacturing companies closing down their operations as they were local goods were being substituted with seemingly cheap imports while inadvertently exporting jobs and importing poverty to the country.

Indeed, an authoritative source from the CBN stated that while the concerns raised by MAN and the OPS on the 41 items are being reviewed, it discovered that many manufacturers preferred to import rather than produce locally even when obstacles were being removed.

The highly placed source, who prefers anonymity, stated that some manufacturers had accessed facilities to the tune of N3 billion without any form of security, while others who expressed interest to backwardly integrate their processes had no farms but only interested in continued importation of such goods.

The source noted that “despite claims about lack of access to forex, not less than 1,342 manufacturers and allied firms received $660.17 million from the CBN through Deposit Money Banks (DMBs) for importation of raw materials, plants and machinery in September.”

The source argued that government will be doing the economy a disservice if it yielded to pressure to withdraw restriction on some of the restricted items as they can be sourced and produced locally.

Many indigenous manufacturers are already threatening to exit from Nigeria over lack of access to forex and other financial support, but Government accused them of sabotage.

According to Government, those manufacturers threatening to leave the country are unpatriotic and only seek funds to continue importation rather than backwardly integrating their processes to enhance local production.

Reacting to the allegation, the President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, said that while it may be true that some manufacturers are not sincere to their commitments to commence local production having enjoyed certain waivers and privileges, it may not be true to generalise that manufacturers are not sincere to the backward integration agenda.

This is because many members of MAN are already seeking alternative sources for their raw materials locally.

“I may not be able to hold brief for all manufacturers, but I do know that the area where some operators have enjoyed some concession is in the area of tomato production, even though there is not much to show for it. Others are backwardly integrating as that is the only alternative due to the scarcity of foreign exchange,” Jacobs added.

Private individuals under the Organised Private Sector (OPS) and the manufacturers had differed with the apex bank on the classification and definition of some of the products restricted from access to forex market, stating that some of the items are raw materials used in the course of production in their factories.

MAN President, Jacobs, noted that about 680 HS codes were identified following the breakdown and classification of the 41 restricted items by the CBN from the official forex window into HS codes.

Of the 680 HS codes, Jacobs explained that 95 HS codes are raw materials used in the course of production in the factories and they are presently restricted from access to forex market.

This is meant to identify some of the 41 items restricted from the subsidised official forex window that are believed to form part of the raw materials used in local production by manufacturing firms.

Indeed, Vice President, Prof. Yemi Osinbajo, while speaking at the yearly general meeting of the Manufacturers Association of Nigeria (MAN) in Lagos, had noted that negotiations are ongoing with the CBN.

Meanwhile, some of the manufacturers decried the lack of fiscal policy framework by the Government to encourage economic activities through spending and tax incentives, describing it as measures that guarantee their investments in the country.

The Director-General of the non-profit premier chamber of commerce in Nigeria, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, decried the lack of a fiscal policy framework that will guide operations in the real sector.

According to him, if the fundamentals are not right, backward integration will not work as so many linkages in the value-chain are missing.

“We need to build capacity of investors in the value-chain for backward integration to be successful. Except for the big manufacturers with huge capacity, it could be too much for industrialists to embark on the process with little or no support. Government needs to embark on a holistic and integrated approach as some of the raw materials are not easy to get as it is being described,” Yusuf said.

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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Crude Oil

Goldman Sachs Revised Down Brent Oil Forecast for Q3 2021

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Brent crude oil - Investors King

Goldman Sachs Group, an American multinational investment bank and financial services company, has revised down its Brent oil price projection for the third quarter (Q3) of 2021 by $5 from $80 per barrel previously predicted to $75 a barrel following the surge in Delta variant COVID-19.

The investment bank predicted that the surge in Delta variant COVID-19 cases will weigh on Brent oil price in Q3 2021 even with the expected increase in demand.

However, the bank projected a stronger second half of 2021, saying OPEC+ adopted slower production ramp-up will offset 1 million barrel per day demand hit from Delta.

Goldman said, “Our oil balances are slightly tighter in 2H21 than previously, with an assumed two-month 1 mb/d demand hit from Delta more than offset by OPEC+ slower production ramp-up.”

The leading investment banks now projected a deficit of 1.5 million barrels per day in the third quarter, down from 1.9 million barrels per day previously predicted.

Therefore, Brent crude oil is expected to average $80 per barrel in the fourth quarter, a $5 increase from the $75 initially predicted and the bank sees 1.7 million barrels per day in the fourth quarter.

The oil market repricing to a higher equilibrium is far from over, with the bullish impulse shifting from the demand to the supply side,” the bank said.

Goldman added that even if vaccinations fail to curb hospitalisation rates, which could drive a longer slump to demand, the decline would be offset by lower OPEC+ and U.S. shale output given current prices.

Oil prices may continue to gyrate wildly in the coming weeks, given the uncertainties around Delta variant and the slow velocity of supply developments relative to the recent demand gains,” it said.

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Crude Oil

Oil Extends Gains on Thursday on Expectations of Tighter Supplies

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Crude Oil - Investors King

Oil prices rose about $1.50 a barrel on Thursday, extending gains made in the previous three sessions on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.

Brent crude settled at $73.79 a barrel, up $1.56, or 2.2%, while U.S. West Texas Intermediate (WTI) settled at $71.91 a barrel, rising $1.61, or 2.3%.

“The death of demand was greatly exaggerated,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “Demand is not going away, so we’re back looking at a very tight market.”

Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, collectively known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.

But as demand was still set to outstrip supply in the second half of the year, Morgan Stanley forecast that global benchmark Brent will trade in the mid to high-$70s per barrel for the remainder of 2021.

“In the end, the global GDP (gross domestic product) recovery will likely remain on track, inventory data continues to be encouraging, our balances show tightness in H2 and we expect OPEC to remain cohesive,” it said.

Russia may start the process of banning gasoline exports next week if fuel prices on domestic exchanges stay at current levels, Energy Minister Nikolai Shulginov said, further signalling tighter oil supplies ahead.

Crude inventories in the United States, the world’s top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.

Inventories at the Cushing, Oklahoma crude storage hub and delivery point for WTI, however, has plunged for six continuous weeks, and hit their lowest since January 2020 last week.

“Supplies fell further by 1.3 million barrels to the lowest level since early last year, theoretically offering support to the WTI curve,” said Jim Ritterbusch of Ritterbusch and Associates.

Gasoline and diesel demand, according to EIA figures, also jumped last week.

Barclays analysts also expected a faster-than-expected draw in global oil inventories to pre-pandemic levels, prompting the bank to raise its 2021 oil price forecast by $3 to $5 to average $69 a barrel.

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Energy

RES4Africa, Enel Green Power and the European Investment Bank Encourage African Youth to Find Green Energy Solutions to Community Challenges

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European Investment Bank - Investors King

The second Micro-Grid Academy Young Talent of the Year Award today acknowledged energy innovation from across Africa that can accelerate the green transition and improve economic opportunities.

Backed by the RES4Africa Foundation, Enel Green Power and the European Investment Bank the yearly competition encourages young energy entrepreneurs from across the continent to develop projects that expand enegy access, enable greater use of renewable eneryg and accelerate sustainability.

Young finalists from across West, East and Southern Africa presented their innovative ideas to expert judges from the RES4Africa Foundation, Enel Green Power and the European Investment Bank.

The 2021 edition of the Micro-Grid Academy Young Talent of the Year Award has arrived to its final steps. Today, the eight young African innovators selected as finalists out of nearly 50 applicants presented to the international public their disruptive projects for the first time. The presentation took place during the event Public Competition for the MGA Young Talent of the Year 2021 finalists, and represents a preparatory step for the announcement of the three winners, that will be held the 28th of September in the framework of the Precop26.

The three entities strongly believe that renewables and innovation will be the response to the climate changes and energy deficit that Africa faces. In this deeply needed path towards its just energy transition, the continent can and must rely on one of its most precious resources : its youth. With this joint initiative, RES4Africa, Enel Green Power and the European Investment Bank put together their efforts to support those young people from all Africa countries who are committed and motivate to create a real change in their communities.

These are the finalists identified by the selection committee, who publicly presented their project ideas and among which there are the three future winners:

• Adekoyejo Ifeoluwapo Kuye, 26 years old from Nigeria, introduced a project focused on a sustainable cold chain for food;

• Alex Makalliwa, 31 from Kenya, presented his initiative of electrical tricycles for heavy loads in Nairobi;

• Benson Kibiti, 34 also from Kenya, performed an overview on an PV-powered trolley for heating up food and providing power;

• Lucas Filipe Tamele Junior, 24 from Mozambique, focused on waste management, biofertilizers and biogas;

• Matjaka Ketsi from Lesotho is 28, and presented an initiative aiming at building solar-powered Learning Centres for rural communities;

• Shedrack Charles Mkwepu is instead 26 and comes from Tanzania: he designed a system that allows farmers to control irrigation and other soil parametres from a mobile phone;

• Carol Ofafa, 32 from Kenya, proposed the installation of a PV system for health facilities;

• Kumbuso Joshua Nyoni, 34 from Zambia, envision an integrated Water-Food-Energy model for PV power and a water pumping system.

The webinar benefitted from the presence of Salvatore Bernabei, President of RES4Africa and Head of Enel Global Power Generation, as well as of Maria Shaw Barragan, Director of Lending in Africa, Caribbean, Pacific, Asia and Latin America, European Investment Bank. They introduced the objectives of the MGA Young Talent of the Year Award, while reflecting upon youth’s impact on the just energy transition.

Moreover, after the finalists’ presentation, a final feedback was provided, with closing remarks, by Roberto Vigotti, Secretary General at RES4Africa Foundation, Carmelo Cocuzza, Head of Corporates Unit, European Investment Bank, and Silvia Piana, Head of Regulatory Affairs Africa, Asia and Australia Area at Enel Green Power.

“The ability to generate innovation will be a fundamental driver to pave the way for a transformation that goes well beyond the dynamic of the Energy sector” commented Salvatore Bernabei “We are here give voice and visibility to young talents, innovators, entrepreneurs promoting the best innovative ideas to stimulate socio-economic progress from within and free the creativity of the younger generations in designing the Africa of tomorrow”.

Increasing energy access and enabling more sustainable energy use is crucial to unlock opportunities for communities across Africa. The finalists in this year’s Micro-Grid Academy Young Talent Awards all demonstrate inspirational and innovative thinking that combined world-class energy expertise with unparalleled understanding of local energy needs and all deserve to win. The European Investment Bank is pleased to join RES4Africa and Enel Green Power to support talented young innovators and encourage them to become green energy leaders of the future.” said Maria Shaw-Barragan, European Investment Bank Director for Global Partners.

RES4Africa Foundation (Renewable Energy Solutions for Africa) envisions the sustainable transformation of Africa’s electricity systems to ensure reliable and affordable electricity access for all, enabling the continent to achieve its full, resilient, inclusive and sustainable development. The Foundation’s mission is to create favourable conditions for scaling up investments in clean energy technologies to accelerate the continent’s just energy transition and transformation.

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