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Afreximbank Seeks Improved Intra-Africa Trade

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President, AfreximBank, Dr. Benedict Oramah
  • Afreximbank Seeks Improved Intra-Africa Trade

For the umpteenth time, African Export-Import Bank (Afreximbank) has reiterated that active participation in intra-African trade will foster resilience in the region’s economies.

Already, the region’s biggest trade bank said the initial response to the call trade has made it possible for a number of African countries to record strong trade figures, amid persistent fall in commodity prices.

Afreximbank President, Dr. Benedict Oramah, in Addis Ababa, at the Africa Trade Facilitation Forum, organized by the African Union and the United Nations Economic Commission for Africa, said that a distinguishing feature of countries like Cote d’Ivoire, Ethiopia, Senegal, Rwanda, Morocco and Kenya, with economies growing at blistering paces, was their greater participation in intra-African trade.

Meanwhile, the bank has sealed a Dual Tenor-Dual Currency Syndicated Term Loan Facility, cumulatively worth $872 million, with strong support from its core relationship banks, for trade finance and general corporate purposes.

The deal, which involved 14 banks and 12 Initial Mandated Lead Arrangers and Bookrunners, saw the bank seal a $761 million and €105 million facilities.The 14 lenders that joined in the general syndication have been described as a balanced mixture of institutions from the Middle East, Europe and the Asia-Pacific region.

The Facility comprises a $316 million Tranche A1 and €105 million Tranche B, each with a tenor of two years, and a $445 million Tranche A2 with a tenor of three years.

Already, the margins of both the two and three-year tranches, at 130bp and 150bp respectively, represent the lowest levels that Afreximbank has paid for a syndicated loan.

“Kenya and Cote d’Ivoire’s intra-regional trade share of their respective total trade is 40 per cent and 32 per cent respectively. Intra-African trade has enabled the Kenyan shilling to remain reasonably stable when many others have been badly battered,” Oramah said.

For Nigeria, while the trade record made impressive rise in the third quarter, the directions of the transactions were dominated by Asia, Europe and United States, while Intra-African trade showed that imports were 3.6 per cent of the total.

Oramah said that intra-African trade had proven to be a buffer to external shocks and an instrument for structural transformation of commodity dependent African economies.

According to him, while Africa’s total trade in 2016 is expected to remain subdued, intra-African trade is expected to bounce back strongly to reach an estimated $180 billion, the same level attained in 2013, pushing its share of African trade to a new high of 19 per cent.

To this end, he said Afreximbank had introduced an Intra-African Trade Initiative under which it had committed to working with others to achieve more than 50 per cent growth in intra-African trade by raising the value from $170 billion in 2013 to $240 billion by 2021, a target of 22 per cent rise.

The bank was also aiming at formalising no less than 40 per cent of Africa’s informal cross-border trade.Noting that this is the time for trade facilitation and advocacy in accelerating intra-African trade, he warned that there is the need resolve issues of free movement and multiplicity of standards across the continent.

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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