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Nigerians Not Feeling Impact of Development Banks – Dogara



SPEAKER of the House of Representatives, Yakubu Dogara
  • Nigerians Not Feeling Impact of Development Banks

The Speaker of the House of Representatives, Mr. Yakubu Dogara, said on Tuesday that Nigerians were not feeling the impact of Development Finance Institutions established by the Federal Government to serve as a catalyst for development.

He noted that despite the huge financial resources at the disposal of the institutions, they had made little impact over the years to grow Micro, Small and Medium Enterprises, among others.

Some the country’s DFIs include the Bank of Industry, Bank of Agriculture, Federal Mortgage Bank of Nigeria, Nigerian Export-Import Bank, The Infrastructure Bank and National Economic Reconstruction Fund.

Last week Wednesday, President Muhammadu Buhari announced his administration’s plan to recapitalise the BoI and the BoA next year by making a provision of N15bn in the budget for the two institutions.

Dogara on Tuesday spoke at the opening of a hearing by an ad hoc committee of the House on the dwindling efficiency of the DFIs.

He stated that the House would support the government’s efforts to strengthen the institutions to be able to deliver on their core mandates.

Dogara cited the example of SMEs, which he said had not been able to access loans for development despite the presence of the DFIs established primarily to serve this purpose.

The Speaker added, “The DFIs are established to serve as catalysts for the development of Micro, Small and Medium Enterprises and agro-based businesses. In most developing countries, the DFIs have been the springboard on which such countries became economy giants.

“The financial conditions of many development banks have deteriorated over the years owing to a number of factors such as the prevalence of macroeconomic instability, low repayment rates by clients, and significant shortage of investible funds.”

The committee is chaired by a member from Anambra State, Mr. Emeka Anohu.

But, the BoI, argued that the loans it offered to small-scale enterprises recorded 95 per cent performance over the years.

The bank’s acting Managing Director, Mr. Waheed Olagunju, said the BoI’s performance was above the threshold set by the Central Bank of Nigeria, one of its key financiers.

“We got a six-year intervention fund of N535bn from the CBN, running from 2010. And the performance of our loan is 95 per cent, which is over and above the CBN’s threshold of five per cent, and the industry average of 11 per cent,” Olagunju explained.

He called for stronger private sector involvement in the economy to drive industrialisation as against leaving it in the hands of the government alone.

The BoI boss, however, advised that the country must address all the social challenges associated with industrialisation.

Olagunju added, “When investors come in, how they are treated at our embassies in their countries when seeking for visas matters a lot. How the airport security treats them, how the taxi driver and hotel receptionists receive them in Nigeria, and lastly, how bureaucrats handle their files while pushing for investment opportunities, all determine whether they will bring in the money or not.

“So, the government has very little to do with regards to the attitude of individuals, because no profession preaches corruption.”

He disclosed that the bank faced initial challenges, like the failure of the administration of former President Olusegun Obasanjo to release the N50bn take off grant it promised the BoI.

“We didn’t get up to the N50bn promised by the government. So, we decided to become a self-funding institution by sourcing our funds and loan them out to small and medium-scale industrialists,” he said.

The committee later summoned all the DFIs to appear before it on January 17 with full disclosures of the funds they had received from the government since their creation.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

Crude Oil

Brent Crude Rises to $69 on IEA Report



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Oil prices rose after the release of the International Energy Agency’s (IEA)  closely-watched Oil Market Report, with WTI Crude trading at above $66 a barrel and Brent Crude surpassing the $69 per barrel mark.

Prices jumped even though the agency revised down its full-year 2021 oil demand growth forecast by 270,000 barrels per day (bpd) from last month’s assessment, expecting now demand to rise by 5.4 million bpd. The downward revision was due to weaker consumption in Europe and North America in the first quarter and expectations of 630,000 bpd lower demand in the second quarter due to India’s COVID crisis.

The excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even steeper stock draws, the IEA said yesterday, keeping an upbeat forecast of global oil demand despite the weaker-than-expected first half of 2021.

However, the upbeat outlook for the second half of the year remains unchanged, as vaccination campaigns expand and the pandemic largely comes under control, the IEA said.

Moreover, the global oil glut that was hanging over the market for more than a year is now gone, the agency said.

“After nearly a year of robust supply restraint from OPEC+, bloated world oil inventories that built up during last year’s COVID-19 demand shock have returned to more normal levels,” the IEA said in its report.

In March, industry stocks in the developed economies fell by 25 million barrels to 2.951 billion barrels, reducing the overhang versus the five-year average to only 1.7 million barrels, and stocks continued to fall in April.

“Draws had been almost inevitable as easing mobility restrictions in the United States and Europe, robust industrial activity and coronavirus vaccinations set the stage for a steady rebound in fuel demand while OPEC+ pumped far below the call on its crude,” the IEA said.

The market looks oversupplied in May, but stock draws are set to resume as early as June and accelerate later this year. Under the current OPEC+ policy, oil supply will not catch up fast enough, with a jump in demand expected in the second half, according to the IEA. As vaccination rates rise and mobility restrictions ease, global oil demand is set to soar from 93.1 million bpd in the first quarter of 2021 to 99.6 million bpd by the end of the year.

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OPEC Expects Increase In Global Oil Demand Raises Members’ Forecast on Crude Supply



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The Organisation of Petroleum Exporting Countries (OPEC) yesterday lifted its forecast on its members’ crude this year by over 200,000 bpd and now expects demand for its own crude to average 27.65mn bpd in 2021.

This is almost 5.2mn bpd higher than last year and around 2.7mn b/d higher than an earlier estimate of the group’s April production.

According to the highlights of the organisation’s latest Monthly Oil Market Report (MOMR), OPEC crude is projected to rise from 26.48 million bpd in the second quarter to 28.7 million bpd in the third and 29.54 million bpd in the fourth quarter of the year.

The report also indicated a fall in Nigeria’s crude production from 1.477 bpd in February to 1.473, a difference of just about 4,000 bpd before rising again in April to 1.548 million bpd, to add 75,000 bpd last month.

OPEC stated that its upward revision of members’ crude was underpinned by a downgrade in the group’s forecast for non-OPEC supply, which it now expects to grow by 700,000 bpd to 63.6mn b/d against last month’s report’s projection of a 930,000 bpd rise to 63.83mn bpd.

The oil cartel projected that US crude output would drop by 280,000 bpd this year, compared with its previous forecast for a 70,000 bpd decline.

On the demand side, OPEC kept its overall forecast unchanged from last month’s MOMR, stressing that it expects global oil demand to grow by 5.95 million bpd to 96.46 million bpd this year, partly reversing last year’s 9.48mn bpd drop.

Spot crude prices fell in April for the first time in six months, with North Sea Dated and WTI easing month-on-month by 1.7 percent and 1 percent, respectively.

On the global economic projections, the cartel said stimulus measures in the US and accelerating recovery in Asian economies might continue supporting the global economic growth forecast for 2021, now revised up by 0.1 percent to reach 5.5 percent year-on-year.

This comes after a 3.5 percent year-on-year contraction estimated for the global economy in 2020.

However, global economic growth for 2021 remains clouded by uncertainties including, but not limited to the spread of COVID-19 variants and the speed of the global vaccine rollout, OPEC stated.

“World oil demand is assumed to have dropped by 9.5 mb/d in 2020, unchanged from last month’s assessment, now estimated to have reached 90.5 mb/d for the year. For 2021, world oil demand is expected to increase by 6.0 mb/d, unchanged from last month’s estimate, to average 96.5 mb/d,” it said.

The report listed the main drivers for supply growth in 2021 to be Canada, Brazil, China, and Norway, while US liquid supply is expected to decline by 0.1 mb/d year-on-year.

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Crude Oil

Oil Rises Over Concerns of Fuel Shortages



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Oil prices rose on Tuesday, as lingering fears of gasoline shortages due to the outage at the largest U.S. fuel pipeline system after a cyber attack brought futures back from an early drop of more than 1%.

Brent crude futures rose 35 cents, or 0.5%, to $68.67 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 49 cents, or 0.8%, to $65.41.

Benchmark gasoline futures prices rose 1 cent to $2.14 a gallon.

On Monday, Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said it was working to restore much of its operations by the end of the week.

Right now there’s a generalized anxiety premium being built into prices because of Colonial and it’s keeping a floor under the market,” said John Kilduff, partner at Again Capital LLC in New York.

Fuel supply disruption has driven gasoline prices at the pump to multi-year highs and demand has spiked in some areas served by the pipeline as motorists fill their tanks.

Traders booked at least four tankers to store refined oil products off the U.S. Gulf Coast refining hub after a cyber attack that knocked out the pipeline, shipping data showed on Tuesday.

North Carolina, the U.S. Environmental Protection Agency and Department of Transportation issued waivers allowing fuel distributors and truck drivers to take steps to try to prevent gasoline shortages.

OPEC on Tuesday raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India.

Meanwhile, the rapid spread of infections in India has increased calls to lock down the world’s second-most populous country and the third-largest oil importer and consumer.

India’s top state oil refiners have already started reducing runs and crude imports as the new coronavirus cuts fuel consumption, company officials told Reuters on Tuesday.

On the bullish side for crude, analysts are expecting data to show U.S. inventories fell by about 2.3 million barrels in the week to May 7 after a drop of 8 million barrels the previous week, a Reuters poll showed.

Gasoline stocks are expected to have fallen by about 400,000 barrels, analysts estimated ahead of reports from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday.

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