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Afrinvest CEO Urges FG to Embark on ‘Bold’ Reforms to Jumpstart Growth

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  • Afrinvest CEO Urges FG to Embark on ‘Bold’ Reforms to Jumpstart Growth

The Chief Executive Officer of Afrinvest West Africa Limited, Mr. Ike Chioke has stressed the need for the federal government to be bold and assertive in pushing for critical reforms in the country. This, according to him was needed to stimulate economic growth.

Chioke, who said this during a media briefing on the launch of Afrinvest’s 2017 Nigerian Economic Outlook titled: “Reform or be Relegated,” in Lagos, said with the current state of the economy, if policy makers don’t push for critical reforms, ” we would be talking of a bigger problem than what we have now in the future.”

“Nigerians are very patient people. If they have a problem, instead of solving it, they go for palliative. I think the leadership needs to try to focus on how to solve problems in a holistic manner, otherwise we would be continuously relegated. People are talking about the ‘Giant of Africa,’ we are giant of nothing!” he said.

According to him, investors in Africa are now increasingly showing more interest going to countries like Ghana, Kenya and Egypt.

“While we have refused to reform, because of either political, religious or ethnic tensions, other countries similar to Nigeria that have similar commodity driven environment, such as Russia, Brazil and South Africa, because they reformed very rapidly, they have been able to attract enough foreign direct investments (FDIs) and foreign portfolio investments (FPIs) flows.

“Last year, Nigeria only recorded $2.1 billion of FDI, compared to $5.6 billion in 2015. When you compare that to Brazil, in 2015, they recorded $261 billion of FDI flows. In 2016, because they reformed quickly, they went up to nearly $340 billion. So, in an environment where we are going down, Brazil is going up. Same thing happened in Russia, in 2015, they had $31 billion of FDI flows, while in 2016, they recorded over $40 billion of FDIs.

“So, because these were markets that quickly reformed their currency, restructured their oil and gas sector, in other to attract long term capital, that immediately supported their economies and they have left the problems of 2014, far behind. But here we are in 2017, still suffering from the symptoms of 2014, when oil prices started going down and we started seeing the impact of shale production,” the Afrinvest boss added.

These, according to Chioke, are problems nations face when they refuse to reform major areas of the economy, but just skirt around the edges.

“See what is happening in the oil and gas sector, the Petroleum Industry Bill (PIB) has been floating around. Look at the Niger Delta militancy, it has been there for almost a decade. The combination of these issues means that we are looking at certain sectors for reforms. We need to carry out a major reform in the oil and gas sector. We think that we need to do whatever is necessary to ensure the passage of the PIB. That, with some targeted sale of some assets, the government can go from being 51 per cent owner of the Joint Venture to be a significant minority. Imagine an NNPC running as efficient as NLNG, you will get really attractive dividends and get value.

“The power sector is another area that massive reform is needed. One of the challenges of the sector is the national grid arrangement, which means that if I generate power in Lagos, before I can sell it to the people in Lagos; I need to send it to the national grid. It means therefore that it is extremely difficult for power to get to Nigeria. In other countries around the world, they don’t have a national grid. But we introduced it because of political reasons,” he added.

While calling on the federal government to take the mining sector out of the exclusive list, improve the ‘Ease of Doing Business,’ in the country, Chioke also advocated for favorable market-friendly policies, especially with regards to the foreign exchange market.

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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Commodities

Increased Demand Paves The Way for Expansion of Africa’s Sugar Industry

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Sugar - Investors King

Africa, June 2021:  A new focus report produced by the Oxford Business Group (OBG), in partnership with the International Sugar Organization (ISO), explores the potential that Africa’s sugar industry holds for growth on the back of an anticipated rise in regional demand. The report was presented to ISO members during the MECAS meeting at the Organization’s 58th Council Session, on June 17th 2021.

Titled “Sugar in Africa”, the report highlights the opportunities for investors to contribute to the industry’s development by helping to bridge infrastructure gaps in segments such as farming and refining and port facilities.

The report considers the benefits that the African Continental Free Trade Area (AfCFTA) could deliver by supporting fair intra-African sugar trade efforts and bringing regulatory frameworks under a common umbrella, which will be key to improving competitiveness.

The increased international focus on ESG standards is another topical issue examined. Here, the report charts the initiatives already under way in Africa supported by green-focused investment with sustainability at their core, which will help to instil confidence in new investors keen to adhere to ESG principles in their decision-making.

In addition, subscribers will find coverage of the impact that Covid-19 had on the industry, with detailed analysis provided of the decrease in both worldwide sugar production and prices, as movement restrictions and social-distancing measures took their toll on operations.

The report shines a spotlight on sugar production in key markets across the continent, noting regional differences in terms of output and assessing individual countries’ roles as net exporters and importers.

It also includes an interview with José Orive, Executive Director, International Sugar Organisation, in which he maps out the particularities of the African sugar industry, while sharing his thoughts on what needs to be done to promote continental trade and sustainable development.

“The region is well advanced in terms of sugar production overall, but several challenges still hinder its full potential,” he said. “It is not enough to just produce sugar; producers must be able to move it to buyers efficiently. When all negotiations related to the AfCFTA have concluded, we expect greater investment across the continent and a clearer regulatory framework.”

Karine Loehman, OBG’s Managing Director for Africa, said that while the challenges faced by Africa’s sugar producers shouldn’t be underestimated, the new report produced with the ISO pointed to an industry primed for growth on the back of anticipated increased consumption across the continent and higher levels of output in sub-Saharan Africa.

“Regional demand for sugar is expected to rise in the coming years, driven up by Africa’s population growth and drawing a line under declines triggered by the Covid-19 pandemic,” she said. “With sub-Saharan Africa’s per capita sugar consumption currently standing at around half of the global average, the opportunities to help meet increasing domestic need by boosting production are considerable.”

The study on Africa’s sugar industry forms part of a series of tailored reports that OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.

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Gold

Global Demand for Investment Gold Plunged by 70% YoY to 161 Metric Tons in Q1 2021

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gold bars - Investors King

Last year, investors flocked to gold as stock markets crashed on a gloomy economic outlook due to the spread of the COVID-19 pandemic. In the second quarter of 2020, global demand for investment gold surged to over 591 metric tons, the second-highest level since 2016. However, the investors’ demand for gold has dropped significantly this year.

According to data compiled by AksjeBloggen, global demand for investment gold plunged by 70% year-over-year to 161 metric tons in the first quarter of 2021.

The Lowest Quarterly Figures after Record Gold Investments in 2020

In 2016, the global gold demand amounted to 4,309 metric tons, revealed Statista and the World Gold Council data. By the end of 2019, this figure rose to 4,356 metric tons. Investment gold accounted for 30% of that amount. Worldwide gold jewelry demand volumes reached 2,118 metric tons that year. Central banks and technology followed with 648 and 326 metric tons, respectively.

Statistics show the global demand for investment gold surged amid the COVID-19 outbreak, growing by 35% YoY to almost 1,800 metric tons in 2020. Demands for gold used in technology also rose by 17% to 383.4 metric tons, while central banks and other institutions bought 326.2 metric tons of gold in 2020, a 50% plunge in a year.

However, after record gold investments in 2020, the global demand for gold for investment purposes dropped to the lowest quarterly level in years.

The Price of Gold Dropped by 5% Since January

The average gold value tends to increase during a recession, making it an attractive investment in uncertain times. In February 2019, a troy ounce of gold cost $1,320.07, revealed the Statista and World Gold Council data. By the end of that year, the price of gold rose to $1,479.13.

The gold price continued growing throughout 2020, reaching an all-time high of over $2,000 in August. By the end of the year, the precious metal price slipped to $1,864 and then rose to over $1,950 in January 2021.

However, the first quarter of the year brought a negative trend, with the price of gold falling to $1,684 by the end of March. Statistics indicate the price of gold stood at around $1,860 last week, a 5% drop since the beginning of the year.

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Gold

Gold, Other Safe Haven Assets Plunge Ahead of Fed Rate Hikes

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Gold and Bitcoin - Investors King

Gold and other safe-haven assets plunged last week as the Federal Reserve signals the possibility of raising interest rates twice in 2023 given the ongoing economic recovery post-COVID-19.

The price of gold dropped by 6.04 percent last week as investors rushed to move their funds out of safe-haven assets including the new gold, cryptocurrency.

The entire crypto space sheds $898 billion in market value to hover around $1.625 trillion last week, down from $2.523 trillion recorded on Wednesday 12, 2021. Its highest market capitalisation till date.

The Federal Reserve raised inflation expectations to 3.4 percent and shifted the year it is expected to increase interest rates from near-zero to 2023 from the previously projected 2024.

The new hawkish stance of the central bank led to capital outflow from safe havens and subsequently boosted dollar attraction.

The United States Dollar gained across the board with the dollar index that tracks its performance against six major currencies, rising by 0.63 percent to 91.103 last week.

However, on Monday morning the gold showed signs of recovery, gaining 0.5 percent to $1,772.34 per ounce following the retreat in U.S. treasury yield that boosted the attraction of non-yielding metal.

Bitcoin, the most dominant cryptocurrency coin, pared losses to $33,245 per coin, up from the $32,658 decline it posted last week.

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