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More Nigerians Turn to Virtual Currency, Ignore CBN Ban

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Bitcoin
  • More Nigerians Turn to Virtual Currency, Ignore CBN Ban

The current depreciation of the Naira, growing popularity of Ponzi schemes and other electronic transactions, have all paved way for virtual money (computer generated currencies) such as Bitcoin, to continue thriving in the country despite a recent ban by CBN. FRANKA OSAKWE, takes a look at the impact of this on criminal and money laundering activities in the country.

In January, the Central Bank of Nigeria (CBN) issued a circular to banks and other financial institutions requiring them not to use, hold, trade and/or transact in any way in digital currencies. The CBN cited money laundering and terrorism financing as reason for ban, specifically naming “Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin,” and similar virtual currencies.

Despite this crackdown on virtual currencies in banks, international transactions have continued online using virtual currencies as more countries embrace the payment mode.

Investigations reveal that the users have no need of banks, or regulators to transfer virtual currencies, all they need is their laptop and an internet connection.

Across the globe, the popularity of virtual currency such as Bitcoin are increasing with big companies like Microsoft, Dell, Amazon, accepting it as currency of payment and some countries such as Barbados now making use of Bitcoin as legal tender. Hence anyone can buy international products and services online from these countries using the currency.

Here in Nigeria, interest has also been spiked, driven by the popularity of Ponzi schemes like MMM, which promises huge financial return using the Bitcoin currency.

For instance, Mr. Obinna, 35year old importer, who does his international transactions using Bitcoin, says he has been trading in Bitcoin for two years now without the help of any bank. “so, the ban does not stop me from trading with the currency. Bitcoin doesn’t need bank.

The high interest rate charged by Nigerian commercial banks makes it hard for us to transfer foreign currency through banks. But through the use of Bitcoin, I transfer money to my foreign associates in Bitcoin and they can convert it to their currency. This makes transfer of fund easy, even undetected and I don’t pay any bank interest”, he said.

According to him, he has become a multi-millionaire overnight just by trading with the virtual currency. Aside that, Obi revealed that he also buys and trade Bitcoin. “I buy the currency when the rate is lower and sell when higher, just like forex trading. For me to do this, I have to monitor the market”, he said.

On how he exchanges the virtual currency for real cash he said, “Bitcoin has an online exchange platforms such as Netteller, Bitex and Localbitcoin.com. When I go to any of the sites, I can sell or exchange my Bitcoin for Dollar, Naira, Pound, Euro or any real currency. I can also buy Bitcoin at lower rate from any of the exchangers, and sell at higher rate to another exchanger based on their selling prize”, he said.

Another Bitcoin user, Michael, said he got introduced to Bitcoin through the MMM ponzi scheme, “whenever I play games online or invest in MMM scheme using Bitcoin, I discover that the return is much higher. From then I got more interested in Bitcoin- I soon realize that the currency has high global acceptance and value more than dollar and other currencies. For instance, today one Bitcoin is equivalent to about 1000 USD depending on the exchangers. Now I carry out transactions on the internet using Bitcoin and it is easier for me- no bank interest, the transfer is swift and anonymous”, he said.

As at the time of this publication, Bitcoin virtual currency, sells for the rate of 1Bitcoin to 1011USD, making it almost as equal to gold in value!

“But the currency is flexible, meaning it can go up today and come down tomorrow,” an IT Specialist, Mr. Chukwudalu Chukwuneta, divulged. He explained why the currency is so favoured. “it is anonymous- users can hold multiple bitcoin addresses that are not linked to names, addresses, or other personally identifying information. you can transfer 50 million Naira worth of Bitcoin and no one will know or question you. It is also fast-You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment. Unlike bank transaction, there is no transaction fee. It is not controlled by one central authority and it is easy to set”, chukwuneta explained.

It is these characteristics that make it easy for money laundering and illegal activities to be undetected. According to President of the Information Security Society of Africa (ISSAN), Dr. David Isiavwe, the major risk virtual currencies have today is anonymity.

“You can be conducting a transaction with someone and you won’t even know the actual identity of the person. You don’t know if you are dealing with a woman or a man, you don’t know the person’s BVN number, address or detail. This is a problem because it makes it susceptible to money laundering, and other cyber- crimes.

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.

Energy

African Energy Developments Demand Sustained Investment With New Projects in Mozambique, Tanzania, Uganda, and Senegal

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Workers

In the past twelve months, the African energy sector has seen several encouraging developments – in the form of both Foreign Direct Investment (FDI) and strategic partnerships – that have advanced the sustainable development of its natural resources. In fact, despite a global downturn in investment in 2020, FDI flows to developing economies accounted for 72% of global FDI, the highest share to date. Given the magnitude of Africa’s oil and gas reserves – not to mention its abundant renewable resource wealth – the continent remains a highly attractive market for inbound investment, which is vital for its growth.

Take Uganda, for instance, which is home to one of the largest onshore discoveries in sub-Saharan Africa. Following multiple petroleum discoveries in Uganda’s Albertine Graben – estimated to contain 6.5 billion barrels of oil, of which 1.4 billion are considered recoverable – foreign investments into the country are expected to reach nearly $20 billion. Last April, Total E&P Uganda B.V. signed a Sale and Purchase Agreement with Tullow Oil PC, through which Total will acquire Tullow’s entire 33.34% interests in Uganda’s Lake Albert development project and the East African Crude Oil Pipeline (EACOP). Five months later, the Ugandan Government and Total signed a host government agreement for EACOP, representing a significant step toward reaching a final investment decision. The deal pushes along an extended development process – slowed by infrastructure issues, tax complications, then COVID-19 – that not only promises to bring first oil by 2022, but also provides a pathway to monetization via associated transport infrastructure.

In addition to developments at Lake Albert, the Ugandan Government has proven its commitment to attracting FDI to its hydrocarbon sector through its second licensing round held last year, as well as its invitation to local and foreign entities to forge joint-venture partnerships with the Government. By prioritizing the establishment of mutually beneficial partnerships, the emerging East African producer aims to facilitate the successful transfer of skills, knowledge and technology, initiating an influx of technical expertise and working capital into the country.

“Those who have been locked out from access to opportunity want the same from the energy sector that the energy sectors want from governments.  We must not forget local content, local jobs, local opportunities especially for young people and women” Stated NJ Ayuk Executive Chairman of the African Energy Chamber.

Meanwhile, in West Africa, Senegal has been reaping the rewards of a long-standing partnership with Germany, which has resulted in more than one billion Euros in funding, including significant support for small-scale power plants and renewable energy projects. Holding sizeable potential for solar and wind energy development, Senegal serves as a regional leader in renewable deployment as a means of rural electrification. Indeed, energy is a central component of poverty alleviation across Africa, with electricity access enabling greater independence, clean cooking and potable water, as well as dramatically improving the well-being of individuals, businesses and communities alike.  Rural populations are cognizant of the challenges posed by a lack of stable electricity supply – increased urban migration, lack of access to basic services, low economic competitiveness, to name a few – and distributed renewables can represent the fastest and least expensive path to electrification.

European interest in Senegal has shed light on and served as a model for co-operation opportunities between renewable-rich African countries and developed partners, which offer cutting-edge technologies and technical expertise to transform raw resources into viable off-grid and mini-grid solutions.

Furthermore, while the cost of deploying renewable technology has never been lower, the availability of renewable-focused capital has never been higher. Investment in commercial and industrial solar has demonstrated resilience against the pandemic, continuing to be seen as a safe investment in light of rising utility costs and increasing distribution of both solar and financial technologies. Yet resource potential and low costs of equipment are not enough; Senegal and other resource-rich African nations require active investor interest and strong government support to unlock diversified energy mixes. In turn, a lack of investment represents a pointed threat to the achievement of long-term energy security.

“Young people and women have shown their great resilience, and it is our hope we close these deals in the renewable energy sector, Africans can have a sense of some hope that they will be included in the industry contracts and opportunities. It is no longer correct for the African to be the last hired and the first fired” Concluded Ayuk.

Moreover, without sustained levels of FDI continuing to move the needle on oil, gas and renewable developments, energy export revenues run the risk of being stranded and resources left undeveloped. For emerging producers like Uganda – as well as Tanzania, Kenya, Mozambique, among several others – this would mean foregoing critical government revenues that could aid in a much-needed, post-COVID-19 economic recovery. FDI is vital to Africa’s growth, and while it may be challenging to procure capital in a tepid global economy, it is even more difficult not to. Yes, COVID-19 has put emerging producers in a tough spot: new exploration is seen as risky, and new producers lack existing assets or low-cost development of marginal fields on which to fall back. However, it is not an option to slow or postpone time-sensitive developments that promise to harness natural resource wealth and make sustainable improvements in standards of living across the continent. Africa requires a sustained flow of investment and has proven time and again that it offers the scope of projects and magnitude of resources that are worthy of foreign capital.

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Energy

Saudi Aramco’s Profit Halved in Two Years, Market Cap $210B Below Apple’s

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Even before the pandemic, the oil and gas industry was faced with slumping prices. However, with a record collapse in oil demand amid the lockdowns, the COVID-19 crisis has further shaken the market, causing massive revenue and market cap drops for even the largest oil companies.

According to data presented by Finaria.it, the net income of the world’s biggest oil producer and one of the largest publicly listed companies, Saudi Aramco, dropped to $49bn in 2020, a 55% plunge in two years.

The COVID-19 Crisis and Oil Price War Cut Profits by Almost $40B in a Year

In preparation for its IPO, which took place in December 2019, Saudi Aramco had published 2018 profits. With a net income of $111.1bn, Saudi Arabia’s state-run oil giant ranked as the most profitable publicly listed company in the world.

Global macroeconomic concerns like the US-China trade war and the oil overproduction set significant price drops even before the coronavirus outbreak. In 2019, the company reported a profit of $88.2bn, a 20% drop year-over-year.

However, a standoff between Russia and Saudi Arabia in the first months of 2020 sent prices even lower and caused a massive hit for Saudi Aramco’s profits.

After global oil demand plunged in March, Saudi Arabia proposed a cut in oil production, but Russia refused to cooperate. Saudi Arabia responded by increasing production and cutting prices. Shortly Russia followed by doing the same, causing an over 60% drop in crude oil prices at the beginning of 2020. Although OPEC and Russia agreed to cut oil production levels to stabilize prices a few weeks later, the COVID-19 crisis already hit.

In March, Saudi Aramco announced full-year figures for the second time since going public, and the results revealed huge financial losses. In 2020, Saudi Arabia’s state-run oil company reported a net income of $49bn, almost a $40bn drop in a year.

While Saudi Aramco was the most profitable publicly listed company globally in 2019, the current result puts the company behind Apple, which reported a net income of $57.4bn in 2020.

Saudi Aramco’s Market Cap $210B Below Apple’s

In December 2019, Saudi Arabia’s state-run oil giant completed its long-awaited IPO and hit a staggering $2 trillion valuation on the second day of trading, nearly one trillion higher than the world’s next-largest publicly listed companies Microsoft and Apple. The initial public offering was an essential part of Crown Prince Mohammed bin Salman’s Vision 2030 program to transform the Saudi economy.

However, Saudi Aramco’s stocks were outperformed by Apple in 2020. After plunging to $1.61trn in March last year, the market cap of the Dhahran-based company jumped to $2.15trn in September. By the end of the year, this figure slipped to $2.05trn. Statistics show that Saudi Aramco’s market cap floated around this value for the last three months and then dropped to $1.87trn in April after the company revealed the full-year results.

Although valued one trillion less than Saudi Aramco at the time of its IPO, the world’s largest tech company, Apple’s, has seen its market cap surge last year. In January 2020, the combined value of shares of the US tech giant stood close to $1.4trn. After plunging to $1.1trn in March, Apple’s market cap soared to over $2.3trn in December. Although this figure slipped to $2.08trn last week, it still represents almost a 90% increase in a year.

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Crude Oil

Oil Inches Higher But Rangebound as COVID-19 Cases Soar

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Crude oil

Oil prices edged higher in rangebound trade on Monday on optimism about a rebound in the U.S. economy as vaccinations accelerate, but rising COVID-19 cases in other parts of the world kept a lid on prices.

Brent was up 22 cents, or 0.4%, at $63.17 a barrel by 0843 GMT. West Texas Intermediate (WTI) U.S. crude rose 12 cents, or 0.2%, to $59.44 a barrel.

The prices have remained rangebound in the last three weeks, with Brent between $60 and $65 per barrel and WTI at $57 to $62.

“Oil prices are entering a consolidation phase after swinging wildly last month,” Stephen Brennock of oil broker PVM.

“While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India and some emerging markets, while vaccine rollouts have proved slower than anticipated,” he added.

India now accounts for one in every six daily infections worldwide, and other parts of Asia are seeing infection rates rise.

Asian oil demand remained weak and some buyers asked for lower volumes in May partly because of refinery maintenance and higher prices.

The United States has fully vaccinated more than 70 million people but U.S. gasoline demand has not picked up as much as expected.

The U.S. economy is at an “inflection point” amid expectations that growth and hiring will accelerate in the months ahead, but faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases, Federal Reserve Chair Jerome Powell said in an interview broadcast on Sunday.

“There really are risks out there. And the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we’ll see another spike in cases,” Powell said in a CBS interview, recorded on Wednesday.

On the production side, no new oil drilling rigs were started in the United States in the most recent week, a report published by Baker Hughes showed.

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