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Oramah: Intra -African Trade Will Rise to $400bn if Hindrances are Removed

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Afreximbank
  • Intra -African Trade Will Rise to $400bn if Hindrances are Removed

Achieving economic integration among African countries which will give way to the continent’s economic growth is capable of growing the size of intra-African trade from its current level of $170billion to $400billion, if impediments are removed, president and Chairman, African Import Export (AFREXIM) Bank, Dr. Benedict Oramah has said.

Oramah, who stated this at the 24 annual general meeting of the bank held in Kigali, Rwanda, identified the growth factors as enabling environment such as political will, market knowledge, conducive environment and right policies combined with adequate financial resources.

He said there is urgent need to address the existing problem of trading information gap among the member countries.

Speaking on the topic, ‘Expanding African Trade in a World of Rising Protectionis’, Oramah noted that the rise of anti-globalisation, protectionism and nationalism has got direct attack on capital mobility, from advanced to developing countries, despite the fact that this is the hallmark of globalisation.

He observed that advanced countries, who have been the apostles of globalisation are now building anti trade walls against developing countries.

“During the last one and half decades, foreign direct investment flows into developing economies grew by more than 200per cent from $230billion in 2001 to over $760 billion in 2015.

“The capital flow was accompanied by movement of technology and jobs. Industrial and manufacturing activities moved from Europe and North America to Asia where return to capital was highest. As Asian developing economies narrowed their technological gap and became more competitive, accumulating trade surpluses, many advanced economies had resorted to subtle “anti-market” policies to contain rising external imbalances,” he observed.

Oramah, quoted the World Trade Organisation (WTO) as saying: “The stock of trade restrictive measures increased from 424 in 2010 to 2,238 measures in 2016; between October 2015 and October 2016, 182 new trade-restrictive measures were put in place mostly by advanced economies; G20 countries introduced an average of 19 trade-restrictive measures per month during 2016.”

He however expressed optimism that despite these, Africa as a continent, has all the ingredients required for a big economic push and to accelerate its trade, adding that relative low intra-African trade provides room for growth in a context of contraction of global trade and creeping protectionism.

According to him, Political will, market knowledge, conducive environment and right policies combined with adequate financial resources are the ingredients that will put the continent on the path to industrial transformation and a quantum leap in intra-African trade.

He said due to lack of knowledge of the African continent and limited access to trade information among African businesses, a number of African countries are spending their foreign exchange in importing what they produce at home from abroad.

Giving analysis of this, the AFREXIM Bank boss said:

“Australia, is the main source of tanned hides and skins for Southern Africa, while Zambia, globally exports this same input at a lower cost and its exports are higher than South Africa’s imports.

Again he said: “South Africa imports leather further prepared after tanning from India at a price which is double the price at which Ethiopia exports the input to the world.

“Mauritius and Nigeria, globally import leather products from Italy and Belgium at a much higher costs as compared to what South Africa and Botswana globally exports”.

Highlighting some of the potential of the continent, Oramah said: “Africa has diverse natural resources and abundant labour that can form the foundation for export manufacturing and industrial take-off. Africa has a pan African trade finance bank, the Afreximbank that has the capacity to de-risk the trade and financial flows within the continent.”

A number of African champions have emerged creating manufacturing capacities and fostering the emergence of regional and continental supply chains. For instance: El-Sewedy Electric, an Egyptian entity, has become one of the largest suppliers of electricity generation and distribution equipment and technologies in Africa.

The Dangote Group has cement plants in about 14 African countries and is now the largest supplier of cement in Africa. The Group will by 2018 open one of the largest refineries in the world. The refinery, with capacity of about 650,000 bpd, can supply the total refining requirements of West Africa.

ShopRite, the retail giant from South Africa now operates in not less than 18 African countries; MTN, an African telecom giant, now operates in 22 countries”, he enumerated.

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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Oil Inches Higher But Rangebound as COVID-19 Cases Soar

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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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Energy

Equatorial Guinea to Launch Vision on Post-COVID Energy Transition Plans with Report and Film

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The Africa Energy Series (AES): Equatorial Guinea 2021 campaign – comprising a report and a documentary – will serve as a critical tool to navigate the energy investment landscape in one of Africa’s more mature petroleum producing markets; Equatorial Guinea has largely been able to sustain its pace of engagement with global investors in the face of COVID-19, forecasting $1.1 billion in FDI in oil and gas activities in 2021; The third edition of the AES: Equatorial Guinea 2021 report will be released at Africa Oil & Power’s U.S. Africa Energy Forum 2021 networking event in Washington, D.C. this July.

Africa Oil & Power is proud to announce the upcoming launch of its Africa Energy Series (AES): Equatorial Guinea 2021 investment report and documentary, as part of a multimedia campaign set to champion the domestic energy sector and shape the West and Central African energy narrative.

The dual-language publication will target key developments driving a post-COVID-19 recovery in Equatorial Guinea – namely, the growth of petroleum and power industries; regional gas monetization initiatives; a clean energy transition; the impact of environmental, social and governance criteria; and expansion of the national diversification agenda.

A 30-minute documentary will provide a visual complement to the publication, featuring first-hand interviews with government officials, private sector players, industry regulators and energy experts discussing Equatorial Guinea’s unparalleled ambition and future plans.

“From spearheading regional gas monetization initiatives to drilling new exploration wells as early as Q2 2021, Equatorial Guinea continues to cement its reputation as a progressive, dynamic force on the African energy stage,” said H.E. Gabriel Obiang Lima, Minister of Mines and Hydrocarbons. “The Africa Energy Series publication in conjunction with a detailed documentary format, gives us the voice to showcase the depth of our full-stream investment opportunities to a global audience.”

Since the onset of COVID-19, Equatorial Guinea has been proactive in safeguarding opportunities for foreign investors and continuing to drive capital into its hydrocarbon resources. In February, Chevron achieved first gas flow from the successful execution of its Alen Gas Monetization project, a $475-million investment representing the first phase of Equatorial Guinea’s Gas Mega Hub masterplan.

The Ministry of Mines and Hydrocarbons is currently promoting several capital-intensive projects – including the construction of modular oil refineries, a gold refinery, liquefied petroleum gas strategic tanks, a urea plant and the expansion of a compressed natural gas project – which are open for investment. Last December, the Ministry of Mines and Hydrocarbons announced a forecast of $1.1 billion in foreign direct investment in oil and gas activities in 2021.

Active in Equatorial Guinea since 2015, AOP released its first AES documentary on the country in 2016, followed by investment reports in 2018 and 2019.

The AES: Equatorial Guinea 2021 investment report will be launched at the U.S. Africa Energy Forum 2021 online seminar and in-person networking event in Washington, DC. (July 12). The documentary will be launched at the U.S. Africa Energy Forum conference in Houston (October 4-5) and broadcast globally on news networks.

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U.S. Africa Energy Forum 2021 Launches: Promotes U.S. Role as Primary Investor in African Energy

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The U.S. Africa Energy Forum 2021 – organized by Africa Oil & Power, in partnership with the African Energy Chamber’s U.S.-Africa Committee – will foster alignment between U.S. and African governments’ energy policies and highlight African oil, gas, power and renewable projects across the energy value chain for U.S. investors; the multi-day forum unites U.S. and African policymakers, energy executives and industry leaders to create new linkages and foster discussions that drive long-term policy formation and project execution; the in-person, two-day summit and gala dinner will be hosted in Houston, Texas (October 4-5, 2021) and an online seminar and in-person networking event will be held in Washington D.C. (July 12).

Africa Oil & Power (AOP) and the African Energy Chamber are excited to announce the launch of the first-ever U.S. Africa Energy Forum (USAEF). This event aims to create deeper cooperation between the U.S. and Africa on energy policy, to reach alignment on long term sustainability goals, to stimulate greater American investment in the African oil, gas and power sectors, and to engage and reposition the U.S. as the primary partner of choice for African energy developments.

Under the theme “New Horizons for U.S. Africa Energy Investment” the forum will explore diverse foreign investment and export opportunities across the continent, including natural gas as a vital fuel for the energy transition; energy storage and battery minerals; Africa’s place in global energy supply chains; the benefits of the African Continental Free Trade Area; evolving energy technologies and how they relate to the future role of petroleum resources; and on-and off-grid power developments.

An online seminar and in-person networking event will be held in Washington D.C. on July 12, 2021, building up to the in-person U.S. Africa Energy Forum summit and gala dinner, to be hosted in Houston, Texas, on October 4-5, 2021. Africa Oil & Power and the African Energy Chamber invite all U.S.-based companies with an interest in engaging with African industry leaders and project developers to participate in the USAEF Houston summit.

This initiative comes at an important juncture in U.S.-Africa relations. The Biden Administration’s announcements of its intentions to proactively build a stronger U.S.-Africa partnership coincides with the fact that African projects are seeing rising interest from U.S. companies and lending institutions alike. The USAEF event is thus dedicated to enabling dialogue between its participants that advances these developments.

“Our mission has always been to showcase the resource potential that Africa has to offer while at the same time showing its growing preference for sustainable energy policies and technologies. Toward that end, we hope it becomes evident that Africa does not just want investment capital: it wants smart capital and an accompanying partnership with the investors,” says James Chester, Senior Director of Africa Oil & Power. “The U.S. Africa Energy Forum represents the first-of-its-kind opportunity to catalyze U.S. participation in Africa’s energy transformation – via technology, policy support, capital injection and skills development – and turns a new page in the chapter on global energy investment.”

In partnership with the African Energy Chamber’s U.S.-Africa Committee, AOP will introduce American companies to African opportunities and advance an agenda of sustainable, long-term investment in African energy and other sectors by U.S. organizations.

“The rise in support from the U.S. to the continent is a credit to Africa itself, which is increasingly viewed as a favored destination for global investors, multilaterals and export credit agencies,” says Jude Kearney, President of Kearney Africa and former Deputy Assistant Secretary for Service Industries and Finance at the U.S. Department of Commerce during the Clinton Administration. “Africa continues to command a healthy share of global FDI in oil and gas industries. It has for decades shown that investment in those sectors is favorable compared to other jurisdictions and can be successful by many measures. Even as Africa and the rest of the world wrestles with a global pandemic, Africa’s energy sector shows vitality and resiliency – not only in hydrocarbons but in regard to new opportunities in mining, liquefied natural gas, and agriculture.”

Both African governments and private sector sponsors of African energy projects value highly the combination of investment and partnership that US investors famously convey. The USAEF seeks to enable successful partnerships between its participants such that the energy development goals of U.S. investors and strategic partners and their African counterparts can be achieved.

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