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Open up Economy, Experts Urge

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  • Open up Economy, Experts Urge

The Federal Government has been urged to open up the economy to foreign direct investment to put Nigeria on the path of sustainable economic growth.

An Economist and Chief Executive Officer of Economic Associates, Dr. Ayo Teriba, made the call during a breakfast session of the Financial Services Group of the Lagos Chamber of Commerce and Industry (LCCI), with the theme: Economic Recovery and Growth Plan: Roadmap to a Sustainable Economy held in Lagos yesterday.

The forum was sponsored by Sterling Bank.

Teriba, who spoke on Nigeria’s economic outlook: Getting out of recession cycle, said “there is need to open up Nigeria to receive massive foreign investments, just like Saudi Arabia and India. This will unlock vast and latent opportunities in the country.”

He urged the Federal Government to sustain its recent issuance of 1.5 Eurobond and must plan to issue a Diaspora bond. Teriba advised the Central Bank of Nigeria (CBN) to complement the Federal Government’s effort by issuing Eurobond to ensure stability in the forex market.

He said the Federal Government should learn how to manage cyclical shocks such as the remarkable drop in oil earnings which led to the devaluation of the naira in 2016, high level of inflation as well as increase in the interest rate.

While urging fiscal responsibility, Teriba called on the Federal Government to halt the mis-alignment in some sectors of the economy where government parastatals were building expensive corporate offices and official cars without appropriation through the aid of revenue collecting agencies.

Chairperson of the group and General Manager, Corporate Banking, Sterling Banking, Mrs. Mojisola Bakare, said the lender was keen on the resolution of issues affecting Nigeria’s economic development, adding that it has become necessary to discuss the theme of the breakfast session.

She said the topic of the session was motivated by the recent launch of the Economic Recovery Growth Plan (ERGP) by the Federal Government with the three broad strategic objectives of restoring growth to the economy, investing in the people and building a globally competitive economy as a blueprint for recovery in the short short-term and a strategy for sustained growth and development in the long-term.

Mrs. Bakare said there was no doubt that the economy was in the recovery mode with inflation rate coming down from 18.45 per cent last February to 16.25 per cent in June.

According to her, the capital market is also on the upward swing though at a slow pace coupled with renewed effort of the Federal Government on the ease of doing business, adding that “Generally, the other economic indices are pointing towards our exit from recession by September 2017 as predicted by the World Bank.”

Also speaking, the President of LCCI, Chief Dr. (Mrs.) Nike Akande said with the economy highly import dependent, consumption driven and undiversified, it has become necessary for government to draw a roadmap for economic diversification that would drive sustainable growth and development.

Represented by the Deputy President, Mr. Babatunde Ruwase, she also said it has also become imperative for government to create initiatives that would restore growth, a competitive economy and provide an enabling business environment that would empower the private sector in delivering its mandate towards the actualisation of the EGRP.

Dr. Akande said while the Economic Recovery and Growth Plan (ERGP) is perceived as a laudable initiative, commitment to its implementation is critical if the plan would foster growth in the economy within the next couple of years, adding that driving these plans require the collaborative efforts of Federal Government, state government and the private sector.

She said Nigeria remained one of the developing nations with high returns on investments, noting that with governments’ renewed focus on growth sectors like agriculture, solid minerals, creative and entertainment, power, automobiles, infrastructure and technology, Nigeria will remain a major investment destination on the African continent.

The president also said the Federal Government was also committed to the creation of an enabling environment through the creation of the Presidential Enabling Business Environment Council (PEBEC).

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.

Energy

Nigeria’s Power Sector to Get $7.5bn from $30bn African Electrification Initiative, Says Minister Adelabu

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Minister of Power Adebayo Adelabu has said that Nigeria is set to receive a portion of a $30 billion investment aimed at electrifying Africa.

During a visit to Splendor Electric Nigeria Limited, Adelabu revealed that the World Bank and the African Development Bank (AfDB) have committed to this ambitious initiative with Nigeria slated to receive approximately $7.5 billion, or 25% of the total fund.

The groundbreaking initiative is designed to extend electrification to an additional 300 million Africans over the next five years.

This large-scale project aims to address the energy deficit that has long plagued the continent and is expected to transform the power infrastructure significantly.

Adelabu expressed optimism about Nigeria’s role in the project, citing the country’s large population and ongoing power sector reforms as key factors in securing a substantial share of the funds.

“I want to inform you of the proposal or the intention, which is at an advanced stage, by the World Bank and the African Development Bank to spend about $30 billion to extend electrification to an additional 300 million Africans within the next five years. Nigeria is going to participate fully in this. I am confident that nothing less than 20% or 25% of this fund would come into Nigeria because of our population,” Adelabu stated.

The minister’s visit to Splendor Electric Nigeria Limited, a porcelain insulator company, underscores the government’s commitment to involving local businesses in the electrification drive.

The investment will focus on enhancing and upgrading power infrastructure, which is crucial for improving electricity access and reliability across Nigeria.

Despite the promising news, Nigeria continues to face significant challenges in its power sector. The country’s power grid has suffered frequent collapses, with the Nigerian Bureau of Statistics reporting less than 13 million electricity customers and frequent nationwide blackouts.

The International Energy Agency highlighted that Nigeria’s national grid experienced 46 collapses from 2017 to 2023, exacerbating the nation’s energy crisis.

To combat these issues, the government is also advancing the Presidential Power Initiative, a project in collaboration with Siemens, which aims to build thousands of new lines and numerous transmission and injection substations.

Adelabu noted that the pilot phase of this initiative is nearing completion and that Phase 1 will commence soon.

With over 200 million people and a chronic energy shortfall, Nigeria’s power sector is in urgent need of overhaul.

The additional $7.5 billion from the African Electrification Initiative represents a critical step toward achieving reliable and widespread electricity access.

The investment is expected to stimulate not only infrastructure development but also economic growth, creating opportunities for local companies and improving the quality of life for millions of Nigerians.

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Crude Oil

Oil Prices Climb as Markets Eye Potential US Rate Cuts in September

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Crude oil - Investors King

Oil prices rose during the Asian trading session today on speculation that the U.S. Federal Reserve may begin cutting interest rates as soon as September.

Brent crude oil, against which Nigerian oil is priced, increased by 32 cents to $82.95 a barrel, while U.S. West Texas Intermediate crude oil climbed 34 cents to $80.47.

The anticipation of rate cuts stems from recent U.S. inflation and labor market data indicating a trend towards disinflation and balanced employment, according to ANZ Research.

The Federal Reserve is set to review its policy on July 30-31, with expectations of holding rates steady but providing clues for potential cuts in September.

The potential rate cuts could stimulate economic activity, increasing demand for oil. This optimism has been partially offset by recent concerns over China’s slower-than-expected economic growth, which could dampen global oil demand.

President Joe Biden’s announcement to not seek re-election and endorse Vice President Kamala Harris had minimal impact on oil markets.

Analysts suggest that U.S. presidential influence on oil production is limited, although a potential Trump presidency could boost oil demand due to his stance against electric vehicles.

In response to economic challenges, China surprised markets by lowering key policy and lending rates. While these measures aim to bolster the economy, analysts remain cautious about their immediate impact on oil demand.

With OPEC+ production cuts continuing to support prices, the focus remains on the U.S. Federal Reserve’s next moves.

Any decision to cut rates could further influence oil prices in the coming months, highlighting the interconnectedness of global economic policies and energy markets.

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Crude Oil

Dangote Refinery Clash Threatens Nigeria’s Oil Sector Stability

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Crude oil

Nigeria’s oil and gas sector is facing a new challenge as a dispute between Dangote Industries Limited and the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) intensifies.

The disagreement centers on claims by NMDPRA that diesel from the Dangote Refinery contains high sulfur levels, making it inferior to imported products.

The $20 billion Dangote Refinery, located near Lagos, has the potential to process half of Nigeria’s daily oil output, promising to reduce dependency on foreign fuel imports and create thousands of jobs.

However, the recent accusations have cast a shadow over what should be a significant achievement for Africa’s largest economy.

Industry experts warn that the ongoing conflict could deter future investments in Nigeria’s oil sector.

“Regulatory uncertainty is a major disincentive for investors,” said Luqman Agboola, head of energy at Sofidia Capital. “Any factor affecting foreign investment impacts the entire value chain, risking potential energy deals.”

The regulatory body, led by Farouk Ahmed, maintains that Nigeria cannot rely solely on the Dangote facility to meet its petroleum needs, emphasizing the need for diverse sources.

This position has stirred controversy, with critics accusing the agency of attempting to undermine a vital national asset.

Amidst these tensions, energy analyst Charles Ogbeide described the agency’s comments as reckless, noting that the refinery is still in its commissioning stages and is working to optimize its sulfur output.

In response, Dangote Industries has called for fair assessments of its products, asserting that their diesel meets African standards.

The refinery’s leadership argues that certain factions may have ulterior motives, aiming to stifle progress through misinformation.

As the dispute continues, the broader implications for Nigeria’s oil sector remain uncertain. The outcome will likely influence not only domestic production but also the country’s standing in the global energy market.

Observers hope for a resolution that supports both industrial growth and regulatory integrity, ensuring stability in a sector crucial to Nigeria’s economy.

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