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IATA to Africa: Invest in Airport Infrastructure

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  • IATA to Africa: Invest in Airport Infrastructure

The International Air Transport Association (IATA) has advised African governments to invest in airport infrastructure.

Such investment, IATA said, would ensure improvement in air safety.

Besides, focusing on airport infrastructure, the global airlines regulator also urged African governments to consider committing more resources to training of technical aviation personnel to boost the quality of industry expertise and education.

IATA said investment in human capital development was neccessary for the growth and development of air transportation in Africa.

Its Regional Vice President, Africa and Middle East, Muhammad Ali Albakri, made this known in an interview with The Nation at the weekend in Lagos.

He said air transport could grow in Africa, if governments plough revenues accruing from taxes and levies into expanding operational facilities to enable airline operate safely and profitably.

Albakri said the global body will continue to engageAfrican governments on ways to improve civil aviation regulation,promote safety and security as well as design measures that will stimulate the growth of air transportation.

The global airlines regulator, however, canvassed the sharing of security information among African countries to facilitate the movement of cargo and people across transnational borders.

He said connectivity within African countries still remains a major hurdle for many countries because of failure of African governments to liberalise their airspace.

Liberalising the African airspace, Albakri said, will make it easy for more carriers to fly into major capitals without bilateral restrictions.

Regrettably, Albakri said the Single African Sky Agreement reached by many countries many years was yet to take off, because some of them were yet to realise the benefits a liberalised airspace could bring to their economies.

He said though Nigeria has taken some steps to fix its aviator sector, a lot still needs to be done.

Albakri said: “Air transport in Nigeria supports more than 650,800 jobs, including tourism-related employment, and contributing $8.2 billion to the country‘s Gross Domestic Product (GDP).

“ Over the next 10 years, passenger volumes are forecast to grow more than seven per cent yearly, exceeding the global average by a healthy margin.

“For Nigeria, this means an additional 7.9 million passengers that will take to the sky every year, creating significant opportunity to accelerate economic growth, boost prosperity and support development.”

He said despite significant investment in Nigeria’s aviation sector, the country’s air transport infrastructure still ranks low among African states.

Albakri said though IATA recognises and supports the positive developments by Nigeria on infrastructure, it seeks continued adherence to international best practices and an optimal regulatory environment.

He said: “Now that the country is emerging from recession, aviation can unlock the enormous economic potential that exists within Nigeria. We encourage the government to continue to promote aviation for its role as a catalyst and economic enabler for the country, and to promote stronger connectivity within Nigeria and its neighbouring African countries.

“In addition, now is the time to continue to invest in modern and efficient infrastructure to accommodate the future traffic growth that will occur,” he said.

Albakri said unwarranted or excessive taxation on international air transport will continue to have negative impact on economic and social development.

This, he said, pushed IATA to join forces with industry partners in ensuring that airlines are subjected to fair and efficient taxation measures with respect to their operations, regardless of location.

He said: “IATA will continue to work with the industry to ensure that government authorities adhere to the International Civil Aviation Organisation (ICAO), the Organisation for Economic Cooperation and Development (OECD), and the United Nations taxation principles. In this regard, IATA is actively involved in a range of activities.

“We will ensure that new and existing taxation measures, be they direct or indirect, are fairly applied and adequately consider the economic and social ramifications.

“We will continue to push against measures that result in double taxation, mobilise against taxation measures that unjustly target the industry, where the resulting tax revenues are not reinvested in air transport related services and infrastructure. He also said IATA will continue to play leadership role in influencing airport and airspace planning and development projects worldwide to meet airline requirements for safety, efficiency and functionality.

The IATA chief, however, spared a thought for the multiple entry policy obtainable for African carriers into Nigeria, urging other African carriers to open their skies for accelerated development of the continent.

Albakri said: “We encourage other countries to embrace what Nigeria has done by removing all restrictions that serve as obstacle to opening Africa with the least requirements.

“What we need in Africa is air services to connect the entire continent so that there could be exchange of expertise, knowledge and commerce.”

He said air safety in Africa has improved tremendously with more carriers embracing the International Operations Safety Audit ( IOSA).

Albakri said: “Safety has improved for African carriers due to hard work and focus on international standards, practices and procedures.

“We will continue to urge African countries to focus on airport and airspace management infrastructure improve training documentation, engage in regulatory information sharing to drive safety culture.”

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.

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Treasury Bills

CBN Set to Auction N166.1 Billion in Treasury Bills Amid Economic Data Releases

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The Central Bank of Nigeria (CBN) has announced plans to auction N166.1 billion in Treasury bills.

This auction comes amidst a flurry of economic data releases and amidst concerns over the nation’s fiscal health.

Scheduled for the upcoming week, the auction will include N27.11 billion for the 91-day tenor, N1.49 billion for the 182-day tenor, and N137.50 billion for the 364-day tenor.

This strategic allocation shows the CBN’s efforts to manage liquidity and control inflationary pressures during global economic uncertainties.

The decision aligns with broader fiscal strategies as the United States and India prepare to release crucial consumer price index reports, expected to influence global market sentiment.

Concurrently, the Organisation of the Petroleum Exporting Countries (OPEC) is set to unveil its monthly oil market report, detailing shifts in global oil supply and demand dynamics.

Nigeria’s economic landscape has recently faced challenges, with May witnessing a dip in oil production to 1.25 million barrels per day, down from 1.28 million in April.

This decline has been attributed to various factors, including oil theft in the Niger Delta and aging infrastructure—a setback impacting national revenue streams.

The Treasury bill auction is a cornerstone of the CBN’s monetary policy toolkit, aiming not only to fund government operations but also to influence short-term interest rates and manage inflation expectations.

Analysts anticipate keen interest from both domestic and international investors, gauging Nigeria’s commitment to fiscal discipline amid fluctuating oil prices and global economic shifts.

Moreover, the stability of Nigeria’s foreign exchange market, marked by the recent convergence of the naira/dollar rate at N1,520 across official and parallel markets, is expected to complement the CBN’s monetary actions.

This convergence signifies progress in the CBN’s efforts to stabilize the currency amidst external economic pressures.

Looking ahead, the outcome of the Treasury bill auction will likely set the tone for Nigeria’s financial markets, providing insights into investor confidence and the government’s ability to manage fiscal challenges.

As stakeholders await the results, the economic landscape remains poised for further developments, influenced by both local policy measures and global economic indicators.

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Investment

Nigeria Sees Record $3.38 Billion in Q1 Foreign Investments

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Nigeria attracted a record $3.38 billion in foreign investments during the first quarter of 2024, the highest quarterly inflow in four years.

This surge in investments is largely attributed to reforms implemented by the Central Bank of Nigeria (CBN), as revealed in the latest capital importation report by the National Bureau of Statistics (NBS).

The report highlighted a 210.2 percent increase in foreign investments from the $1.09 billion recorded in the previous quarter.

Year-on-year, foreign capital inflows rose by an impressive 198.1 percent from $1.13 billion in Q1 of 2023.

Analysts point to several key reforms by the CBN that have boosted investor confidence. These include the harmonization of the foreign exchange rate market, the clearance of forex backlogs, naira devaluation, and high interest rates aimed at curbing inflation.

These measures have collectively sent positive signals to investors, prompting a significant increase in capital inflows.

Portfolio investment was the largest contributor to the foreign investment surge, accounting for $2.08 billion, or 61.5 percent of the total.

Other investments followed, with $1.18 billion (34.9 percent), while foreign direct investment (FDI) lagged behind, contributing only $119.2 million (3.53 percent).

Money market instruments under portfolio investment saw a dramatic increase, surging by 592.7 percent to $1.61 billion in Q1 from $231.8 million in Q4. Compared to Q1 of the previous year, this represents an astonishing rise of 1,175.2 percent.

“On the money market front, open market operations (OMO) were the major contributors. Foreign investors were attracted to the over 25 percent yield for a carry trade in naira while managing the attendant FX risks,” explained Temitope Omosuyi, investment strategy manager at Afrinvest Limited.

The CBN is also expected to receive a $1 billion loan from Afrexim as part of a $3.3 billion inflow from a commodity swap deal.

This anticipated inflow further shows the growing confidence in Nigeria’s economic prospects.

Foreign inflows into stocks jumped fivefold in the first three months of the year to N93.37 billion from N18.12 billion in the same period last year, the highest in any three-month period since 2019.

“The CBN’s reforms have transformed Nigeria from being uninvestable a year ago to an attractive investment destination today,” commented a foreign portfolio manager who preferred to remain anonymous. “The settlement of the FX backlog, shift to a more market-determined exchange rate, and a more credible monetary policy are proving too hard to resist for investors.”

The NBS report also showed that the banking sector recorded the highest capital inflows with $2.07 billion, representing 61.2 percent of the total.

This was followed by the trading sector, valued at $494.9 million (14.7 percent), and the production/manufacturing sector, which attracted $191.9 million (5.68 percent).

Geographically, the capital importation report revealed that most of the investments originated from the United Kingdom, contributing $1.81 billion (53.5 percent).

The Republic of South Africa followed with $582.3 million (17.3 percent) and the Cayman Islands with $186.2 million (5.52 percent).

Lagos State emerged as the top destination for foreign capital, receiving $2.78 billion, or 82.4 percent of the total capital imported. It was followed by Abuja (FCT) with $593.6 million (17.6 percent) and Ekiti with $0.01 million.

Stanbic IBTC Bank Plc received the highest capital importation into Nigeria with $1.26 billion (37.2 percent), followed by Citibank Nigeria Limited with $547.7 million (16.2 percent), and Rand Merchant Bank Plc with $528.7 million (15.7 percent).

Despite the positive outlook, experts caution against celebrating too early. Adeola Adenikinju, president of the Nigerian Economic Society, said, “While foreign portfolio investment (FPI) is on the rise, it is crucial to ensure these inflows translate into foreign direct investments (FDI) that generate employment and reduce poverty. FPI may not necessarily create the same long-term economic benefits.”

President Bola Tinubu, who assumed office in May 2023, has taken significant steps to attract foreign investment, including the removal of petrol subsidies and partial foreign exchange reforms.

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Treasury Bills

CBN Treasury Bills Auction Oversubscribed by 338%, Raises N284.26bn

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The Central Bank of Nigeria (CBN) has successfully raised a total of N284.26 billion through its latest Nigerian Treasury Bills (T-Bills) auction.

The auction, which was initially set to offer N228.72 billion, saw an overwhelming subscription of N773.98 billion, indicating an oversubscription rate of 338%.

This substantial interest highlights the ongoing demand for government securities amid Nigeria’s economic conditions, providing a crucial source of funding for the government’s short-term expenditure.

According to the auction results released by the Debt Management Office (DMO) and confirmed by data on the CBN website, the strong investor turnout underscores the perceived safety and attractiveness of T-Bills as an investment option.

Surge in Treasury Bill Debt

The successful auction comes at a time when Nigeria’s T-Bills debts have soared to unprecedented levels.

Between December 2023 and March 2024, the debt rose sharply from N6.5 trillion to N10.4 trillion, marking a 60% increase in just three months.

This rise reflects the government’s heavy reliance on T-Bills to finance short-term fiscal needs amid ongoing economic challenges.

Breakdown of the Auction

The auction featured three tenors: 91-day, 182-day, and 364-day bills. Each tenor saw significant investor interest, with the 364-day bills attracting the highest subscriptions:

  • 91-day bills: Offered at N29.83 billion, received subscriptions worth N36.29 billion, with an allotment of N28.15 billion. The stop rate was 16.30%.
  • 182-day bills: Offered at N30.67 billion, received subscriptions of N40.58 billion, with an allotment of N36.44 billion. The stop rate was 17.44%.
  • 364-day bills: Offered at N168.21 billion, received overwhelming subscriptions of N697.11 billion, with an allotment of N219.67 billion. The stop rate was 20.68%.

Investor Confidence and Government Strategy

The significant oversubscription across all tenors highlights strong investor confidence in Nigerian T-Bills as a secure investment avenue, even amidst prevailing economic uncertainties.

The high subscription rate, particularly for the 364-day bills, indicates a preference for longer-term securities, likely driven by expectations of future economic stability and favorable returns.

Government’s Debt Management

This auction underscores the critical role of T-Bills in the government’s debt management strategy.

Treasury bills and Federal Government of Nigeria (FGN) bonds are considered risk-free investments, providing a safe haven for investors while helping the government manage its debt profile and finance short-term expenditures.

Rising Domestic Debt

The surge in T-Bills debt has contributed to an increase in Nigeria’s total domestic debt profile, which rose to N65.6 trillion in Q1 2024, up from N59.1 trillion in December 2023.

While the external debt profile saw a slight dip from $42.9 billion to $42.1 billion, the overall public debt in naira terms stood at N114.7 trillion as of March 2024.

Economic Outlook

Despite the rising debt levels, experts highlight the importance of these instruments in managing liquidity and supporting government financing needs.

Treasury bills not only help in raising funds but also play a role in controlling the money supply, which is crucial for implementing effective monetary policy.

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