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60% Forex Allocation Saved Manufacturing Sector – Report

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  • 60% Forex Allocation Saved Manufacturing Sector – Report

Although the Central Bank of Nigeria’s preferential allocation of foreign exchange to the manufacturing sector was short-lived and fraught with controversies, a report has emerged showing that the initiative registered a huge impact and lent a boost to the manufacturing sector during the period.

The initiative, which commenced in August 2016, came to an end in February 2017.

An executive summary of the Manufacturers Association of Nigeria’s Economic Review of second half of 2016 attributed a 9.54 per cent increase in capacity utilisation (from 49.64 per cent in second half of 2015 to 59.18 per cent in the second half of 2016) to the 60 per cent preferential forex allocation to the manufacturing sector for importation of raw materials and machinery not locally available.

“Capacity utilisation averaged 51.74 per cent in 2016 as against 50.17 per cent of 2015, thereby indicating 1.57 percentage point increase over the period,” the report stated.

A further analysis of capacity utilisation based on sectors showed that it increased in the entire sectoral groups in the period under review.

“Capacity utilisation in Food, Beverage and Tobacco group increased to 60.3 per cent in the second half 2016 from 53.7 per cent recorded in the corresponding half of 2015, thereby indicating 6.6 percentage point increase of the period. It also increased by 10.5 percentage point when compared with 49.8 per cent recorded in the preceding half.

“Textile Apparel and Footwear (group) increased to 56.9 per cent in the period under review from 52.7 per cent recorded in the corresponding half of 2015, thereby indicating 4.2 percentage point increase over the period. It also increased by 15.3 percentage point when compared with 41.6 per cent recorded in the preceding half.”

Analysis across MAN industrial zones also showed that capacity utilisation increased in Rivers, Ikeja, Apapa, Kano Bompai, Ogun and Kaduna zones.

In Ogun Zone, for instance, capacity utilisation increased to 68.0 per cent in the period under review from 59.5 per cent recorded in the corresponding half of 2015, thereby indicating 8.5 percentage point increase over the period.

It also increased by 17.8 per cent when compared with 50.2 per cent recorded in the preceding half.

According to the report, total production volume in the sector equally increased to N8.38tn as against N7.71tn in 2015, indicating N0.67tn or 8.7 per cent increase over the period.

Manufacturing investment during the period stood at N448.94bn, out of which N313.62bn or 69.9 per cent went to Ogun Zone.

The impact extended to job creation whereby a total of 10,061 jobs were created in the manufacturing sector in the second half of 2016 as against 9,393 jobs created in the corresponding half of 2015, indicating an increase of 668 jobs over the period.

At the end of 2016, an estimated 1.63 million historical cumulative jobs were created in the sector, the report said.

Food, Beverage and Tobacco sectoral group was said to have accounted for most of the jobs created with 2,947 jobs.

The report noted, however, that a total of 4,408 jobs were lost during the period as against 12,400 jobs lost in the second half of 2015.

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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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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