- Manufacturers Groan Under Rate Disparity, Others, Says Report
The 2017 Manufacturing Sector Survey conducted by NOIPolls in collaboration with the Study of Economies of Africa (CSEA), has identified a number of unfavourable economic conditions the industrial sector contends with.
They include unfavourable foreign exchange rates (55 per cent), bad roads (55 per cent); unavailability of petrol and diesel (47 per cent); limited access to credit (45 per cent), and policy inconsistency (44 per cent).
Others are lack of Infrastructure (39 per cent), unstable power supply (31 per cent), and weak demand (29 per cent), as the top challenges facing the manufacturing sector in Nigeria.
The Report, which was presented in Abuja on Tuesday, came on the a heels of a report penultimate week by the Central Bank of Nigeria (CBN) that it had injected $9.964 billion into the interbank segment of the foreign exchange (forex) market since it commenced its aggressive interventions in February this year.
The report declared that the sustained intervention in the Forex market had helped to ease pressure on Nigeria’s forex market, which prior to the CBN’s action had been pummelled by speculators.
A breakdown of the dollar sales indicated that $680million was pumped into the market in February, $1.542billion was sold in March, $1.616billion in April, $2.102billion in May, and $1.631billion in June.
Also, while the Central Bank offered $1.639billion to banks to sell to their customers in July, as of August 21, it had sold a total of $754million.
The $2.102billion sold by the CBN in May remains the highest in the six months under review, during which it sold dollars in eight different sessions, in a bid to stabilise the market and discourage currency speculation.
However, much of the dollar sales had been targeted at retail invisibles for PTA, BTA, school fees, and medical bills, wholesale forwards, SMEs, and Secondary Market Intervention Sales (SMIS). Only a negligible portion went to the manufacturing and real sector of the economy, a fact which somewhat confirms the outcome of the new Report.
Presenting the Report yesterday, the NOI POLLS Chief Executive, Dr. Bell Ihua, explained that the 2017 Manufacturing Sector Survey represents a 14-point increase from the 2016 result (60 per cent), thus indicating a worsening of the business environment.
He said lack of infrastructure; red-tapism and corruption were identified as some of the structural bottlenecks stifling the business environment in the current review.
The report said “75 per cent of manufacturing companies say the disparity in foreign exchange rates has had negative impact on their operations. Similarly, 80 per cent of the companies affirmed that inflation has had a negative effect on their businesses.
“All the manufacturing companies interviewed affirmed that the recession had impacted their business operations and profitability; with 70 per cent stating that the recession had impacted their businesses negatively.”
On the issue of bad roads, manufacturers in particular lamented the poor state of some roads such as: Apapa-Tin Can Access road, Lagos-Ibadan Express road, Benin-Ore road, Oyo-Ogbomosho (in South West), East-West road, Benin-Agbor road, Aba-Port Harcourt road (South-South), Ajaokuta-Ayangba-Nsukka road, Lokoja-Ajaokuta road, Obajana-Okene road, Makurdi-Enugu road (North-Central and South-East) and many others.
Ihua said and a total of 496 companies across 12 states, which represent two per geo-political zone, were interviewed between the months of February and May 2017.
But the Manufacturers Association of Nigeria (MAN) was not represented at the presentation, which had representatives from CSEA, Dr Adedeji Adeniran, Eke Ubiji; the Executive Secretary/Chief Executive Officer NASME, Charles Dungor; and the Lagos Chambers of Commerce and Industry.
Ihua said 74 per cent of manufacturing companies found the business environment unsupportive in 2017, while half of the companies considered importation of raw materials critical to their production; particularly medium to large manufacturing companies, with up to 62 per cent of inputs imported.
In his remark, Ubiji urged the Federal, State and Local Government policymakers to have a critical view of the survey in the bid to aid manufacturing in Nigeria, noting that a huge fund is set aside for the companies, but accessibility has remained a big challenge.
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
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