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African Leaders, Dangote Move to Change Continent’s Economic Narrative

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  • African Leaders, Dangote Move to Change Continent’s Economic Narrative

African business and political leaders have expressed optimism of using the Afrochampions Initiative to change the continent’s socio-economic narrative through a consensus on seven key issues ranging from regional and continental integration to global representation.

Designed to promote economic development in Africa, the initiative among other issues, seeks to encourage the emergence of home-grown pan-African companies that will help to transform and integrate the continent through cross-border investments as well as reduce poverty rate.

Some of the target issues the initiative seeks to address include continental and regional integration, structural transformation, job creation and youth development, local content and SME development, taxation, environment, sustainability and governance and global representation.

The initiative, jointly chaired by African’s richest man, Alhaji Aliko Dangote, and former President of South Africa, Thabo Mbeki, called for greater integration of African economies to enable the continent to develop free trade among African Union member nations.

According to the promoters of the initiative, there is a need for Africa to create over 10 million jobs yearly to cater for its growing youth population and to achieve this, opportunities in the regional markets have to be harnessed by home-grown pan-African companies.

Speaking at the unveiling of the initiative, Vice President Yemi Osinbajo, noted that the Continents Free Trade Area Initiative (CFTA), launch of the African passport and free movement of persons showed how the continent intended to grow in regional integration, which also showed how quickly the continent could move.

He said the conference of the African Heads of State in July focused on a lot of those initiatives “and I am convinced that we are on the threshold of seeing a deeper and more integrated African market.’’

The Vice President explained that the move was a strategic priority for the country to enable a single integrated African market deep enough to exploit all the potential in the country.

He added that there was a sense of urgency in the public sector initiative, which the private sector would bring, noting that the administration believed in the Afrochampions initiatives.

“We think that it is the private sector that would do what is required to bring the urgency and the sense of mission to all the plans in the AU.

“We will like to see greater synergy and collaboration in the Africa champions while all the organs of the AU get involved in economic integration issues”.

He said that in the past few years it had become obvious to many African countries that both the momentum and common sense were in favour of the private sector leading the economies of the continent.

He further said the sector was championing the initiative to drive intra-African trade and commerce.

“The role of the public sector is to catalyse the umpire, to incentivise but whether we like it or not the private sector in Africa is already building world class grounds and trading everywhere,’’ he added.

Osinbajo noted that it was obvious that Afican giants had sprang up in manufacturing, banking sector and in telecommunications.

On his part, former President Olusegun Obasanjo expressed appreciation and commendation for the initiative and added that while the initiative had put the private and public sectors together, it needed to integrate the financial institutions.

He thanked the Vice President for attending the inaugural meeting, adding that his presence gave impetus to the partnership.

Obasanjo noted that the inaugural meeting was good and noted that one of the things that had not been done well in Africa was to sustain initiatives.

He mentioned the Lagos Plan of Action, the Abuja treaty, NEPAD as initiatives which had not achieved their purposes before going under.

“We should not allow this one to sleep; we should continue to fan the flame of Afrochampions initiative and may God help Africa,” he added.

Dangote on his part said the Afrochampions initiative is for African businesses to cater to African needs to accelerate development in the continent and create more jobs to tackle unemployment of youths in the continent.

He acknowledged that it is the first time that leaders from Africa’s multinational companies will meet, not to discuss their sector and ad-hoc investment opportunities, but to exchange views on Africa’s transformation and on what contributions they may have.

“This is the first time that we have created venue for regular and action-oriented dialogue with public decision-makers, for the benefit of our continent. And this is the first time that a forum is being create to discuss Africa’s economic relations with the rest of the world and on how we can find a new balance with other regions and foreign players and institutions.

“We do have to change the dynamics in a way that is more favourable to Africa and Africans because as Africa’s biggest multinationals, we owe a duty towards our communities, towards the next generation of young men and women who now want to become Pan-African entrepreneurs”, he added.

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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Commodities

Economic Strain Halts Nigeria’s Cocoa Industry: From 15 Factories to 5

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Once a bustling sector, Nigeria’s cocoa processing industry has hit a distressing low with operational factories dwindling from 15 to just five.

The cocoa industry, once a vibrant part of Nigeria’s economy, is now struggling to maintain even a fraction of its previous capacity.

The five remaining factories, operating at a combined utilization of merely 20,000 metric tons annually, now run at only 8% of their installed capacity.

This stark reduction from a robust 250,000 metric tons reflects the sector’s profound troubles.

Felix Oladunjoye, chairman of the Cocoa Processors Association of Nigeria (COPAN), voiced his concerns in a recent briefing, calling for an emergency declaration in the sector.

“The challenges are monumental. We need at least five times the working capital we had last year just to secure essential inputs,” Oladunjoye said.

Rising costs, especially in energy, alongside a cumbersome regulatory environment, have compounded the sector’s woes.

Farmers, who previously sold their cocoa beans to processors, now prefer to sell to merchants who offer higher prices.

This shift has further strained the remaining processors, who struggle to compete and maintain operations under the harsh economic conditions.

Also, multiple layers of taxation and high energy costs have rendered processing increasingly unviable.

Adding to the industry’s plight are new export regulations proposed by the National Agency for Food and Drug Administration and Control (NAFDAC).

Oladunjoye criticized these regulations as duplicative and detrimental, predicting they would lead to higher costs and penalties for exporters.

“These regulations will only worsen our situation, leading to more shutdowns and job losses,” he warned.

The cocoa processing sector is not only suffering from internal economic challenges but also from a tough external environment.

Nigerian processors are finding it difficult to compete with their counterparts in Ghana and Ivory Coast, who benefit from lower production costs and more favorable export conditions.

Despite Nigeria’s potential as a top cocoa producer, with a global ranking of the fourth-largest supplier in the 2021/2022 season, the industry is struggling to capitalize on its opportunities.

The decline in processing capacity and the industry’s current state of distress highlight the urgent need for policy interventions and financial support.

The government’s export drive initiatives, aimed at boosting the sector, seem to be falling short. With the industry facing over N500 billion in tied-up investments and debts, the call for a focused rescue plan has never been more urgent.

The cocoa sector remains a significant part of Nigeria’s economy, but without substantial support and reforms, it risks falling further into disrepair.

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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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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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