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Afreximbank Unveils Programme to Unlock Over $100b Intra-African Investments

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  • Afreximbank Unveils Programme to Unlock Over $100b Intra-African Investments

By creating and modifying trade finance instruments, the African Export-Import Bank (Afreximbank), has stated that it hopes to unlock about $100billion worth of investments within the continent, hitherto not mobilised via informal trade and Diaspora funds, through its newly launched Guarantee Programme (AFGAP).

Although the bank said efforts to mobilise untapped investments had started last year with a target of $10billion, it realised that there are more funds to be harnessed considering the success it recorded within the period its mobilisation efforts commenced.

According to the bank, the programme, which has several initiatives, seeks to de-risk intra-African trade by mobilising available resources within the continent rather than struggling to attract foreign direct investment from international agencies and developed countries.

Besides, the bank also reinforced the need to de-commoditise the continent by developing strategies and adapting to changes in the global community, especially as the world switches to data economy.

President of Afreximbank, Dr Benedict Oramah, explained that the move for inclusiveness in the area of trade became important in the light of difficulty in accessing FDIs by many African countries and the need to help the fragmented continent to reap benefits of integration.He spoke at the opening ceremony of the advanced structured trade finance seminar on the Island of Sal in Cape Verde, yesterday.

He added that the trade solutions being unveiled are needed to boost intra-African trade, especially as there are emerging trends in technology, mobile payments and changing data environment. “Resource mobilisation from African sources helps to reduce dependence on foreign liabilities when there is over $1trillion worth of funds within the continent waiting to be harnessed. We need to help ourselves first rather than financing other economies through bonds issuance

“Intra-African trade can only expand if Africa produces more diversified products and if risks associated with the financing of the trade can be adequately mitigated. Industrialisation and export manufacturing have become critical components of the efforts to expand intra-African trade. The role of financing in all of these cannot be overemphasized. Creating the export manufacturing capacities the continent will require billions of dollars in financing the enabling infrastructure as well as the acquisition of the equipment the factories will need.”

Afreximbank also estimates that an amount of about $25billion exists as intra-African trade financing gap annually even today Due to novelty of regional markets, there is the need to create instruments that will mitigate payment risks, including country risks, for traders. Historically, distinguished ladies and gentlemen, international banks had not supported intra-African trade for various reasons: these banks had traditionally favoured commodity financing, which lent itself to the use of classical structured trade financing techniques to mitigate perceived risks in the continent.

Under such structures, the international banks usually assumed the performance risks of African commodity exporters, while transferring the payment risks to Organisation for Economic Cooperation and Development (OECD) countries. This approach contributed in entrenching commodity dependence in Africa as items other than commodities could not be financed. It also contributed to the low levels of intra-African trade given that African buyers rarely qualified as acceptable off-takers under such arrangements.

While these problems persist today, others are emerging. For instance, rising costs of compliance is beginning to constrain access of many African economies to import financing. A cocktail of enhanced regulatory compliance requirements and the emerging Basel IV and IFRS 9 are likely to further worsen the situation. What all these mean is that bankers doing business in Africa have to be adaptive and responsive to the needs of the continent and the evolving operating environment. It is no longer possible to operate as if things are not changing. While Africa pioneered FINTECH, the speed of its evolution is creating challenges and opportunities for trade finance banks around the globe.

“With new payment platforms emerging daily as well as gradual acceptance of digital currencies, letters of credit may not be relevant in the near future. This seminar will give participants the capacity to structure bankable trade finance deals of varying levels of complexity and will also give them the opportunity to network and exchange ideas,” he said.

On his part, the Minister of Finance, Cape Verde, Olavo Correia, hinged the growth of the continent’s economy on trade facilitation and development of free markets that aid the transition of several informal trades to the formal platform.

“A unified market is key and Afreximbank as an institution is crucial to achieving that. We need to look at several sectors that can drive inclusiveness. We are doing our best as a country to connect several sectors and islands,” 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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Crude Oil

Oil Prices Decline for Third Consecutive Day on Weaker Economic Data and Inventory Concerns

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Crude Oil

Oil prices extended their decline for the third consecutive day on Wednesday as concerns over weaker economic data and increasing commercial inventories in the United States weighed on oil outlook.

Brent oil, against which Nigerian oil is priced, dropped by 51 cents to $89.51 per barrel, while U.S. West Texas Intermediate crude oil fell by 41 cents to $84.95 a barrel.

The softening of oil prices this week reflects the impact of economic headwinds on global demand, dampening the gains typically seen from geopolitical tensions.

Market observers are closely monitoring how Israel might respond to Iran’s recent attack, though analysts suggest that this event may not significantly affect Iran’s oil exports.

John Evans, an oil broker at PVM, remarked on the situation, noting that oil prices are readjusting after factoring in a “war premium” and facing setbacks in hopes for interest rate cuts.

The anticipation for interest rate cuts received a blow as top U.S. Federal Reserve officials, including Chair Jerome Powell, refrained from providing guidance on the timing of such cuts. This dashed investors’ expectations for significant reductions in borrowing costs this year.

Similarly, Britain’s slower-than-expected inflation rate in March hinted at a delay in the Bank of England’s rate cut, while inflation across the euro zone suggested a potential rate cut by the European Central Bank in June.

Meanwhile, concerns about U.S. crude inventories persist, with a Reuters poll indicating a rise of about 1.4 million barrels last week. Official data from the Energy Information Administration is awaited, scheduled for release on Wednesday.

Adding to the mix, Tengizchevroil announced plans for maintenance at one of six production trains at the Tengiz oilfield in Kazakhstan in May, further influencing market sentiment.

As the oil market navigates through a landscape of economic indicators and geopolitical events, investors remain vigilant for cues that could dictate future price movements.

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Commodities

Dangote Refinery Cuts Diesel Price to ₦1,000 Amid Economic Boost

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Aliko Dangote - Investors King

Dangote Petroleum Refinery has reduced the price of diesel from ₦1200 to ₦1,000 per litre.

This price adjustment is in response to the demand of oil marketers, who last week clamoured for a lower price.

Just three weeks ago, the refinery had already made waves by lowering the price of diesel to ₦1,200 per litre, a 30% reduction from the previous market price of around ₦1,600 per litre.

Now, with the latest reduction to ₦1,000 per litre, Dangote Refinery is demonstrating its commitment to providing accessible and affordable fuel to consumers across the country.

This move is expected to have far-reaching implications for Nigeria’s economy, particularly in tackling high inflation rates and promoting economic stability.

Aliko Dangote, Africa’s richest man and the owner of the refinery, expressed confidence that the reduction in diesel prices would contribute to a drop in inflation, offering hope for improved economic conditions.

Dangote stated that the Nigerian people have demonstrated patience amidst economic challenges, and he believes that this reduction in diesel prices is a step in the right direction.

He pointed out the aggressive devaluation of the naira, which has significantly impacted the country’s economy, and sees the price reduction as a positive development that will benefit Nigerians.

With this latest move, Dangote Refinery is not only reshaping the fuel market but also reaffirming its commitment to driving positive change and progress in Nigeria.

The reduction in diesel prices is expected to provide relief to consumers, businesses, and various sectors of the economy, paving the way for a brighter and more prosperous future.

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Crude Oil

IEA Cuts 2024 Oil Demand Growth Forecast by 100,000 Barrels per Day

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Crude Oil

The International Energy Agency (IEA) has reduced its forecast for global oil demand growth in 2024 by 100,000 barrels per day (bpd).

The agency cited a sluggish start to the year in developed economies as a key factor contributing to the downward revision.

According to the latest Oil Market Report released by the IEA, global oil consumption has continued to experience a slowdown in growth momentum with first-quarter growth estimated at 1.6 million bpd.

This figure falls short of the IEA’s previous forecast by 120,000 bpd, indicating a more sluggish demand recovery than anticipated.

With much of the post-Covid rebound already realized, the IEA now projects global oil demand to grow by 1.2 million bpd in 2024.

Furthermore, growth is expected to decelerate further to 1.1 million bpd in the following year, reflecting ongoing challenges in the market.

This revision comes just a month after the IEA had raised its outlook for 2024 oil demand growth by 110,000 bpd from its February report.

At that time, the agency had expected demand growth to reach 1.3 million bpd for 2024, indicating a more optimistic outlook compared to the current revision.

The IEA’s latest demand growth estimates diverge significantly from those of the Organization of the Petroleum Exporting Countries (OPEC). While the IEA projects modest growth, OPEC maintains its forecast of robust global oil demand growth of 2.2 million bpd for 2024, consistent with its previous assessment.

However, uncertainties loom over the global oil market, particularly due to geopolitical tensions and supply disruptions.

The IEA has highlighted the impact of drone attacks from Ukraine on Russian refineries, which could potentially disrupt fuel markets globally.

Up to 600,000 bpd of Russia’s refinery capacity could be offline in the second quarter due to these attacks, according to the IEA’s assessment.

Furthermore, unplanned outages in Europe and tepid Chinese activity have contributed to a lowered forecast of global refinery throughputs for 2024.

The IEA now anticipates refinery throughputs to rise by 1 million bpd to 83.3 million bpd, reflecting the challenges facing the refining sector.

The situation has raised concerns among policymakers, with the United States expressing worries over the impact of Ukrainian drone strikes on Russian oil refineries.

There are fears that these attacks could lead to retaliatory measures from Russia and result in higher international oil prices.

As the global oil market navigates through these challenges, stakeholders will closely monitor developments and adjust their strategies accordingly to adapt to the evolving landscape.

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