- Expert: Investments in Port, Logistics Infrastructure Will Boost Africa’s GDP
The rapid expansion of regional and international trade underscores the need for significant investments in port and logistics infrastructure as gateways for African exports, Chief Executive of Maritime and Port Authority of Singapore, Mr. Andrew Tan has said.
Tan stated this while addressing delegates and stakeholders at the just concluded African Maritime Administrations (AAMA) Conference held in Sharm El Sheikh, Egypt.
This, he stated, is crucial because exports would continue to be an important engine of growth for Africa, where every dollar exported is expected to increase gross domestic products (GDP) by $3.5 dollars.
Having adequate and efficient port infrastructure, he added, is therefore an important enabler to unlock economic growth and strengthen Africa’s competitiveness in the long run.
According to him, “Africa has been on a sustained growth path since the 1980s and holds tremendous economic potential today. Despite global volatility and uncertainties ahead, Africa’s growth outlook remains robust. Collective GDP in Africa is currently expanding faster than the world average. In particular, Sub-Saharan Africa is projected to continue accelerating to reach an average annual growth rate of 3.9 per cent by 20221. At this pace, Sub-Saharan Africa is on track to become the world’s second-fastest growing region after Emerging Asia.
“Africa has many diverse regional economies. Each offers unique strengths and opportunities. Through my engagements with African maritime officials and global business leaders, I have had the privilege to learn about the economic dynamism and transformations taking place across Africa.”
“Today, many African nations are seeking to diversify their economies beyond commodity-focused industries. At the enterprise level, African businesses are evolving rapidly by embracing technology and innovation. The pace and scope of change is impressive.
“For example, a recent report by McKinsey has recognised East Africa as a global leader in e-payments2. Digital trade is also fast expanding. In Nigeria, Africa’s largest economy, e-commerce revenue has doubled each year since 2010. Other industries such as manufacturing, financial services and IT services are growing rapidly as well, ‘he stated.
Regional integration, he pointed out, is another key driving force creating economic opportunities across multiple dimensions.
“The combination of significant infrastructure investments and a growing network of transport links has vastly improved physical connectivity and logistics efficiency in Africa. Efficiencies in logistics are important for large geographical regions like Africa – so landlocked countries, transhipment points, and port cities all share the benefits of trade and economic growth.
“External initiatives such as the Belt and Road Initiative will also drive the momentum for infrastructure development forward. Africa’s economic outlook today is bright. With large reserves of untapped resources and significant export potential, Africa will continue to play a significant role in the global trade and commodity value chain,” he said.
Much like it is for Singapore, he said maritime connectivity will be a key enabler to sustain Africa’s growth momentum.
“Infrastructure investments must therefore continue apace but with long-term planning considerations and greater emphasis on sustainability. Relevant stakeholders should coordinate on key issues such as logistics connectivity, cross-sector synergies and environmental impact as part of integrated infrastructure planning. We must also be prepared to adapt and transform the way we work by harnessing technology as a force multiplier. Investments in automation and digital tools are no longer good-to-haves but a necessity. This should be coupled with efforts to streamline workflows and optimise existing resources.
“Going forward, the global maritime industry will become more interconnected. Singapore and Africa today have a broad range of partnerships spanning trade, investments, capability exchange and maritime security among others. I am confident that we will further deepen our partnerships through multi-lateral platforms such as the International Maritime Organisation (IMO) and collaboration in new opportunities and growth areas, “he said.
Similarly, Tan said economic integration has made good progress, adding that the recent signing of the Continental Free Trade Agreement (CFTA) was a significant milestone.
“Regional blocs that are part of the African Economic Community are also cooperating more closely to reduce trade and economic barriers. These integration efforts will ensure that cross-border trade can continue to flourish. It will also enhance the non-physical flows of information, capital and talent throughout the region,” he added.
Oil Prices Drop on Stronger U.S Dollar
The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.
The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.
The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.
“Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.
“The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.”
The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.
A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.
Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.
Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.
“This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.
Oil Rises as Threat of Immediate Iran Supply Recedes
Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.
Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.
A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.
It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian Presidential Elections later this week,” ING Economics said in a note.
Other members of the Organization of Petroleum Exporting Countries (OPEC) along with major producers including Russia — a group known as OPEC+ — have been withholding output to support prices amid the pandemic.
“Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.
To meet rising demand, U.S. drillers are also increasing output.
U.S. crude production from seven major shale formations is forecast to rise by about 38,000 barrels per day (bpd) in July to around 7.8 million bpd, the highest since November, the U.S. Energy Information Administration said in its monthly outlook.
Oil Prices Rise as Demand Improves, Supplies Tighten
Oil prices rose on Monday, hitting their highest levels in more than two years supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate.
Brent was up 53 cents, or 0.7%, at $73.22 a barrel by 1050 GMT, its highest since May 2019.
U.S. West Texas Intermediate gained 44 cents, or 0.6%, to $71.35 a barrel, its highest since October 2018.
“The two leading crude markers are trading at (almost) two-and-a-half-year highs amid a potent bullish cocktail of demand optimism and OPEC+ supply cuts,” said Stephen Brennock of oil broker PVM.
“This backdrop of strengthening oil fundamentals have helped underpin heightened levels of trading activity.”
Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.
The mood was also buoyed by the G7 summit where the world’s wealthiest Western countries sought to project an image of cooperation on key issues such as recovery from the COVID-19 pandemic and the donation of 1 billion vaccine doses to poor nations.
“If the inoculation of the global population accelerates further, that could mean an even faster return of the demand that is still missing to meet pre-Covid levels,” said Rystad Energy analyst Louise Dickson.
The International Energy Agency (IEA) said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.
IEA urged the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to increase output to meet the rising demand.
The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.
On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high, Dickson said.
U.S. oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.
It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.
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