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Africa Transparent in Military Spending

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  • Africa Transparent in Military Spending

The level of transparency in military spending in sub-Saharan Africa is greater than previously thought.

A new report from the Stockholm International Peace Research Institute (SIPRI) carried out the survey between 2012 and 2017.

At least 45 of the 47 states surveyed published at least one official budget document in a timely manner online.

Contrary to common belief, countries in sub-Saharan Africa show a high degree of transparency in how they spend money on their military,’ says Dr Nan Tian, Researcher in the SIPRI Arms Transfers and Military Expenditure Programme.

‘Citizens everywhere should know where and how public money is spent. It is encouraging that national reporting in sub-Saharan Africa has improved.’

No transparency in Equatorial Guinea and Eritrea; fall in Botswana

While SIPRI’s study shows that there is generally a high degree of transparency in the military sector in sub-Saharan Africa, Equatorial Guinea and Eritrea have not published any official information on military spending since 2009 and 2003 respectively, and Botswana was one of very few states to show a deterioration in transparency.

Recently in Botswana, official budgetary reports have become increasingly difficult to obtain, there is a lack of a national defence policy and almost no government information or dialogue exists on issues such as arms procurement.

‘While these issues are worrying, the main cause for concern is the decreased public engagement on military-related matters,’ says Dr Tian.

Botswana had the third highest percentage increase in military spending between 2014 and 2017. Military spending grew by 60 per cent (or $182 million) in that period as part of several military procurement programmes involving France and Switzerland.

‘This military spending increase has occurred despite the fact that Botswana is located in one of the least conflict-prone areas of Africa and is one of the few states in sub-Saharan Africa to have never been involved in an armed conflict,’ says Dr Tian.

The Central African Republic (CAR) is one of the stand-out cases with substantial improvements in military sector transparency.

There is evidence of improved oversight and accountability in budget reporting, such as implementing an official budget formulation process and publishing budget execution reports both quarterly and biannually.

Although improvements are still needed in the areas of accessibility and disaggregation, military sector transparency has increased substantially.

‘The publication of accessible spending information is a major step towards greater transparency and accountability in the military sector,’ says Tian.

Unlike Europe and South America, there are currently no regional reporting mechanisms in place in sub-Saharan Africa for exchanging information on military expenditure between states.

The UN Report on Military Expenditures is the only international reporting system to which states in sub-Saharan Africa have agreed to participate.

In the period 2008–17, only five states in sub-Saharan Africa reported at least once, and no reports were submitted during the years 2015–17.

‘It is clear from SIPRI’s study that the lack of UN reporting is not due to a lack of information.

Rather, the challenge is to encourage countries to submit data to the UN,’ says Pieter Wezeman, Senior Researcher with the SIPRI Arms Transfers and Military Expenditure Programme.

‘Government transparency at the international level is key to reinforcing trust and encouraging dialogue between countries,’ says Ambassador Jan Eliasson, Chair of the SIPRI Governing Board and former UN Deputy Secretary-General.

‘Therefore, UN member states need to work together on implementing and improving reporting,’ he says.

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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OPEC+ Production Cuts Set to Balance Global Oil Market, Says Russian Deputy PM

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In a statement on Monday, Russian Deputy Prime Minister Alexander Novak expressed confidence that the global oil market will achieve balance in the second half of 2024, thanks to the production cut strategies implemented by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.

OPEC+, which includes major oil-producing countries such as Saudi Arabia and Russia, has been actively managing oil output to stabilize the market since late 2022.

In their most recent meeting on June 2, the group agreed to extend their latest production cut of 2.2 million barrels per day (bpd) until the end of September. This cut is scheduled to be gradually phased out starting in October.

“The market will always be balanced thanks to our actions,” Novak stated, emphasizing the importance of the coordinated efforts by OPEC+ in maintaining market equilibrium.

The U.S. Energy Information Administration (EIA) recently projected that global oil demand will surpass supply by approximately 750,000 bpd in the latter half of 2024 due to the continued reduction in OPEC+ output.

This outlook was echoed in a report by OPEC last week, which highlighted an anticipated oil supply deficit in the coming months and into 2025.

Novak’s remarks come at a crucial time for the global oil market, which has experienced significant volatility over the past year.

The OPEC+ alliance has been pivotal in mitigating some of this instability by adjusting production levels in response to fluctuating demand and other market dynamics.

Analysts suggest that the measures taken by OPEC+ will play a vital role in ensuring that the oil market remains stable as the world continues to navigate economic uncertainties and fluctuating energy demands.

The production cuts are expected to support oil prices by limiting supply, thereby helping to balance the market.

The impact of these production cuts is already being felt, with oil prices showing signs of stabilization.

However, the market remains sensitive to geopolitical developments and economic trends, which could influence future supply and demand dynamics.

As OPEC+ prepares to unwind some of its production cuts in the coming months, industry observers will be closely monitoring the market’s response.

The gradual phasing out of the cuts is designed to prevent any sudden shocks to the market, allowing for a smoother transition and sustained balance.

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Oil Prices Steady Amid U.S. Political Uncertainty and Middle East Tensions

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Oil prices held firm on Monday as the political uncertainty in the United States and ongoing tensions in the Middle East persist.

Brent crude oil, against which Nigerian oil is priced,  fell slightly by 13 cents, or 0.2%, to $84.90 a barrel after a 37-cent drop on Friday.

Similarly, U.S. West Texas Intermediate crude stood at $82.15 a barrel, down 6 cents, or 0.1%.

The dollar’s strength, which followed a failed assassination attempt on U.S. presidential candidate Donald Trump, exerted some pressure on oil prices.

A stronger dollar typically makes oil more expensive for buyers using other currencies, leading to reduced demand.

“I don’t think you can ignore the uncertainty that the weekend’s assassination attempt will cast across a deeply divided country in the lead-up to the election,” said Tony Sycamore, market analyst at IG.

In the Middle East, efforts to end the Gaza conflict between Israel and Hamas stalled over the weekend.

Talks were halted after three days, although a Hamas official indicated that the group had not withdrawn from discussions.

The situation escalated further when an Israeli attack targeting a Hamas military leader killed 90 people on Saturday, maintaining the geopolitical premium on oil.

Despite these geopolitical tensions, oil markets remain supported by supply cuts from OPEC+. Iraq’s oil ministry has pledged to compensate for any overproduction since the beginning of the year, reinforcing the market’s stability.

Last week, Brent fell more than 1.7% after four weeks of gains, while WTI futures slid 1.1%. The decline was largely attributed to a fall in China’s crude imports, which countered robust summer consumption in the United States.

“While fundamentals are still supportive, there are growing demand concerns, largely emanating from China,” noted ING analysts led by Warren Patterson.

China’s crude oil imports fell 2.3% in the first half of this year to 11.05 million barrels a day, with disappointing fuel demand and reduced output by independent refiners due to weak profit margins.

Also, crude throughput at Chinese refineries dropped 3.7% in June from a year earlier to 14.19 million barrels per day, marking the lowest level this year, according to customs data.

China’s economy has slowed in the second quarter, weighed down by a protracted property downturn and job insecurity, keeping alive expectations that Beijing will need to implement more stimulus measures.

In the United States, the active oil rig count, an early indicator of future output, fell by one to 478 last week, marking the lowest level since December 2021, according to energy services firm Baker Hughes.

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Nigeria Awards $21M Contract to Meter 187 Crude Oil Flow Stations

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The Federal Executive Council (FEC) has approved a $21 million contract to meter 187 crude oil flow stations across Nigeria.

The decision was announced by the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, during a press briefing in Abuja.

Minister Lokpobiri highlighted that this initiative is part of the government’s broader strategy to reorganize the oil and gas sector, ensuring accurate accounting of the country’s crude oil production and exports.

The contract, awarded to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), aims to install metering systems at flow stations within the Niger Delta region.

“This project marks a major development that has never happened in this country. The metering of our 187 flow stations will provide proper accountability of our oil production and exportation,” Lokpobiri stated. The project is expected to be completed within 180 days.

In addition to the metering contract, the FEC also approved the deployment of advanced software to monitor the movement of Nigeria’s crude oil from the point of loading to its final destination.

This technology will allow real-time tracking of crude oil shipments, addressing long-standing issues of oil theft and misreporting.

Lokpobiri explained, “With this advanced cargo tracking technology, we will know from the point of loading in Nigeria up to the final destination. This step is crucial in ensuring Nigerians get maximum value for the crude oil produced.”

The metering and monitoring initiatives come at a time when Nigeria faces significant challenges in its oil production.

Domestic refineries have complained of insufficient crude supplies, and there have been persistent concerns about the transparency of actual crude oil volumes produced in the Niger Delta.

Nigeria’s current production stands at less than 1.3 million barrels per day, below the 1.5 million barrels daily quota approved by the Organisation of Petroleum Exporting Countries (OPEC).

The initiatives are part of the government’s efforts to ramp up crude oil production and increase revenue.

“Oil remains the fastest way to raise the funding needed to address our economic and social problems,” Lokpobiri noted.

The accurate tracking and metering of oil production are expected to bolster investor confidence and contribute to the country’s economic stability.

The minister also hinted at ongoing efforts to rekindle investor confidence in Nigeria’s oil sector, which has seen a decline in major investments over the past 12 years.

“Since the inception of this administration, we have been working hard to bring back the confidence of the investing community,” Lokpobiri declared.

In a related development, the Port Harcourt refinery is expected to come on stream soon, although Lokpobiri did not specify a date for its operational commencement.

The refinery’s activation is anticipated to further boost Nigeria’s oil processing capacity and reduce dependence on imported refined petroleum products.

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