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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.

Crude Oil

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

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Dangote Refinery

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

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Crude Oil

Oil Prices Hold Steady as U.S. Demand Signals Strengthening

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Crude Oil - Investors King

Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

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Crude Oil

Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

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Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.

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