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Africa To Get $2bn Facility To Promote Economy – AFC

Africa Finance Corporation (AFC) says Africa will get up to a $2bn credit facility to support the economy and enhance economic resilience in the continent

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In its commitment to financially support Africa to be back stronger after being hit by the COVID-19 pandemic, Africa Finance Corporation (AFC) says Africa will get up to a $2bn credit facility to support the economy and enhance economic resilience in the continent.

According to a statement released by the Corporation and obtained by Investors King, AFC is committed to funding up to 50 percent of the facility and mobilise the rest through its network of international partners and investors. The AFC also promised to help Africa recover from the effect of global challenges.

“In the wake of global crises including the COVID-19 pandemic and more recently the Russia-Ukraine conflict, Africa Finance Corporation is pleased to announce the launch of a US$2billion facility to support bank-driven economic recovery in Africa, and the resilience of African economics”, the statement read in part.

The funded facility will be tagged – Africa Economic Resilience and will be distributed through loans to designated banks such as commercial, regional development banks and central banks in different parts of Africa.

The Africa Economic Resilience facility is to also provide hard currency liquidity to finance trade and other economic activities in their various capacities. These financial institutions will be able to leverage AFC’s proven access to global funding to access financing at competitive rates.

While speaking on the purpose of the launch at the AFC Live infrastructure Solutions Summit, Head of Treasury and Financial Institutions, Banji Fehintola said: “the COVID-19 pandemic set back Africa’s economic growth trajectory and further widened the trade financing gap. Before the continent could get over that, the Russia-Ukraine conflict has brought with it a new set of challenges, but which have the same effect of negatively impacting growth prospects across the continent”.

“As such, we are determined to play a leading role in shaping the continent’s recovery and resilience, not only though the work we do in bridging Africa’s infrastructure gap, but also through targeted interventions such as this $2billion COVID-19 economic resilience facility,” he continued.

The statement added that through this funding intervention, AFC will accelerate its developmental impact in Africa, driving the continent to a new phase of growth that is focused on maximum resource value capture and domestic job creation.

For over 15 years, AFC has been committed to mobilizing a form of capital for important African projects using different bonds issuance for the last two years.

In 2019, it issued 10 year project plan of $500m, Eurobond. In 2020, it gave a five-year-old $700m Eurobond and in 2021, it gave a seven-year $750m Eurobond, its lowest yield.

Recently, an independent asset management arm, AFC Capital Partners was established with plans to raise $2bn to fund climate adaptation infrastructure projects in Africa.

The applications for the African Economic Resilience facility will open in (Date/Month/Year) through AFC’s website (www.AfricaFC.org).

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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