Economy

IMF: Africa Needs $425 Billion to Recover From Covid-19 Pandemic

Published

2 years ago

May 31, 2022

The International Monetary Fund (IMF ) has stated that Africa needs about $425 billion to recover from the Covid-19 Pandemic.

Speaking at the latest Sub-Saharan Africa Regional Economic Outlook in Abuja, Ari Aisen, IMF’s Resident Representative for Nigeria explained that African countries were at the risk of falling further behind in terms of development, now that the world economy was faced with unprecedentedly high energy and food prices.

He outlined the economic activities of Nigeria and Africa at large – revealing that the funds they provide have done a lot to help African countries, south of the Sahara by allocating $23 billion in SDRs and intending to re-channel an additional $100 billion in SDRs from rich countries.

He explained that Nigeria had access to as much as $6. 8 billion in facilities between 2020, in the wake of the COVID-19 Pandemic till date from the IMF. Nigeria received $3. 4 billion in Special Drawing Rights and a similar amount as a loan from the Fund.

“with unrivaled potential for renewable energy and an abundance of minerals, a successful transition offers opportunities for diversification and job creation; ensuring the green transition is also a just transition,” he said.

However, Aisen noted that Africa needs $425 billion to recover from the COVID-19 pandemic, in addition to $30–50 billion per year for climate adaptation and $ 6-10 billion annually for commodity imports.

Furthermore, Aisen diverged into the oil sector, revealing that Nigeria could pay out as much as N6 trillion in oil subsidies in 2022 if oil prices continue to rise and urgent actions are not taken to reverse the trend.

Investors King gathered that the amount is roughly a third of the N17.319 trillion federal government budget for 2022, with nearly N6.9 trillion in scheduled recurrent spending and N5.96 trillion in capital outlay.

According to him, with a monthly petrol subsidy bill of N500 billion, the country might end the year with a record N6 trillion subsidy.

He did, however, express optimism that if the Dangote Refinery can begin operations within the year as anticipated, it will assist reduce gasoline imports and subsidy burdens.

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Economy

Nigeria’s Untapped Coffee Sector Holds the Key to $2 Billion Annual Revenue

Published

4 hours ago

December 6, 2023

Investors King

People stand in front of coffeeshops in Rembrandtplein in Amsterdam

Amidst declining foreign reserves and the need for alternative revenue streams, Nigeria’s overlooked coffee industry emerges as a potential powerhouse capable of contributing over $2 billion annually to foreign exchange earnings.

Industry experts emphasize the necessity for strategic investments and modernized farming practices to unlock the full economic potential of the coffee sector.

While Nigeria is not among the top 10 coffee producers in Africa, the country’s untapped coffee industry holds the promise of significant financial gains, job creation, and sustainable agricultural development.

The urgency for revitalization comes as Nigeria grapples with a decline in foreign reserves, dropping from $38.25 billion in September 2022 to $33.23 billion in the third quarter of 2023.

Salihu Imam, Chairman of the National Coffee and Tea Association of Nigeria, Oyo State, highlighted the global significance of coffee, stating, “Coffee is the second most traded/valuable of all commodities and first in Agricultural commodities in the world.”

The potential economic impact extends beyond immediate financial gains, with Nigeria positioning itself as a key player in the global coffee trade.

Despite its potential, Nigeria’s coffee exports remain modest, producing less than one million bags annually.

In contrast, Ethiopia, the largest coffee exporter in Africa, is projected to produce 8.25 million bags. Experts suggest that Nigeria, with its unique coffee varieties, could generate $2 billion annually.

Segun Lary-Lean, President of the West Africa Specialty Coffee Association, emphasized the robust global demand for coffee, comparing it to water in Western countries.

He noted the significant earnings of coffee-producing nations like Brazil, Colombia, Vietnam, and Kenya, which experienced a 17% increase in coffee earnings.

In a call to action, industry players urge the Federal Government to prioritize strategic investments, modernized farming practices, and value-added processing to harness the coffee sector’s full economic benefits.

Unlocking the potential of Nigeria’s coffee industry stands not only as a financial opportunity but as a catalyst for broader economic growth and diversification.

Economy

Nigeria’s Q3 Foreign Trade Skyrockets: Crude Oil Revenue Surges by 83.23% to N8.54tn

Published

1 day ago

December 5, 2023

Investors King

Nigeria’s foreign trade expanded by 53.16% year-on-year to N18.80 trillion in the third quarter (Q3) of 2023.

The surge was primarily propelled by an impressive 83.23% spike in crude oil revenue to N8.54 trillion, a substantial increase from N4.66 trillion recorded in the same quarter of the previous year.

This was reported by the National Bureau of Statistics (NBS) in its ‘Foreign Trade in Goods Statistics (Q3 2023)’ that highlighted the nation’s trade balance and economic outlook.

The report noted that total exports rose by 60.78% to N10.35 trillion.

Mr. Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission, emphasized the importance of viability in retaining exploration leases.

He said, “Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases.”

The report outlined the dominance of crude oil in exports, constituting 82.50% of total exports, while non-crude oil products contributed N677.57 billion or 6.55% of total exports. The positive trade balance stood at N1.89 trillion.

The top five export destinations for Nigeria included Spain, India, The Netherlands, Indonesia, and France, collectively accounting for 45.98% of total export value.

On the import side, China, Belgium, India, Malta, and the United States were the major sources, comprising 57.18% of total imports, valued at N4.84 trillion.

While these promising trade figures indicate a robust economic performance, challenges in the oil sector persist, with the country’s crude oil production below the 2023 target.

The government’s commitment to increasing production aims to boost revenue and fund strategic national projects, as highlighted by Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.

The surge in exports, possibly linked to the recent naira devaluation, underscores the intricate relationship between economic policies and trade dynamics, shaping Nigeria’s economic trajectory.

Economy

Federal Government to Earn Over $500 Million in INTELS Deal

Published

2 days ago

December 4, 2023

Investors King

The Nigerian Ports Authority (NPA) has unveiled an agreement with INTELS Nigeria Limited that is set to bring substantial financial gains to the federal government.

The comprehensive deal, negotiated over weeks, not only resolves a contentious pilotage contract but also promises to bolster Nigeria’s coffers by over $500 million.

The accord encompasses a multifaceted approach to financial benefits, including an interest waiver of $193,317,556 and a significant reduction in the interest rate on outstanding debt.

The debt, originally at a six-month London Interbank Offer Rate (LIBOR) + 6.5%, has been revised to a more favorable six months Secured Overnight Financing Rate (SOFR) + 3%.

Such financial restructuring is anticipated to save the government a staggering $326.8 million over the next 15 years.

NPA, in a detailed breakdown, elucidated that the agreement further involves spreading the debt repayment over 15 years, with the initial two years being interest-free.

Additionally, there is a commendable reduction in the commission percentage, dropping from 28% to 24.5%, a move that aligns with the government’s commitment to optimizing financial resources.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, received accolades for his tireless efforts in steering the negotiations to a successful conclusion. NPA expressed gratitude for his commitment to putting Nigeria first, emphasizing the critical role played by the minister in resolving the long-standing INTELS dispute.

Former Vice President Atiku Abubakar, however, denied benefiting from the reinstatement of INTELS contracts.

He clarified that his divestment from the company remains unchanged, emphasizing that he cannot be a beneficiary of the restored pilotage monitoring business.

NPA’s move to ensure a resolution with INTELS is not only seen as a financial triumph but also as a strategic step towards fostering economic stability.

The agreement is poised to have a positive ripple effect on revenue generation and underscores the government’s commitment to diplomatic and economically viable solutions.