- Banks Frustrating New Forex Measures, CBN Cries Out
The Central Bank of Nigeria (CBN) yesterday disclosed that it had received reports that some customers seeking to buy foreign exchange (forex) for business travel allowance (BTA), personal travel allowance (PTA), medical and school fees were being frustrated by some banks with the false claim that the CBN was not allocating enough forex for such invisible items.
It will be recalled that the CBN on Thursday informed the market that a lower exchange rate will be advised latest Mondaymorning.
Authoritative sources at the CBN have hinted that the bank is considering at least a N5 reduction for PTA/BTA and medical and school fees at both the bank and BDC segments.
Also, the CBN has issued stern warning to deposit money bank compelling them that it is only the prerogative of the customer to decide the mode of payment, either as dollar cash or card.
The bank has further warned that it prefers the mode of dispensing PTA/BTA through cash payment and has threatened to impose stiff sanction not only on the bank but also the CEO that failed to obey this directive.
This warning is coming based on information received by the CBN through its misery shoppers who complained that banks were turning back their customers. The apex bank further directed that any bank customer turned back at any branch nationwide should report such bank through its hot line.
It urged any customer that is not attended to within 24 hours for BTA/PTA or 48 hours for tuition and medical fees should call a dedicated number or send an email to the Consumer Protection Department of the CBN, with the name and branch of the non-cooperating bank.
Also yesterday, the Minister of Finance, Mrs. Kemi Adeosun assured that the newly-established wholesale development finance institution, Development Bank of Nigeria (DBN) would be free of any form of political interference.
The apex bank, which made the accusation against the banks in a statement by its acting Director, Corporate Communications, Mr. Isaac Okorafor, titled: “There is Adequate Forex for PTA, BTA, Tuition & Medical Fees,” said such claim by banks was totally untrue.
According to the CBN, all banks have more than enough stock of forex in their possession for the purpose of meeting genuine customers’ demand for BTA, PTA, tuition and medical fees. “Indeed, on a weekly basis, the CBN has been selling at least $80 million to banks for onward sale to their customers for these invisible items.
“Members of the public seeking to buy forex for the above-mentioned purposes are, therefore, advised to go to their banks and obtain their forex,” it added.
“Furthermore, no customer should accept to buy forex from any bank at more than the currently prescribed rate of N360/$1,” it added
The development in the market negatively impacted the performance of the Naira on the parallel market as it fell to N391 to the dollar yesterday, lower than the N384 to the dollar it was the previous day.
In continuation of its determination to sustain liquidity in the foreign exchange market, the CBN had on Thursday increased the amount of dollars to be sold to Bureau De Change (BDC) operators to $10,000 weekly, up from the $8,000 per week it was previously. This meant that the operators would be entitled to $5,000 per bid, at a new rate to be announced on Monday.
The CBN had on Monday directed all banks to immediately begin the sale of FX for BTA, PTA, tuition and medical fees to customers at not more than N360 per dollar. The CBN explained that it will sell to banks at N357 per dollar, adding that banks are expected to post the new rates in the banking halls of their branches immediately. Also, barely 24-hours after the policy was announced, the CBN lowered the rate at which dollar inflows from International Money Transfer Operators (IMTOs) are sold to BDC operators to N360/$1, from the N381/$1 it was previously. With this directive, the BDCs were expected to sell the greenback to retail end-users at not more than N362/$1, lower than the N400/$1 it used to be sold at this segment of the market.
Adeosun: DBN will be Free of Political Interference…
Meanwhile, the Minister of Finance has assured Nigerians that the newly-established wholesale development finance institution, Development Bank of Nigeria (DBN) would be free of any form of political interference.
She stated that DBN had been well structured to be run in a seamless professional manner devoid of any form of politics and shenanigans, noting that the bane of many government organisations with high failure rate was political interference.
Adeosun was responding to a question on what the new bank would be doing differently from other existing development finance institutions, when she introduced the management of the bank to journalists in Abuja.
The minister said apart from the DBN enjoying an atmosphere of non-political encumbrances, it also has the distinction of multilateral financing, adding the management and board also came through stringent recruitment process and will be controlled by the government.
She stated that Small and Medium Enterprises (SMEs) segment, which DBN is set to target accounts for about 50 per cent of Nigeria’s Gross Domestic Product (GDP), adding if cheaper funding window is provided, a quantum leap would be recorded in the economy.
According to her, DBN was of the legacies of the previous government, which the incumbent administration considered worthy to be sustained and therefore set out to fine tune the structure with a view to making it commence operations.
Speaking on how the bank will operate, its Managing Director, Mr. Tony Okpanachi said the bank would run a lean structure of 35 well-motivated personnel and would not be operating on any form of subsidies, adding that it would build its own funds.
Okpanachi stated that the DBN would operate on four areas of impact, among which is financial inclusion.
He noted that jobs would be created through the SMEs, adding that strong emphasis on women empowerment will be a major focus.
The CEO stated that a strong point of the bank would be lending to commercial and microfinance banks for on-lending to SMEs.
According to him, what had stifled SMEs was the absence of long term financing as well as high interest rates.
These areas, he stated, were what the DBN would bridge, stressing that a credit guarantee scheme would be in place for risk sharing, noting that the bank would be ready to share risks of up to 50 per cent.
Okpanachi disclosed that the bank was targeting 20,000 SMEs across the country in its first year of operations.
Meanwhile, the Ministry of Finance has provided clarifications on the reported fraud in YouWin.
The ministry said in a statement that the current administration inherited YouWin as an ongoing programme, which had made legally binding commitments of grants to 1,500 entrepreneurs.
“The administration decided that those commitments should be honoured. It was in that regard that a batch of awardees under YouWin 3 was submitted to the Minister of Finance, Mrs. Kemi Adeosun, for cash disbursement totaling N611,821,910 million.
“Allegations were received from an anonymous whistleblower, which provided documentary evidence of irregularities in 10 cases out of the batch,” statement issued by the Director, Information, Mr. Salisu Na’Inna Dambatta said
The minister, the statement added, immediately directed that an internal investigation be conducted to determine the veracity of the alleged fraud and report the findings to her for necessary action.
“The substance of the allegations was that an awardee was the child of a former director in the ministry and there were a number of cases where married couples each benefitted. This raised concerns about the integrity of the original selection process, which took place in 2014.
“The position of the ministry is that investigations are ongoing under the Presidential Initiative on Continues Audit (PICA) who will review each suspected case to determine whether any irregularity occurred. In the interim, disbursements of this batch have been suspended.
It is on record that the original YouWin programme midwife 3,900 enterprises within four years, and was just one of the multiple intervention programmes to create jobs at the time,” the statement added.
US 2020 Election: Leading Organisations Donate Over $255m for Campaigns
Top 1o Leading Organisations Donate Over $255m Towards US Election campaigns
Ten leading global business organisations have donated over $255 million towards the US 2020 election campaigns, according to recent data compiled by Buy Shares.
The data indicates that the top ten organisations contributed a combined $255.20 million towards the U.S elections campaign as of September 8, 2020.
The report also noted that the Democratic Party receives the largest donations at $135.59 million while the Republican Party followed with $119.61 million.
Across both parties, Uline Inc led with $40.09 million contributions towards the Republican Party campaign.
Other top donors towards the Republican Party include Blackstone Group ($31.97 million), American Action Network ($19.88 million), Las Vegas Sands ($14.06 million), and Adelson Clinic for Drug AbuseTreatment & Research ($13.59 million).
On the other hand, Fahr LLC is the largest contributor towards Democratic Party campaigns at $39.65 million. Other leading donors include Sixteen Thirty Fund ($34.33 million), Paloma Partners ($21.76 million), Senate Majority PAC ($21.41 million), and Carpenters & Joiners Union ($18.42 million).
According to the research report: “There is still debate if the organization’s donations influence politics. According to experts, successful companies usually bet their contributions towards the winning candidates. On the other hand, small firms are likely to back candidates who will lose. Political pundits argue that big companies are in a better position at foreseeing future events. To a large extent, the company’s usually support candidates or political parties that are likely to support their priorities. Additionally, in some incidents, stocks of companies that backed the winning candidate might rise after the election. The boost in stock prices tends to attract investors.”
Campaign contributions are used to cover the cost of travel, political consulting, and other the direct costs of communicating the party’s agenda.
Mozambique LNG Project Could Be Transformational for Mozambique – If Western Environmentalists Don’t Interfere (By NJ Ayuk)
Mozambique LNG Project Will Transform the Country
When Anadarko Petroleum Corp. confirmed last year it would be constructing a $20 billion liquified natural gas (LNG) plant in Mozambique, this was major news. Mozambique’s first onshore LNG plant would be creating tens of thousands of jobs – and contributing to sustainable, long-term economic growth that would impact millions of people.
Two additional LNG projects have been announced since then: the $4.7 billion Coral FLNG Project by ENI and ExxonMobil, and the $30 billion Rovuma LNG Project by ExxonMobil, ENI, and the China National Petroleum Corporation. While these two have been postponed by the COVID-19 pandemic, the original LNG Mozambique project has been moving forward.
French oil major Total acquired the project and finalized project funding in July, even in the face of recent terror attacks in northern Mozambique’s Cabo Delgado province, where Total’s LNG plant will be constructed.
That’s why it’s so disheartening to learn that a UK-based environmental group is pursuing actions that could jeopardize the project’s timely progression, all in the name of preventing climate change. Friends of the Earth has said it will initiate a legal challenge against the UK’s decision to provide $1 billion in funding for the Mozambique LNG project.
Never mind the project’s importance to everyday Africans. Never mind its potential to grow and diversify the economy. Never mind that projects like this are just what Mozambique needs to address its energy poverty, or that the Mozambique government has invested considerable time and resources into making this LNG project possible.
This is not the first time that not so well informed radical activist have attempted to interfere with Africa’s energy industry in ways that do not help poor Africans but serve their own interest. International organizations, including the World Bank, and private investors, under pressure by environmental groups, have been dropping support for African fossil fuel production. A lot of poor people are suffering from this and hundreds of millions more will if we to change direction.
I find it stunning that, during a time when much of the world is talking about the need to respect black perspectives, environmental groups seem to have no qualms about dismissing African voices.
As I’ve said in the past, I agree that climate change should be taken seriously. And I understand the risks it poses to Africa. The thing is, why are non-African organizations trying to dictate how African countries address those risks? The message in this case seems to be that “they know best.” That idea is insulting, and interfering with an African country’s efforts to build up its economy – simply because fossil fuels are involved – is completely unacceptable.
A ‘Missed Opportunity?’ Really?
UK Export Finance (UKEF) is one of eight export credit agencies to provide funding for Total’s Mozambique LNG project, which includes the construction of a two-train liquefaction plant with a capacity of 12.9 million tonnes per year.
UKEF’s $1 billion commitment includes awarding $300 million in loans to British companies working on the gas project and guaranteeing loans from commercial banks worth up to $850 million. The UK’s parliamentary under-secretary for the Department for International Trade, Graham Stuart, has pointed out that Total’s LNG project could be transformational for Mozambique and create 2,000 jobs in the UK as well.
But Friends of the Earth has said they will seek a judicial review into the UK government’s decision to help finance a project that, as they put it, will “worsen the climate emergency.” The group’s director, Jamie Peters, also expressed his disappointment in a letter to the UK government. The UKEF’s funding decision, Peters said, represents a “lost opportunity” for the UK to be a world climate leader.
My question to Mr. Peters is, what about Mozambique’s opportunities? To help everyday people improve their lives? To earn a decent living? To have a reliable source of energy? I’m talking about an opportunity to nudge the average life expectancy in Mozambique above 59 years, where it stands now.
The Mozambique LNG project is poised to make those things possible. As far as I’m concerned, losing that opportunity would devastating.
What Mozambique Stands to Gain
I can’t overstate the far-reaching implications and potential that Total’s Mozambique LNG project represents for local businesses, communities, and individuals.
Total estimates that its plant will generate about $50 billion in revenue for Mozambique’s government during its first 25 years in operation. That revenue can be directed toward much-needed infrastructure, educational programs, and economic diversification programs.
Consider direct foreign investment in Mozambique: Total’s US$25 billion investment in the LNG plant is more than twice Mozambique’s current GDP.
How about the plant construction project? Not only will it generate tens of thousands of local jobs, but it also will provide training opportunities for local people. Indigenous companies will be contracted to provide goods and services.
This pattern will continue once the plant is operational. Locals can train for and take a wide range of positions, including professional and leadership roles. Over time, subject matter experts who can share their knowledge in Mozambique, and with other African companies, will be cultivated. And, once again, the plant will be looking to local companies to provide products and services.
LNG Can ‘Em-power’ Mozambique
In addition to these far-reaching economic opportunities, the LNG produced at the plant will provide affordable energy for Mozambique.
The need is urgent. Only about 29% of the population has access to electricity today. Medical care is hindered. Education is impacted. And sustainable economic growth is an uphill climb.
Earlier this year, I praised the government of Mozambique for negotiating for part of the LNG production to be diverted to the domestic market, meaning it can be used for power generation. Since then, the government secured financing for a 400MW gas-fired power plant and transmission line to Maputo, the country’s capital, which will dramatically improve power reliability there.
By the way, when the Mozambique government ensured that some of the plant’s LNG production would be available for domestic use, it also laid the foundation for monetization and economic diversification. In Mozambique, LNG will be available to serve as feedstock for fertilizer and petrochemical plants. It can be exported by pipeline to neighboring companies. And that, in turn, can help Mozambique build even more infrastructure and contribute to even greater widespread prosperity.
Mozambique Has Been Working for This
I’d also like to point out the thought and preparation that the Mozambique government has put into making its natural gas operations beneficial for the country as a whole since approximately 180 trillion cubic feet of natural gas reserves were discovered there in 2010.
Mozambique’s national oil company, ENH, hired global energy research and consulting firm Wood Mackenzie to help it prepare for the responsibility of managing and selling its corresponding portion of the resources. Since then, ENH formed a consortium with international oil and gas trader, Vitol.
The government also has sought the support of more experienced energy producers and international partners. Earlier this year, President Filipe Nyusi met with Norway’s Crown Prince Haakon and signed an agreement for support on natural gas resource management.
But even before that, Mozambique laid the foundation for a successful oil and gas industry with the new Petroleum Law of 2014. And with that legislation in place, the country completed a successful bidding round for exploration blocks. These efforts, along with careful negotiations with international oil companies, is what brought Mozambique to where it is today: on the cusp of becoming a major LNG producer. And these efforts are what will make Mozambique’s LNG industry a success, not just in terms of government revenue, but also in improving the lives of everyday people.
We Must Put People First
Mozambique is not asking for aid to lift its people out of poverty. It’s attempting to capitalize on its own natural resources. The government isn’t trying to make a quick buck. It’s working to lay a foundation for long-term growth. And efforts like the Exxon and Total Mozambique Projects are more than an opportunity for international oil companies, or even Mozambique’s government. They have the potential to improve the lives of millions of everyday people.
I recognize the need to protect our planet and prevent climate change. But interfering with financing for Africa’s fossil fuel projects is not the right path. We must not dismiss the value of projects like these or their ability to make meaningful changes for the better in Mozambique. And we must not put environmental ideals ahead of the pressing needs that are facing people right now.
Oil Rises to $43.76 Despite Falling Oil Demand
Brent Crude Rises to $43.76 Per Barrel on Friday
Oil price extended its gain on Friday despite OPEC and other experts predicting a further decline in demand for the commodity.
The Brent crude oil, against which Nigerian oil is priced, rose from $39.44 per barrel on Tuesday to $43.76 per barrel on Friday before pulling back to $43.42 per barrel.
The oil surged after reports showed that US oil producers were shutting down due to hurricanes and also that crude oil inventories dropped by over 9 million barrels in the week ended September 11, 2020.
The commodity started its bullish run a day after OPEC lowered its demand outlook for the year through the first half of 2021, saying recovery without COVID-19 remained slow.
“Once again, OPEC+ meets against a worrying backdrop of soft global oil prices and an uncertain demand outlook,” Cailin Birch from The Economist Intelligence Unit told CNBC via email on Thursday.
“We maintain our view that Brent crude prices will average just over $42 a barrel in 2020, assuming that OPEC+ partners reconfirm their commitment to output cuts at their September meeting,” Birch said.
Another expert, Tim Bray, a senior portfolio manager at GuideStone Capital Management, through an email said “I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.
“It might set the stage for action at future meetings, however,” Bray said.
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