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Oil Rebound Takes the Edge Off Covid-19 Slump in Nigeria

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Oil Rebound Nigeria

Oil Rebound Takes the Edge Off Covid-19 Slump in Nigeria

Africa’s largest economy had a week of good and bad news as the oil price rebounded to the highest level in two months, while the negative impact of the coronavirus pandemic on consumers and business activity became clearer.

Crude prices have doubled since hitting a two-decade low in April, climbing past $40 a barrel after OPEC+ cuts started taking excess supplies from the market.

With oil bringing in 90% of foreign exchange revenue for the continent’s largest producer, this will boost government income and dollar liquidity. Ironically, Nigeria is among the countries accused by the production group of not fully complying with the reductions that helped push up prices in the last month.

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The following four charts show some of the bad and the good for Nigeria.

A crude-price rally has eased concerns of a currency devaluation for Nigeria

If oil prices stabilize close to the current levels until the end of the year, it would add modest upside risks to forecasts for economic growth, public finances and international reserves, said Mahmoud Harb, a director at Fitch Ratings. A 10% rise in the full year’s average crude price above the company’s current forecast of $35 per barrel would improve Nigeria’s current-account deficit by about 1.5% of gross domestic product, he said.

Lower Nigerian bond yields signal improved investor appetite

Yields on Nigerian bonds maturing in 2047 fell from an all-time high of 13.2% on March 19 to 8.6% on Friday, a sign that investor concern has eased. Although the West African nation has ruled out going to international bond markets this year, the cost of raising new debt will be relatively lower now if it chooses to.

Nigeria's PMI levels signal the economy probably will contract in second quarter

Although the purchasing managers index of Stanbic IBTC Bank and IHS Markit’ rose last month, it remained below 50, suggesting the economy of Africa’s largest crude producer will shrink in the second quarter. The central bank said last week Nigeria may avert a recession and that the drop in GDP could be less than the 3.4% projected by the International Monetary Fund, but its own manufacturing PMI fell to 42.4 in May after staying above 50 for 36 consecutive months. The manufacturing PMI compiled by Lagos-based FBNQuest Capital fell to 43.3 in May from 45.8, with all sub-indices in contracting territory.

“The recession this year will be smaller than in advanced and many peer economies because of the limits to Nigeria’s integration within the global economy,” analysts at investment banking firm, FBNQuest wrote in a note on Friday. “For the same reason its U-shaped recovery in 2021 is likely to disappoint. Household demand remains squeezed.”

Widespread Impact

Many Nigerians have lost sources of livelihood due to the virus

Nigeran consumers are feeling the impact of the disruption in economic activities, data released Friday by the statistics agency shows.

At least 79% of respondents in a survey said their incomes have decreased since mid-March, when restrictions were imposed to curb the spread the pandemic. More than 42% who were working before the pandemic now say they no longer do and 51% of households were forced to buy less food due to higher costs.

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Business Africa

Fuel scarcity looms as NUPENG threatens FG With Strike

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fuel scarcity looms as NUPENG threatens FG With Strike

The Nigerian Union of Petroleum and Natural Gas (NUPENG) has issued a two-week strike notice to the federal government, raising the possibility of fuel scarcity across the country in the coming weeks.

This was contained in a statement jointly signed by NUPENG President, Williams Akhoreha, and General Secretary, Olawale Afolabi, Monday.

The union said the notice of strike was one of the decisions reached at its special national delegates conference Thursday.

It listed non-payment of workers’ salaries and benefits, among others, as reasons for its resolution.

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One of the issues, NUPENG said, was the outstanding payment of terminal benefits to its members that were declared redundant in 2012 by the management of Chevron Nigeria limited.

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LCCI pushes for growth in intra-African trade

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LCCI pushes for growth in intra-African trade

The Lagos Chamber of Commerce and Industry has said it aims to promote intra-African trade at the 35th edition of its annual Lagos International Trade Fair.

The Director-General of the LCCI, Dr. Chinyere Almona, said in a statement on Wednesday that this year’s edition would feature business-to-business meetings simultaneously with the general interest fair.

She said, the focus this year is to encourage intra-African trade and position Africa as the preferred investment destination and an economic powerhouse adding that The exhibition will also facilitate networking amongst exhibitors and between exhibitors and visitors.

She said corporate organisations, including multinational corporations, indigenous conglomerates, financial institutions, and small and medium businesses, had indicated interest in participating at the fair and relevant agencies and departments of government would also be available to exhibit and attend to other exhibitors and visitors.

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She said agencies that had confirmed attendance to provide information and educate exhibitors and visitors were the Bank of Industry and Nigerian Export Promotion Council, among others.

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NEPC Empowers 60 Osun SMES for Export Business

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NEPC Empowers 60 Osun SMES for Export Business

The Nigerian Export Promotion Council has organised a workshop for over 60 operators of Small and Medium-scale Enterprises in Osun State on how to make their products fit for export.

The workshop, which was held in Osogbo, was tagged ‘Facilitating strategic export market access programme in collaboration with the trade support institutions.’

The Assistant Director, Policy and Strategy Department, NEPC, Aliu Saddique, said the participants were SMEs owners with the potential to export to the international market.

He said the council was using the model developed by the Centre for the Promotion of Imports from Developing Countries to train the participants so as to enable them to have a good understanding of the demands of the international market.

While speaking, The Osun State Commissioner for Commerce, Cooperatives, Industries and Empowerment, Dr. Bode Olaonipekun, called for serious planning ahead of the time when crude oil would no longer bring revenue for the country again.

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Olaonipeokun, who also blamed the current economic hardship on the neglect of non-oil export, said planning for the era without oil must start immediately to avert economic crises.

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