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Nigerian manufacturers want govt to clear $7bn forex backlog

Published

4 months ago

January 3, 2024

The Manufacturers Association of Nigeria (MAN) has begged the Nigerian government to clear the current $7 billion forex backlog, which they argue might lead to a challenging first six months of the year for players in the industry.

This position was expressed by the association’s Director-General in its “Manufacturing Sector Outlook for 2024” report, where it was also predicted that the Manufacturers’ CEOs’ Confidence Index would surpass 55 points by the end of Q42023, that sectoral real growth would likely reach roughly 3.2%, and that the sector’s contribution to the economy would probably surpass 10%.

Since the difficulties with foreign exchange and the high rate of inflation are likely to persist until the middle of the year, average capacity utilisation is predicted to remain close to the 50% mark.

Due to speculation and excess demand being directed to the black market, the naira has been losing value on the parallel market, creating a larger disparity with the official market, where trading restrictions were removed in June.

The report read in part, “Judging from the observed trend, it is obvious that the outlook for the manufacturing sector in 2024 may not be a positive one, at least in the first half of the year. The period will be challenging, with a subtle possibility of recovery from the third quarter.

“The envisaged recovery is highly dependent on the deployment of policy stimulus supported by a synthesis of domestic growth-driven, export-focused, and offensive trade strategies. This will promote resilience and steady growth and ensure that the sector gains meaningful traction in the later part of the year.”

According to MAN, increased manufacturing output is anticipated to start in the third quarter of the year when the government allocates budgetary funds for new, ongoing, and abandoned capital projects, with an anticipated preference for locally produced goods.

The association recommended that to counteract the unique inflationary pressures arising from insecurity, as well as energy and transportation costs, the government should use the money saved from the fuel subsidy to implement various production-focused policies, supported by more structural measures.

November saw a worsening of the cost-of-living crisis in the largest economy in Africa, as annual inflation reached its highest level in eighteen years— 28.20%.

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Nigeria’s Petroleum Regulator begins bidding round for 12 oil blocks

Published

3 hours ago

May 14, 2024

Ifeoluwa Dada

The Nigerian Upstream Petroleum Regulatory Commission has announced the start of the bidding process for 12 oil blocks recently put up for sale. It also marks the beginning of the 2024 Nigeria Petroleum Licensing Round and the continuation of the 2022/2023 mini-bid round.

This was stated in a press release issued by the commission’s CEO, Gbenga Komolafe, on Monday in Abuja. Last month, the commission made the first announcement about the bidding process.

It also waived the signing bonus requirement throughout the bidding process to entice investors to bid on the auctioned oil blocks.

He said, “On behalf of the Federal Government of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission is pleased to announce the commencement of the 2024 Petroleum Licensing Round.”

On the number of blocks for the offer, Komolafe noted, “We have identified 12 blocks that cut across deep offshore, shallow water and onshore terrains to be made available to interested investors.”

According to him, this licensing round represents a key milestone in our commitment to supporting long-term growth and innovation in the energy sector, as well as creating economic prospects for investment to stimulate new exploration and development activities in our petroleum landscape.

He explained that the 2024 Licensing Round will provide an opportunity for domestic and foreign parties to participate in the exploration and development of Nigeria’s hydrocarbon resources. He emphasized that having access to high-quality geological and geophysical data is important to this approach.

Komolafe stated that the National Data Repository of NUPRC, in partnership with multi-client partners, is committed to providing prospective bidders with access to broad and strong datasets to help them make better decisions.

Commenting on the 12-block offer, he stated that it is consistent with the licensing round’s objectives and includes a varied range of exploratory possibilities and discoveries with varying technical and operational preferences.

Komolafe added, “Our goal for this licensing round is to harness innovative exploration techniques and foster partnerships that will enhance our production capabilities and ensure environmental sustainability.

“We anticipate that this initiative will not only expand our operations but also significantly contribute to the global energy supply, aligning with international energy security goals.”

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Ecobank’s $183 million impairment losses highlight hazards in sovereign bonds

Published

3 hours ago

May 14, 2024

Ifeoluwa Dada

Ecobank, a pan-African banking group, has more than doubled its impairment losses on Ghana’s problematic Eurobonds to $183 million, highlighting the extent of risk that African lenders face when investing in state bonds.

The Lome-based lender also stated that it had removed around $39 million in interest income collected on the $13 billion Ghanaian Eurobonds from its 2023 financial statements due to continuing and yet-to-be-completed restructuring discussions with commercial bondholders.

The latest impairment losses represent a 144% increase from $75 million in 2022.

“As of year-end 2023, the total impairment charges on Government of Ghana Eurobonds are estimated at $183 million, a significant rise from $75 million in year-end 2022,” the lender says in its audited financial statement for 2023.

“Additionally, $26 million of modification losses were incurred on the GoG debt net of impairment charge releases due to the final settlement of the old bonds for the new bonds in February under the Domestic Debt Exchange Programme.

Ecobank operates in 35 African nations, including Kenya, Burundi, the Democratic Republic of the Congo, Ethiopia, Ghana, and Cote d’Ivoire. Moody’s Investor Service, a global rating organization, has previously urged banks against excessive lending to governments, warning that their credit profiles risk being lowered alongside those of governments facing liquidity constraints.

Zambia secured an agreement with its creditors in March to restructure $3.5 billion Eurobonds, bringing respite to Lusaka, which has been grappling with a long-running debt problem. As part of the agreement, bondholders agreed to extend payment dates, allowing Lusaka to continue receiving funding from a $1.3 billion International Monetary Fund (IMF) project.