All posts by Michael Patotschka

Nigeria, Others to Attract $73.5bn Foreign Investments in 2015

By Eromosele Abiodun

Following plans by United States retail giant, Walmart to enter Nigeria’s retail market, increasing greenfield investment from China, India and South Africa, foreign investments in Nigeria and other African countries are expected to reach $73.5 billion by the end of this year.

A report by the African Economic Outlook (AEO) revealed that official remittances have increased six-fold since 2000 and are projected to reach $64.6 billion in 2015 with Egypt and Nigeria receiving the bulk of flows.

The AEO is a product of collaborative work by three international partners: the African Development Bank (AFDB), the OECD Development Centre and the United Nations Development Programme (UNDP).

Official remittances, the report added, remained the largest source of international financial flows to Africa, accounting for about 33 per cent of the total since 2010.

Conversely, the report predicted that Overseas Development Assistance (ODA) will decline in 2015 to 54.9 billion, “and is projected to diminish further”.

“More than two-thirds of states in sub-Saharan Africa, the majority of which are low-income countries, will receive less aid in 2017 than in 2014. FDI is diversifying away from mineral resources into consumer goods and services and is increasingly targeting large urban centres in response to the needs of a rising middle class.

“African sovereign borrowing is increasing. Private external flows in the form of investment and remittances are driving growth in external finance. Despite significant improvements in tax revenue collection over the last decade, domestic resource mobilisation remains low. Public domestic finance in Africa has increased more than threefold in a decade from $157 billion in 2003 to $507 billion in 2013. Compared to 2012, total tax revenue in 2013 registered a slight decrease of about 1.5 per cent mainly on account of lower resource rents, “the report revealed.

According to the report, “The report added that recent trends in African total trade flows – exports and imports – highlight a shift in trade dynamics and increasing competition from China for the African market. Although Europe remains Africa’s largest trading partner, Africa’s trade with Asia rose by 22 per cent between 2012 and 2013, while trade with Europe grew by just 15 per cent.

Manufactured exports from Europe to Africa fell from 32 per cent of the total in 2002 to 23 per cent in 2011. On the other hand, Asia’s share in Africa’s trade rose from 13 per cent of the total to 22 per cent during the same period. In 2009, China overtook the United States as Africa’s largest single trading partner.”

Source: Thisday, 12th August, 2015

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World Bank raises forecast for 2015 global crude prices

Washington – The World Bank is nudging up its 2015 forecast for crude oil prices from 53 dollars in April to 57 dollars per barrel after oil prices rose 17 per cent in the April to June quarter.

The forecast is contained in the bank’s latest Commodity Markets Outlook released on Wednesday.

The bank said energy prices rose 12 per cent in the quarter, with the surge in oil offset by declines in natural gas and coal prices.

However, it said it expected energy prices to average 39 per cent below 2014 level.

“Natural gas prices are projected to decline across all three main markets including the United States, Europe and Asia.
Continue reading World Bank raises forecast for 2015 global crude prices

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$2.5trillion address Nigeria’s infrastructure gap — IA&CE

By Emmanuel Elebeke & Grace Udofia

The Institute of Appraisers and Cost Engineers, (IA&CE), has said that Nigeria would require about $2.9 trillion investment in the next 30 years to close current infrastructure gap in the country. The engineering economists disclosed this at the 2015 National Technical Conference of the IA&CE which took place in Abuja.

The body also called on Federal Government to follow internationally acceptable standard procedures in the concept, design, development and execution of engineering projects in the country.
Continue reading $2.5trillion address Nigeria’s infrastructure gap — IA&CE

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Oyebola: Nigeria is West Africa’s Most Viable Investment Destination

15 Jun 2015

By Obinna Chima

The Managing Director and Chief Investment Officer of FBN Capital Asset Management Limited, Mr. Michael Oyebola, has highlighted Nigeria’s position as the top foreign institutional funds destination in West Africa.

He made this known in a presentation titled: “Nigeria: West Africa’s most viable destination for US institutional funds,” during the 2015 edition of the Africa Institutional Funds and Managers’ Series (AIFMS), held in New York recently.

Oyebola stated that Nigeria has a compelling investment business case, despite the socio-economic challenges she is contending with.  He noted that Nigeria continues to show great potential in core areas of interest to traditional institutional fund managers, while her burgeoning middle-class and status as Africa’s largest economy following her Gross Domestic Product (GDP) rebasing, establishes her as the sub-region’s most viable investment destination.

He also highlighted the country’s ongoing revival in agriculture, its vast and untapped power resources, a progressive financial services sector, the untold potential which remains in oil and gas, as well as a vibrant telecoms and ICT industry, among other investment-stimulating factors.  According to him, “in agriculture the investment opportunities which exist in food processing and storage facilities, crop production, and animal husbandry due to a huge domestic demand are many, while in the power sector, the nation’s gas agenda facilitates a potential for aggressive gas-based industrial growth.”

Furthermore, he noted that crucial to the successful performance of institutional fund investment from the US and other continents to Nigeria, was partnership with leading investment and asset management firms in the sub-region to ensure knowledge and expertise of the local operating environment.

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Nigeria’s Economic Ambitions

It is time to plan for a highly diversified post-oil economy

When the Muhammadu Buhari Administration comes to power later this month, it will be confronted with a perfect storm of economic conditions. The price of oil is currently just over half of where it was in June 2014.Foreign exchange reserves are falling. The excess crude account has dwindled to the point of being nearly empty. The government debt portfolio, especially the domestic component, is on the rise. It will be a mistake to attribute all these problems to the out-going administration alone. Nigeria’s current economic problems have accumulated over a long period and the change of administration offers an opportunity to reflect and act on Nigeria’s economic ambitions. The current dismal economic trends can be traced to many sources, but one reason stands out above others: Nigeria’s continued high dependence on oil. Although the rebasing of the economy in 2014 has revealed significant growth in the gross domestic product, estimated at US$510 billion, the government still depends on oil for about 65 per cent of its revenue (the 2015 federal government budget is based on the assumption that oil will account for 53 per cent of government revenue) and over 90 per cent of its foreign exchange earnings. The boom in oil prices from 2000-2008 had one insidious effect on economic policy-making, the expectation that Nigeria could power its way to economic greatness through projected trends in oil and gas production and growth in population size. That expectation was particularly fuelled by Goldman Sachs reports which predicted that Nigeria would be among the top 20 economies by 2020 and which included Nigeria in the so-called NEXT 11 countries after the BRICs: Bangladesh, Egypt, Indonesia, Iran, Mexico, Pakistan, South Korea, the Philippines, Turkey, and Vietnam. More recently, Nigeria was included in a sub-set of the NEXT 11 called MINT, which stands for Mexico, Indonesia, Nigeria and Turkey. Continue reading Nigeria’s Economic Ambitions

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