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Op-Ed

Sokoto shows the way forward for Nigerian business

Dawn Spetale

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The election season in Nigeria has inevitably focused attention on the importance of creating jobs and supporting businesses. But if Africa’s largest economy is genuinely to thrive, and to provide a sustainable base for Nigeria’s emergence as a global power in the twenty-first century, the country’s politicians need to understand that promises and posturing about the economy should not be a vote-seeking indulgence. 

Nigeria’s politicians should not be singled out here; politicians the world over are guilty of promising the world in election campaigns. But few countries are more in need of business development and support than Nigeria, with its stubbornly high rates of poverty, systemic unemployment, emigration of high-skilled entrepreneurs and young, digitally savvy population. 

There needs to be a sea-change in the way business is viewed in Nigeria. It cannot any longer be considered the servant of politics. Instead, politicians need to serve business: not favour any one individual business over another, nor prioritise sectors, but create and nurture the conditions in which all businesses can grow, adding jobs and generating wealth. 

I’m part of a project based in Sokoto that aims to create a world-class leather industry. We’re aiming to take the artisanal craft skills built up over generations, and to add it to the best environmental, marketing and production practices to develop an integrated leather cluster that can show to the world Nigeria at its best. 

My involvement in Nigeria has grown over many years and many visits. It’s a society in flux, but one thing has always struck me: the huge possibilities of the country, and the untapped reservoir of talent in its greatest resource – its people. 

That’s why my company, Pan African Enterprises, has joined Governor Tambuwal and his team at the Sokoto Investment Company Ltd (SICL) to build a partnership to achieve this ambitious goal. In doing so, we not only want to place Sokoto on the global manufacturing map, but we also want to provide inspiration to other businesses in Nigeria, and to shape a model for successful public-private cooperation. 

SICL’s leadership understands the importance of maximising its economic potential. As a relatively dry, frontier state, its position as a crossroads for intra-regional trade has been essential to its history. And while the state’s low rainfall limits the possibility of growing cash crops, the livestock sector has traditionally been strong, hence Sokoto’s centuries of experience in the leather trade.

It’s this comparative advantage that SICL’s chairman, Tukur Umar, and its managing director Muhammadu Buhari Dasuki, want to build on. I’m not alone in seeing the tremendous opportunity in Nigeria. The World Bank is enthusiastic about our vision, and we’re in discussions about long-term support. We have brought on board some world-class experts in all aspects of the leather production chain, from livestock through to sales of finished products.

In particular, given our focus on developing Sokoto as a focal point in Africa for high-quality footwear, we have engaged leading shoe design experts to conceive innovative new products. What enthuses me most is that our partners and Sokoto share a vision of a socially and environmentally responsible project: one that creates jobs but pays good wages, and that gives the community a genuine stake in the success of the business.

We are pushing for the most stringent environmental standards to ensure that the industry competes on quality with other global leather hubs. Nigeria’s business community is progressively moving towards a more inclusive, responsible model, and through our project in Sokoto we hope to accelerate that process. 

I’m proud to be active in business in Nigeria – a resilient, enterprising country full of committed, innovative individuals. I’m grateful for the strong political support we have received from Governor Tambuwal and his dedicated colleagues.

Nigeria’s economic future surely lies in a closer relationship between politics and business, but one in which the public sector acts as a facilitator and partner for businesses of all shapes and sizes.  

This is the depth of support we have received in Sokoto. Let our project be the start of something big: not only to create a centre of excellence in leather, but to show the way towards sustainable, inclusive business across Nigeria.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.


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Op-Ed

Oil sensitivity set to intensify on conflicting themes

Oil markets are poised to remain highly sensitive and reactive to supply and demand side factors ahead of the OPEC meeting this month.

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Oil sensitivity set to intensify on conflicting themes | News Central TV

It has been a rollercoaster trading week for oil markets as investors tussled with conflicting fundamental themes pulling and tugging at the commodity.

Oil prices initially collapsed roughly 4 per cent mid-week thanks to an unexpected rise in U.S. crude stockpiles and a gloomy outlook for global oil demand. Bulls were later thrown a lifeline after geopolitical tensions in the Middle East rekindled concerns over potential supply shocks.

Oil markets are poised to remain highly sensitive and reactive to supply and demand side factors ahead of the OPEC meeting this month. With oil trading at depressed levels despite the recent rebound, OPEC+ may have no other choice but to extend supply cuts in an effort to prevent any further downside shocks.

Related: Nigeria foreign reserves rise in May; Gold Shines

For as long as Nigeria remains reliant on oil sales as a source of growth, the weakness in oil exposes the nation to significant downside risks. Should oil prices sink deeper into the abyss, Nigeria’s fragile recovery, exchange rate stability and improving sentiment will be under threat.

Looking at the technical picture, WTI Crude is trading marginally below $53.00 as of writing. Repeated weakness below this level is likely to encourage a decline towards $52.00 and $50.60.

Dollar steady ahead of retail sales 

dollar

The Dollar edged higher against a basket of major currencies today as trade tensions and global growth concerns supported the flight to safety.

While the Dollar is likely to remain supported by safe-haven flows amid persistent trade tensions, the question is for how long? With the Fed speculated to cut interest rates and recent economic data from the United States nothing to celebrate about, the Dollar is running on borrowed time.

Related: Nigeria’s week ahead: ECB meeting and Oil in focus

Much attention will be directed towards the latest U.S. retail sales figures on Friday which should offer insight into the health of the U.S. economy.

Should the report disappoint, the Dollar is likely to weaken as expectations mount over the Federal Reserve cutting interest rates this year.

Commodity spotlight – Gold 

Commodity spotlight – Gold

This has been a mixed trading week for Gold due to the growing sensitivity of global risk sentiment.

Related: Investors “Sell in May and Go Away” as risk aversion intensifies; Oil collapses

The precious metal has the potential to conclude the week on a positive note if the pending US retail sales report fails to hit market expectations. Looking at the technical picture, Gold is likely to test $1347 if $1324 proves to be a reliable support.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central TV’s editorial stance.

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Op-Ed

Nigeria’s week ahead: ECB meeting and Oil in focus

The week kicks off with the US ISM Manufacturing PMI for May which is projected to hit 53.0

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Nigeria week ahead: ECB meeting and Oil in focus
(File photo)

It will be another busy week for financial markets as investors grapple with trade tensions, Brexit, depressed oil prices and concerns over slowing global growth.

The week kicks off with the US ISM Manufacturing PMI for May which is projected to hit 53.0. Appetite for the Dollar is likely to take another hit if the PMI figures fail to meet market expectations.

Investors will be paying very close attention to Fed Chair Powell’s speech on Tuesday for fresh insight into the Fed’s monetary policy path. Investors will be paying very close attention towards Powell’s tone, given how concerns are rising over trade tensions potentially impacting the US economy. 

The biggest event risks this week will be the European Central Bank meeting and US jobs report on Friday. The Dollar could end up depreciating further if the US jobs report disappoints and fuels speculation over the Fed cutting interest rates this year. Naturally, this will be good news for emerging market currencies with the Naira falling into the category.

The economic calendar for Nigeria will be relatively light this week with the Stanbic IBTC Bank PMI scheduled for release on Thursday. Although the economic docket is light, external factors in the form of trade tensions, the Dollar and most importantly oil prices will impact sentiment towards the nation.

Falling oil prices are set to place the Nigerian economy in a difficult position. It is widely known that Nigeria relies heavily on crude oil exports which account for over 90% of exports earnings and over 70% of government revenues.

A sharp decline in oil prices could threaten Nigeria’s economic recovery while disrupting exchange rate stability. The potential decline in foreign exchange reserves from lower oil is likely to weaken the Naira, consequently translating to rising inflationary pressures. Consumers and businesses will feel the pain as inflationary pressures mount, while the drop in foreign reserves may complicate the Central Bank of Nigeria’s efforts to defend the Naira.

For Nigeria to insulate itself against such external risks, there needs to be a greater push on diversifying away from oil reliance to other sustainable sources of economic growth with Agriculture being one of several solutions. Elsewhere, Gold is glittering as geopolitical risk factors and concerns over slowing global growth accelerate the flight to safety.

This precious metal has turned bullish on the daily timeframe as is positioned to push higher should $1,300 prove to be reliable support. A vulnerable Dollar should inject bulls with enough inspiration to push Gold towards $1,324 in the short to medium term.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central TV’s editorial stance.

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Op-Ed

Nigeria foreign reserves rise in May; Gold Shines

Rising foreign reserves should provide the extra ammunition needed for the Central Bank of Nigeria (CBN) to defend the Naira

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Nigeria foreign reserves rise in May; Gold Shines

The Naira is set to witness further stability against the Dollar after Nigeria’s foreign exchange reserves increased by $295.12m to $45.087bn in May.

Rising foreign reserves should provide the extra ammunition needed for the Central Bank of Nigeria (CBN) to defend the Naira against a tornado of domestic and external headwinds. Nevertheless, the nation still remains exposed to oil price volatility. It is widely known that Nigeria relies heavily on crude exports which account for over 90% of exports earnings and over 70% of government revenues. The fact that oil prices are sinking towards $55 today may lead to a fall in reserves in the coming months which has the potential to impact exchange rate stability, inflation, and economic growth.

Dollar blinks and loses hold on throne 

Dollar bulls were nowhere to be found today despite risk aversion accelerating the flight to safety. Market fears over Trump’s trade disputes with Mexico and China negatively impacting the US economy are weighing on the US Dollar.  While the Greenback still remains a prime destination of safety in times of uncertainty, the question is for how long? When keeping in mind how the Fed funds futures are currently pointing to a near 70% chance of a rate cut by September, the Dollar’s upside may be limited. In regards to the technical picture, the Dollar Index has the potential to sink back towards 97.50 if a weekly close below 98.00 is achieved.

Commodity spotlight – Gold 

Gold is extended gains on Friday amid news of unexpected tariffs on Mexican goods, while ongoing US-China trade tensions continued to support safe-haven demand. 

A depreciating Dollar is supporting the upside with prices trading marginally below $1300 as of writing. Market expectations over the Fed cutting interest rates in 2019 coupled with concerns over slowing global growth are likely to ensure Gold remains buoyed moving forward. Technical traders will continue to closely observe how Gold behaves below the $1300. A solid breakout above this point should signal a move higher towards $1324.

Oil set to register first monthly loss of 2019 

Oil is on track to register its first monthly loss of 2019 with WTI Crude sinking towards $55 thanks to Trump’s newly announced tariffs on Mexico and concerns over rising US gasoline stockpiles.

It is becoming increasingly clear that oil markets remain highly reactive to news around supply and demand factors. Such market dynamics will frame the upcoming OPEC meeting in June as a pivotal event that will shape Oil’s outlook for the rest of the year. Even if OPEC+ decide to extend their supply cuts into the second half of the year, this may be overshadowed by concerns over US-China trade tensions impacting the demand for oil as global grows.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.

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