Category: Economy

{Crude oil futures rose on Thursday as an attack on a Nigerian oil pipeline and a weaker U.S. dollar buoyed sentiment in the market, lifting prices from five-week lows.}

Brent crude was trading up 51 cents, or 1.1 percent, at $47.37 a barrel by 0415 GMT (12:15 a.m. ET). U.S. crude was up 39 cents, or 0.9 percent, at $45.73 per barrel.

Crude prices were underpinned by concerns about supply disruptions after militants in Nigeria’s southern Niger Delta oil hub attacked a pipeline operated by the Nigerian National Petroleum Corporation on Wednesday.

“The market is always a little sensitive to (news about supply disruptions),” said Ric Spooner, chief market analyst at CMC Markets.

A softer dollar also buoyed prices by making the dollar-denominated oil less costly for importing countries.

The dollar slipped for a third session as positioning for next week’s U.S. presidential election overshadowed the Federal Reserve’s latest review, where policymakers signaled they were on track to hike rates next month.

Both oil benchmarks, on Wednesday, hit their lowest since late September after data showed U.S. crude stockpiles soared more than 14 million barrels last week, the largest weekly build since the U.S. Energy Information Administration started keeping records in 1982.

“The recovery (in oil prices) has more to do with the fact that it hit a strong support at around $46.50 a barrel”, a Singapore-based oil broker said, referring to Brent that hit $46.46 in the prior session. U.S. crude fell to $44.96 on Wednesday.

{When farmer Isaac Tondo fell on lean times in Liberia’s long rainy season, his brother in the capital sent 8,000 Liberian dollars ($87) to his Lonestar mobile money account, ensuring his children’s school fees would still be paid.}

Across Africa, more and more people — from urban start-ups to hard-up villagers — are now spending, saving and planning for the future through banking services offered by mobile phone companies. And experts believe growth and poverty reduction will follow, if certain key risks are managed.

Tondo’s brother used to entrust cash with contacts passing through their home village in Grand Gedeh county, but the roads are so bad they can no longer access it.

“The only means of receiving money from Monrovia is through mobile money,” the farmer told AFP.

Collecting and depositing cash at omnipresent kiosks and sending money via text message has fast become the natural solution in African nations where distances are often long, roads and infrastructure poor, and few have access to traditional bank accounts.

Africans are “leading in the world” in their uptake of mobile banking services, Mitsuhiro Furusawa, deputy managing director of the IMF, told AFP at a recent conference on promoting access to financial services in Dakar, Senegal.

SUBSTANTIAL POTENTIAL

The IMF has said the potential for further financial development is “substantial” on the continent, and that wider access to banking services could unlock an additional 1.5 percent in annual growth.

Payment systems such as Orange Money in west Africa, M-Pesa in Kenya and Tigo Cash, used in several nations, have become incredibly popular in recent years in sub-Saharan Africa, where the vast majority lack physical or financial access to traditional banking services.

Around 11 per cent of Africans now have a mobile banking account, according to the IMF, rising to 60 per cent in Kenya. The average figure for the rest of the world is two per cent.

While Kenya, Tanzania and Uganda lead the way in east Africa, Ivory Coast is the bright spot in the west of the continent, where 25 per cent of the nation uses such services.

Jean Marius Yao, president and director-general of Orange Money in Ivory Coast, believes the market is far from saturated.

“There is a big margin for improvement, with some sectors not being fully served, notably rural communities and women,” he said.

One other area of growth was likely to be those who already had traditional bank accounts, he said, including employers paying wages via text.

“The flow is going in both directions,” Yao added.

PARALLEL SYSTEM

Africa’s enthusiastic adoption of mobile banking has evolved from a simple way to transfer cash into an entire parallel system of micro-payments of everything from saving accounts to business loans.

Countries such as Kenya could give a glimpse of how the sector will evolve across the continent, said Roger Nord, deputy director of the IMF’s African Department.

Payment system M-Pesa, operated by British telecom giant Vodafone’s subsidiary Safaricom, began offering interest on its “e-wallet” accounts, allowing users “who never saved a dollar” to put money aside, Nord said.

“There is a very clear relationship in economics between financial development and economic growth and poverty reduction,” he added.

M-Pesa’s range of services now encompasses medical insurance, bill payments and small business loans, building livelihoods and better securing users’ futures.

In Ivory Coast, Orange Money offers savings accounts, collective financing of large-scale projects and life insurance to a population previously largely locked out of such services.

Meanwhile, East African companies are now able to collect small payments every day for purchases made by clients unable to save up large sums to pay at the end of each month, Nord said.

In Asia, above all, others have taken note: Afghanistan now pays police salaries by mobile, while India has just launched an ambitious national payments system for smartphones.

CREDIT CHECKS

But these systems’ ease of use also pose a significant drawback, however.

The Economist Intelligence Unit (EIU) has described mobile money fraud as “a huge problem,” citing a Kenyan Central Bank study that showed 37 per cent of mobile money transactions were fraudulent compared with 10 per cent by banking agents.

Poor encryption and a proliferation of scams including fake “rewards” offers by text and phones that mimic telephone identifier codes were also a huge problem, the EIU said.

But mobile companies are getting smarter every day, mapping consumer behaviour and judging credit-worthiness from the results.

A recent report by the Washington-based Brookings Institution cited a study in Brazil that showed one month of pre-pay activity provided sufficient information to determine credit risk.

“The data that this generates: people who are saving a lot, saving regularly, suddenly we knew who were the reliable risks and suddenly they were given access to small loans,” Nord commented.

{Hyperinflation fears as Zimbabwe is set to begin using notes issued by its own reserve bank for first time since 2009.}

Zimbabwe says it will introduce “bond notes” equivalent to the US dollar by the end of next month to tackle cash shortages, but analysts raised concerns over a potential repeat of the excessive money printing that led to hyperinflation several years ago.

The country adopted the US dollar and South African rand in 2009 after massive inflation wreaked havoc to the economy and rendered the local currency worthless.

But Zimbabwe has run out of US dollar notes in recent months, and now hopes to ease the cash crunch by printing notes issued by its own reserve bank, starting with small denominations of $2 and $5.

“The bond notes will start to circulate by the end of October and will be at par with the US dollar,” John Mangudya, the governor of the Reserve Bank of Zimbabwe, said in the capital Harare.

“We anticipate by the end of the year $75m will be in the market.”

The Bank “hopes that the cash injection will boost exports, benefit local businesses and ease the suffering” of Zimbabwe’s poor population, Al Jazeera’s Haru Mutasa, reporting from Harare, said.

But analysts said the token currency would not hold its US dollar value and would be seen as a new version of the local dollar, which was rendered worthless by hyperinflation sparked by a decade-long economic crisis.

Some economists also said that printing a new “bond note” would fuel a parallel black market.

“Money is all about trust; if you don’t believe in it, you won’t accept it, or you’re going to accept it at a very deep discount,” Harare-based economic analyst John Robertson told Al Jazeera.

“That’s the issue which has not been addressed yet, and I don’t think anybody has been convinced by the claims made by the government that they are not going to print billions of these things.”

With the government again printing its own money, many in the country fear a repeat of the excessive printing that led to hyperinflation.

“No to bond notes” has been among the regular slogans heard in a wave of protests that have shaken the government of President Robert Mugabe this year.

But Mangudya denied the new bond notes would be rejected by many Zimbabweans.

“It is critical to emphasise that the introduction of bond notes does not mark the return of the Zimbabwe dollar through the back door,” he said.

The new notes will be printed in Germany and backed by a $200m support facility provided by Afreximbank (Africa Export-Import Bank), the government has said.

The country’s cash shortage has forced the government led by Mugabe’s ZANU-PF party to delay paying salaries each month to civil servants and the military.

Zimbabwe once removed 12 zeros from its battered currency at the height of hyperinflation in 2009 when the largest note was the $100tr denomination. Bond coins valued in US cents were introduced in Zimbabwe in 2014 to provide small change.

Further anti-Mugabe protests are planned for Saturday, despite a police ban on rallies in Harare.

{African leaders, business people and major development partners pledged more than 30billion US dollars in investments to increase production, income and employment for small scale farmers and local African agricultural businesses over the next ten years.}

The collective pledges at the African Green Revolution Forum in Nairobi, Kenya, are believed to represent the largest package of financial commitment to agricultural sector in Africa to date.

The commitments were made at the official opening of the Sixth African Green Revolution Forum (AGRF) that has attracted more than 1,500 influential figures from 40 countries for three days of brokering new agricultural initiatives.

The historic investments represent just the first wave of support for the new ‘Seize the Moment’ campaign one backed by the African Union Commission, the New Partnership for Africa’s Development (NEPAD), the African Development Bank, the Alliance for a Green Revolution in Africa (AGRA), key NGOs, companies and donor countries.

While agriculture in Africa has seen significant progress in the last ten years, the ‘Seize the Moment’ campaign is a frank acknowledgement that much more is needed for African countries to achieve inclusive economic development and ultimately realise the UN’s Sustainable Development Goals (SDGs).

The campaign is decisive push for the political, policy and financial commitments essential to transform Africa’s agricultural sector.

The goal: A new era of business opportunities for the 70 per cent of African population that depend on farming for food and income, yet too often face poverty and poor nutrition.

Joined by President Paul Kagame of Rwanda, Kenya’s President Uhuru Kenyatta officially opened the AGRA 2016 by laying out a bold vision of how agricultural transformation should play out in Kenya and across Africa.

Committing himself to deliver on both political and policy agenda, President Kenyatta announced his government will invest USD 200 million so that at least 150,000 young farmers and young agricultural entrepreneurs can gain access to markets, finance and insurance.

He called on his fellow leaders across Africa to step up and invest aggressively over the five years in agriculture related endeavours.

{Nigeria has slipped into recession, with the latest growth figures showing the economy contracted 2.06% between April and June.}

The country has now seen two consecutive quarters of declining growth, the usual definition of recession.

Its vital oil industry has been hit by weaker global prices, according to the Nigerian Bureau of Statistics (NBS).

But the government says there has been strong growth in other sectors.
Crude oil sales account for 70% of government income.

The price of oil has fallen from highs of about $112 a barrel in 2014 to below $50 at the moment.

Outside the oil industry, the figures show the fall in the Nigerian currency, the naira, has hurt the economy. It was allowed to float freely in June to help kick-start the economy, but critics argued it should have been done earlier.

The government, however, has found some positive news in the figures.

“There was growth in the agricultural and solid minerals sectors… the areas in which the federal government has placed particular priority,” said presidential economic adviser Adeyemi Dipeolu.

Nigeria, which vies with South Africa for the mantle of Africa’s biggest economy, is also battling an inflation rate at an 11-year high of 17.1% in July.

“A lot of Nigeria’s current predicament could have been avoided,” said Kevin Daly from Aberdeen Asset Management.

“The country is so reliant on oil precisely because its leaders haven’t diversified the economy.

“More recently, they have tried, and failed, to prop up the naira, which has had a ruinous effect on the country’s foreign exchange reserves and any reputation it might have had of being fiscally responsible.”

This economic recession comes as no surprise to millions of Nigerians. Many say they’ve never known it so tough.

The slump in global oil prices has hit Nigeria hard. The government depends on oil sales for about 70% of its revenues.

But critics say government policies made a bad situation even worse. The decision to delay devaluing Nigeria’s currency meant many businesses struggled to get foreign currency to pay for imports, which had a cooling effect on the entire economy.

Following enormous pressure, the government changed tack this summer, allowing the naira to float.

That’s led to a spike in inflation, but the hope is that it will attract foreign investors.

The government also says the country needs to import less: it wants to see more products made in Nigeria.