Oil prices fell on Wednesday on weak economic data from China and Europe and a rise in U.S. crude inventories, almost erasing the previous session’s sharp gains after the U.S. said it would delay tariffs on some Chinese products.
Brent crude LCOc1 was down $2.08, or 3.4 per cent, at $59.22 a barrel at 1214 GMT, after rising 4.7 per cent on Tuesday, the biggest percentage gain in a day since December.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down $2.13, or 3.7 per cent, at $54.97 a barrel, having risen four per cent the previous session, the most in just over a month.
China reported a raft of unexpectedly weak data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the U.S. intensifies.
“This morning’s Chinese industrial production came in below expectations confirming our expectation that the late-cycle dent likely becomes deeper before year-end,’’ Norbert Ruecker of Swiss bank Julius Baer said, referring to the late-cycle phase in economies that are characterised by slowing growth.
“Oil demand should continue to soften,’’ he added.
The global slowdown amplified by tariff conflicts and uncertainty over Brexit is also pressuring European economies.
A slump in exports sent Germany’s economy into reverse in the second quarter, data showed.
The euro zone’s GDP barely grew in the second quarter of 2019.
Profit-taking after Tuesday’s sharp gains also weighed on crude prices on Wednesday, analysts said.
Benchmark crude prices surged on Tuesday after U.S. President Donald Trump backed off his Sept. 1 deadline for 10 per cent tariffs on some products, affecting about half of the $300 billion target list of Chinese goods.
“While Brent crude has recovered back above $60 a barrel, the technical outlook for WTI looks somewhat better after once again managing to find support above $50 a barrel,’’ said Ole Hansen, Head of Commodity Strategy at Saxo Bank.
“The range-bound behaviour, however, looks set to continue with a focus on U.S.-China trade talks and continued production restraint from OPEC, led by Saudi Arabia.’’
Data from industry group the American Petroleum Institute (API) showed U.S. crude stocks unexpectedly rose last week.
Edited by Abdulfatah Babatunde
Expert tasks minister on trade, ECOWAS related policies
A Trade and Economic Development Advocate, Mr Ken Ukaoha, has urged the new Minister of Industry, Trade and Investment Adeniyi Adebayo, to renew Nigeria’s trade policy in order to advance the sector
Ukaoha, who is the President, National Association of Nigerian Traders (TS), made the call in an interview with the Nigeria News Agency , in Abuja.
According to him, the first agenda for Adebayo is providing Nigeria with a trade policy.
“It is a shame that up till this moment, since 2002 when the country had its last trade policy; we are yet to have one.
“A lot of people have been asking. We have been engaged in a number of trade negotiations, here and there, what then are we negotiating this trade with, upon what domestic policy are we negotiating.
Ukaoha disclosed that the World Trade Organisation (WTO)’s rules provided that every developing country such as Nigeria would have to renew its trade policy every five years.
He said there had always been WTO policy reviews; and it had been noted that Nigeria’s trade policy was outdated.
He also urged the minister to look into the subject of a Common External Tariff (CET) and Economic Community of West African States (ECOWAS) related trade policies.
Ukaoha said that the CET experimentation for Nigeria would expire this year and by 2020, Nigeria should be having a full fledged implementation of the common external tariff.
He, however, regretted that the country had not learnt any lesson from the five years experimental stage; and called for the hosting of a meeting of trade and industry stakeholders by the ministry to collaborate and strategise.
The expert called for synergy between the ministry and the Ministry of Agriculture, to boost local produce and market strategies, as the chunk of Nigeria’s export commodities export were agricultural produce.
“So that we will know what we are going to export and at what level we will export, to reduce our food imports while we are also using that to industrialise the country,’’ he said.
Ukaoha expressed regrets that Nigeria was still an observer of the African Continental Free Trade Area (AfCFTA), which President Muhammadu Buhari had signed on July 7, at the 12th African Union (AU) Extraordinary Summit in Niamey, Niger Republic.
“Nigeria has been outside the gate in terms of negotiations, but courtesy of the President’s signature, which made us the 53rd country to sign on the framework.
“Nigeria has come in now, however it still remains as an observer in the AfCFTA negotiations.
“How Nigeria will come in as a full member, that is where the minister comes in, and we need an urgent fast track action from the ministry towards the ratification of the AfCFTA agreement.
“Until it is ratified, we will remain an observer in the AfCFTA. We need to catch up, a lot of things have happened without our input,’’ he said.
Ukaoha explained that Section 12 of the 1999 constitution, as amended, stated that no international agreement can come into force except it be ratified by the National Assembly, adding that the minister should facilitate that.
“As we pursue the ratification we should also call to mind where we are, and where the countries which signed the agreement and currently negotiating the agreement are too.
“It is necessary because negotiations are ongoing in terms of services, in terms of the third leg of the negotiation, corporation in intellectual property and procurement policy. We need to catch up,’’ he said.
He also urged the minister to undertake the role of working on the export strategy, in preparation of the AfCFTA implementation.
“Nigeria needs a data of market across the country, it is A shame that sometimes people call, especially from abroad requesting for where to get certain commodity or item. We need a yellow book that itemises all goods in the country.
“I congratulate the ministers, the job is quite demanding, contemporary issues on trade have revealed that trade is highly technical, and we should be prepared in terms of operations and policy works going on at various levels,’’ Ukaoha said.
NSE urges FG to act in line with Executive Order 5 on projects’ execution
The Nigerian Society of Engineers (NSE) has urged the Federal Government to act in line with Executive Order 5 by encouraging more multinational engineering firms to employ Nigerian engineers.
reports that President Muhammadu Buhari had on Feb. 12, 2018 in Abuja, signed Executive Order 5 that stipulates the need to improve local content in public procurement with science, engineering and technology components.
Agoro said that signing of the executive order by President Buhari had empowered and protected the local engineers, local suppliers and local contractors such that Nigerian engineers could lead projects.
He, however, said that signing of the executive order might not be enough, and called for its enforcement, government’s full backing and encouragement to enable Nigerian engineers to secure and also lead in execution of projects.
According to him, the implementation of the executive order on local content will not only drastically reduce capital flight but also reduce unemployment and boost Gross Domestic Products (GDP) of the country.
“The signing of the executive order was very encouraging, but its implementation is key.
“If there is no full support and backing from government, it will be difficult for the Nigerian engineers to lead in the execution of projects amid foreign contractors,” he said.
Agoro lamented that the effects of Executive Order 5 had not been felt in the construction industry, saying that most of the projects were still being awarded to multinational companies at the detriment of Nigerians.
He suggested that where Nigerian engineers did not have the expertise, they could partner with foreign firms in the execution of mega projects to avoid situations whereby jobs were hijacked by foreign firms.
“All the multinational firms protect their own interests; they gradually fill the company with their nationals to the detriment of the Nigerian engineers.
“Let the government put Nigerian engineers in position of authority so that they can actually influence national policies.
“Until government trusts the Nigerian engineers to allow them lead in execution of projects, the Executive Order 5 will still remain more of theoretical and not practical,” Agoro said.
Edited by Chioma Ugboma
Economist berates FG for merging Ministry of Finance with Budget and National Planning
Dr Aminu Usman, Dean, Faculty of Social Sciences, Kaduna State University, has frowned at the merging of the Ministry of Finance with Budget and National Planning.
He said this while speaking with the Nigeria News Agency in Abuja.
Usman, an economist, said that it was hard to believe that after the experiences the country has had in the past four years, it was still not ready to embrace National Economic Planning with the required seriousness it deserved.
“There is a subsisting law that says National Planning Commission should be chaired by the President and run by a Chairman of cabinet status, usually the Chief Economic Adviser to the president.
“Converting the commission to a ministry is a great disservice let alone subsuming it under Ministry of Finance.
“In effect, we will as a nation continue to grope in the dark not knowing where we are and or where we are going,” he said.
Usman said it was time the nation took lessons from the experiences of India, China, Brazil, and other nations that had institutionalised periodic national planning and stuck to it over the years.
He added that it was evident that these countries had been able to move their country ahead of their peers and were able to lift millions of their people out of poverty over the years because of proper planning.
“I want to believe that the president is not aware of the need to strengthen our capacity to plan for our development and follow it up with due diligent implementation including legislation to prevent any coming government from deviating from the nation’s plan or return to planlessness.
“Going forward, we will now be driven by short term monetary and fiscal policy goals that might have little or no long term benefit to the economy in a coordinated matter.
“In fact, planning now becomes a non-issue as for sure the minister will be preoccupied with finance and treasury issues.”
The dean, however, advised the minister, Mrs Zainab Ahmed to take steps that would put the country on the path to planning such that it would be able to track its progress on a continuous basis and also ensure budgets were drawn from agreed plans.
According to him, this way the nation will be able to measure the progress it is making as a country against its set targets and that of its peers.
He also urged the finance minister to find a way of fostering a good working relationship with the Central Bank of Nigeria (CBN).
“They should be complementary, rather than rivals in the management of the economy.
“She should also focus on long term approach to issues rather than always focusing on short term macroeconomic gains that may not have any trickle-down effect on the well-being of average Nigerians ravaged by excruciating poverty.
“In essence, I am advising the minister to pay more attention to the planning arm of her new mega ministry,” he added.
reports that President Muhammadu Buhari, on Wednesday swore in 43 ministers to manage the affairs of the country, appointing Ahmed as the Minister of Finance, Budget and National Planning.
Edited by Ese E. Ekama
Association urges FG to reduce import duty on solar components
The Renewable Energy Association of Nigeria (REAN) has called on the Federal Government to reduce import duty on solar components to attract more usage of solar power.
Mrs Lande Abudu, Executive Secretary of REAN made this call in an interview with the Nigeria News Agency in Abuja on Sunday.
reports that renewable energy is from a source that is not depleted when used, such as wind or solar power.
She said that the current five per cent import duty and five per cent VAT levied on solar components put these products beyond the purchasing capability of many rural dwellers that stand to gain the most from their use.
“ Since the imposition of the combined 10 per cent import charges, investors in the off-grid solar market have recorded a fall in sales growth and market penetration.
“ Value Added Tax (VAT) and import duty on solar technologies significantly inflate end-user costs.
“Thereby undermining the ability of the solar industry to compete with traditional means of lighting and electrification.
“Such as kerosene lanterns and petrol generators, which already enjoy consumption from fuel subsidies from the Federal Government ‘’ she said.
Abudu said that by exempting solar components from VAT and import duty, the Federal Government can accelerate the market demand that makes local manufacturing economically-viable while simultaneously supporting market development that expands choice and affordability for end-consumers.
According to her, REAN acknowledge the Federal Government’s desire to protect the interest of local manufacturers and anti-dumping laws through trade policies.
“ Exemptions will be passed on to the end-customer, thus significantly reducing the retail prices of solar products, while providing reliable electricity to power agricultural and industrial processing activities.
“ The Federal Government through the relevant ministries should implement a 5-year Duty Free Importation on solar energy components, parts and materials.
“This, however, should be tied to a national bond or Memorandum of Understanding (MoU) with companies that agree and show verifiable on-the-ground commitment to begin local production of some of the solar components locally,” she said.
NIMPORT seeks connectivity with inland dry port to ease cargo traffic
The Nigerian International Maritime Ports and Terminals (NIMPORT), a port and terminal promotion body, has appealed to the Federal Government to ensure seamless connectivity for cargo and human traffic.
“The focus should be full connectivity, from the port to the hinterland.
“There should be full and seamless connectivity for cargo and human traffic as it will actually help the country achieve its potential.
“The Minister of Transportation should not relent in moving the sector forward.
“There should not be politicking about connectivity, about decongesting Lagos as the focus is actually on the western axis.
“The rail project should be completed as quickly as possible.”
Idu pointed out that the sector was hoping and aspiring to see a Lagos without container traffic, saying that having containers dropping off bridges in a busy and populated city like Lagos was appalling and unthinkable.
He urged the Lagos State government and the Federal Government to work closely and ensure that Lagos is rid of container traffic.
“I expect that bulk breaking of container content should be done outside the main commercial city of Lagos and that can only be achieved with real connectivity and where you have inland terminals and rail stations around Lagos.
“With rail stations in Ogun State, Lokoja or even between Ibadan and Lagos, containers could be immediately moved out of Lagos the moment they are offloaded from the ship to places where they could be bulk broken.
“Then you have the distribution network by road.
“Having a full container load traveling on the bridges is not good at all,” he said.
He spoke of the need to ensure that rivers in the country were navigable.
According to him, once the rivers are navigable, containers could be moved from Lagos across the rivers in batches.
(Edited by Emmanuel Yashim)