Newscast - Africa

Oil prices fell on Wednesday as the United States government data showed a surprise rise in the country’s crude inventories, and as tensions escalated between the US and China.

According to Reuters, the international oil benchmark, Brent crude, fell 55 cents, or 1.2 per cent, to $43.77 per barrel by 10:56 EST (1456 GMT). U.S. West Texas Intermediate crude dropped 56 cents, or 1.3 per cent, to $41.36.

The Energy Information Administration on Wednesday said US crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, as the sharp outbreak in coronavirus cases has started to hit US consumption.

Crude inventories rose by 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million bpd, up 100,000 bpd.

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The International Monetary Fund on Monday said it had approved $7.6 million debt relief to Burundi to help address the economic impact of the COVID-19 pandemic.

It said the relief for three months would be potentially raised to $24.97 million over the next 21 months, if resources are available.

The IMF in a statement said IMF debt relief will help free up resources for public sector health needs including other emergency spending and help mitigate the balance of payments shock posed by the COVID-19 pandemic.

The IMF said it has revised downwards economic growth projections for 2020 by 5.3 percentage points to -3.2 percent this year.

It said the pandemic has exacerbated preexisting economic challenges and creates significant external financing needs in 2020 and 2021, mainly as a result of lower exports, elevated imports needs, and reduced remittances inflows.

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The Institute of Energy Security, IES, says fuel prices will be marginally stable for the second pricing window for July 2020 across various pumps in the country.

According to them, the stability of the cedi against major currencies and a rise in the prices of Gasoline and Gasoil on the international market, will be the main factors for the marginal increase.

A litre of petrol or diesel is currently pegged at 4 Ghana Cedis, 82 pesewas.

In an interview with Citi Business News, Executive Director of IES, Nana Amoasi VII (the 7th), said competition between Oil Marketing Companies to control and gain more market share and mounting pressure on government to reduce fuel prices may result in prices remaining largely stable in the second Pricing-window for July.

He however added that, prices are likely to go up again due to the increases BDCs place on their prices before selling to the OMCs.

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The Chamber of Petroleum Consumers Ghana, COPEC, says government would have to be more serious about broadening the tax net especially by capturing the informal sector if it hopes to make up for the revenue shortfalls created by fallen crude oil prices.

According to COPEC, the COVID-19 pandemic has presented an opportunity for government to include the informal sector in tax issues as the sector also has a lot of potential in contributing immensely to revenue generation.

Executive Director for COPEC, Duncan Amoah, said the presentation of the Mid-Year Budget Review on Thursday July 23, should provide an opportunity for the Finance Minister, Ken Ofori-Atta, to come up with a policy direction stating alternative measures to collect revenue and ease the burden on the petroleum sector.

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According to currency exchange operators, the Federal Government’s move to unify multiple exchange rates in the country will attract over $25bn diaspora remittances.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had recently hinted of the Federal Government’s plans to unify the multiple exchange rates to generate more local currency from its dollar inflows and further achieve naira stability.

The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, while outlining the benefits of the unification, said It will attract over $25bn diaspora remittances, lead to increase liquidity and discourage speculation and hoarding.

According to him, the unification of exchange rates is a mechanism for a shift in the static exchange rate regime to a flexible exchange rate regime, and remains the only solution to forex market rate stability.

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Access Bank Plc on Monday announced the completion of the acquisition of Transnational Bank (Kenya) Plc.

The bank, in a notice to the investing public and the Nigerian Stock Exchange, noted that the acquisition followed the receipt of full regulatory approvals and fulfillment of all condition’s precedent to completion.

The bank’s Group Managing Director/Chief Executive Officer, Mr Herbert Wigwe, while commenting on the acquisition expressed excitement at the successful entry into the vibrant Kenyan market.

The discussion, according to a notice obtained from the NSE is regarding a potential transaction between Access Bank Zambia and Cavmont Bank Limited, a wholly owned subsidiary of Cavmont Capital.

The notice explained that the potential transaction was related to the sale of 100 per cent of Cavmont Capital’s interest in Cavmont Bank to Access Bank Zambia.

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The Governor of the apex bank, Godwin Emefiele, on Monday said About 20 projects valued at N26.28bn have been funded under the N100bn Central Bank of Nigeria credit support intervention for the healthcare industry.

The CBN also said it had received over 27 proposals from researchers requesting for N67bn grant.

Emefiele said this in Abuja during the inauguration of the Board of Experts of the Healthcare Sector Research and Development Intervention Scheme.

He said currently, 20 projects valued at N26.28bn have been funded under the N100bn credit support intervention for the healthcare industry.

He said some of the firms that have been able to obtain funding include hospitals, research centres and pharmaceutical industries.

The CBN Director (Development Finance), Philip Yusuf, said that the apex bank had received over 27 proposals from researchers requesting for N67bn grants.

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The Nigerian National Petroleum Corporation has increased the prices at which two of the country’s major crude oil grades would be sold in August.

According to Reuters, most of the country’s September loading programmes emerged on Monday, but traders were still waiting for Angolan allocations.

The NNPC on Monday raised its August official selling prices for Bonny Light and Qua Iboe crude oil to dated Brent plus 61 cents and plus 65 cents per barrel respectively.

The loading programmes for Bonny Light and Forcados will both have seven cargoes, Bonga will have four and Qua Iboe six.

Total loadings for the four key grades will be at 756,000 bpd in September up slightly from 743,000 in August.

Bonny Light and Qua Iboe were being offered at about dated Brent plus 90 cents to plus $1.00.

The international oil price benchmark, Brent crude, rose by $0.14 to $43.28 per barrel as of 8pm on Monday.

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The Central Bank of Nigeria on Monday retained the country’s benchmark interest rate or Monetary Policy Rate at 12.5 per cent.

The Governor, CBN, Godwin Emefiele, said the retention of the MPR at 12.5 per cent was the decision of the Monetary Policy Committee at its Monday.

The Lagos Chamber of Commerce and Industry said the business community was more worried by the silence of the apex bank on the uncertainty in the foreign exchange market.

Emefiele said the committee also noted that increasing MPR at the current stage of the economy would be counter-intuitive and would result in upward pressure on market rates and cost of production.

The CBN boss observed that further cut in MPR might not necessarily lead to a corresponding decrease in market interest rate, considering the current economic challenges.

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Fitch Ratings said the coronavirus pandemic and the oil price shock have caused a severe impact on credit rating in Nigeria and some other sub-Saharan African countries.

It stated this in its report on Monday titled Outlook on Sub-Saharan sovereigns is negative.

The report said Fitch forecasts the median real gross domestic product for rated SSA sovereigns will contract by 2.1 per cent in 2020, before returning to growth at four per cent in 2021, which is barely above trend growth.

Fitch said countries with a concentration on tourism, particularly Cabo Verde and the Seychelles, had also been badly affected.

It noted that the coronavirus pandemic and the oil price shock it triggered had had a severe impact on sovereigns in sub-Saharan Africa, which led to rating downgrades on seven of the 19 rated SSA sovereigns since the beginning of March 2020.

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