Wednesday, 23 June 2010

Revised estimate for real Gross Domestic Product (GDP) by the National Bureau of Statistics (NBS) indicates that the economy grew by 7.23 percent first quarter of 2010 as against 6.7 percent it had earlier projected for the quarter.

The figure shows a dip from 7.44 percent recorded in the fourth quarter of 2009, however, it is an increase from 4.50 percent in the corresponding quarter of last year. NBS attributes the 2.73 percentage point increase in Real GDP to expansion in oil production following relative peace in the Niger Delta region, although the non-oil sector remained key driver of growth. The Bureau in the latest report on GDP estimates that the economy on nominal basis expanded to N6, 399,716.09 first quarter of 2010 up from N5, 004,850.00 recorded during the corresponding quarter of 2009, indicating an increase of N994, 866.09.

Despite the robust growth, NBS reports that during the period, activities in the non-oil sector slowed down with a resultant decreased output as banks drastically cut down credit to businesses and focused more on recovering existing bad and non-performing loans.

But an analysis of the report shows that the oil sector output grew steadily since first quarter of 2009. NBS estimates that about 202,358,601 barrels of crude oil and condensates were produced for the first quarter of 2010 with an average daily production of 2.25 million barrels per day. This is compared with the 184,661,774 barrels produced within the first quarter of 2009 with a corresponding average daily production of 2.05 million barrels per day.

“These figures, with their associated gas components, resulted in a growth rate, in real terms of 3.21 percent in oil GDP in the first quarter of 2010 compared with the -8.08 percent for the corresponding period of 2009.

“The observed increase in oil GDP is attributable to the improvement in output, which could be traced to the various interventions by government in the peace process in the oil producing regions.

“The oil sector contributed about 18.70 percent to real GDP in the first quarter of 2009, while the contribution in first quarter of 2010 was however 18.00 percent”, the Bureau notes.

On the other hand, the non-oil sector in the first quarter of 2010 recorded an 8.15 percent growth in real terms compared with 7.90 percent achieved a year ago and remained the key driver of the economy even though it experienced a declining growth when compared with data on the last quarter of 2009.

Credits: Business Day Nigeria/Onyinye Nwachukwu

African Entrepreneur Honored

June 22, 2010 – 2:45 PM | by: Amy Kellogg

Upon accepting his award as African Business Leader of the Year, Wale Tinubu, CEO of Oando PLC, an integrated energy company based in Nigeria, spoke passionately about what Africa needs.

“The support of the international community—not aid, we need credit, we need support.  We need opportunities for people to get the opportunity of changing their lives, and the only way that is going to happen is by commercial support for the continent.”

The African Business Awards are given out by African Business magazine and the Commonwealth Business Council to recognize business excellence in Africa.

Tinubu says he started Oando with $100, but managed to get loans to launch, albeit at a rate of 10 percent each month.  He saw an opportunity to fuel the ships working on oil rigs in Nigeria.  His business grew into a major energy outfit, Nigeria’s leading fuel retailer.  And now has drilling rights.  Oando has become Africa’s largest, if not first, indigenous, private sector integrated energy firm, with plans to capture the gas flared in the Niger Delta to provide energy for Nigeria.

Publisher of African Business Magazine Omar Ben Yedder said of Tinubu, “he has pioneered the execution of world class initiatives in the West Africa region as a business leader, social entrepreneur and philanthropist.”  Other companies and leaders who have made contributions to the development of the continent, the economic aspirations of its citizens and the transformation of Africa’s image in international markets were also honored alongside Tinubu.

42-year-old Tinubu launched his business fifteen years ago, and it would appear this is only the beginning of a massive project that dovetails with Nigeria’s plans to develop the oil business indigenously.  Long the preserve of foreign companies, Nigeria, the continent’s primary oil producer, is looking to keep the development and profits with Nigerians.

The Niger Delta, rich in oil, has also been a hotbed of instability, with impoverished locals feeling left out of the boom, and criminal gangs, exploiting a certain lawlessness over the years, to sabotage oil installations, siphon off and steal crude and kidnap foreign oil workers.  Corruption in Nigeria is rife, so many criticize the central government for not forcing compliance of oil companies, and not keeping order in the Delta.  Tinubu says that is changing, after an amnesty granted to those who terrorized the Niger Delta, and that the government is earmarking much of the oil revenue for that part of the country.  It is just a matter of distributing it effectively, and enforcing equitable distribution of construction contracts, which most observers, including Tinubu, agree is a massive challenge.  Part of Tinubu’s business plan is to help the locals and make them feel invested in and taken care of by the region, so he is funding schools and hospitals in the Delta region.

Another part of Tinubu’s plan is expanding what he calls the “repatriate” base of his company.  He estimates he lures 50 of Nigeria’s best and brightest in the oil business back to work in their country, as opposed to abroad.

And he hopes his award will inspire other young business-minded Africans.

“We are a reference point for budding entrepreneurs who want to make a difference on my continent,” he said.

Though Nigeria-watchers are cautious in their assessments of progress in governance and fighting corruption, Tinubu is enthusiastic.

“Corruption is down.  Growth is up.  There is economic progress and vitality.”  He said in his acceptance speech, “There is a belief, there is an indomitable will to succeed irrespective of the odds.”

But he acknowledges that the stakes are high for business, regardless of home base.

“To live in today’s world, you have to compete on a globalized platform.  Africa will not have an exception.”

The African Business Awards were a reason for celebration, he said.  “It’s not usual we get positive coverage of our continent.  Typically, as somebody said earlier tonight, you get stories about famine, disease, coups.  The truth of the matter is Africa is changing.  It is vibrant.”

26/05/2010

FROM THE AFRICAN DEVELOPMENT BANK

The African Development Bank (AfDB) Group, the European Investment Bank (EIB), the International Financial Corporation (IFC), the OPEC Investment and Development Fund and Abu Dhabi Development Fund (ADDF) on Tuesday, May 25, 2010, launched the African Capitalization Fund.

With an initial package of US$ 600 million, including co-investment resources, the new mechanism is designed to finance the continent’s banking system. Designed by the IFC, the fund will be managed by the World Bank’s asset management branch responsible for private sector operations. It will buy shares mainly through savings in identified banks as determinants in a country or a region for regional integration or trade facilitation.

Speaking during the event, the AfDB private sector director, Timothy Turner, the African Capitalization Fund “is one of the multiform responses that the AfDB, in particular, and the international finance institutions, in general, have come up with to counter the effects of the global financial crisis on African economies.”

Weighing the real risk that declining credit due to the withdrawal of commercial banks from the markets and the increasing banking regulations pose to African economies, these institutions are looking to use this new mechanism to counter the shortage of financing that is looming on the horizon. Speaking during the launch, the IFC director for East Africa and Australia, Philippe Prosper, explained that “the decline or the drying up of credit translates into a dangerous withdrawal from the financing of economies, thus an unfortunate contraction of private sector activities.”

The African Capitalization Fund therefore aims at “strengthening the banking sectors of African countries by providing resources it needs to continue financing the private sector.”

Being pan-African in nature, an EIB expert, P. Walsh, stressed that “he will do everything he can to cover the entire continent in its interventions,” adding that “countries will be considered in the same way and that the portfolio will be more diversified and it will be in line with the investment principle which aims at systematically strengthening large banks on the continent, regardless of their sizes.”

The appropriateness of this new mechanism is not in doubt, and according to a Mauritanian leasing fund manager, it is designed to serve as “a missing link in the African development financing chain.” The conditions for its interventions constitute a concern, though. There is fear that if its conditions are stiff, many African banks may not access its services. According to inside sources, the conditions are expected align with those of the markets. Besides filling a gap, the fund, which has been awarded US$50 million by the AfDB will benefit from expertise from the various international financial institutions given that it is a partnership.