Uber booms in Nigeria, eyes expansion to French-speaking West Africa

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Ride-hailing company Uber has offered over a million trips in Nigeria two years after it started there and is eyeing expansion to a French-speaking West African country next, its West African chief said on Thursday.

The U.S. tech firm operates in over 400 cities worldwide and in Africa is present in countries including South Africa and Kenya. It began operations in Nigeria’s business capital Lagos two years ago and in Abuja, the capital city, in March.

“We recorded our millionth trip in Lagos in July,” Ebi Atawodi, Uber’s general manager for West Africa, told Reuters on the sidelines of a Nordic-African business conference in Oslo.

After launching operations in Ghana’s capital Accra in June, Uber was now eyeing to expand in a French-speaking West African country, said Atawodi, declining to say which one.

“We are always looking at cities,” she said.

In Lagos, users include professionals braving the city’s notoriously traffic-jammed roads, students sharing a car to go to one of the city’s three shopping malls, partygoers wanting to avoid drinking and driving – but also to go to a hospital.

“In the central business district of Lagos, there is one ambulance. So in an emergency, how do you get to the hospital, especially if you can’t drive?” she asked. “People know they can get a car in less than five minutes.”

Uber wants to attract more economic activity around its platform than just offering rides, including attracting car insurers, car washers and car mechanics, as well as offering credit ratings to individuals who would not get a bank loan otherwise.

“In the West, the Uber partners (drivers) tend to drive their own vehicle. In sub-Saharan Africa, they are employed by someone who owns one or more cars and then they employ the drivers,” said Atawodi.

“What we are starting to see is that many of these people have moved on from becoming drivers to owning their own vehicles,” she said, explaining they were able to do that by providing Uber data to banks that showed how much they earned per week and how their customers rated them.

The Galaxy Note 7 is dead – Samsung stops production as fresh problems emerge

Authorities in the U.S. and South Korea are still investigating why even the replacement Note 7 phones that Samsung equipped with a safer battery are catching fire. An official at the South Korean safety agency said the replacement phones may have a defect that is different from the problem with the original Note 7s.
Authorities in the U.S. and South Korea are still investigating why even the replacement Note 7 phones that Samsung equipped with a safer battery are catching fire. An official at the South Korean safety agency said the replacement phones may have a defect that is different from the problem with the original Note 7s.

SEOUL, South Korea (AP) — Samsung Electronics said Tuesday that it is stopping production of Galaxy Note 7 smartphones permanently, a day after stopping global sales of the ill-fated devices amid reports that batteries were catching fire.

The South Korean company said in a regulatory filing that it decided to stop manufacturing Note 7s for the sake of consumer safety.

Samsung is struggling to regain consumer trust after a first round of recalls that prompted criticism both for the faulty devices and for the company’s handling of the problem.

After the earlier recall, the company said it had identified a manufacturing defect in the batteries of its top-of-the-line smartphone.

It started shipping new Note 7 phones that were supposed to be safer. But reports that even the replacements were catching fire led Samsung to announce it was stopping sales of the devices.

Authorities in the U.S. and South Korea are still investigating why even the replacement Note 7 phones that Samsung equipped with a safer battery are catching fire. An official at the South Korean safety agency said the replacement phones may have a defect that is different from the problem with the original Note 7s.

Samsung’s shares plunged 8 percent Tuesday in Seoul, their biggest fall since the 2008 financial crisis. And that was before it announced it was discontinuing the Note 7.

Also Tuesday, China’s product safety regulator said Samsung will recall all Galaxy Note 7 smartphones sold in mainland China, amounting to around 191,000 units.

The General Administration of Quality Supervision, Inspection and Quarantine said it was investigating for defects in the devices

Samsung will either provide a full refund at the original price or replace Note 7 units with any other model of Samsung phone, and give refunds of the difference in prices, along with a 300 yuan ($45) voucher.

Samsung’s brand has already been battered by complaints it is doing too little to reassure Chinese owners their handsets are safe.

Initially, Samsung had said in September that the Note 7s sold in China would not be affected because their batteries came from a different supplier, ATL. Samsung recalled 1,858 Note 7 phones in China in September, saying they were distributed for testing before sales to the public began on Sept. 1.

Asian Chamber Gala in Houston Honors Local Business Leaders

Winners from the Asian Chamber’ s Spirit of Entrepreneurship Awards Gala:  Youngro Lee, Rising Star; Thomas Nguyen, Entrepreneur of the Year; Alice Lee, Business Female; Nelvin Joseph Adriatico, Ambassador; and Jorge Franz representing Houston First Corporation, Community Champion.
Winners from the Asian Chamber’ s Spirit of Entrepreneurship Awards Gala: Youngro Lee, Rising Star; Thomas Nguyen, Entrepreneur of the Year; Alice Lee, Business Female; Nelvin Joseph Adriatico, Ambassador; and Jorge Franz representing Houston First Corporation, Community Champion.

The Asian Chamber of Commerce honored successful businessmen and women at The Spirit of Entrepreneurship Gala last week. Winners were: Entrepreneur of the Year, Thomas Nguyen, Peli Peli Restaurant Group; Business Female, Alice Lee, Hawes Hill Calderon LLP; Rising Star, Youngro Lee, Nextseed; Community Champion, Houston First Corporation; Ambassador, Nelvin Joseph Adriatico, Thadhani, Core Realty.

“Asian-American businesses are a vital part of our local economy,” said Chamber President Linda Toyota. “The Asian Chamber wants to recognize those who succeed and who help others to succeed.”

The elegant annual event was held at the Bayou City Event Center Friday, September 30.

Keynote speaker was Dr. Benjamin Chu, President and CEO of Memorial Hermann Health System. Also making remarks Mayor Sylvester Turner, Qiangmin Li, Consul General of the People’s Republic of China, and State Representative Gene Wu.

Co-Chairs for the Spirit of Entrepreneurship were Alice Chen, Al Duran, Stephen Le Sr. and Bin Yu. Honorary Co-Chairs were Mayor Turner, Congressman Al Green and Consul General Qiangmin Li.

The Asian Chamber of Commerce has been supporting the business community in Houston for 25 years. This Chamber is a diverse, multicultural group focused on increasing business with the Asian community locally and abroad for all Asian countries, as well as improving the overall economic prosperity of Houston. The Chamber hosts and supports numerous activities around the city to encourage our members to develop lasting relationships.

Here’s why we should be worried about Nigeria’s economy

Nigeria’s statistics office said Wednesday that the country has dropped into recession as its all-important oil industry has suffered under weak global prices.

The country’s gross domestic product (GDP) dropped by 2.06 percent in the second quarter of 2016 after falling 0.36 percent in the previous three months. The technical definition of a recession is two consecutive quarters of negative growth.

An economic adviser to President Muhammadu Buhari, Adeyemi Dipeolu, told the Associated Press that the bleak data was largely attributed to “a sharp contraction in the oil sector due to huge losses of crude oil production,” resulting from vandalism and “sabotage.”

The figures from the country’s National Bureau of Statistics placed estimated oil production at 1.69 million barrels per day, down by 0.42 million barrels per day from the first quarter. Consequently, real growth within the sector was negative 17.48 percent year on year in the second quarter of 2016.

Tony Elumelu, chairman of Heirs Holdings and the United Bank for Africa, said in an interview with CNBC Tuesday that following the fall in the price of commodities, “the government in Nigeria and across Africa … need to diversify their economies.” But, he warned that this process was a gradual one, as “you don’t diversify an economy overnight.”

Reflecting Nigeria’s potential for this diversification, Facebook chief executive Mark Zuckerberg is currently in Nigeria, meeting with technology start-ups and visiting a coding summer camp for children.

According to the GDP report, Nigeria’s non-oil sector was driven by the agriculture, information and communication, water supply, arts, science, education and services sectors, which all saw positive growth. But overall, the non-oil segment of its economy declined by 0.38 percent in real terms in the second quarter of this year.

Elumelu was positive about Buhari’s economic management of the country, commending what he perceived as the current government’s genuine “realization about what the situation is” as well as its “firm commitment and determination to do something and bring change about.” Elumelu also discussed Buhari’s “policy stability” which would enable investors in the country to plan.

With regards to an overarching strategy for the region, Elumelu stressed that “Africa needs private global capital to come in,” and that “what is good for the private sector is good for society.” He viewed such investment as enabling countries to create employment, address the issues of inequality and poverty, and “engender inclusive growth.” Elumelu asserted: “this is the solution to the difficult economic times everyone is going through.”

Africa’s biggest economy crashes into recession

Buhari....The country's decision to unpeg the naira against the dollar does not appear to have led to a hoped-for influx of dollar investment. Instead the government is now dealing with inflation.
Buhari….The country’s decision to unpeg the naira against the dollar does not appear to have led to a hoped-for influx of dollar investment. Instead the government is now dealing with inflation.

Africa’s largest economy, Nigeria, has officially entered recession after two consecutive quarters of contraction. Gross domestic product shrank by 2.06% in the second quarter of 2016, following a 0.36% shrinking in the first quarter, according to data released by the country’s National Bureau of Statistics on Wednesday.

Those two consecutive quarters of economic shrinkage mean the country is in its first recession in more than 20 years. Recession in Nigeria may be an unwelcome development, but it is not unexpected. Earlier in the year, Godwin Emefiele, the governor of the Central Bank of Nigeria, warned “recession was imminent,” the Financial Times reports.

“We have long warned of a slow-burning crisis in Nigeria,” Capital Economics’ Africa economist, John Ashbourne, said in May. “It now seems that this view was too optimistic: The country is headed into a full-blown economic crisis.” The International Monetary Fund has also warned on the state of the country’s economy, forecasting that growth will shrink by 1.8% in 2016.

The big driver of the slump in the Nigerian economy, which was one of Africa’s great success stories until recently, has been the persistently low price of oil over the past 2 1/2 years. Nigeria relies heavily on oil and is the largest producer of the commodity on the continent, producing roughly 2.4 million barrels a day. Given that oil’s price has slumped from more than $100 a barrel in 2014 to roughly $48 now, it is perhaps unsurprising that the country has struggled to find economic growth.

The Nigerian oil industry’s problems have been made even worse by a series of major disruptions in the oil-rich Niger Delta area, caused largely by a militant group calling itself the Niger Delta Avengers. Most notably, the group attacked a Chevron offshore facility in May and the underwater Forcados export pipeline operated by Shell in late March. The production disruptions caused by these attacks and others have wreaked havoc with the already stricken industry.

Growth in non-oil sectors of the country’s economy has also been badly hit, as Business Insider’s Elena Holodny wrote in May, with manufacturing taking the biggest hit. Non-oil GDP contracted by 0.38% in Q2, according to a tweet by Kale. The country’s decision to unpeg the naira against the dollar does not appear to have led to a hoped-for influx of dollar investment. Instead the government is now dealing with inflation.

“This is very bad news for Nigeria’s government, which has justified the current FX system as a method of promoting non-oil industries,” Ashbourne of Capital Economics said. “It is now clear that these policies have — as we’d long argued — made a bad situation worse.” While things look pretty bleak for the economy, research from Barclays circulated to clients on Wednesday argues that the worst of Nigeria’s crisis may be over.

“Economic activity in Q3 16 continues to be hampered by security concerns in the Niger Delta, ongoing FX shortages, rising inflation and significantly tighter monetary policy. That said, the decision by militants to stop attacks, the implementation of the 2016 budget and better availability of FX, despite it remaining a massive constraint, suggests a marginally better outlook for H2,” Ridle Markus argued in Barclays’ “Sub-Saharan Africa Daily” note.

Markus did say, however, that “for the year as a whole, we fear that the economy is set to contract, which will be the first full-year recession since 1991.”

African-Japanese Trade Deals Expected From Summit

Japan's Prime Minister Shinzo Abe inspects a military honor guard in Nairobi, Kenya, where he's visiting as part of an international development conference, Aug. 26, 2016.
Japan’s Prime Minister Shinzo Abe inspects a military honor guard in Nairobi, Kenya, where he’s visiting as part of an international development conference, Aug. 26, 2016.

African heads of state and VIPs from around the world have converged in this Kenyan capital for the sixth Tokyo International Conference on African Development, expected to foster a host of new trade and investment deals.

For the first time since its 1993 inception, the summit — now held every three years — is being held in Africa. It’s an historic occasion, Japanese Prime Minister Shinzo Abe told reporters here Friday.

He said Japan would work hand in hand with Africa to realize the goals set out by the continent’s people, whom he said were strongly promoting themselves.

Japan’s government, along with the World Bank, the United Nations and the African Union, host the TICAD summit. It’s billed as a platform for high-level dialogue on policy.

The list of attendees is full of VIPs, including 37 African heads of state and the leaders of the World Bank and the African Development Bank, to name a few. The two-day conference, which concludes Saturday, has drawn approximately 10,000 delegates.

Focus on industrialization

Lagging industrialization in Africa is on the agenda.

“We know that most nations which escape the grip of poverty do so by industrializing,” Kenya’s President Uhuru Kenyatta said Friday. “Africa has not still lived up to its potential. We need to put our heads together to see how we can hasten the industrialization of the continent and how we can avoid the missteps of those who have previously walked this path.”

The Japanese prime minister said his country would unveil new technology and training opportunities at the conference to encourage growth.

At the last TICAD in 2013, Japan pledged $32 billion in development aid to Africa. Some of it was earmarked for infrastructure development to encourage foreign investment.

Japan is currently undertaking an expansion of the Kenyan port of Mombasa, to the tune of $250 million.

“The Japanese have been heavily involved … here in our ports in Mombasa, in Mozambique,” Kenyan economic analyst Aly Khan Satchu told VOA. “They are doing a lot of the roads. They seem to meet a strategy basically around logistics and opening up the continent, and I think that’s going to work well for them.”

Satchu, who works for Rich Managent, continued: “What we have is a situation where the Indian Ocean is very much an appendage to the South China Sea. And I think Japan is looking to counter China’s influence not only in the South China Sea but also in the Indian Ocean.”

Duncan Onduu, a Nairobi-based sustainable development analyst, said he expected hot topics to include climate change and agriculture investment. He anticipates “greater commitment on issues of climate change, issues of food security” and helping Africans become more self-reliant “so that we don’t have instances where there are pockets of hunger.”

Nigeria’s central bank suspends nine banks from FX market, sources say

LAGOS (Reuters) – Nigeria’s central bank has suspended nine banks from the interbank currency market for failing to remit money owed to the government, banking sources told Reuters on Tuesday.

The suspension comes after the central bank tightened restrictions on the flow of dollars to domestic lenders in March. That has forced the banks to delay hard-currency loan and trade repayments and increased their risk of default.

“This is really a function of the dire macroeconomic situation and illiquidity in the FX markets rather than willful non-compliance by banks,” said Diran Olojo, a spokesman for FCMB, one of the banks.

Olojo said the bank was working with the central bank to resolve the issue.

The banks have failed to remit $2.1 billion, the government’s share of dividends from the state-owned gas company, NLNG. The banks were supposed to pay the money into the government’s account at the central bank.

Last year, President Muhammadu Buhari ordered the merger of state accounts into that one account at the central bank to reduce corruption.

In addition to FCMB , the banks are First Bank , United Bank for Africa (UBA) , Heritage Bank, Keystone Bank, Skye Bank , Diamond Bank , Sterling Bank and Fidelity Bank , banking sources say.

“We could not trade today,” one banker said. “The suspension is meant to pass on the pressure to banks to make payments (but) this is foreign currency and we have to source the dollars.”

Nigeria, Africa’s largest economy, is suffering its worst financial crisis in decades as a slump in oil revenues hammers public finances and the naira. The central bank governor has said recession is likely.

The bank floated the currency in June to attract investment, allowing the naira to fall by 40 percent against the dollar. But foreign investors have remained on the sidelines, making the central bank the main supplier of dollars.

Some lenders were trying to sell assets to pay the funds, another banker said, adding that the central bank was aware of refinancing challenges facing the industry.

A director at one of the affected lenders said his bank informed all board members of the suspension via a letter on Tuesday, adding it held $125 million of the total sum.

The central bank has been selling dollars almost daily to boost interbank trading and liquidity. But it reduced its sales volume this week, traders said, after it settled two-month outright forwards it sold in June.

The regulator paid $1.2 billion for currency forwards it sold in June at 280 per dollar, the bankers said, further draining its dollar reserves. Those reserves are down to $25.7 billion, their lowest in more than 11 years.

The naira, which hit a record low of 365.25 per dollar on Thursday, closed flat at 305.50 on Tuesday, gaining ground after the central bank sold dollars

Economy in tatters as Nigeria loses title as Africa’s largest economy

On June 15, Nigeria’s central bank announced it would abandon its currency’s dollar peg. Since then, the naira has fallen 61 percent against the U.S. dollar, generating difficulties for both foreign and domestic businesses in Africa’s most populous country. Nestle Nigeria, for instance, saw a 94 percent drop in profits as the currency depreciated. The currency’s move also led to Nigeria losing its title as Africa’s largest economy — a symbolic downgrade that succinctly summarizes the many challenges facing the country.

As oil prices fell from more than $100 a barrel in June 2014 to under $50 today, government revenues plunged, leaving Nigeria with a $7 billion budget deficit.

Perhaps the most disruptive development in the Nigerian economy over the past five years has been the drop in the price of oil, which accounts for 70 percent of government revenue and 95 percent of export income. As oil prices fell from more than $100 a barrel in June 2014 to under $50 today, government revenues plunged, leaving Nigeria with a $7 billion budget deficit.

Amidst the decline in oil revenue, the government’s prolonged peg of the currency to the dollar led to foreign exchange shortfalls and import barriers on items such as margarine, private jets, wooden doors and even toothpicks, significantly hurting both local and multinational businesses.

These measures drove United Airlines and Iberia Airlines to cut off routes to Nigeria. The measures also left domestic operators with painful fuel shortages. Business in other industries suffered as well, with companies like Nestle’s Nigerian operation struggling to access foreign exchange and the Africa president of Unilever calling the maintenance of the policies “very insane.”

Meanwhile, militants known as the Niger Delta Avengers have blown up pipelines, contributing to Nigeria’s loss of its title as Africa’s largest oil producer. Sabotage has cost the country 700,000 barrels per day, sending the country’s output down to its lowest level in almost three decades. Shell’s production in Nigeria dropped 24 percent between the first and second quarters of this year alone. The government has engaged the militants in peace talks (as well as paying them stipends), but analysts are not optimistic that peace is imminent.

In the north, the military continues to battle Boko Haram terrorists, whose violence has displaced 2.2 million people. At the same time, regional tensions have erupted elsewhere in the country, and land disputes have killed more people this year than Boko Haram.

Given this backdrop, it shouldn’t be a surprise that the economy is in tatters.

Given this backdrop, it shouldn’t be a surprise that the economy is in tatters. Growth slowed from 6.3 percent in 2014 to 2.8 percent last year, and the IMF says the economy could shrink by 1.8 percent in 2016. In June, inflation rose to an 11-year high of 16.5 percent, while business confidence has hit all-time lows. The unemployment rate is over 12 percent, and major electricity companies are threatening to cut off power if the government does not pay them the hundreds of millions of dollars it owes.

If all that wasn’t enough, a moth ravaged the tomato crop in the northern Nigerian state of Kaduna, driving up the local price of a basket of tomatoes from as little as 300 naira to 42,000 naira — a 14,000 percent increase (and incidentally, sparking ill-will towards the decadent, annual tomato-throwing festival in Spain on social media). Locals called it “tomato Ebola,” and the regional government declared a state of emergency.

The slowing economy is particularly problematic for a country that is adding 13,000 new people to its population every day. By 2050, the country is expected to have roughly 400 million people, surpassing the U.S. and only trailing the populations of India and China. By 2100, that figure could near 1 billion. Population density will skyrocket as well, given the country’s land area is roughly equivalent to that of Texas. With a population growing at 2.7 percent per year, the economy needs to maintain that level of growth just to tread water, let alone improve the incomes of its citizens.

With a population growing at 2.7 percent per year, the economy needs to maintain that level of growth just to tread water, let alone improve the incomes of its citizens.

One impediment to growth has been corruption. Nigeria lies in the bottom 20 percent of nations on Transparency International’s Corruption Perceptions Index. Muhammadu Buhari, who was elected president with a mandate to crack down, seems to have made some progress. In June, the government announced it had seized more than $10 billion dollars’ worth of stolen wealth. But some are skeptical of this figure, noting only $600 million had actually been repatriated so far.

There are signs of hope for Nigeria’s economy. While painful, the plunge in the currency could be an opportunity for entrepreneurs and exporters who have costs in naira and revenues in foreign currencies. It might also help local industries as Nigerians substitute domestically produced goods for foreign imports.

Another bright spot is the development of Nigeria’s petroleum refining infrastructure. Today, the country produces more crude oil than it can process. Ironically, this means that even as Nigeria exports crude oil, it is dependent upon imports to meet domestic gasoline consumption demands.

Aliko Dangote, Africa’s richest man, is constructing a refinery that could “satisfy Nigeria’s daily requirement of 445,000 to 550,000 barrels of fuel, with spare capacity to export,” according to CNN. This could improve the country’s trade balance while making shortages induced by currency fluctuations less likely.

“Today we may appear young and people may not believe in us, but we are going to compel them to believe in us through our achievement.”

An expansion in access to information technology could also be a boon for business. This year, the price of data for the country’s nearly 100 million mobile internet users has plunged dramatically as the market was deregulated and competition grew. According to Quartz, the price of 500 megabytes fell 50 percent in a single month this spring — but it still needs to fall much farther to enable mass consumption.

Infrastructure investment will also drive growth. This June, a U.S. fund announced it would raise $2 billion to fund projects in the country — a drop in the bucket of Nigeria’s $300 billion infrastructure deficit, but nevertheless a positive sign of Nigeria’s potential to attract capital even amid turmoil. The state has also announced fiscal spending to offset the downturn.

So while pessimism abounds, it is crucial to keep our eyes on the bright spots in Nigeria’s economy. We write off and ignore the country at our own peril; it could very well become a 22nd century superpower. As the Nigerian businessman Tony Elumelu said, “Today we may appear young and people may not believe in us, but we are going to compel them to believe in us through our achievement.”

Africa will be the secret victim of Brexit

Britain’s economy may bear the brunt of the fallout from the UK’s decision to leave the European Union, but another part of the world — Africa — is set to be an unexpected victim.

Much of the economic spotlight since Britain voted to leave the EU has understandably been trained on how the so-called Brexit vote will affect the British economy as well as those of countries within the eurozone and the wider European Union.

In the UK one word — recession — dominates, with banks, economic research houses, and supranational institutions all predicting that growth in Britain will shrink this year or next.

Barclays thinks the UK is on the “cusp of recession,” Credit Suisse predicts that a recession will cost Britain 500,000 jobs, and Morgan Stanley says a recession is coming, though it was unsure of the specific details.

It isn’t just predictions that are dire. Economic surveys, like Friday’s disastrous Markit flash PMI data, are also pointing to recession.

Europe is a slightly different story. Before the referendum it was generally accepted that a vote to leave would drag massively on growth and crush confidence, but so far the impact looks to be negligible, if surveys from the German think tank Ifo Institute and Markit are to be believed.

But according to new research from Barclays, Brexit’s economic impact on Africa, and particularly sub-Saharan Africa, or SSA, could be profound and incredibly damaging to the continent’s burgeoning development. In a note by analysts led by Peter Worthington, Barclays argues that the referendum will materially affect growth on the continent, saying:

“Post-Brexit, we see growth in sub-Saharan Africa halving to just 1.4% in 2016, the slowest pace in decades, due principally to sharply weaker growth outlooks in sub-Saharan Africa’s three biggest economies: Angola, Nigeria, and South Africa, which together account for nearly three fifths of SSA GDP.”

Barclays identifies seven key reasons SSA growth is at risk from Brexit. Take a look below:

  1. Brexit could harm global demand for goods, particularly hitting African economies that are focused on the export of raw materials. This would lead to “slower growth and wider current account deficits,” Barclays argues.
  2. Weaker global demand could also, Barclays says, cause key commodity prices to fall, further undermining the African economy, which relies heavily on exporting minerals, ores, and other commodities. The possible exception would most likely be gold, which has been boosted by market uncertainty since the referendum. Two of the world’s 10 biggest gold-producing nations are in sub-Saharan Africa.
  3. Tourism will dwindle. A key area of economic prosperity for African nations is tourism, particularly through safaris and other nature tours. The basic argument here is simple — if Brits and other Europeans are suffering through economic hardship, an African holiday will be far less affordable.
  4. Fewer African workers will be able to work in developed nations, which will reduce the amount of money sent back to SSA countries. As Barclays puts it, there will be fewer “economic opportunities for African migrants to the UK and Europe, and hence less workers’ remittances to home countries.”
  5. If things get really bad, aid from UK and European governments could start to dry up, robbing SSA countries of vital funding for infrastructure projects and other economically beneficial plans.
  6. Brexit is causing heightened uncertainty and, in some respects, increased risk aversion. These factors are likely to increase financing costs and shrink capital inflows into sub-Saharan Africa.
  7. Earnings on sub-Saharan investments into Europe and the UK will be lower. That is likely to have the biggest impact on sub-Saharan Africa’s most developed nation, South Africa, which has substantial investments in Europe.

Barclays said it was impossible to quantify exactly how big the impact would be (emphasis ours):

“Quantifying the aggregate impact of all these factors is challenging, especially because of the many feedback loops between financial markets and the real economy, and the interlinking second order, multiplier, and lagged effects as the Brexit shock reverberates across borders around the global economy. Moreover, even once the UK triggers Article 50 (the procedure to formally initiate divorce proceedings) it is likely to take at least two years to negotiate the terms of the UK’s exit from the EU. Until these terms are clear, the ultimate effect of Brexit will be obscured by much uncertainty.”

Nigeria hikes rates to lift naira, fight inflation

Abuja (AFP) – The Central Bank of Nigeria (CBN) on Tuesday raised its benchmark interest rate to 14 percent from 12 percent in move to stabilise the country’s currency, the naira, and tame soaring inflation.

CBN governor Godwin Emefiele told reporters the monetary policy committee which meets every two months “voted to increase the MPR (interest rate) by 200 basic points from 12 percent to 14 percent.”

MPR is the benchmark rate at which the CBN lends to commercial banks and it has been a key instrument in stabilising prices.

Financial analysts welcomed the decision.

“Given the cost-push nature of inflation in Nigeria, which largely stems from the shortage of foreign exchange, we believe that this was the right thing to have done,” said Razia Khan of Standard Chartered Bank.

“Today’s monetary policy decision demonstrates a commitment to foreign exchange liberalisation, which alone will undo some of the bottlenecks that have contributed to inflation,” Khan added.

Inflation hit an 11-year high of 16.5 percent in June as prices of food and energy jumped after the government freed up the naira currency in April, allowing it to plummet against the US dollar.

Nigerians are struggling with spiralling cost of living after a 67 percent hike in the price of petrol in April and last month’s scrapping of the peg of the naira exchange rate at 197/199 to the dollar.

The naira now trades at around 370 to the dollar on the black market. The official rate is at about 300 to the dollar.

The International Monetary Fund said last week it expected Nigeria’s economy to contract by 1.8 percent in 2016 after having forecast a 2.3-percent expansion in April, but the finance Minister Kemi Adeosun said there was nothing to worry about.

Nigeria, one of Africa’s main oil producers, normally gets 70 percent of its revenue from oil sales. But the global fall in crude prices since mid-2014 has left the government cash-strapped and even unable to pay wages.

The nation’s economic woes have been exacerbated by sabotage to oil and gas facilities in the oil-producing south by militants wanting self-determination for the delta region.

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