Major International Business Headlines Brief::: 16 January 2023

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Major International Business Headlines Brief::: 16 January 2023 

 


 

 


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ü  Energy boss warns higher bills are here to stay

ü  Richest 1% own 40.5% of India's wealth, says new Oxfam report

ü  Tesla cuts prices by up to a fifth to boost demand

ü  Winklevoss firm charged in US over crypto sales

ü  Adidas loses stripes row trademark battle with luxury designer Thom
Browne

ü  Does easing US inflation point the way for the world?

ü  Middlesbrough vinyl plant to double capacity

ü  South Africa: Energy Crisis Puts Water, Food Security at Greater Risk 

ü  Nigeria Air - Parties Hope On the Court, As Battle Rages

ü  Nigeria: Int'l Borders - Adeola Decries Restriction of Fuel Stations to
20km

ü  Nigeria: New Naira Notes and CBN's Policy Snafu

ü  Nigeria: How Govt Spent $14.37bn to Service World Bank, Other Debts in 8
Years

ü  Rwanda's Coffee Exports to UAE Set to Grow

 


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Energy boss warns higher bills are here to stay

The boss of Norwegian energy giant Equinor has said he does not expect gas
and electricity bills to return to the levels they were before Covid.

 

Anders Opedal told the BBC the transition from fossil fuels towards less
damaging sources of energy meant costs would remain high.

 

Mr Opedal also said that windfall taxes on energy firms were affecting
investment in projects in the UK.

 

Energy companies have reported record profits because of higher gas prices.

 

Equinor, which makes most of its money producing oil and gas, is one of
Europe's biggest energy companies, with operations in 36 countries around
the world including the UK.

 

In its most recent financial results, it reported pre-tax profits of $24.3bn
(£19.8bn) between July and September compared to $9.7bn in the same period
the year before.

 

What is a windfall tax?

Wholesale prices rose as Covid restrictions began to ease but soared higher
after Russia invaded Ukraine and countries targeted the Kremlin with
sanctions.

 

In recent weeks, in part due to warmer than usual weather across Europe, gas
prices have returned to where they were before the Russian invasion of
Ukraine.

 

However, gas and electricity bills for households and businesses remain
elevated and are squeezing living costs for many.

 

Mr Opedal said it was doubtful that gas and electricity bills would return
to a time when the typical UK household was paying around £1,300 a year. The
typical annual bill for homes is currently around £2,500 which includes help
from the UK government.

 

Mr Opedal said there is "a kind of re-wiring of the whole energy system in
Europe particularly after the gas from Russia was taken away". He said huge
investment in renewables was needed, including using more hydrogen for
example.

 

"This will require a lot of investment and these investments need to be paid
for, so I would assume that the energy bills may slightly be higher than in
the past but not as volatile and high as we have today," Mr Opedal said.

 

Looking ahead, he said "we need to treat energy as something that is not
abundant".

 

"I think we have had a lot of cheaper energy in the past and we probably
wasted some of it, so we need to make sure we're making the right
investments now [and] everyone [should] use as little energy as possible."

 

Mr Opedal spoke to the BBC before attending the World Economic Forum in
Davos, Switzerland which is an annual gathering of political and business
leaders. The theme of this year's meeting, which takes place from 16-20
January, is "Cooperation in a fragmented world".

 

Mr Opedal took over as chief executive and president of Equinor in November
2020 with a pledge to be "a force" in the shift to green energy. He started
his career as a petroleum engineer.

 

Net zero delay will hurt economy, MP’s review says

Last year, the UK introduced a windfall tax on energy companies that have
benefitted from the spike in prices.

 

Initially 25%, the so-called Energy Profits Levy will rise to 35% in January
and remain in place until March 2028.

 

The tax applies to profits made from extracting UK oil and gas, but not from
other activities such as refining oil and selling petrol and diesel on
forecourts.

 

The scheme also lets firms claim tax savings worth 91p of every £1 invested
in fossil fuel extraction in the UK.

 

Mr Opedal said that while the tax had not impacted Equinor's investment
strategy in the UK: "It is affecting how we judge each project because we
have to take into account what is the tax level compared to what are all the
other risks."

 

He cited the Rosebank oilfield off the coast of Shetland which Equinor is
seeking to develop, pending government approval.

 

Equinor says the field could produce almost 70,000 barrels of oil a day at
its peak, accounting for 8% of the UK's total oil production between 2026
and 2030.

 

However, environmental campaigners have described the plans as a "total
betrayal" of the UK's climate goals.

 

Mr Opedal said: "There have been two changes in the tax regime already and
we're thinking about will it even be more going forward? Rosebank is a
project that we think is needed in the UK in terms of energy security."

 

He added: "Uncertainty about what will the tax level be will be an important
part of the decision [to go ahead] because, for instance, now on some of the
fields we have invested in we are still not profitable but pay tax already
based on the windfall taxes. So this is how we kind of evaluate every
project."

 

Equinor's Norwegian operations account for around two thirds of its oil and
gas business. The rest of its oil and gas business is spread across 30
countries, with two of its largest operations the Peregrino field in Brazil
and the Mariner field off Shetland, which started production in 2019.

 

The firm also has investments in renewables including hydroelectric power.
It recently announced plans with Germany's RWE to develop hydrogen-ready
power plants.

 

The plants will run on gas initially but will eventually be able to transfer
to using hydrogen generated by renewable energy.-bbc

 

 

 

 

Richest 1% own 40.5% of India's wealth, says new Oxfam report

India's top 1% owned more than 40.5% of its total wealth in 2021, according
to a new report by Oxfam.

 

In 2022, the number of billionaires in the country increased to 166 from
from 102 in 2020, the report said.

 

Meanwhile, it added that the poor in India "are unable to afford even basic
necessities to survive".

 

The charity called on India's finance minister to levy a wealth tax on the
ultra rich to tackle this "obscene" inequality.

 

The report - Survival of The Richest - was released as the World Economic
Forum began in Davos, Switzerland.

 

The report highlighted the large disparity in wealth distribution in India,
saying that more than 40% of the wealth created in the country from 2012 to
2021 had gone to just 1% of the population while only 3% had trickled down
to the bottom 50%.

 

In 2022, the wealth of India's richest man Gautam Adani increased by 46%,
while the combined wealth of India's 100 richest had touched $660bn.

 

In 2022, Mr Adani was ranked the second richest person in the world on the
Bloomberg's wealth index. He also topped the list of people whose wealth
witnessed the maximum rise globally during the year.

 

Meanwhile, the country's poor and middle class were taxed more than the
rich, Oxfam said.

 

Approximately 64% of the total goods and services tax (GST) in the country
came from the bottom 50% of the population, while only 4% came from the top
10%, the report said.

 

"India is unfortunately on a fast track to becoming a country only for the
rich," Oxfam India CEO Amitabh Behar said. "The country's marginalised -
Dalits, Adivasis, Muslims, women and informal sector workers are continuing
to suffer in a system which ensures the survival of the richest."

 

The rich, currently, benefited from reduced corporate taxes, tax exemptions
and other incentives, the report added.

 

To correct this disparity, the charity asked the finance minister to
implement progressive tax measures such as wealth tax in the upcoming
budget.

 

A 2% tax on the entire wealth of India's billionaires would support the
nutrition of the country's malnourished population for the next three years,
the report said.

 

A 1% wealth tax could fund the National Health Mission, India's largest
healthcare scheme for more than1.5 years, it added.

 

Taxing the top 100 Indian billionaires at 2.5% or taxing the top 10 Indian
billionaires at 5% would nearly cover the entire amount required to bring an
estimated 150 million children back into school, Oxfam said.

 

"It's time we demolish the convenient myth that tax cuts for the richest
result in their wealth somehow 'trickling down' to everyone else," said
Gabriela Bucher, the executive director of Oxfam International.

 

Taxing the super-rich was necessary for "reducing inequality and
resuscitating democracy", she added.-bbc

 

 

 

 

Tesla cuts prices by up to a fifth to boost demand

Tesla has cut the price of some of its most popular electric cars by
thousands of pounds in Europe and the US, in a bid to boost customer demand.

 

The firm faces a difficult global economic outlook and increased competition
from other carmakers.

 

The price cuts are in the range of 10% to 13% in the UK, but run as high as
20% on some US models.

 

New UK buyers will save £5,500 on an entry-level Model 3 and £7,000 on the
cheapest Model Y.

 

However, more than 16,000 customers bought those best-selling models last
year, and some were angry that they had paid more.

 

One posted on a Facebook group for Tesla owners: "I just picked up the car
yesterday. What should I do? Go to Tesla and give back the car? I can't
believe after a few hours from picking up the car I lost £5k".

 

Tesla had a similar response from customers in China, where it announced
price cuts last week.

 

At the weekend disgruntled owners demonstrated outside Tesla distribution
centres in Shanghai and other cities, calling for compensation.

 

Tesla has reduced prices twice in China in the last six months and they are
now 13% to 24% below September levels.

 

Ill-feeling

To try to avoid similar objections in the US and Europe, Tesla said
customers who had ordered, but not yet received, their vehicle would be
charged the new lower price.

 

Ginny Buckley, from the electric vehicle marketplace, Electrifying.com, said
the price cuts were still controversial and bound to "send shockwaves"
through the industry, because Tesla was making a shift from a premium to a
more mainstream product.

 

Paul Hollick, chair, Association of Fleet Professionals welcomed the price
cuts, saying it would make electric vehicles more affordable to his members.
However the "disorderly marketing" was not good news, he said.

 

"A move of this kind does unavoidably create ill-feeling. The company would
do well to introduce some kind of redress," he said.

 

line

Analysis box by Theo Leggett, business correspondent

The electric carmaker has been growing rapidly in recent years, as it moves
from being a niche premium brand to a mass market manufacturer.

 

But there are challenges.

 

Slowing global growth and higher interest rates, not to mention increasing
competition from more established carmakers and from Chinese brands, all
threaten its expansion.

 

When demand for Tesla cars far exceeded supply, it could maintain prices at
what Elon Musk himself described as "embarrassing levels".

 

But in a world where more electric car brands will be competing for a
diminishing pool of potential buyers, it can no longer afford to do so - if
it wants to keep on growing.

 

line

James Baggot, editor in chief of Car Dealer Magazine, said the move would
have a big impact on used Tesla prices, which he said had already fallen by
more than a fifth last year.

 

The lowest priced new Tesla Model 3 in the UK is now priced at £42,990.
Model Y vehicles start at £44,990.

 

'Significant challenges'

Demand for electric vehicles has been rising steadily, driven by rising fuel
costs and customers' concerns around climate change.

 

Electric models accounted for almost one-fifth of new car sales in the UK
last year.

 

But chief executive Elon Musk acknowledged last year that prices for new
Teslas had become "embarrassingly high" and could hurt demand.

 

Globally, Tesla deliveries rose 40% in 2022, but that was below market
expectations.

 

That dealt a further blow to the company's share price which fell more than
65% over the year as a whole - its worst year since going public in 2010.

 

The dramatic slide in the share price dented Mr Musk's fortune, nudging him
off his spot as the world's richest person.

 

Tesla said there had been "significant challenges" last year including a
shortage of semi-conductors, the rising cost of energy and ongoing
Covid-related disruptions.

 

However, the firm said its focus on "original engineering and manufacturing
processes" and a recent "normalisation" of some of the cost inflation, had
allowed it to pass on savings to customers.

 

Like other carmakers, Tesla is grappling with the likelihood of slowing
demand for vehicles as customers deal with rising borrowing costs and
concerns about an economic slowdown.

 

Tesla shares fell again after the price cut announcement, as investors
feared lower prices would eat into profits.

 

However Wedbush analyst Dan Ives said the move was a "shot across the bow"
for Tesla's rivals. suggesting that Tesla was "not going to play nice in the
sandbox with an EV price war now underway".-bbc

 

 

 

 

Winklevoss firm charged in US over crypto sales

Cryptocurrency firms Gemini and Genesis have been charged by US regulators
with illegally selling crypto assets to hundreds of thousands of investors.

 

The companies are accused of breaking the law by offering and selling the
products through their joint programme, Gemini Earn, which launched in 2021.

 

The Securities and Exchange Commission (SEC) is in charge of the case.

 

Gemini was co-founded by twins Tyler and Cameron Winklevoss - known for
their legal dispute with Facebook.

 

Tyler called the complaint "disappointing", and said his company looks
forward to defending itself.

 

Genesis, which is owned by the crypto conglomerate Digital Currency Group,
has so far not commented on the charges.

 

Public feud

Gary Gensler, who chairs the SEC, said: "Today's charges build on previous
actions to make clear to the marketplace and the investing public that
crypto lending platforms and other intermediaries need to comply with our
time-tested securities laws.

 

"Doing so best protects investors. It promotes trust in markets. It's not
optional. It's the law."

 

Over the past week, a public feud has erupted between the Winklevoss
brothers and Barry Silbert, the chief executive of Digital Currency Group,
the parent company of Genesis.

 

It related to Gemini Earn, which was sold to investors as an opportunity to
make up to 7.4% in interest on their crypto currency holdings.

 

When FTX filed for bankruptcy last November, Genesis halted customer
withdrawals saying it lacked sufficient liquid assets because of the
volatility of the market.

 

This had a knock-on impact for 340,000 customers using Gemini Earn, leaving
them unable to take out their crypto assets.

 

Cameron Winklevoss claims Digital Currency Group owes $900m (£737m) to
clients of his firm Gemini as a result and accused Mr Silbert's group of
"defrauding" his customers.

 

A Digital Currency Group spokesperson rejected the accusations, saying they
were "malicious, false and defamatory attacks" and describing them as a
"desperate and unconstructive publicity stunt".

 

'Wild West'

The SEC regulates financial markets in the US and has enforcement powers to
launch civil actions against companies it believes has breached laws.

 

Through its complaint, filed in the US District Court for the Southern
District of New York, it is seeking to hit both companies with civil
penalties and make them repay "ill-gotten gains".

 

Earlier this week, Mr Gensler described crypto as the "Wild West".

 

These latest charges come as US officials crack down on the sector after the
uproar caused by the bankruptcy of FTX and Alameda Research.

 

Their founder, Sam Bankman-Fried, is accused of fraud after diverting funds
deposited by millions of customers on his FTX platform, and transferring
them without authorisation to Alameda, a hedge fund.

 

Mr Bankman-Fried denies the charges.-bbc

 

 

 

Adidas loses stripes row trademark battle with luxury designer Thom Browne

Adidas has lost a court case to try to stop a fashion designer from using a
four-stripe design.

 

The sportswear giant argued that luxury brand Thom Browne Inc's four stripes
were too similar to its three stripes.

 

Browne argued that shoppers were unlikely to confuse the two brands as -
among other reasons - his had a different number of stripes.

 

Adidas had planned to ask for more than $7.8m (£6.4m) in damages - but a
jury in New York sided with Browne.

 

Browne's designs often feature four horizontal, parallel stripes, encircling
the arm of a garment or - as frequently seen on the creator himself - a
sock.

 

Adidas' designs often see three stripes.

 

Browne's legal team portrayed him as the underdog taking on a huge
corporation, and argued the two brands served different customers.

 

Sportswear does not dominate Thom Browne Inc's creations and its output is
aimed at wealthy customers - for example, a pair of women's compression
leggings cost £680, while a polo shirt goes for £270.

 

Browne's lawyers also argued that stripes are a common design.

 

While Adidas launched legal action in 2021, the battle between the two
companies dates back more than 15 years.

 

In 2007, Adidas complained that Thom Browne was using a three-stripe design
on jackets. Browne agreed to stop using it and added a fourth stripe.

 

Since then Thom Browne Inc has expanded rapidly and is now sold in more than
300 locations worldwide, and in recent years has been creating more
athletics wear.

 

The brand has a diverse fan base. It designed rapper Cardi B's outfit for
the 2019 Met Gala, while former professional footballer and Bournemouth
manager Scott Parker sported one of its cardigans and a blazer to matches.

 

A spokesperson for Adidas said the company was disappointed but will
"continue to vigilantly enforce our intellectual property, including filing
any appropriate appeals".

 

A spokesperson for Thom Browne Inc said the company was pleased with the
outcome. Speaking to the Associated Press, the designer said he hoped the
case would inspire others whose work is challenged by larger companies.

 

"It was important to fight and tell my story," he said.

 

Documents used in the case showed that Adidas has launched more than 90
court battles and signed more than 200 settlement agreements since 2008
related to its trademark.-bbc

 

 

 

 

Does easing US inflation point the way for the world?

The US helped spark a global surge in the cost of living. Now that the
country's price inflation shows signs of easing, does it point the way for
the rest of the world?

 

The US was the first major economy where inflation took root, as a wave of
pandemic relief money from the government set off a boom in activity and
spending.

 

The price increases soon spread overseas, as strong demand from American
buyers pushed up the cost of oil and other essentials, global shipping firms
raised fees, and companies faced with shortages hiked prices.

 

Then, when the US central bank started raising interest rates to fight the
problem, it triggered a rush of money into the country, sending the dollar
to its strongest level in two decades - and raising costs in other countries
even more.

 

The US was hardly the only force behind the sudden rise in the cost of
living - the war in Ukraine also played a massive role, knocking out food
supplies and disrupting energy markets, especially in Europe.

 

Still, analysts say that if America's inflation problem is improving, that
is good news for the rest of the world, especially if it means the central
bank can ease up on its fight, allowing exchange rates to stabilise.

 

"To the extent that US inflation slows, that's going to be helpful for the
inflation situation in the rest of the world," says Maurice Obstfeld, a
professor of economics at the University of California, Berkeley and a
senior fellow at the Peterson Institute for International Economics.

 

But, he cautions, so far the price easing remains modest: "We don't want to
get ahead of ourselves."

 

Easing prices for energy and goods

The latest report from the US showed annual inflation, the pace at which
prices rise, was 6.5% in December. That was the smallest increase in more
than a year, marking the sixth month in a row of the rate falling.

 

Line chart showing US inflation at 6.5% in December 2022

That has been driven by falling costs for used cars, appliances and other
goods that were in hot demand - especially in the US - during the pandemic.

 

It has also reflected global price easing, as oil markets recover from the
shock of the Ukraine war, and investors bet that energy demand will fall, as
economies slow due to the inflation fight.

 

Analysts expect even more items to benefit from lower prices in coming
months, as the US economy slows and demand falls due to higher borrowing
costs.

 

Dollar effect

The US central bank yanked its key interest rate to the highest level in 15
years in 2022, moves followed by many countries around the world.

 

By increasing borrowing costs, the bank was trying to discourage activity
like business expansions and spending on homes and cars, and rein in the
pressures pushing up prices.

 

But last month, it said it would stop raising rates so aggressively, as
officials try to avoid an unnecessarily severe economic slowdown and gamble
that much of their work is done.

 

For the rest of the world, which has been dealing with the historic surge in
the value of the dollar sparked by the bank's moves, analysts say the policy
shift should mean relief.

 

"We saw this really dramatic appreciation of the dollar when the US was
really moving most forcefully against inflation earlier in 2022," says
Kathryn Dominguez, a professor of economics and public policy at the
University of Michigan, who notes that many companies around the world
borrow and trade goods in the currency, which soared 18% in the first nine
months of 2022 before starting to retreat.

 

"As exchange rates stabilise, that kind of moving of inflation from one
country to another is likely to abate."

 

A less aggressive Federal Reserve may also ease other kinds of financial
strain, by making it easier for countries in the developing world to attract
investment, says Shang-Jin Wei, a professor of economics at Columbia
Business School.

 

"When the US slows down its interest rate increases, it's very good news for
many countries around the world because higher US interest rates tend to
attract capital away from Latin America, Africa, Asia," he says.

 

"Countries like Argentina, Indonesia, Sri Lanka - they can breathe a sigh of
relief."

 

Risks in 2023

Although the Fed has said it will slow down its rate rises, the path ahead
remains uncertain.

 

The bank has forecast that inflation in the US will fall to roughly 3% by
the end of 2023 - but that's an outlook that "seems quite optimistic",
according to Prof Dominguez.

 

A man pushes his cart as he walks past Bharat Petroleum's storage tankers in
Mumbai on December 8, 2022.

 

For now, the jobs market in the US remains strong, and workers are pushing
for higher wages, which could lead to higher prices down the road.

 

China's recent decision to loosen its Covid-19 policies may also add demand
pressures to the global economy.

 

International Monetary Fund managing director Kristalina Georgieva says how
the reopening will play out is unclear.

 

"We know that would be a couple of tough months for China. How long would
that be, and how deeply it would impact the Chinese economy and through it,
Asia and the rest of the world, is still to be seen," she told the BBC's
Talking Business programme.

 

If the Fed is forced to take a tougher stance than expected, that could
affect exchange rates - and borrowing costs in other countries, as other
central banks feel pressure to follow suit.

 

Meanwhile Prof Obstfeld warns that relief from lower inflation in the US may
prove a "double-edged sword", since it is likely to reflect a recession in
the world's largest economy.

 

"That of course is going to be negative for employment and output growth
throughout the world," he says.

 

Ms Georgieva says she thinks the US will avoid a recession, "carried forward
by the confidence of US consumers and the savings they accumulated during
the Covid lockdowns".

 

Hopefully, the fact that countries are united in their fight against
inflation will make it more successful, and less economically damaging, than
people expect, Prof Dominguez says.

 

"The hope is if all countries are moving in the same direction, they will
not need to be as aggressive, which might then also lead to less economic
slowdown across the world," she says.-bbc

 

 

 

 

Middlesbrough vinyl plant to double capacity

A record-pressing plant on Teesside is to double production after a
successful first year in business.

 

Press On Vinyl opened in Middlesbrough in early-2022 with the aim of
producing 50,000 records a month.

 

Co-founder David Todd said the continued resurgence of vinyl records was due
to factors including collectability for fans and profit margins for labels.

 

The firm has 28 full-time employees with plans to add to that number.

 

Mr Todd told BBC Radio Tees the company's first year had been "lots of fun,
lots of hard work" with the popularity of vinyl "bouncing back big time".

 

"Streaming is such an important part of how people consume music these days
- it's fantastic, you've got every song you could want at your finger tips -
but people like collecting things and having something tangible in their
hands.

 

"They like flicking through their collection, picking a record, looking at
the sleeve and listening to it from beginning to end in the order planned by
the artist.

 

"From the artist and label point of view, it's a really good way to generate
revenue [compared to streaming]. That's a key to why it's come back,
especially for grassroots artists and smaller indie labels."

 

The plant has installed a further two machines as it looks to ramp up
production in the coming months.

 

Mr Todd added: "We've really learned the process this last year.

 

"The quality is on par with anyone else and we'll be employing more pressing
operators and packing staff. These are skilled jobs and it's great for the
area."-bbc

 

 

 

 

South Africa: Energy Crisis Puts Water, Food Security at Greater Risk - 

Cape Town — Load Shedding Putting Food Security at Greater Risk, Farmers
Warn

 

The Transvaal Agricultural Union has called on government to exempt farmers
from load shedding as recent intense power cuts have put food security at
risk, IOL reports. Producers of temperature regulated products said that
shelf life cannot be guaranteed. Irrigation has also been affected due to
lower diesel supplies, ending production for some potato farmers.

 

Hout Bay Reopened Following Temporary Closure Due to Sewage Spill

 

The City of Cape Town as elected to reopen Hout Bay Beach after water
quality testing revealed e.coli levels to be within the minimum requirement,
Eyewitness News reports.

A sewage spill caused by faulty sewer pumps affected by load shedding
prompted the precautionary measure to close the beach. An investigation also
found that reticulation pipes were blocked by by foreign objects such as
carpets, tin, and animal carcasses.

 

Water Supply Limitations Loom Due to Load Shedding, City of Cape Town Warns

 

Prolonged power cuts have prompted the City of Cape Town to call on
residents to restrict their water usage to prevent supply limitations in
high-lying, mountainous areas, News24 writes. According to acting mayoral
committee member for Water and Sanitation Siseko Mbandezi, extended Stage 6
power cuts have affected reservoirs which cannot fill up fast, as well as
water treatment plants.

 

 

 

 

Nigeria Air - Parties Hope On the Court, As Battle Rages

There seems to be no hope in sight for the proposed national carrier -
Nigeria Air, by the current administration despite the availability of
start-up investment funds of over $250 million.

 

This is coming against the backdrop of the court proceedings resuming today
(January 16) in Lagos where the Airline Operators of Nigeria (AON) is
challenging the airline's establishment, citing anti-competitive reasons.

 

Nigeria Air has a start-up budget of $250 million with the Federal
Government expected to contribute only $12.5 million in line with its 5
percent share in the proposed new national carrier.

 

It would be recalled that the current administration led by President
Muhammadu Buhari had in 2015 promised to float a new national carrier to
replace the defunct Nigeria Airways, which was grounded in 2004 over
liquidity crisis.

 

The Minister of Aviation, Hadi Sirika, had proposed the commencement of the
national carrier last December, stressing that no rational court in the
country would stop the floating of the national carrier.

 

Following the development, the Nigerian Federal High Court in Lagos on
November 24, 2022, ordered all parties to maintain the status quo pending
the case's determination after it had already granted the AON an interim
injunction preventing the government from selling shares in Nigeria Air to
Ethiopian Airlines.

 

In response to the judgement, Sirika and the Attorney General of the
Federation, Abubakar Malami, filed a Motion of Notice with backing
affidavits praying the Federal High Court in Lagos to transfer the suit
filed against them on the suspended national carrier to the Federal High
Court in Abuja citing various reasons.

 

But an authoritative source from the AON told Vanguard Aviation World that
they are set to file a counter affidavit challenging the motion to transfer
the case out of Lagos.

 

According to a motion filed January 13, 2023, with suit no:
FHC/L/CS/2159/22/283, it prayed the court for an Order transferring the suit
to the Federal Capital Territory, Abuja judicial division for determination,
being the judicial division where all the defendants reside and carry on
substantial part of their business.

 

In an affidavit in support of the motion on notice, Counsel to the 1st, 3rd
and 4th defendants, Des-Bordes Felicia, stated: "After carefully studying
the originating process and other processes filed by the plaintiffs, the
cause of action alleged by the plaintiffs occurred in the Federal Capital
Territory outside the judicial division where this suit is instituted.

 

"That the 1st, 3rd and 4th defendants who are not residents within the
judicial division of this honourable court will be subjected to serious
hardship in the event this suit proceeds to hearing and prosecuted within
the judicial division of this honourable court wherein this suit is
commenced.

 

"The engagement of counsel to handle the instant case in the judicial
division of this honourable court which is outside all the defendants' place
of residence will attract huge amount of expenses on the part of the
Defendants and that may likely affect the Defendants' proficiencies to
properly prosecute the suit to a logical and expeditious conclusion, and by
extension, affects the course of fair hearing in the course of the trial.

 

"As a matter of facts, the Plaintiffs know that the Defendants reside in the
Federal Capital Territory. Abuja and equally carry on substantial part of
their businesses which is outside the judicial division of this Honourable
Court but still went ahead to commence this suit herein."

 

Domestic airlines to file counter affidavit challenging motion

 

Meanwhile, the AON has kicked against the transfer of the case from Lagos to
the Federal High Court in Abuja.

 

An authoritative source from the AON stated that the body seeks to challenge
the motion.

 

He noted that the airline body and other concerned parties will oppose the
planned transfer of the case to Abuja from Lagos.

 

He said: "A transfer may equally affect fair hearing and may lead to the
manipulation of the case.

 

"Definitely, we will oppose the transfer of the case to Abuja. All the
parties involved in this case are based in Lagos and AON's office is also in
Lagos."

 

However, the Nigeria Air has applied for AON membership to align with the
aviation sector.

 

Vanguard Aviation World gathered that the carrier also faces potential
political upheaval depending on who wins the general elections on February
25, 2023. President Buhari is ineligible to run, being term-limited.

 

-Vanguard.

 

 

 

Nigeria: Int'l Borders - Adeola Decries Restriction of Fuel Stations to 20km

Chairman, Senate Committee on Finance, Senator Solomon Adeola, weekend,
decried the untold hardship and economic loss occasioned by the Federal
Government's policy of banning fuel stations' operations 20 kilometres to
the international borders of Nigeria.

 

The Senator, who rounded up his three days ward to ward campaign tour of
Ipokia Local Government Area, with separate meetings with all the Ipokia
Traditional Council and stakeholders, lamented that the policy, conceived to
tackle the menace of smuggling of petroleum products, has negatively
impacted the economic fortunes of the people at borders areas.

 

Adeola, who is All Progressives Congress, APC, candidate for Ogun West
Senatorial District, said: "The policy, as well as the closure of borders,
was intended to protect our national economy from the negative effects of
cross border smuggling.

 

However, it has led to untold suffering for border communities and with
years of implementation of this policy and the incipient removal of fuel
subsidies, it is time to consider the plight of the long-suffering border
communities and review these policies. As it is the price of petrol now
ranges from N250 to N350 making the business of its smuggling unattractive."

 

The lawmaker promised to liaise with the National Security Adviser to the
President and other relevant authorities on the need for a review of the 20-
kilometer distance for filling stations operations adding that at the very
least the distance should be reduced to 10 or 5-kilometer to the
international borders across the nation.

 

He promised to work towards a constitutional amendment to give
constitutional roles to traditional rulers as they are closest to the people
and should be in a position to directly address issues of development and
security facing the nation if given firm backing adding that the incessant
killing of the people of border areas by men of Nigeria Customs Service
would be a thing of the past once he is elected as he would influence better
operational and technological procedures to combat smuggling and prevent
loss of innocent lives.

 

-Vanguard.

 

 

 

Nigeria: New Naira Notes and CBN's Policy Snafu

PREMIUM TIMES believes that no one has worked harder to debase the Central
Bank of Nigeria than its current governor.

 

Controversy dogged the decision by the Central Bank of Nigeria (CBN) to
redesign the nation's banknotes from the day in October last year when the
bank's governor announced it. There were questions around the propriety of
the redesign before serious conversations had been had about currency
reform. With the N200 and N500 notes worth less than US$1, did it not make
sense to put them out as coins? Given how rapidly these currencies move
around the economy, they were likelier, as coins, to bear the ensuing wear
and tear better than as notes. The question of the populace's supposed
unwillingness to hold coins raised a further reform challenge.

 

By lending nearly US$50 billion to the Federal Government without holding
collateral of any sort, the Central Bank was not only caught out in an
illegality, it had drawn a bold line under the question of how fit for
purpose it still is. However, reconciling the Bank's price stability mandate
with conduct that so clearly helped push domestic prices up, was but one of
several outstanding matters. The economics of a banknote swap ahead of a
general election was always dodgy. By constricting demand, the swap was
always going to hurt domestic output growth during and in the months
preceding it. And that was before you added the challenges faced by the man
on the street in completing online transactions. Even more questionable was
the economics of deploying currency in circulation as an anti-inflation
tool.

 

With a little over a fortnight to the deadline for swapping old banknotes
with the new ones, the economy struggles: the new banknotes remain a
collector's item; and banks' automated teller machines (ATMs) continue to
dispense the old notes. The CBN's contortions have been unhelpful. It
reversed itself on the amount of cash that banks' customers may now withdraw
across the counter. Having instructed banks to provide the new notes through
ATMs from 9 January and only in the N200 denomination, last week it ordered
them to do so immediately, and across banknotes. Yet, it takes the original
equipment manufacturers weeks to reconfigure the ATMs to dispense these new
notes.

 

That the Central Bank is not aware of this technical hurdle would be a
surprise. That it keeps issuing these instructions to banks to make the new
notes available, even when it is unable to meet the banks' needs, borders on
the irresponsible. Yet, the policy was fated to be so. The Nigerian Security
Printing and Minting Plc. was already struggling with the task of replacing
defaced and/or mutilated currency. There was no way it was going to produce
N3 trillion worth of banknotes in a year. That the CBN sought to optimise
this constraint by casting it in terms of unorthodox monetary policy
measures designed to fight inflation is instructive, and that it persuaded
the president, even more so.

 

How would this impact our cash-based local businesses and the markets in
which they operate? Without moving the 31 January deadline for the note
swap, it is a fair bet that the domestic transaction system will collapse.
As doubt swells over the naira's usefulness as a store of value, unit of
account, and means of exchange, the use of the CFA Franc will spread inwards
from border towns - a process that will be expedited by the CFA Franc's
improved exchange rate vis-à-vis the naira. In inner cities, dollar cash
transactions will spread.

 

Extending the sunset date for the banknote swap, attractive though it might
seem at first blush, will not do. At least without increasing the Nigerian
Security Printing and Minting Plc.'s capacity to produce banknotes. Neither
will an unwieldy exit that sees both banknotes co-existing for an undefined
period, during which the CBN would try to get a proper handle on this snafu.
A far better solution might be to acknowledge the mess that has been
created, withdraw the new notes, and fix the root incompetence that this is
a pointer to.

 

In the end, currencies are pieces of paper. Markets use them only because
they trust in the issuing authority. PREMIUM TIMES believes that no one has
worked harder to debase the Central Bank of Nigeria than its current
governor. The problems with the naira, whether in relation to the dollar, in
relation to domestic goods, or simply as banknotes and coins, are but
symptoms of a much deeper malaise.

 

-Premium Times.

 

 

 

Nigeria: How Govt Spent $14.37bn to Service World Bank, Other Debts in 8
Years

Amid fears that debt services and payments is constituting a major threat to
Nigeria's economy, it has emerged that the federal government spent a
whooping $14.37billion in eight years under President Muhmmadu Buhari
administration to settle International Monetary Fund (IMF), among other
foreign debt obligations.

 

The latest "international payment" data released by the Central Bank of
Nigeria (CBN) showed that from 2015 to 2022, the amount paid on foreign
debts have continued to increase with 2022 hitting second highest in the
period under review.

 

The debt services and payments, it was learnt, were made on behalf of the
federal government alone excluding 36 states and the Federal Capital
Territory (FCT).

 

 

Extract from the data revealed that the CBN debt services in 2022 increased
to $2.49billion, representing an increase of 17.17per cent from $2.13
billion in 2021.

 

The 2022 month-on-month breakdown showed that the CBN in January spent
$101.3 million to service debts; it increased by 219.71 per cent to $213.3
million in February; and increased further to $345.36 million in March.

 

In April 2022, the CBN disclosed that $82.99 million was spent on debt
service; it moved to $178.11 million in May, and closed June at
$336.85million in June.

 

In July, the amount used to services debt hits highest figure at
$426.18million, the highest and in August, it dropped to $51.15million.

 

For September and October the figures reported by the CBN were $112.5
million and $262.69million, respectively.

 

 

However, between November and December of 2022, the CBN revealed that
$225.4million and $45.64million was spent in debt services and payments
respectively.

 

The data revealed that 2021 has the highest debt services and payments, a
whopping sum of $5.77billion and this was year the federal government
borrowed N7.3trillion to bridge its budget deficit.

 

Specifically, the federal government's actual expenditure of N11.69 trillion
vastly exceeded its 2021 generated revenues of N4.39 trillion.

 

The government has been running a fiscal deficit for at least 11 years;
however, the 2021 deficit is simply remarkable and is 22 per cent higher
than the N5.98 trillion deficit recorded in 2020.

 

The data further revealed the CBN withdraw $1.34 billion in 2019 for debt
servicing and payment and $1.47billion in 2018.

 

THISDAY gathered that between 2015 and 2017, the CBN spent a sum of
$1.17billion on debt services and payments with an average $444.77million
spent in 2017 alone.

 

 

As Nigeria's debt profile continued to snowball and its attendant cost
worrisome, analysts have stressed that debt is at the highest level and is
worrisome at 83 per cent debt service-to-revenue ratio.

 

The Debt Management Office (DMO) had reported that if other sovereign debts,
including the Ways and Means Finances, are fully captured, the debt stock
could jump to N77 trillion.

 

The Director-General of the Debt Management Office (DMO), Ms Patience Oniha
recently in Lagos argued that debt service to revenue was extremely high, an
indication that urgent steps needed to be taken to boost nation's revenue
and enhance public debt sustainability.

 

According to her, "Nigeria's public debt stock has grown consistently over
the past decades and even faster in recent years. Consequently, debt service
has continued to grow. Nigeria's low revenue base compounded by dependence
on crude oil resulted in budget deficits over the past decades. Efforts at
increasing non-oil revenue are yielding positive results.

 

"Dependence on borrowing and low revenue base are now threatening debt
sustainability. With a low debt to GDP ratio, Nigeria's debt service to
revenue ratio would have been low if revenue was strong," Oniha said.

 

She added that most countries around the world have placed more emphasis on
taxation as a principal source of funding for the government while reverse
is the case in Nigeria.

 

Speaking at the last Monetary Policy Meeting (MPC), the governor of CBN, Mr.
Godwin Emefiele in his personal statement said, the domestic shocks
originate from the persisting insecurity inhibiting economic agents; rising
cost of debt and debt servicing; deteriorating fiscal balances; increased
spending as the 2023 general elections approach; and continued uptrend in
inflationary pressure.

 

On his part, the Director, Centre for the Promotion of Private Enterprise
(CPPE), Dr Muda Yusuf explained that the capacity to service the current
stock of debt raises serious sustainability concerns.

 

According to him, "For instance, the debt service provision in the 2023
budget was a whooping N6.3 trillion, which includes the N1.2 trillion
interest payment on Ways and Means financing by CBN. The debt service is
also 60 per cent of projected revenue 29per cent of projected total
expenditure.

 

"Meanwhile, the actual revenue has historically been less than budgeted
revenue. This implies that the debt service to actual revenue ratio would be
much higher by the end of the fiscal year. The debt situation does not
reflect a healthy fiscal position and should be a cause for concern. With
the weak revenue performance and the growing recurrent expenditure, the
capacity to fund capital projects has become severely constrained.

 

"The opportunity costs of high debt service for the economy and citizens are
very high as the economy is denied desired funding for critical social and
economic infrastructure projects which are needed to build a globally
competitive economy and advance the welfare of citizens. There is also the
crowding effect of the private sector in the domestic credit market. The
government plans to borrow N7 trillion from domestic financial markets in
2023 to fund its fiscal deficit.

 

There is also the exchange rate risk inherent in the exposure to mounting
foreign debt which we need to worry about. As the currency depreciates, the
burden of servicing foreign debts would intensify, especially when
productivity in the economy remains low. Government debt management strategy
has been recently reviewed to reduce the foreign component of the debt stock
and also further reduce exposure to commercial debts. It was a move in the
right direction. Commercial debts are the costliest components of external
debt, and the Euro bond is one of such debts. The less commercial debts we
incur, the better for debt sustainability. Concessionary debts are generally
much better.

 

"These are debts from multilateral institutions such as the African
Development Bank, the World Bank, IMF, and Bilateral debts. Their interests'
rates are extremely low, and their tenure are quite long. Most often, these
concessionary debts are specific to projects, which reduces the risk of
inappropriate public expenditure. This Fiscal Responsibility Act underscores
this position. All these underline the imperative of reforms to reduce
recurrent expenditure, especially the cost of governance. It is critical as
well to ensure right policy choices to attract equity domestic and foreign
private sector capital for economic and social infrastructure financing."

 

He noted that reducing the burden of debt and the risk of a debt trap also
demands appropriate polices to incentivize private investments.

 

He added, "Investment growth would boost economic growth, enhance the growth
of revenue, and reduce the prospects of fiscal deficit and consequent
borrowing. Creating an enabling environment for private investment is
therefore very critical to reducing the burden of public debt.

 

"Economic reforms are imperative to ease the fiscal burden of government in
the provision of infrastructure. Bankable infrastructure projects should be
identified for private sector investment. but this should come with the
right incentives, especially around the minimization of risk exposure by the
private sector.

 

"Quality of government spending and right expenditure priorities are crucial
for the attainment of fiscal sustainability by the government. There is need
to address corruption risks in government projects and general government
expenditure as well."

 

Analysts at Afrinvest in a latest report said, "Equally worrisome, the
debt-service-to-revenue ratio, a measure of liquidity remains
disproportionately high at 83 per cent as of Q3:2022. Sadly, economic
sabotage has robbed Nigeria of the windfall gains from the oil price rally
in 2022. Based on our estimate, the debt service-to-revenue ratio could
touch 91.8per cent by year-end."

 

-This Day.

 

 

 

Rwanda's Coffee Exports to UAE Set to Grow

Rwanda's coffee exports to the United Arab Emirates are expected to grow as
the country partners with Dubuy, a B2B e-commerce platform by DP World, to
bring high-quality Rwandan coffee closer to consumers in the UAE and the
Gulf region.

 

The prospects of coffee exports were echoed this week at the Coffee Cupping
and Testing event in Dubai, organised to celebrate and promote Rwanda
coffee, in the margins of the World of Coffee Exhibition that took place in
Dubai from January 11 to 13, this year.

 

Rwanda's Ambassador to the UAE, Emmanuel Hategeka, joined leaders from Dubuy
and Dubai Multi Commodities Centre as well Rwandan coffee exporters,
UAE-based importers and coffee lovers at the event.

 

The ambassador said that Rwanda coffee was the highlight of Expo2020 where
the pavilion served all guests a free cup of coffee every day and hosted
over 1.2 million visitors in six months. He recapped the UAE market
potential as well as the impact of the cash crop on people's livelihood.

 

 

"First, coffee is one of Rwanda's leading traditional agricultural exports
with annual revenues of over $75 million supporting more than 355,000
smallholder families for their daily livelihoods.

 

"Second, UAE is a major trade hub and Rwanda's leading trade partner. As a
major coffee consumer society, coffee buyers from UAE and GCC cannot miss
the opportunity to source single-origin high-quality Rwandan coffee. This
unique event brings the exporters and buyers together to sample the best of
Rwanda's coffee and conclude supply deals," he said, adding that trade
logistics have been put in place.

 

Dubuy, working with DP World in Kigali as well as RwandAir which has already
started direct cargo flights to Dubai are facilitators of two-way trade
flows between Rwanda and UAE, he said.

 

Mahmood Al Bastaki, Chief Operating Officer of Digital Trade Solutions, DP
World and Saeed Al Suwaidi, Director of Agri Commodities at Dubai Multi
Commodities Centre (DMCC), commended the Rwandan coffee while reiterating
their commitment to promoting Rwandan coffee on the global market.

 

On December 16, 2020, Rwanda Development Board signed an MoU with DP World
to launch Dubuy.com to link B2B and end-to-end destinations from Kigali to
UAE. The platform was first launched in Rwanda in early March 2021.

 

As of January 2023, in around 100 registered Rwandan sellers on Dubuy, there
are about 20 top Rwandan Coffee sellers.

 

Coffee is grown in most provinces of Rwanda at an altitude of less than 1900
m. It is uniquely known for its rich, aromatic, and natural flavourful
profiles.

 

It is sweet, strong-bodied, and rich in acidity, giving Rwandan coffee a
special taste and aroma.

 

Rwandan coffee is exported under the national brand of A Second Sunrise and
has won global awards and different accolades.

 

In the fiscal year 2021-2022 alone, Rwanda's coffee export volumes amounted
to over 15 million kilogrammes, and generated over $75.5 million.

 

That is an increase of about 23 per cent in coffee revenues compared to the
previous year.

 

-New Times.

 

 

 

 

 

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2023

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

National Unity Day

 

December 22

 


 

Christmas Day

 

December 25

 


 

Boxing Day

 

December 26

 


Companies under Cautionary

 

 

 


CBZH

Meikles

Fidelity

 


TSL

FMHL

Turnall

 


GBH

ZBFH

GetBucks

 


Zeco

Lafarge

Zimre

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


(c) 2023 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
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