Archive | October 2014

Nigeria: Smile launches 4G service in Abuja

Smile-communicationsSmile Communications, one of Nigeria’s newest internet service providers has launched its 4G LTE broadband internet service in Abuja. This came barely one year after the company came into the market in 2013 at Ibadan and a few months later in Lagos.

The company said company said the Abuja roll-out is coming after more than three years of extensive testing and development.

Tom Allen, Smile Group’s Chief Operating Officer , stated that: “Abuja is very strategic in the company’s growth, and Smile has taken its time to ensure the service is at its best in the capital city. Our vision of becoming the broadband internet provider of choice in Nigeria has guided us in everything from selecting our people and partners to developing relevant products and services. We are confident and excited, and we are ready to share the promise of digital citizenship with Abuja residents and millions of Nigerians.”

According to Allen, Smile customers are already experiencing global standard speed and quality; however, with the implementation of 4G technology, these customers can experience speeds over 20Mbps.

Allen noted that key driver for Smile’s operation is to create a memorable experience for the customers.

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Nigeria’s Jonathan to run for president again in February

Nigerian president Goodluck Ebele Jonathan addresses the 69th United Nations General Assembly at the U.N. headquarters in New York September 24, 2014.       REUTERS/Lucas Jackson

Nigerian president Goodluck Ebele Jonathan addresses the 69th United Nations General Assembly at the U.N. headquarters in New York September 24, 2014.

CREDIT: REUTERS/LUCAS JACKSON

(Reuters) – Nigerian President Goodluck Jonathan’s office confirmed on Wednesday that he will seek a second term in office in elections set for February.

Jonathan, who had been widely expected to run again, will collect a nomination form on Thursday to be the ruling party candidate in the presidential vote, his spokesman said.

“President Jonathan thanks all Nigerians, members of the PDP, friends, associates who in sincere appreciation of the achievements of the administration in the last four years have been urging him to seek a second term in office,” presidential spokesman Reuben Abati said in a statement emailed to press.

The announcement will be seen as a mere formality by the Nigerian political class since Jonathan had already been adopted as sole candidate by the board of the ruling People’s Democratic Party (PDP).

Jonathan’s government has been beset by criticism over its inability to end an insurgency by Boko Haram Islamists, for his response to their abduction of more than 200 schoolgirls still being held six months later, and for a raft of oil corruption scandals.

However, the president still appears to be in a strong position, partly because there is no clear alternative, but also because Nigerian elections tend to be fought more on vast patronage than on policy, which gives an encumbent in this oil-rich state an advantage.

The battle lines between Jonathan and whoever wins the nomination for the opposition All Progressives Congress (APC) are increasingly being drawn, with several defections both ways over the past year.

Nigeria’s lower house speaker and fourth most powerful person, Aminu Tambuwal, defected to the opposition coalition on Tuesday, boosting its bid to unseat Jonathan.

The top two contenders for the APC presidential ticket next year are former military ruler Muhammadu Buhari and recently defected vice president Atiku Abubakar. Both are Muslim northerners, while Jonathan is a Christian southerner, which will inevitably add an ethnic and sectarian dimension to the contest.

In 2011 Buhari’s defeat against Jonathan triggered three days of bloodshed that left 800 dead and 65,000 displaced.

The APC’s failure to agree on a leader has diminished its support among Nigeria’s elite and made it look weaker as the polls approach.

Several lawmakers defected to the APC last December as it gained momentum, but since then a number of powerful figures have swung back to the president’s camp.

(Reporting by Felix Onuah; Writing by Tim Cocks; Editing by Susan Fenton)

Nigerian economy creates over 1 million jobs

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, says the Nigerian economy created a total of 1.2 million jobs in 2013 and that about 91 percent of these jobs were created by the private sector. Speaking at a JPmorgan event in Washington, US on the sideline of the 2014 IMF/World Bank Group Annual Meetings, Emefiele said: “For the first half of 2014, the economy has created over 500, 000 jobs and “interestingly, almost 40 percent of employers cited “business expansion” as the reason for hiring new staff.”

He noted, however, that given that over one million persons enter the job market annually, there appears to be room for improvement.

According to Emefiele, the economy has remained resilient due to the fact that “the system has endured over 10 years of reforms. In the financial system, we have now had about a decade of sustained reforms to make us a better system”.

“The Reforms after the global financial crisis of 2007/2008 anchored on four pillars, namely: enhancing the quality of banks, establishing financial system stability, enabling a healthy financial sector evolution, and ensuring that the financial sector contributes to the real economy,” he said.

He also told his audience that the 2004 Bank Consolidation Programme was embarked upon to create more resilient banks, adoption of risk-based regulatory framework while the 2009 reforms after the global crisis was to enhance quality of banks, detoxicate the banking system and improve corporate governance.

How Libya and Nigeria could provide a floor for oil prices

German oil firm Wintershall Holding AG's production facilities in the Libyan desert

AFP/Getty ImagesGerman oil firm Wintershall Holding AG’s production facilities in the Libyan desert

Saudi Arabia has long been a swing producer of oil, ready to take action to maintain a floor for prices. However, with the Kingdom showing no signs of intervening in the near term, Libya and Nigeria have emerged as nations that could alleviate recent downward pressure on prices.

Both countries posted large output gains during the summer, amid a backdrop of softening demand and accelerating North American production.

Helima Croft, head of commodity strategy at RBC Capital Markets, pointed out that the unanticipated return of Libyan exports was the initial catalyst for the downward move in oil.

She also noted that Libya and Nigeria contributed nearly one million additional barrels per day to the market over the three-month period.

“In both cases, production has increased in an environment where the overall security situation has deteriorated, seemingly placing them at risk for a sudden reversal in export volumes that could help lessen the burden on the other big producers to turn off the spigots,” Ms. Croft said in a report.

Despite the remarkable recovery in Libyan exports, the security situation has significantly worsened since the summer as regional leaders warn that the country is at risk of becoming a failed state.

“For now, though, oil has been spared from the rising unrest,” the strategist said, noting that the elected government has managed to keep control of oil infrastructure and oil accounts at the central bank. “How long they can maintain this advantage, however, is very much in question.”

Nigeria’s oil surge was primarily attributed to a decline in crude theft and force majeures by companies operating in the volatile Niger Delta. However, Ms. Croft warned that the oil region will likely become more difficult to control as national elections set for February 2015 approach.

“The Nigerian military, underfunded and overextended by the virulent Boko Haram insurgency in the north, will be hard pressed to deal with any uptick in election related unrest and criminal activities in the oil region,” she said. “In our view, the recent gains in output could quickly become a casualty of Nigeria’s looming game of thrones.”

Africa’s GDP Is Bigger Than You Think

Africa's GDP Is Bigger Than You Think

Getty Images

On Sept. 30, Kenya announced the results of its “rebasing”—a recalculation of its gross domestic product to include previously unaccounted-for economic activity. Its GDP expanded 25.3 percent, to $55.2 billion, moving it up several rungs on the list of Africa’s largest economies, to 9th. The government adjusted its 2013 growth rate from 4.7 percent to 5.7 percent.

Kenya’s is the latest in a series of rebasings that have reinforced investors’ perception of the area’s growth potential. Even as Ebola ravages West Africa and civil war devastates the Democratic Republic of Congo, many of the other economies in the region remain dynamic: The International Monetary Fund predicts sub-Saharan growth will be 5.8 percent next year, up from an estimated 5.1 percent for 2014. Many of the area’s governments issue bonds that look like good bets based on that projected growth. “Africa’s the final frontier among emerging markets for high yield,” says Brett Rowley, emerging-markets sovereign analyst for TCW Group in Los Angeles.

The first big rebasing of 2014 took place on April 7, when Nigeria declared itself the largest economy in Africa, surpassing South Africa in GDP. According to Nigeria’s National Bureau of Statistics, the GDP numbers had been inaccurate for years, and the state finally addressed the problem. A recalculation by the statistics bureau, with help from the World Bank, the IMF, and the African Development Bank, showed the country’s statisticians were missing almost half of Nigeria’s economic activity.

The new figure, which took more than a year to calculate, increased the GDP total from $262.2 billion to $488 billion. It’s still not entirely accurate, because the calculations for the farm sector were based on older numbers—highlighting the difficulty of calculating GDP as well as the importance of the number. GDP is the world’s most watched economic statistic, and Nigeria’s triumph over South Africa made news around the globe. (South Africa regularly rebases its GDP, so an announcement that the country’s GDP is much larger than previously claimed is unlikely.)

Rebasings are “something a country might use to market itself, and it has political implications,” says Roy Adkins, Africa sovereign debt analyst for T. Rowe Price, the mutual fund group. Politics played a role in Nigeria’s recalculations. A national election is coming up in February, and incumbent President Goodluck Jonathan will be able to brag that on his watch the country usurped South Africa’s premier position.

Many poor and middle-income countries have had to work with shaky statistics for decades, according to the World Bank’s Bulletin Board on Statistical Capacity, which surveys the quality of statistics from different countries. According to the IMF, most African GDP figures are too low and need an update. Underestimating is chronic because calculating GDP in the most accurate way is expensive. It’s also impractical to conduct annual censuses of the population and all economic activities—in short, counting every person, good, and service that can be found. An affordable and faster option, which most countries choose, including the U.S., is to conduct several types of census—for population and various economic sectors—in a single year, and in the years between censuses use surveys, statistical samples from which to extrapolate an overall growth rate.

Nigeria’s old base year was 1990, and its new one is 2010. Nigeria in that time went from having no cell phones to having one of the largest user populations worldwide. Because there wasn’t a starting figure for the mobile telecom industry in the 1990 base from which growth was extrapolated, this part of its economy wasn’t counted until now. The country’s film industry is another example: What were just a few movies produced annually in 1993 have exploded into Nollywood, the world’s second-largest film industry by volume. Both mobile phone networks and films are now part of GDP. Nigeria’s case shows why recalculating GDP often is important. Donald Kaberuka, president of the African Development Bank, says all African nations should rebase their economies every five years to keep GDP figures as accurate as possible.

Yvette Babb, a fixed-income and currency strategist for Standard Bank Group(SBK:SJ) of South Africa, Africa’s largest lender by assets, expects four economic sectors to show the most growth in the rebased economies: services, telecommunications, wholesale and retail trade, and manufacturing. If a wave of rebasings does uncover more manufacturing, that would be important fodder for the “Africa rising” debate. Skeptics say sustainable economic growth in Africa requires more manufacturing and less reliance on exporting raw materials, the continent’s established source of revenue. In Nigeria, rebasing took manufacturing from a 1.94 percent share of GDP to 6.83 percent, according to the National Bureau of Statistics.

Countries that have rebased in recent years include Ghana and Namibia; up next are some of Kenya’s neighbors in East Africa such as Tanzania. Taken together, the new numbers are expected to show that Africa accounts for more of the world’s economic activity than previously thought. It formally comprises about 4.9 percent of global GDP, but its share is probably closer to 6 percent, says the African Development Bank’s Kaberuka.

A rebased GDP, even if imperfect, is at the very least evidence that a government wants to increase its transparency and attract investment. “This sends the right message. As a Eurobond investor, you want to accurately know the size of the economy,” says Aly-Khan Satchu, chief executive officer of Rich Management, an investment adviser in Nairobi. The value of sovereign Eurobonds issued by African countries is expected to beat last year’s record amount of $16.6 billion, according to Standard Bank. Carlyle Group’s (CG) first private equity fund to invest exclusively in sub-Saharan Africa aimed to raise $500 million this year. It blew past that target to close at $698 million.