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As tension continues in Ukraine, we analyse why the country remains economically torn between Russia and the EU.
Counting the Cost Last updated: 01 Mar 2014 09:38
|It was the bloodiest week in Ukraine’s post-Soviet history. The president fled, an opposition leader left jail after three years and, with the dust now settling, a clearer picture is emerging about the dire state of the country’s finances.Ukraine’s political crisis began with the economy; ousted president Viktor Yanukovich wanted to align with Russia, while his opposition was looking to Europe – which prompted what almost amounted to a bidding war.
On the Russian side, Moscow had earmarked $15bn to inject into the Ukrainian economy.
The European Union had offered just $800m and while Ukraine would get great access to EU goods and services, it would not actually be able to get its own products into the continent.
Things are now worse, as Ukraine says it needs $35bn over two years, and Standard & Poors says the country, the central bank and its state-owned oil companies have about $13bn worth of debt to repay. Although it has $18bn in reserves, that is not enough to run an economy.
On this week’s Counting the Cost, we look how Ukraine remains torn between Europe and Russia and which side offers the best deal. We speak to Dmirty Sologoub formerly an economist with the IMF, but now head of research Raiffesien Bank Aval in Ukraine.
Nigeria’s ‘missing money’
In Nigeria, President Goodluck Jonathan has suspended Lamido Sanusi, the governor of the central bank for “financial recklessness and misconduct”.
Sanusi had earlier exposed all sorts of corruption in Nigeria’s oil industry, alleging that $20bn had gone missing from oil sales.
Speaking exclusively to Al Jazeera’s Yvonne Ndege in Lagos, Sanusi said the money that disappeared in the last 19 months was supposed to be given to the central bank by the state oil company, Nigerian National Petroleum Corporation (NNPC).
His allegations mean losses in public money could run into the hundreds of billions of dollars. The ex-governor says he will not be surprised if he is jailed for speaking out.
Nigeria is one of the world’s largest oil producers. Oil accounts for more than 90 percent of state revenue, although as little as one percent of Nigerians are thought to benefit from the wealth.
Many people we spoke to in Abuja about Sanusi’s ouster told us they thought the missing money might be used to fund election campaigns. Nigerians go to the polls next year to vote in presidential elections. But Sanusi thinks the public money may have already been squandered.
Ndege also spoke to Ngozi Okonjo-Iweala, Nigeria’s finance minister.
Over-fishing in Indonesia
In Indonesia, over-fishing is depleting fish stocks. The government has introduced marine-protected areas, but for some fishermen that is not enough.
They are using increasingly aggressive means to put fish in their nets, and food on their tables. Many fishermen, who wish not be identified, admit they use explosives.
Despite using desperate measures they still cannot compete with the big boats catching all the fish. They also now have to travel a lot further to find tuna.
Millions of Indonesians are dependent on fish for their income and nutrition. The government has introduced measures to make sure fish populations will grow back, but this might be too little too late. With aggressive fishing techniques not being banned, traditional fishermen have only a slim chance to pass on their skills to the next generation.
Al Jazeera’s Step Vaessen reports from Benoa, Indonesia.
It seems the “dollar is a reserve currency for ever and ever” propaganda has not reached Africa, also known as Southern China as explained here two years ago, where moments ago the Central Bank of Nigeria issued the following surprise announcement:
- CENTRAL BANK OF NIGERIA TO SELL DOLLARS TO DIVERSIFY RESERVES
- NIGERIA CENTRAL BANK TO RAISE SHARE OF YUAN TO 7% FROM 2%
- NIGERIA CENTRAL BANK TO DIVERSIFY RESERVES INTO YUAN
- NIGERIA CENTRAL BANK CONSIDERING DIM SUM BOND: MOGHALU
But why would anyone buy Yuan when there are so many ever-more diluted dollars available? And now, let’s open it up for the most creative Nigerian email scam involving Chinese Yuan…
The oil production cartel, which is meeting in Vienna today, is set to keep its production target unchanged.
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- Oil supply The cartel’s challenge
- China car growth fuels Opec bullishness on crude demand
- Opec keeps production targets unchanged
With Brent crude, the global benchmark, hitting a two-month high of more than $113 per barrel, oil ministers from the group which spans Venezuela to Saudi Arabia have said they want to keep targeting production of 30m b/d.
In spite of the apparent consensus, this week’s meeting has seen aggressive jockeying for internal position within the cartel.
Speaking to Iranian journalists in Farsi minutes before ministers went into a closed-door meeting, Bijan Zangeneh, Iran’s oil minister, said: “Under any circumstances we will reach 4m b/d even if the price of oil falls to $20 per barrel.”
“We will not give up our rights on this issue,” Mr Zangeneh added, suggesting Opec would be able to accommodate rising Iranian production to keep prices high.
Opec pumps around a third of the world’s crude oil supplies, and as the only source of spare production capacity plays a key role in setting prices.
Brent has averaged close to $110 per barrel this year, easily above the group’s unofficial target, as production disruptions in Nigeria and Libya have offset rapidly growing US shale oil output.
Buoyed by an interim agreement on its nuclear programme ten days ago, Iran said it would raise production from around 2.8m b/d today to 4m b/d next year.
Iran’s president Hassan Rouhani is looking to pursue a foreign policy of moderation to revive deadlocked nuclear talks with the west after tough financial sanctions have brought the Islamic Republic’s economy to a standstill
Iraq, meanwhile, has also said it plans to increase production by 1m b/d next year to 4mb/d.
That would put pressure on prices, and push the cartel to respond by reining in production from other members, although both countries face significant challenges in meeting their ambitious targets: Iran faces months of tricky negotiations before sanctions could be lifted, and Iraq’s oil industry is labouring under security and infrastructure problems.
Saudi Arabia, the world’s largest oil exporter and de facto leader of the cartel, would face most pressure to cut back on production to accommodate Iran and Iraq, as the kingdom has been producing at near record levels of more than 10mb/d as production from other Opec members has faltered.
But Saudi officials have suggested Iranian and Iraqi production growth is unlikely to materialise quickly, and ahead of the meeting Ali al-Naimi, the Saudi oil minister, brushed off Iran’s aggressive stance on price:
“You are preoccupied by Iran and that is not a good preoccupation,” he said. “You know what is going to happen if the price goes to $20? You know how many countries would be out of producing, including shale oil, including Canadian sands oil, including subsalt oil. All of that will be gone.
Brent was trading down 42 cents at $112.20 a barrel by mid-morning in London.
- Central Nigeria ethnic violence kills at least 48 (thehimalayantimes.com)
- Nigeria Responds to Upsurge in Boko Haram Violence (worldnewscurator.com)
- Activists seek comprehensive food security (news.in.msn.com)
- guardian tecnologia: How lack of food security is failing a starving world (guardian.co.uk)
- Nigeria joins Ghana as new member of G8 food security alliance (ghanabusinessnews.com)
- Could aquaculture solve Africa’s fishing crisis? (guardian.co.uk)
- Why World Vision? Providing the key to food security (worldvision.org)
- Nigeria president declares state of emergency (miamiherald.com)
- Nigerian president declares state of emergency in country’s northeast region (csmonitor.com)
- Nigeria president declares state of emergency (seattletimes.com)
- Nigeria president declares state of emergency (thenewstribune.com)
- Death Toll in Nigeria Unclear After Army Battles Boko Haram (atlantablackstar.com)
- Death toll in Nigeria shootout with Islamist militants reaches 25 (dailystar.com.lb)
- 25 Dead as Muslims wage jihad in Nigeria (atlasshrugs2000.typepad.com)
- Boko Haram and Nigeria: No good guys here (dailymaverick.co.za)
- Nigerian senator says 228 killed in gunfight with Islamists (firstpost.com)
- Why Nigeria Is the Deadliest Place to Be a Christian (blackchristiannews.com)
- ‘Dozens’ killed in Nigeria gun battles (news.smh.com.au)
- Death toll from Nigeria bus station attack at least 22 (dailystar.com.lb)