Saturday, December 26, 2015

Nigeria Set to Reduce Gasoline Prices, Scrap Subsidy Jan. 1.

Nigeria Set to Reduce Gasoline Prices, Scrap Subsidy Jan. 1

Updated on 
  • Petroleum minister says new pricing to fluctuate with market
  • Nigeria depends on fuel imports to meet domestic consumption
Nigeria will reduce gasoline costs and scrap a fuel subsidy under a pricing mechanism to come into effect from January, Petroleum Minister of State Emmanuel Kachikwu said.
Prices will fall to 85 naira ($0.44) per liter from 87 naira, Kachikwu, who is also the group managing director of state-owned Nigerian National Petroleum Corp., told reporters while on a visit to a refinery in the country’s southern oil hub of Port Harcourt on Friday, according to a statement sent by the petroleum ministry.
Nigeria, Africa’s biggest oil producer, relies on fuel imports to meet domestic needs since its refineries produce a fraction of their 445,000 barrels-per-day capacity after decades of poor maintenance, corruption and mismanagement. The refinery in Port Harcourt will begin production next week after repairs are completed, according to Kachikwu.
To keep the country supplied, the NNPC, as the state oil company is known, has relied on imports by other fuel retailers, who get refunded the difference between their costs and the fixed pump prices. It also has agreements with several offshore refiners to swap refined products for crude.
While tumbling oil prices have slashed Nigeria’s revenue and roiled its currency and stock market, it’s also provided an opportunity for the government to end the subsidies that cost as much as $7 billion a year. The finance ministry said last year that $60 per barrel was the break-even point at which there is no more need to subsidize fuel costs.
Widespread fraud and corruption and declining oil revenue have made it imperative for the government to cancel the subsidies, Kachikwu said. An attempt by the previous government to end them in 2011 led to a week of strikes and protests across the country, forcing their partial reinstatement.
President Muhammadu Buhari, who took office in May, had continued the subsidies which -at over 1 trillion naira - accounted for almost a quarter of the 2015 budget.

Bad, Bad News: Oil Prices To Drop To Between $5 And $15 In 2016 – IMF

Bad, Bad News: Oil Prices To Drop To Between $5 And $15 In 2016 – IMF

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Christine Lagarde, Managing Director, International Monetary Fund (IMF), Washington DC; World Economic Forum Foundation Board Member is seen during the Session 'The Global Economic Outlook' at the Annual Meeting 2013 of the World Economic Forum in Davos, Switzerland, January 26, 2013. | WEF/Moritz Hager
The days ahead may just be harder than envisaged as the International Monetary Fund (IMF), Thursday, said crude oil prices may slump to as low as $20 per barrel in 2016.
Following the release of the “IMF Executive Board Concludes 2015 Article IV Consultation with Iran” report, the body highlighted that the price of crude oil could drop between $5 and $15 in 2016. Following the release of the “IMF Executive Board Concludes 2015 Article IV Consultation with Iran” report, the body highlighted that the price of crude oil could drop between $5 and $15 in 2016.
According to IMF, the dwindling oil prices would not have overtly negative effect on Iran, whose gross domestic product (GDP) is expected to rise four to 5.5 percent by 2017.
“Prospects for 2016/17 are brighter, owing to the prospective lifting of economic sanctions. Higher oil production, lower costs for trade and financial transactions, and restored access to foreign assets, are expected to lift real GDP to about 4–5.5 percent next year,” IMF said.
The same cannot be said for Nigeria, whose 2016 budget is benchmarked at an oil price of $38 per barrel for the 2016 fiscal year.
With Nigeria expected to produce 2.2 million barrels of crude oil per day in 2016 and sell at $38 per barrel, the country expects to generate $83.6 million per day in 2016 – $30.514 billion in the year 2016.
Going by IMF’s predictions at $20, Nigeria would generate $44 million per day in 2016, amounting to $16.060 billion in the year.
This would mean that Nigeria would get at least 47.4 percent less revenue from oil than what is already projected, consequently adding more pressure to the nation’s need to go borrowing in 2016.
According to President Muhammadu Buhari, oil related revenues are expected to contribute N820 billion to the economy, while the budget deficit which stands at N2.22 trillion would be funded by foreign and domestic loans.
If the N820 billion expected from oil revenues is cut by 47.4 percent – the IMF projected decline in oil prices – the nation’s budgetary deficit would move N388.68 billion to N2.59 trillion.
As at November, Iran, with the world’s fourth largest oil reserves, had 36 million barrels of oil stored in offshore tankers for sale in 2016 – sure to drive oversupply.
This is against the Organisation of Petroleum Exporting Countries (OPEC) projections that the global crude oil prices at seven-year low will not continue to fall, as it could swing upwards soon.
The Secretary-General, OPEC, Abdullah al-Badri, made this disclosure at the first OPEC-India Energy dialogue in New Delhi.
It will be recalled that oil prices fell by about two-thirds since mid-2014, with Brent crude on Monday flirting with its lowest level since 2004 at just above $36 a barrel.
According to him, “I’ve been in the oil business all my life. I saw six cycles – I saw very high price, I saw low price, and this is one of them. This will not continue.”

The Unraveling of Jacob Zuma

The Unraveling of Jacob Zuma

Foreign Policy Magazine 
JOHANNESBURG — As Jacob Zuma retreats to his rural home in the green hills of KwaZulu-Natal for the holidays, a growing number of South Africans, including some of his own comrades in the ruling African National Congress (ANC), are wishing he would just stay there for good.
It has been an astonishing few weeks for the South African presidency. On Dec. 10, Zuma shocked the country and even his own cabinet by firing Nhlanhla Nene, a respected finance minister who had pushed back against gross overspending, appointing an unknown backbencher in his place. Days later, and clearly under pressure, Zuma reversed course and announced that Pravin Gordhan, who had previously served as finance minister in 2009-2014, would be returning to the post. But the damage was already done: The episode had sunk the rand, South Africa’s currency, to record lows, shaking investors’ faith in the economy — and the ANC’s faith in Zuma.
The populist Zuma has never been loved by urban, middle class — and in particular, white — South Africans, but for the first time since he took office in 2009 thousands of them took to the streets to showcase their discontent. In Johannesburg, Cape Town, and Pretoria, anti-Zuma demonstrators marched on Dec. 16 as part of a campaign dubbed #ZumaMustFall on social media (the name echoed earlier student-led protests over the rising cost of university tuition that were organized under the #FeesMustFall hashtag.)
“Thanks for your service, Mr. Zuma. Now please retire to Nkandla, our gift to you,” read one sign brandished by a protester in Johannesburg. The sign was doubly tongue-in-cheek: Nkandla is the site of the president’s palatial private residence, which recently received a controversial $16 million taxpayer-funded upgrade, complete with a swimming pool and cattle corral.
Potentially more significant than the protests is the growing dissent Zuma’s missteps have engendered within the party. A number of ANC veterans, including former Health Minister Barbara Hogan, have broken ranks to publicly criticize Zuma in recent weeks. Some of these party loyalists had been willing to look the other way on previous excesses, like the house in Nkandla, but the feeling, as Hogan put it, was that Zuma had “crossed a line” by firing Nene.
Nene had opposed excessive government spending, including on a $66 billion nuclear deal with Russia reportedly brokered by Zuma. He had also sought to rein in the ailing parastatal South African Airways, whose board of directors is chaired by Zuma’s close friend Dudu Myeni. (So close are Myeni and Zuma, in fact, that the president’s office has officially denied that the pair had “a romance and a child.”)
While Zuma has always had a reputation for nepotism, members of his own party increasingly view him as reckless, the kind of leader who would play musical chairs with a crucial government position without regard for the consequences. And South Africa can ill afford economic turmoil: GDP is expected to expand just 1.4 percent in 2015 and official unemployment stands at around 25 percent (the real number is closer to 35 percent when discouraged jobseekers, who have simply given up looking for work, are taken into account). Meanwhile, South African farmers are grappling with one of the worst draughts in years, and food prices are expected to rise next year as a result.
“It’s time he left us, it’s time he went to Nkandla,” Ben Turok, an ANC stalwart and veteran of the anti-apartheid struggle, told the local talk radio station Power FM on Dec. 15. “He has a nice house in Nkandla and we forgive him all the sins. Let him go settle down with his cattle, his kraal [corral], swimming pool and have a lekker [nice] retirement — we don’t need him in office anymore.”
Gordhan’s sudden re-appointment as finance minister came after an emergency meeting of the ANC’s top leadership during which the president reportedly came under pressure to reverse course. A statement issued later by the party claimed that Zuma’s about-face was “occasioned by public concern stressing the need for experience and market assurance on the person who will champion the finance and fiscal policy of the country.” (Zuma himself said he had been “listening to the people.”)
Not everyone sees it that way. Susan Booysen, an academic who has written extensively about the ANC, said that Zuma had been slapped down, with even his closest supporters realizing that he had overstepped. “I think this was a serious case of a president who was starting to act too presidential, as if he was a force in his own right, and forgetting that he really depends on the ANC for his support,” Booysen said.
Unlike the primary system used by American political parties, there is no open campaigning within the ANC. But a low-key battle to succeed Zuma is already underway, though his second and final term as president doesn’t end until 2019. Zuma, a polygamist with four current wives, has been promoting his ex-wife, Nkosazana Dlamini-Zuma, the current African Union chairwoman, as a successor. The two remain on good terms and have children together.
Support for Dlamini-Zuma is widely seen as an attempt to extend Zuma’s political influence and ensure protection from possible corruption charges after he leaves office. The refrain, heard within some corners of the party, that “South Africa is ready for a woman president,” is arguably less about having a woman in charge than it is about supporting Zuma and his preferred successor as president.
The other main contender to succeed Zuma is his deputy, Cyril Ramaphosa, a former union leader and business magnate who returned to politics in 2012. Ramaphosa has the backing of the powerful trade unions, whose members argue that as the deputy president of the ANC he should succeed Zuma as the leader of both party and country. The mess surrounding Zuma’s appointments to the Finance Ministry could be a boon for Ramaphosa, who in the past few weeks has been “elevated in the succession stakes,” according to Booysen. “I think he will want to position himself as the anti-Zuma candidate,” she said.
An anti-Zuma candidacy could prove to be a winning strategy. The president has grown increasingly unpopular even among supporters of the ANC, which was returned to power in last year’s general election with 62 percent of the vote. A recent survey by Afrobarometer, a research network involving African think tanks and academic institutes, found that Zuma’s public approval had dropped from 64 percent in 2011 to just 36 percent today. “A majority of citizens of all race groups disapprove of his performance in the past year,” the Afrobarometer report said.
But the problem is bigger than just Zuma. Zwelinzima Vavi, a former general secretary of Cosatu, the powerful trade union federation allied with the ANC, argues that “corrupt hyenas” close to the president within the party bear some of the blame. “People are fed up [and] the ANC members are fed up as well,” he said at a #ZumaMustFall rally in Johannesburg on Dec. 16. “The people who are giving [the president] a round of applause don’t deserve our trust anymore.”
Local elections, due to be held in 2016, will be a major test for Zuma’s leadership of the ANC. Political analysts say the party could even fall below 50 percent support in several major cities, including the capital of Pretoria. Even so, the party that has led South Africa since the end of apartheid is not going anywhere.
“The ANC is not about to lose power, and Jacob Zuma is aware of that fact, which is why he acts with such brazenness,” said Prince Mashele, who runs the Pretoria-based Center for Politics and Research. “We should not be naïve.”
Photo credit: MARCO LONGARI/AFP/Getty Images

Why corruption is holding Africa back

Why corruption is holding Africa back

Story highlights

  • A new report has found that over half of Africans think corruption is increasing
  • Transparency International says 75 million people in Sub-Saharan Africa paid a bribe in 2014
(CNN)If you live in Liberia, arranging to see a doctor might unfortunately not be as simple as booking an appointment.
Seven out of 10 people in the country say they have had to pay bribes to access basic services like healthcare and schooling, according to Transparency International, a global watchdog.
This number is the highest in Africa, but in the latest poll -- which the NGO conducted with Afrobarometer, an organization which publishes surveys on African governance -- 58% of people said they thought bribery was increasing.

"Poverty and exclusion"

"Corruption creates and increases poverty and exclusion. While corrupt individuals with political power enjoy a lavish life, millions of Africans are deprived of their basic needs like food, health, education, housing, access to clean water and sanitation," said José Ugaz, chair of Transparency International, in a statement.
    The NGO estimates that around 75 million people in Sub-Saharan Africa have paid a bribe in the past year. The poor fare the worst -- they are twice as likely as the richest in the region to have had to make payoffs according to the report.
    "This might be because poor people feel powerless to stand up against a corrupt official, or because rich people use their connections to avoid paying such bribes," says Coralie Pring, corruption surveys research coordinator at Transparency International.
    The police and courts -- institutions which exist to safeguard citizen's rights -- are seen as the most corrupt, with over a quarter of those who had dealings with them saying that they had paid a bribe.
    "When coming into contact with the police, more than a quarter of people told us that they needed to bribe either to get assistance from the officer, or to avoid a problem like passing a checkpoint or avoid a fine or arrest, which is further evidence that graft is undermining the rule of law and allows people to get away unpunished for their crimes," says Pring.

    One in five

    Nearly one in five Africans paid bribes to obtain official documents, and access to medical care is sometimes negotiated through an unofficial fee, gift or favor.
    The survey, which polled over 43,000 people in 28 Sub-Saharan countries, also found that half or more of those who paid bribes did so multiple times a year.
    "Corruption is the single biggest threat to Africa's growth," says Ali Mufuruki, CEO of Tanzania's Infotech Investment Group and member of the International Monetary Fund's Group on sub-Saharan Africa.
    "The solution lies in good, ethical leadership, strong and enforceable laws against corruption, severe sanctions for corruption crimes underpinned by a national culture of promoting ethics from family to national level, "he adds.
    Most governments are seen as not doing enough to combat the problem, but citizens of the continent's biggest economies expressed the most pessimistic outlook. In South Africa more than four-in-five people said they have seen corruption rise recently and in Nigeria the figure stands at 75%. However the two countries have diverse bribery levels -- South Africa stands at just 7% while Nigeria is at 43% according to Transparency International.

    Encouraging signs

    It's not all doom and gloom. In Mauritius and Botswana only 1% of public service users say that have paid an official off, which is on a par with low bribery rate countries in Europe and North America.
    The report also highlights the example of Senegal which created a National Office for the Fight against Fraud and Corruption, and passed a law in April 2014 which requires elected officials to declare their assets.
    •