ABUJA (Reuters) &#8211; Nigeria’s gross revenues rose to 653.35 billion naira ($1.7 billion) in June from 517.8 billion naira in May due to higher crude and tax receipts, accountant general Ahmed Idris said, as oil prices recovered from April’s crash.



The coronavirus outbreak early this year prompted a sharp fall in oil prices, Nigeria’s main export, slashing government revenues, weakening its currency and creating a large financing gap for the country.



The global benchmark Brent LCOc1 has since recovered to about $43 a barrel from a 21-year low below $16 in April.



OPEC member Nigeria relies on crude oil sales for two-thirds of government revenue.



The government generated 42.83 billion naira from exchange rate gains, it said in a statement. Income from crude sales and value added tax (VAT) made up the bulk of gross revenues.



Finance Minister Zainab Ahmed has pushed for the central bank to unify its multiple exchange rates so that the government can generate more naira from its crude receipts.



In February, Nigeria increased VAT to 7.5% from 5% to boost revenues, seen among the lowest in the world. Lower government revenue could worsen Nigeria’s debt to revenue ratio this year from a year earlier.

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Nigeria’s revenues rise in June on higher oil, tax receipts

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The Joint Ministerial Monitoring Committee of oil producer club, OPEC will meet later today after which it will announce its recommendation for production policy along with the group’s allies. Joining CNBC Africa to weigh the committee’s options is Kola Karim, Chairman of Shoreline Group.

COVID-19: What to expect from the OPEC+ meeting

By George Ott – Economist



The dual shocks of the Covid-19 pandemic and the international oil price slump are expected to cause severe damage to economies across the African continent.



Oil-dependent African sovereigns are particularly vulnerable to the associated drop in export revenues and resultant rise in currency pressures.



In this regard, there has been considerable uncertainty and speculation about the capacity of both the West African Economic and Monetary Union (Waemu) and the Economic and Monetary Community of Central Africa’s (Cemac) to absorb these shocks and to protect the value of their respective regional currency pegs to the euro.



The CFA franc (comprising the Central African XAF and the West African XOF) is pegged to the euro at CFAfr655.96/€.



Despite relative economic resilience across the Waemu region, oil-exporting members of the Cemac are coming under severe strain as international oil prices fell to decades-low levels.



Moreover, with the Cemac region still in the process of rebuilding external buffers drawn down during the 2014-16 oil price crash, the region’s capacity to absorb the massive shocks of the current global crises is expected to be limited.



With many indicators pointing towards severe strain on the CFA franc, concerns have been raised about a potential devaluation of the currency peg.



With speculation circulating in the local media across the Cemac region, both the Bank of Central African States (Beac) and the French Treasury have released statements to dispel rumours that a devaluation was on the cards.



On Tuesday, May 12, Bloomberg reported that Odile Renaud-Basso, the head of the French Treasury, affirmed the institution’s commitment to ensure the convertibility of the CFA franc, stating in a telephonic interview that they “do not see a need for adjusting the exchange rate. So that is not on the agenda”.



On the same day, Reuters quoted a statement by the Beac in which it denied that it was considering a devaluation of the CFA franc and that foreign exchange reserve levels remained “comfortable”.



With economic and financial pressures mounting on the CFA franc, there has been a measure of uncertainty pertaining to the French Treasury’s willingness to support the regional peg by ensuring the unit’s convertibility to euros at the current rate.



This commitment has not yet been tested and with economic conditions in Europe also hard hit, concern in this regard was arguably warranted.



Therefore, the French Treasury’s public backing of the peg is significant and reduces uncertainty at a time when severe pressures on the CFA franc are unavoidable.



These developments also add weight to our current baseline expectation for the CFA franc to remain pegged to the euro at the current rate of CFAfr655.96/€.



Although economic risks are set to rise across the region in the coming months, we nevertheless expect that financial assistance from multilateral organisations should have an added stabilising impact across both the Waemu and Cemac regions, with a host of member states already having received such assistance.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Administrators propose sales plan for SA retailer Edcon, see potential job cuts

Op-Ed: Rumours of a CFA franc devaluation in West & Central Africa dispelled

Report by Sam Meredith



Key Points:



<ul><li>In its closely-watched monthly report, the IEA’s outlook for oil demand showed a fall of 8.6 million barrels per day (b/d) to 91.2 million b/d this year. That’s 0.7 million b/d more than the group anticipated in its previous report.</li></ul>



<ul><li>The IEA stressed a resurgence of Covid-19 cases would constitute a “major risk factor” to oil demand.</li></ul>



<ul><li>On the supply side, it expected a “spectacular” fall of 12 million b/d this month, falling to a nine-year low of 88 million b/d.</li></ul>



The International Energy Agency (IEA) said on Thursday that market forces had “demonstrated their power” on the supply side of the <a href="https://www.cnbcafrica.com/videos/2020/05/06/access-bank-bond-market-activity-to-pick-up-on-improved-oil-prices/">oil market</a> in recent weeks, but concerns remain over the potential for a second wave of Covid-19 infections.



International benchmark Brent crude traded at $29.72 a barrel on Thursday morning, up around 1.8%, while U.S. West Texas Intermediate stood at $25.84, more than 2% higher.



It comes after what the IEA Executive Director Fatih Birol described as “Black April,” when the price of U.S. crude futures tumbled to around negative $40 a barrel.



Since then, the outlook has somewhat improved in energy markets and <a href="https://www.cnbcafrica.com/videos/2020/05/05/could-ugandas-oil-producing-ambitions-be-boosted-by-covid-19-pandemic/">oil prices</a> have rebounded from their April lows.



“Oil production is reacting in a big way to market forces and economic activity is beginning a gradual-but-fragile recovery,” the IEA said. “However, major uncertainties remain.”



“The biggest is whether governments can ease the <a href="https://www.cnbcafrica.com/videos/2020/05/13/how-african-economies-will-reawaken-from-the-covid-19-nightmare/">lockdown measures</a> without sparking a resurgence of <a href="https://www.cnbcafrica.com/east-africa/2020/05/13/covid-19-how-the-pandemic-is-affecting-africas-free-trade-plans/">Covid-19</a> outbreaks,” the Paris-based energy agency added.



Another risk, the group said, was whether oil producers OPEC and its non-OPEC allies, sometimes referred to as OPEC+, would achieve a high level of compliance with its agreed output cuts.



“These are big questions — and the answers we get in the coming weeks will have major consequences for the oil market,” the IEA said.



<h2 class="wp-block-heading">Demand forecast</h2>



In its closely-watched monthly report, the IEA’s outlook for oil demand showed a fall of 8.6 million barrels per day (b/d) to 91.2 million b/d this year. That’s&nbsp;0.7 million b/d more than the group anticipated in its previous report.



This projected fall of oil consumption would be the biggest demand drop in history, the IEA said.



On the supply side, it expected a “spectacular” fall of 12 million b/d this month, falling to a nine-year low of 88 million b/d.



It comes after OPEC+ agreed to curb production by a record 9.7 million b/d in May and June. OPEC kingpin Saudi Arabia has since said it plans to cut output by an additional 1 million b/d to 7.5 million b/d in June.



“It is on the supply side where market forces have demonstrated their power and shown that the pain of lower prices affects all producers,” the IEA said.



“We are seeing massive cuts in output from countries outside the OPEC+ agreement and faster than expected,” it added.



The IEA said output cuts from countries outside the OPEC+ agreement, such as the U.S. and Canada, meant output was 3 million b/d lower in April than at the start of the year. The group said it could be 4 million b/d lower in June, “with perhaps more to come.”



<h2 class="wp-block-heading">Global confinement measures to fall from a recent peak</h2>



A global public health crisis has meant countries across the globe have effectively had to shut down, with many governments imposing draconian restrictions on the daily lives of billions of people.



The restrictions, which have created an unprecedented demand shock in energy markets, are expected to result in the worst economic downturn since the Great Depression in the 1930s.



To date, more than 4.3 million people have contracted the coronavirus, with 297,226 deaths worldwide, according to data compiled by Johns Hopkins University.



Some countries have sought to slowly ease lockdown measures, allowing some shops and factories to reopen.



The IEA said the gradual relaxation of restrictions was helping demand in energy markets. It estimated that the number of people living under some form of confinement measures at the end of May would drop to 2.8 billion worldwide, down from a recent peak of 4 billion.



However, the group stressed a resurgence of Covid-19 cases would constitute a “major risk factor” to oil demand.



This article was first published on CNBC <a href="https://www.cnbc.com/2020/05/14/oil-iea-warns-of-demand-risk-from-second-wave-of-coronavirus-cases.html">https://www.cnbc.com/2020/05/14/oil-iea-warns-of-demand-risk-from-second-wave-of-coronavirus-cases.html</a> and is republished with its permission.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

COVID-19: South Africa eases lockdown to revive battered economy

A second wave of COVID-19 will have ‘major consequences’ for the oil market, IEA warns

By Chris Bishop



Oil will recover to $43-a-barrel by the end of the year.



That was the word from commodity analyst Giovanni Staunovo at an online briefing by UBS that painted a slightly encouraging picture of the world economy.



The briefing heard that there had been an uptick in investment and retail interest in gold, despite under pressure central banks slowing purchases of bullion &#8211; which was a cushion for the world economy last year. Joni Teves a precious metals Strategist for UBS, said she believed the gold market would be well supported in 2021.



Oil was also likely to shake off its low price blues this year despite a drop in demand of 20%,largely because of COVID-19, in a market where supply has not fallen. &nbsp;&nbsp;&nbsp;



“In the short term there is downward pressure if we keep oil prices subdued,” says Staunovo.



“We will see 43 dollars a barrel at the end of the year. We will see mobility restrictions being removed and oil demand will be high, but it will still take time to recover by December. There will be a demand recovery in the third quarter and we will see more people flying than before and production is falling very quickly among OPEC and its allies.”

Oil to recover to $43 by December – UBS analyst

Ngozi Okonjo-Iweala, former finance minister of Nigeria, co-chair of the Global Commission on the Economy and Climate



<a href="https://www.cnbcafrica.com/covid-19/">The COVID-19 pandemic is a crisis</a>, a tragedy that is all at once fast and slow-moving, personal and global. The virus has killed more than 150,000 people. Livelihoods have been hit hard as communities are cut off and businesses are forced to close. Country leaders are understandably looking for ways to <a href="https://www.wri.org/blog/2020/03/coronavirus-economy-low-carbon-investments">stimulate their economies</a> immediately. 



During a crisis of this scale, it is understandable to the familiar.&nbsp;But, for their own sakes,&nbsp;governments&nbsp;must avoid&nbsp;defaulting&nbsp;to familiar investment habits – namely,&nbsp;ramping up production and use of high carbon emitting fuels.&nbsp;



The pandemic, together with the Saudi-Russia oil price tussle last month, have had a stark impact on oil markets. Oil futures recently went&nbsp;<a href="https://www.nytimes.com/2020/04/21/upshot/negative-oil-price.html">negative for the first time in history</a>. This has highlighted how vulnerable countries with fossil fuel-dependent economies are to volatile fuel prices: in Sub-Saharan Africa, oil exporting nations could&nbsp;<a href="https://www.uneca.org/stories/eca-estimates-billions-worth-losses-africa-due-covid-19-impact">lose up to $65 billion</a>&nbsp;in revenues in 2020 as crude oil prices continue to tumble. Even before COVID-19, the global transition to a low-carbon economy was sparking a decline in oil prices. The pandemic has only exacerbated this trend, underscoring the need for diversifying these countries’ economies.



This is the time to invest in diversifying the economy, to build resilience to future shocks, not lock-in further dependence on fossil fuels. Conversely, investing in renewables and better grids in many countries will enable wider access to energy and greater self-reliance, enabling countries to take control of their economic prospects and insulate themselves from whimsical oil and gas markets.&nbsp;&nbsp;



Efforts to boost economic growth out of this health crisis in a way that locks in more&nbsp;fossil fuel production&nbsp;and use&nbsp;will&nbsp;only&nbsp;exacerbate&nbsp;other health crises, including&nbsp;the ongoing climate crisis&nbsp;and air pollution crisis. This&nbsp;will have&nbsp;dire implications&nbsp;for&nbsp;communities through more frequent and severe natural disasters, and more rapid spread of&nbsp;infectious diseases due to climate change.&nbsp;



Climate-induced changes in the movement patterns of humans, animals and pathogens will make viral outbreaks&nbsp;<a href="https://blogs.ei.columbia.edu/2014/09/04/how-climate-change-is-exacerbating-the-spread-of-disease/">more common</a>.&nbsp;This is&nbsp;just one big reason&nbsp;why&nbsp;we must&nbsp;respond to COVID-19 by building&nbsp;back better in terms of&nbsp;economies that are resilient to future shocks&nbsp;and accelerating the transition to inclusive, low-carbon growth.&nbsp;



Moving away from&nbsp;fossil fuels is challenging, particularly&nbsp;in developing and emerging economies&nbsp;with pressing development&nbsp;needs.&nbsp;Before COVID-19&nbsp;was a household name,&nbsp;Africa&nbsp;was already&nbsp;working to bring over&nbsp;<a href="https://www.brookings.edu/blog/future-development/2019/03/28/poverty-in-africa-is-now-falling-but-not-fast-enough/">400 million people</a>&nbsp;out of poverty and over&nbsp;<a href="http://www.fao.org/news/story/en/item/1180443/icode/">200 million</a>&nbsp;out of hunger.&nbsp;



Some&nbsp;countries,&nbsp;including my own Nigeria,&nbsp;are reliant on&nbsp;oil and gas&nbsp;production to&nbsp;help finance these social gains.&nbsp;A careful and just management of the&nbsp;low-carbon&nbsp;economic transition is&nbsp;essential, to avoid&nbsp;stranded&nbsp;industries,&nbsp;communities and workers, exacerbating&nbsp;inequality.&nbsp;



A&nbsp;better&nbsp;future,&nbsp;where all jobs are green and decent, poverty is eradicated, workers are supported, and communities are thriving and resilient&nbsp;across all sectors of the economy, starts with&nbsp;a&nbsp;<a href="https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/documents/publication/wcms_432859.pdf">just transition</a>&nbsp;today.&nbsp;That means&nbsp;working closely with affected workers and communities to ensure they benefit from the new economy that will emerge, while also directly investing in more diverse, clean energy alternatives and&nbsp;avoiding propping up failing oil and gas operations.



As the COVID-19 crisis has laid bare, robust social protection&nbsp;policies and programmes&nbsp;are&nbsp;essential to meet basic needs during periods of unemployment, re-training or education.&nbsp;A just transition means&nbsp;diversifying local economies, generating new industries, new services and&nbsp;building&nbsp;new&nbsp;essential&nbsp;skills&nbsp;across the workforce&nbsp;and&nbsp;adaptive capacity&nbsp;across&nbsp;communities&nbsp;to ensure they are resilient and benefit from a new climate economy. This&nbsp;will require new types of policies&nbsp;and accompanying investment.&nbsp;



Many&nbsp;wealthy regions are&nbsp;already&nbsp;supporting a just transition. Last year, Germany approved a&nbsp;<a href="https://www.bundesregierung.de/breg-de/aktuelles/bund-laender-einigung-zum-kohleausstieg-1712774">$45 billion</a>&nbsp;aid package for the nation’s coal regions&nbsp;and companies&nbsp;to&nbsp;support the transition to&nbsp;make the country coal-free by 2038.&nbsp;And the&nbsp;European Commission’s&nbsp;Green Deal, now a cornerstone of the EU’s COVID-19 response,&nbsp;includes a&nbsp;€100&nbsp;billion&nbsp;‘<a href="https://ec.europa.eu/regional_policy/en/newsroom/news/2020/01/14-01-2020-financing-the-green-transition-the-european-green-deal-investment-plan-and-just-transition-mechanism">Just Transition Mechanism</a>’&nbsp;to help retrain workers who lose jobs in shuttered coal mines or steel factories.&nbsp;Other&nbsp;countries&nbsp;are&nbsp;approving&nbsp;similar funding packages, but none of&nbsp;them&nbsp;include&nbsp;aid&nbsp;for&nbsp;the transition in&nbsp;developing nations.&nbsp;



Now more&nbsp;than ever,&nbsp;rich countries&nbsp;must&nbsp;support the&nbsp;developing world in the pursuit of a&nbsp;healthy and prosperous future for all.&nbsp;This is&nbsp;the time when we can and must design&nbsp;a new social contract, and&nbsp;demonstrate solidarity&nbsp;with&nbsp;the&nbsp;communities that are the most vulnerable.&nbsp;We must apply every tool at our disposal to&nbsp;advance&nbsp;responses to the pandemic&nbsp;that&nbsp;secure incomes and jobs,&nbsp;address&nbsp;the&nbsp;immediate health needs,&nbsp;and promote&nbsp;a just transition forward&nbsp;toward an inclusive, low-carbon and resilient economy.&nbsp;&nbsp;



The COVID-19 crisis has laid bare the climate crossroads the world was already facing.&nbsp;This terrible moment in history demands us to&nbsp;build back better.&nbsp;The world’s larger economies have a responsibility to lead the&nbsp;charge.&nbsp;Fortunately,&nbsp;low-carbon&nbsp;solutions are cheaper and more available than ever before.&nbsp;The&nbsp;New Climate Economy&nbsp;finds that bold climate action could deliver&nbsp;<a href="http://newclimateeconomy.report/2018">$26 trillion in economic benefits</a>&nbsp;between now and 2030, and these benefits would start immediately. It could also generate over 65 million jobs in 2030.&nbsp;



We are living in uncertain and frightening times.&nbsp;But&nbsp;we must&nbsp;be brave. We must&nbsp;aim to&nbsp;do more than survive, we must thrive.&nbsp;We&nbsp;must&nbsp;improve lives&nbsp;by&nbsp;shifting away from&nbsp;dirty,&nbsp;carbon-intensive&nbsp;industries.&nbsp;Low-income regions cannot do this alone.&nbsp;The world’s&nbsp;developed economies must invest&nbsp;in a better way, a more just way.&nbsp;This&nbsp;is&nbsp;the challenge of our lifetimes.&nbsp;&nbsp;

Okonjo-Iweala

Op-Ed – Ngozi Okonjo-Iweala: A global response to COVID-19 that doesn’t fully support developing countries is no response at all

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Yesterday the price of West Texas Intermediate Crude fell below zero for the first time in history, meaning the sellers were ultimately paying buyers to take the oil. The COVID-19 pandemic has cut global oil demand by almost a third, and now it shows in the US oil market, but what does this all mean for Africa? International Relations Expert, Emery Nzirabatinya joins CNBC Africa for more.

COVID-19: What the oil price crash means for African economies

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Developing countries could see their oil and gas income fall by between 50 percent and 85 per cent this year, that&#8217;s according to a joint statement by the International Energy Agency and OPEC. The global organizations warned that the coronavirus pandemic could have potentially far-reaching economic and social consequences. Steve Osho, Managing Director at Comercio Partners Capital joins CNBC Africa for more.

The impact of COVID-19

The impact of COVID-19, oil price war on developing countries

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Global central banks unveil bigger spending measures to counter the effects of the coronavirus outbreak – this comes as OPEC and the International Energy Agency warn that developing countries could lose up to 85 per cent of oil and gas income this year. Gbite Oduneye, Co-Founder of Eagle Global Markets joins CNBC Africa to breakdown the impact of the global pandemic on markets.

Global markets continue slide on COVID-19

Global markets continue slide on COVID-19, oil price war

Key Points



<ul><li>IEA Executive Director Fatih Birol and OPEC Secretary General Mohammed Barkindo expressed “deep concerns” about the coronavirus pandemic on Monday.</li></ul>



<ul><li>They singled out public sector spending in vital areas such as health care and education as being especially vulnerable.</li></ul>



<ul><li>OPEC’s Barkindo and the IEA’s Birol did not address Russia specifically in their joint statement, but both “underscored the importance of market stability, as the impacts of extreme volatility are felt by producers.”</li></ul>



Developing countries’ oil and gas income could fall to their lowest levels in more than two decades if current energy market conditions persist, the IEA and OPEC have warned in a rare joint statement. 



IEA Executive Director Fatih Birol and OPEC Secretary General Mohammed Barkindo expressed “<a href="https://www.iea.org/news/iea-executive-director-and-opec-secretary-general-discussed-the-current-situation-in-global-oil-markets" target="_blank" rel="noreferrer noopener">deep concerns</a>” about the coronavirus pandemic on Monday, warning it could have “potentially far-reaching economic and social consequences.” 



Birol and Barkindo said they expect developing countries to see their oil and gas income fall by 50% to 85% in 2020.



They singled out public sector spending in vital areas such as health care and education as being especially vulnerable. 



International benchmark&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=@LCO.1">Brent</a>&nbsp;crude traded at $29.91 Tuesday morning, down around 0.7%, while&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=@CL.1">U.S. West Texas Intermediate</a>&nbsp;(WTI) stood at $28.98, more than 1% higher.



Oil prices <a href="https://www.cnbc.com/2020/03/16/oil-drops-more-than-6percent-breaking-below-30.html">slid 10% in the previous session</a>, as the coronavirus continues to spread worldwide and amid an ongoing price war between OPEC kingpin Saudi Arabia and non-OPEC leader Russia.



Crude futures have more than halved since climbing to a peak in January. 



<h2 class="wp-block-heading">‘Market stability’ </h2>



On Monday, Saudi Arabia’s state-owned oil giant Saudi Aramco said it would likely continue with a planned oil production hike from April into May, reportedly suggesting it was “very comfortable” with an oil price of $30 a barrel. 



Russia, which refused to sign up to OPEC’s proposal of deeper production cuts earlier this month, has claimed it can withstand lower oil prices for as long as a decade. 



OPEC’s Barkindo and the IEA’s Birol did not address Russia specifically in their joint statement, but both “underscored the importance of market stability, as the impacts of extreme volatility are felt by producers.” 



They agreed to “remain in close contact on the matter” and continue their regular consultations on oil market developments.



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The IEA, which advises industrialized nations on energy issues, has <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">previously warned</a> long-time allies of de facto OPEC leader Saudi Arabia could be the worst hit from a sharp drop in oil prices. 



Last week, Birol <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">told CNBC</a> that countries like Iraq, Algeria and Nigeria — all OPEC producers — were in a “very, very difficult situation” and would require support from the rest of the world. 



Iraq, OPEC’s second-largest producer, is thought to be particularly exposed to an all-out price war because it has one of the least diversified economies of the producer group — despite relatively low production costs.



(Report by Sam Meredith)



This article was first published on CNBC <a href="https://www.cnbc.com/2020/03/17/opec-iea-warn-some-nations-could-lose-up-to-85percent-of-oil-and-gas-income.html">https://www.cnbc.com/2020/03/17/opec-iea-warn-some-nations-could-lose-up-to-85percent-of-oil-and-gas-income.html</a> and is republished with its permission.

OPEC and IEA warn developing countries could lose up to 85% of oil and gas income this year

JOHANNESBURG (Reuters) &#8211; Shares in South African petrochemicals group Sasol surged nearly 30% on Friday as a recovery in oil prices sparked buying of the stock, which was pummelled in the previous session. 



Brent crude prices rose over 3% on Friday after falling more than 7% the day before, a drop which helped send Sasol shares to a 21-year low. 



“It does look like it was over down around 30 rand. Perhaps some opportunistic buyers are looking to get in at these low prices,” said Nilan Morar, trader at GT247. 



By 0808 GMT shares in Sasol were up 20.9% to 45.01 rand after hitting a high of 55.84 rand earlier in the session. 



(Reporting by Tanisha Heiberg; Editing by Jan Harvey)



This artcile was frst published on Reuters Africa <a href="https://af.reuters.com/article/investingNews/idAFKBN21010K-OZABS">https://af.reuters.com/article/investingNews/idAFKBN21010K-OZABS</a> and is republished with its permission.

Shares in Sasol jump nearly 30% as oil price recovery sparks buying

Key Points



<ul><li>The International Monetary Fund (IMF) on Thursday said it will be working closely with the Nigerian authorities in the coming days to assess any vulnerabilities which may be exposed by the sharp decline in crude prices.</li></ul>



<ul><li>Nigerian dollar bonds sank to record lows stocks on Thursday hit a new four-year low, as fears grow over the devaluation of the naira currency.</li></ul>



With oil prices plunging amid concerns over a <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">price war between Russia and Saudi Arabia</a>, and the coronavirus outbreak obliterating stock markets, Africa’s largest economy is in a precarious position.



The International Monetary Fund (IMF) on Thursday said it will be working closely with the Nigerian authorities in the coming days to assess any vulnerabilities which may be exposed by the sharp decline in crude prices, as Nigerian and Angolan dollar bonds sank to record lows.



Nigerian stocks on Thursday headed for their fifth straight day of losses to a new four-year low, and a fall in <a href="https://www.cnbc.com/quotes/?symbol=@LCO.2">oil prices</a> to just over $30 per barrel, rising external debt and a depreciating currency pose a threat to economic stability in the country of more than 190 million people. Nigeria is Africa’s largest economy in terms of GDP (gross domestic product).



While markedly lower oil prices will undoubtedly have broad adverse consequences for the Nigerian economy, the country is not quite as dependent on oil exports as the likes of Angola, which analysts expect to suffer a substantial blow this year.



<h2 class="wp-block-heading">Currency concerns</h2>



However, a prime concern for economists is Nigeria’s managed naira exchange rate, since even prior to the fallout from OPEC’s failure to reach an agreement with Russia on oil production cuts, the country’s foreign exchange reserves were in steady decline.



After the official exchange rate was devalued in 2016, foreign exchange reserves were approaching $25 billion, and the move failed to stop the slide of the parallel market exchange rate, which meant the Central Bank of Nigeria (CBN) was forced to act again the following year when the Nafex (Nigerian Autonomous Foreign Exchange Rate) was implemented. Reserves held just below $30 billion during this period.



“Extrapolating the trajectory observed thus far this year (the foreign exchange buffer shrunk by $2.3 billion during the first two months of 2020) suggests reserves could fall below the $30 billion mark by Q3 (the third quarter) and end the year just above $25 billion,” NKC African Economics Chief West Africa Economist Cobus de Hart said in a note earlier this week.



Capital Economics Senior Emerging Markets Economist John Ashbourne on Wednesday echoed this projection, suggesting that reserves will soon fall below the $30 billion mark, which Nigerian policymakers had identified as a key benchmark.



Ashbourne predicted that the naira will end the year down 8% to 400 NGN against the U.S. dollar. He added that in Nigeria’s case, a weaker currency will not provide a boost to competitiveness, since the country does not have significant non-oil exports or the “domestic manufacturing base needed to substitute for imported goods.”



Reuters reported Thursday afternoon that the naira was being quoted at 370 to the dollar on the over-the-counter spot market.



<h2 class="wp-block-heading">‘Severe adverse consequences’</h2>



Parliament recently green lighted President Muhammadu Buhari’s request for $22.7 billion in foreign borrowing, but while external debt accumulation would usually be expected to support reserves, de Hart suggested that the sharp fall in global oil prices could potentially “more than offset” the boost.



“Firstly, should Brent crude oil prices average roughly $40pb (per barrel) for the remainder of the year, it would reduce Nigeria’s goods export receipts by roughly $14 billion (as opposed to our February baseline for oil prices to average $62.4 billion in 2020) — this may also be a conservative estimate, as it does not take into account any adverse impact on non-oil exports,” he said in the note Monday.



What’s more, Nigeria may have difficulty accumulating external debt following the fall in oil prices and its impact on the macroeconomic outlook, while the jittery investment environment raises the risk of a capital flight, de Hart highlighted.



Having previously backed the authorities to ride out the storm and maintain its foreign exchange rate at current levels in the immediate future, NKC analysts now believe that the naira’s prospects have “deteriorated markedly” and remains set for a “sharp fall” this year if current conditions persist.



The CBN will again be faced with the choice of whether to let the Nafex buckle or continue to artificially prop it up.



“We believe the CBN will continue to provide support in the near term, with a more drastic adjustment more likely in Q3,” de Hart projected.



“If the Nafex is not permitted to buckle, then the black-market rate should, and this might hold more severe adverse consequences for an economy that is now facing a gloomier outlook on multiple fronts.”



This article was first published on CNBC <a href="https://www.cnbc.com/2020/03/13/africas-largest-economy-braces-for-big-hit-as-oil-prices-plummet.html">https://www.cnbc.com/2020/03/13/africas-largest-economy-braces-for-big-hit-as-oil-prices-plummet.html</a> and is republished with its permission.

Africa’s largest economy braces for big hit as oil prices plummet

KEY POINTS



<ul><li>Nigeria’s $34.6 billion Budget for 2020 was benchmarked on an oil price of $57 per barrel. It expected crude oil sales to contribute 35 percent of government revenue. The oil prices&#8217; plunge has forced the Nigerian government to review its budget. </li></ul>



 By <a href="https://www.cnbc.com/pippa-stevens/">Pippa Stevens</a><a rel="noreferrer noopener" href="https://twitter.com/@PippaStevens13" target="_blank">@PIPPASTEVENS13</a><a href="https://www.cnbc.com/eustance-huang/">and Eustance Huang</a><a rel="noreferrer noopener" href="https://twitter.com/EustanceHuang" target="_blank">@EUSTANCEHUANG</a> Oil prices plunged after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.



<a href="https://www.cnbc.com/quotes/?symbol=@CL.1">U.S. West Texas Intermediate crude</a>&nbsp;dropped 29.48% to $29.11 per barrel as of 05:50 GMT Monday, having earlier tumbled to a low of $27.34 per barrel. International benchmark&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=@LCO.1">Brent crude</a>&nbsp;futures also plummeted 27.26% to $32.93 per barrel.



“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”



On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.<a></a>



“We believe the OPEC and Russia oil price war unequivocally started this weekend when Saudi Arabia aggressively cut the relative price at which it sells its crude by the most in at least 20 years,” Goldman Sachs analyst&nbsp;Damien Courvalin said in a note to clients Sunday. “The prognosis for the oil market is even more dire than in November 2014, when such a price war last started, as it comes to a head with the significant collapse in oil demand due to the coronavirus,” the firm added.



Goldman cut its second and third quarter Brent forecast to $30 per barrel, and said that prices could dip into the $20s.



Saudi Arabia’s price cut followed a breakdown of talks in Vienna last week. On Thursday, OPEC recommended additional production cuts of 1.5 million barrels per day starting in April and extending until the end of the year. But OPEC ally Russia rejected the additional cuts when the 14-member cartel and its allies, known as OPEC+, met on Friday.



The meeting also concluded with no directive about the production cuts that are currently in place but set to expire at the end of the month. This effectively means that nations will soon have free rein over how much they pump.



“As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier,” Russian Energy Minister Alexander Novak told reporters Friday at the OPEC+ meeting in Vienna, adding, “but this does not mean that each country would not monitor and analyze market developments.”&nbsp;



Oil prices have already moved sharply lower this year as the coronavirus outbreak has led to softer demand for crude. A potential supply glut could pressure prices further.



“Both events – coronavirus and OPEC+ falling apart were not expected or priced into the market a month ago,” said Rebecca Babin, senior equity trader for CIBC Private Wealth Management. She said the key things to watch going forward are whether or not Saudi Arabia and Russia reach a “Hail Mary” deal, and if not, how quickly U.S. supply is shut in to support prices.



“There is still significant uncertainty, but the commodity market is not waiting around to find out if miracles can happen,” she added.



The unfolding of events is reminiscent of 2014 when Saudi Arabia, Russia and the U.S. competed for market share in the oil industry. As production escalated, prices plummeted. Some see prices heading back to those lows.&nbsp;



″$20 oil in 2020 is coming,” Ali Khedery, formerly Exxon’s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc &#8211; may prove existential 1-2 punch when paired with COVID19.”



But others, including Eurasia Group,&nbsp;believe that Saudi Arabia and Russia will eventually come to an agreement.&nbsp;



“The most likely outcome of the failure of the Vienna talks is a limited oil price war before the two sides agree on a new deal,” analysts led by&nbsp;Ayham Kamel said in a note to clients Sunday. The firm puts the chances of an eventual agreement at 60%.&nbsp;



Vital Knowledge founder&nbsp;Adam Crisafulli said Sunday that oil “has become a bigger problem for markets than the coronavirus,” but also said that he does not foresee prices falling to the Jan. 2016 lows.&nbsp;



“Saudi Arabia can’t tolerate an oil depression – the country’s fiscal breakeven oil prices remains very high, Saudi Aramco is now a public company, and MBS’s grip on power isn’t yet absolute. As a result, the [government] won’t be so cavalier in sending oil back into the $30s (or even lower),” he said in a note to clients Sunday.



— CNBC’s <a href="https://www.cnbc.com/michael-bloom/">Michael Bloom</a> and <a href="https://www.cnbc.com/natasha-turak/">Natasha Turak</a> contributed reporting.



This article first appeared on CNBC <a href="https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html">https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html</a> and is republished with its permission

US crude prices drop below $30 a barrel after OPEC deal failure sparks price war, oil-dependent economies left vulnerable

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Nigeria’s Minister for Mines and Steel Development, Olamilekan Adegbite, says the country’s mining potential can surpass oil and gas. Meanwhile, data from the National Bureau of Statistics shows that Nigeria’s Mining and Quarrying sector contributed 8.85 to the 2019 GDP lower than the 10.68 per cent recorded in 2018. Joining CNBC Africa to make the investment case for Nigeria’s Mining sector is Cyril Azobu, Partner and Head of Consulting and Mining Leader at PwC.

The investment case for Nigeria’s mining sector

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Ahead of OPEC’s meeting this week, oil prices rose by more than four per cent from multi-year lows earlier, as hopes of a deeper cut by the oil producing club and stimulus from Central Banks fuelled the rebound. Rolake Akinkugbe-Filani, Managing Director of Energyinc Advisors joins CNBC Africa me for more.

Oil prices decline to their lowest since 2018

Oil prices decline to their lowest since 2018, these are the main drivers behind the slide

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The International Energy Agency says oil demand is set to fall this quarter for the first time since the financial crisis in 2009 on the back of the coronavirus outbreak in China. Meanwhile, oil producer group, OPEC and its allies have agreed to cut output by 1.7 million barrels per day until the end of March this year to support the market. So how will these dynamics in the oil market impact Africa? Wale Olafisan, Group Managing Director of Amni International Petroleum Company joins CNBC Africa for more.

Amni’s Wale Olafisan on the future of Africa’s oil and gas sector

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OPEC and non-OPEC’s Joint Technical Committee has scheduled a meeting on the 4th and 5th of February in Vienna to assess the impact of China’s new coronavirus on oil demand. As oil continues to trade below $60 a barrel, Kola Karim, Chairman of Shoreline Group joins CNBC Africa to discuss what this means for Nigeria’s economy.

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Nigeria’s revenues rise in June on higher oil, tax receipts

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