Angola will issue $2 billion dollars of foreign currency bonds in its domestic market, Finance Minister Armando Manuel said at the weekend, as the oil-producing African country looks to ease pressure on its foreign exchange market.
The funds raised would be used to finance public expenditure, Manuel said in a statement.
Nigeria and Angola has signed a memorandum of understanding (MoU) to work together for the development of the capital markets of the two countries.
Nigeria’s Securities and Exchange Commission (SEC) and Angola’s Comissão do Mercado de Capitais (CMC), the respective apex capital market regulator for the two countries, signed the MoU on the sidelines of last week’s meeting of the Africa and Middle East Regional Committee (AMERC) of the International Organisation of Securities Commissions (IOSCO).
The MoU covers areas of technical support and information sharing between the two countries and seeks to further facilitate exchange of information on issues of common interest between regulators.
Also, the two countries would collaborate to promote the identification and discussion on specific issues of common interest as well as encourage development of both markets.
The signing of the MoU was witnessed by the IOSCO Secretary General, Mr. David Wright. IOSCO is the global body of securities regulators and its membership regulates more than 95 per cent of the world’s securities markets in over 100 jurisdictions. AMERC represents a major bloc in IOSCO.
Nigeria is a member of the board of IOSCO, the governing and standard-setting organ of IOSCO. IOSCO board consists of 32 securities regulators including securities regulatory authorities of Argentina, Australia, Belgium, Brazil, Chile, China, France, Germany, Hong Kong, India, Italy, Japan, Korea, Malaysia, Mexico, Morocco, the Netherlands, Ontario, Pakistan, Portugal, Quebec, Romania, Singapore, South Africa, Spain, Switzerland, Trinidad and Tobago, United Kingdom and the United States.
The MoU came as IOSCO set up a work agenda to strengthen and foster the roles of capital markets as trusted sources of capital with a view to encouraging greater use of capital markets as financing channels for transactions.
Angola, Africa largest oil producer behind Nigeria, plans to keep decreasing fuel subsidies next year after it raised gasoline and diesel prices by 20 per cent last week, President Jose Eduardo dos Santos said
Speaking in his year-end address in the capital, Luanda, Dos Santos said: “2015 will be economically difficult because of significantly low oil prices. Some public expenditures will be reduced and some projects postponed. For example, subsidies for fuel prices.”
Oil futures fell 44 per cent this year, set for the biggest annual drop since 2008, as the Organisation of Petroleum Exporting Countries (OPEC) resisted supply cuts to defend market share in response to the highest United States (U.S.) output in three decades. Angola’s government relies on oil for more than three quarters of its revenue, and falling prices prompted the southwest African country to scale back investment plans.
Angola raised the price of gasoline to 90 kwanzas ($0.88) a liter last week from 75 kwanzas, the Finance Ministry said in a statement. Diesel climbed to 60 kwanzas per liter from 50 kwanzas.
Dos Santos said: “Tougher state-budget controls and financial discipline will have to be enforced to keep stability. However, we will maintain our poverty-reduction policy. There are Angolans who live with very little or almost nothing.”
The country is recovering from a 27-year civil war that ended in 2002. The government posted a 1.5 per cent budget deficit last year, the first since 2009 when the International Monetary Fund (IMF) began a $1.4 billion loan programme to help Angola weather oil prices that fell to $33 a barrel. This year’s budget deficit is expected to reach two per cent and the fiscal balance won’t be in surplus until 2019, The IMF said in March.
•Sad, Nigeria’s oil exploration rates lag behind Angola’s
One of the more interesting ironies of the Nigerian economic situation is the way in which some of the most crucial indicators of growth have actually declined at precisely the time that the country has been trumpeting its emergence as Africa’s largest economy.
A significant example of this contradiction is the stagnation in its oil exploration rates even while it is the continent’s largest oil producer. In contrast, Angola is boosting its own rates to such an extent that it could become Africa’s largest oil producer by 2016.
The figures tell a sobering tale of complacency in an era of rapid change. Nigeria currently produces about 2.15 million barrels of oil per day (bpd), in contrast to Angola’s 1.66 bpd. However, Nigeria’s efforts to expand the upstream sector of its oil industry have been stymied by a toxic combination of regulatory and legislative issues, increasing oil theft and growing insecurity.
The much-talked-about Petroleum Industry Bill (PIB) has certainly contributed to the country’s lamentable situation. Drafted under cloudy circumstances, characterised by inordinate delays, and stoutly opposed by several of the multinational oil companies working in Nigeria, the PIB has caused more problems than it is meant to solve.
Its supporters argue that it will provide root-and-branch reform of the oil sector, enabling the country to enjoy greater benefits from its oil and gas endowments. Those who oppose it believe that it puts too much power in the hands of the Minister of Petroleum Resources and is not transparent enough.
The clash of claim and counter-claim notwithstanding, the delay in passing the PIB since 2008 has caused major stakeholders in the oil industry to adopt an unhelpful wait-and-see approach. The results are disheartening: Nigeria had only nine active drilling rigs in July 2014, compared to 42 for Algeria, 14 for Angola, 96 for Iraq, 35 for the United Arab Emirates, and 104 for Saudi Arabia. Its undiscovered oil and gas resources are estimated as being the largest in sub-Saharan Africa. About U.S. $28 billion has allegedly been lost in deferred and abandoned agreements since 2010. An increasing number of oil companies have chosen to sell off their oil blocks rather than exploit them.
In stark contrast to the lumbering giant that is Nigeria, Angola has consistently demonstrated all the speed, aggressiveness and flexibility of a country which knows where it is going and how it intends to get there. Instead of remaining content with its position as Africa’s second-biggest oil producer after Nigeria, it has sought to build on the successes which caused it to briefly attain the top position in 2009. By offering relatively more attractive terms as well as the obvious benefits of increased security and regulatory stability, Angola has boosted foreign investment in its oil and gas industry. Eight pending offshore projects are expected to raise its output to 2 million barrels of oil per day by 2015. Already, Angola’s 2013 average output of 1.73 bpd was significantly close to Nigeria’s own average of 1.9 bpd for the same period.
Nigeria cannot continue to treat the mainstay of its mono-product economy with such inexplicable complacency. Even without the added pressure of vigorous continental competition and increasing energy self-reliance, there can be no justification for this persistent refusal to resolve the problems confronting the oil sector.
It is obvious that the delay in passing the PIB has been a major cause of the loss of investor interest. The bill’s stagnation in the National Assembly cannot continue; it should either be passed as it currently stands or it should be comprehensively re-drafted. Either measure would be more useful than the stasis to which it has been condemned.
The Federal Government would also do well to consider the injection of new blood at the Ministry of Petroleum Resources. Given the way in which scandal, the absence of accountability and the profusion of incompetence have damaged the credibility of this crucial ministry, it cannot be surprising that the sector it supposedly superintends is in such dire straits.
• Within $150,000 to $200,000
Brother to Super Eagles chief coach, Emmanuel Ado has described the proposed salary package which Angola offered to Stephen Keshi to coach its national team as too tempting to ignore.
But Keshi seems not moved as he awaits the Nigeria FA chiefs to formally make their bid which he hopes would come soon, considering the nearness of the Africa Cup of Nations qualifiers.
On Wednesday, Ado told SportingLife that Keshi’s N5m salary as Eagles handler is no match when compared with the Angola offer which will be paid in US dollars. Angola and Nigeria are oil rich nations.
“I have a copy of the offer from Angola in my mail box as l speak to you and l must tell you it is beautiful,” Ado revealed to SportingLife.
As expected, Ado declined to mention the exact figure but hinted it was within the region of $150,000 to $200,000.
“It is not below $100,000 and of course by the time you convert it into our local currency, it is better than what he is presently receiving as the Super Eagles coach,” he explained.
When SportingLife asked Ado for Keshi’s reasons for not accepting the offer, he said: “There are other considerations that we have to look at. Money is good but at the same time, it is not everything. My brother loves Nigeria and is only waiting on the Nigeria FA to make their bid,” he said.
Ado, however, denied the report that Keshi is insisting on N10m as monthly salary from NFF. “Until they make their offer, Keshi cannot say anything. It is what they say and offer that will determine the negotiation and not what we read in the pages of newspapers,” he added.
Ado who also doubles as Keshi’s media aide opened up on the supposed interest of South Africa to contract the latter for the then vacant Bafana Bafana seat which he claimed never existed. “In the first instance there was never any offer from South Africa. In the last 22 years South Africa has had 17 coaches. When coaches are fired or they resign voluntarily in South Africa there is always a debate for a foreign or local coach, several names will be thrown up and perhaps Keshi’s name was mentioned but they (South Africa) never approached Keshi,” he said.
In 2011, Angola was listed as one of the most expensive countries in the world that was confirmed by those who visited the country when it hosted the Africa Cup of Nations in 2010.
Other oil rich countries such as Equatorial Guinea and Gabon have also shown interest in Keshi.
ENI SpA (ENI) crews in Angola, Africa’s second-largest crude oil producer, upgraded a production vessel for new pumping this year as the southwest African country targets output rivaling its bigger competitor, Nigeria.
Eni plans to start production within five months as operator of Block 15-06’s West Hub fields, estimated to hold reserves of 200 million barrels, and boost flows to 80,000 barrels a day, documents on the Rome-based company’s website show. The block’s East Hub development is due to pump about 49,000 barrels a day after starting in 2016, the documents say.
The block, 350 kilometres (217 miles) northwest of Luanda, the capital, is one of eight offshore projects Petroleum Minister Jose Maria Botelho de Vasconcelos is counting on to help raise production to two million barrels a day by next year from 1.66 million last month. That compares with Nigeria’s 2.15 million barrels daily.
One of the largest developments, Total SA (FP)’s Clov in Block 17, started last month and targets output of 160,000 barrels a day. Analysts such as Wood Mackenzie Ltd. said the projects will be too late to boost declining flows by 2015.
“We should think about the need to shorten the time between declaration of oil discoveries and the beginning of production,” Vasconcelos said at the inauguration of the N’Goma, a floating production, storage and offloading vessel for Eni’s West Hub project, the state-run Jornal de Angola stated.
De Beers SA, the world’s largest diamond miner by market value, hopes to obtain a concession to explore in Angola by the end of this year, its Chief Executive Philippe Mellier said.
The London-based company, majority-owned by global miner Anglo American PLC, is also holding initial talks with India about exploring in some areas in the centre-north of the country.
“We expect to have news about exploration licenses before the end of this year and we are in contact with the Angolan government to discuss that. We hope that it’s going to be successful,” Mellier told Reuters in an interview last week.
Early stage work in Angola should start later this year, a spokesman for the company added.
Russia’s Alrosa, De Beers’ main competitor, already operates the Catoca mine in Angola, the world’s fourth-largest, in a joint venture with Angola’s state-owned Endiama.
De Beers previously explored for diamonds in Angola between 2005 and 2012 but concluded that a stand-alone deposit in the area was not economic and relinquished its concession.
It is now going back to explore a new area in the country, which Melliersaid was highly prospective.
Angola is the world’s fourth-largest diamond producer by value, and sixth by volume, and the government is keen to boost a sector where few companies are currently drilling. But the country needs to develop transport links and services for mining companies, and make geological data more accessible, according to a study published late last year.
De Beers produced more than 31 million carats of diamonds last year at its existing operations in South Africa, Botswana, Namibia and Canada. The Botswana government owns 15 per cent of De Beers, while Anglo American owns the rest.
Foreign Direct Investment (FDI) inflows to Nigeria, South Africa and Angola may average $40.6 billion yearly over the next five years, a report by Ernst & Young, global accounting firm has said.
It polled 505 global executives, and 60 per cent said their perception of Africa as a business destination had improved over the past three years. Nearly three quarters said they believed Africa would become more attractive to potential investors over the next three years.
A report on global capital inflows, said as African oil and mineral reserves draw investors from emerging and developed markets. Around a quarter of a million new jobs are likely to be created in the three countries as a result.
It was noted that majority of the foreign investors are targeting the Nigerian bond market where there is sovereign guarantee and improved returns compared to other developed countries. There has also been a strong portfolio inflow to the high yields on local-currency debt, including 91-day Treasury bill which was 14 to 15 per cent.
Intra-African investment has also been a significant driver of growth, with Kenya, Nigeria and South Africa among the top investors into the rest of the continent.
Nigeria topped the list of countries expected to draw significant funds over the next five years, with the report forecasting an average of $23 billion per year in FDI inflows and around 95,000 new jobs. But recent militant attacks in the continent’s top oil producer, which has been the largest African recipient of FDI over the last decade, could deter some investors, it added.
FDI inflows to South Africa were projected to average $10 billion a year, generating up to 125,000 new jobs, compared with $7.6 billion a year and 30,000 new jobs in Angola.
Ernst & Young said more regional integration and increased investment to close an infrastructure gap, which will require an estimated $90 billion yearly, would boost Africa’s standing among investors.
Angola, Africa’s second-biggest oil producer, plans to simplify taxation and more than double revenue from sources other than petroleum to curb the government’s reliance on crude.
Bloomberg said the target is to pass three tax codes this year that will cut fees and modernise laws, some which date from 1948, Gilberto Luther, director of the reform project, said.
The changes will increase receipts from industries, including manufacturing and retail to about 20 per cent of gross domestic product by 2017 from eight per cent in 2011, he said.
In Nigeria, Africa’s largest crude producer, non-oil tax was 6.3 per cent of Gross Domestic Product (GDP) in 2011.
Super Eagles’ players will each receive $15,000 if they beat Cote d’Ivoire and qualify for the semi-final of the 2013 African Cup of Nations on Sunday.
A top Nigeria Football Federation official reconfirmed an MTNFootball.com exclusive of several weeks ago when he also disclosed each player will be $20,000 richer if they triumph in the semi-final.
For victory in the championship game on February 10 inside the National Stadium in Johannesburg, each player will pocket another $30,000.
Each player received $30,000 a day after the team qualified for the quarterfinal on Tuesday.
Team sponsor Guinness has also made a financial commitment for goals scored at the AFCON, while the Eagles are expecting billionaire Aliko Dangote to splash more cash after they reached the last eight.
Each player was paid about $80,000 when Nigeria finished third at the 2010 Nations Cup in Angola.
On Sunday afternoon in Rustenburg, the team will face 1992 champions Cote d’Ivoire.
The winners of this match-up will clash with the winners of the quarterfinal between hosts South Africa and Mali.