25 Jul

Daily Watch – Nigeria to assess Morocco’s ECOWAS cred, Floods to fuel 2017 rice haul

  • OPEC moved on Monday to cap Nigerian oil output and called on several members to boost compliance with production cuts to help clear excessive global stocks and support flagging prices. OPEC has agreed with several non-OPEC producers led by Russia to cut oil output by a combined 1.8 million bpd from January 2017 until the end of March 2018. OPEC states Libya and Nigeria were exempted from the limits to help their oil industries recover from years of unrest. A ministerial committee of OPEC and non-OPEC states that monitors the global oil pact said it had agreed Nigeria would join the deal by capping or even cutting its output from 1.8 million bpd, once it stabilises at that level from 1.7 million bpd recently. The monitoring committee, known as JMMC and which met in the Russian city of St Petersburg, did not give the timeframe for when this would happen, saying it would track Nigerian production patterns in the next weeks.
  • ECOWAS is studying the implications of admitting Morocco following its request last month to join the organisation, Nigeria’s Foreign Affairs Minister Geoffrey Onyeama, has told Bloomberg. Morocco’s request was accepted “in principle” by leaders of the group known as Ecowas at a June 4 summit in the Liberian capital, Monrovia. “The principle, of course, is one of non-hostility to Morocco,” Onyeama said in an interview in Abuja, on July 20. “There’s no enmity there that would mean an immediate and automatic negative response to such a request. What has to be looked at a bit more is all the technical ramifications.” Nigeria didn’t send a high-level delegation to the Ecowas summit after it emerged that Morocco would present its request to join the 15-member bloc. “We would’ve preferred to have had the opportunity to discuss internally and this was not given by the Ecowas secretariat,” Onyeama said. Several Nigerian lobby groups, including an organisation of retired ambassadors, are putting pressure on the Nigerian government to reject the application because of the decades-old dispute over Western Sahara and Morocco’s geographical distance. Nigeria recognises the Western Sahara as an independent nation, while Morocco claims it as part of its territory.
  • Stocks climbed to a more than two-year highs on Monday, lifted by gains in Dangote Cement as investors piled into the shares in anticipation of its half-year earnings. Dangote Cement, which accounts for a third of total market capitalisation, rose 2.44 percent to lift the main share index 1.86 percent to a level last seen in May 2015. Traders said investors were expecting strong a half-year performance from listed firms as results start pouring in this month. Sub-Saharan Africa’s second biggest stock market had put in a lacklustre performance after a sharp fall in crude prices from mid-2014 led foreign investors to flee its financial markets. Analysts say average daily turnover stood at over $16 million from April compared with $6 million daily from January. Other gainers included conglomerate Transcorp, up 8.05 percent, Julius Berger, up 4.96 percent, and Access Bank up 4.46 percent.
  • At least 32 of Nigeria’s 36 states, including those that span the southern cocoa belt, are likely to experience flooding during the current wet season due to irregular rainfall patterns, the Nigerian Meteorological Agency, NiMet, said in its weather outlook for this year. “When you have serious cases of flooding, the tree crops will be forced to accommodate more water than they can absorb,” Sani Mashi, the director general of NiMet said Thursday in an interview in the capital, Abuja. “Unlike a cereal crop like rice that can be submerged, cocoa will be seriously hampered.” Wet conditions such as those created by flooding engender fungal diseases, such as black pod, that reduce both cocoa output and quality. Nigeria ranks seventh among the world’s cocoa producers, with 2015-16 output estimated at 190,000 metric tonnes by the International Cocoa Organization. Nigeria is looking to expand investments in agriculture to cut food imports that cost it $3.2 billion in 2015, according to the NBS. It imported 2.1 million metric tonnes of rice and produced 2.7 million tonnes in 2016, according to the U.S. Department of Agriculture. With additional fields cultivated in recent years and improved yields, Nigeria expects to meet all its domestic requirements for rice by the end of this year, according to Agriculture Minister Audu Ogbeh.
  • Nigerian pasta maker Dufil Prima Food plans to raise ₦40 billion ($131 million) from the local debt market to broaden its funding base. The privately held company, set up over two decades ago, has grown to become the largest pasta maker in West Africa, it said. It competes with listed rival such as Dangote Flourmill, Flour Mills of Nigeria and Honeywell Flour Mills. Dufil also makes cooking oil. Several Nigerian companies have said they want to tap debt markets this year but local inflation, still above 16 percent, has kept bond yields high, leaving many firms undecided on the timing of an issue. Dufil Chief Operating Officer Madhukar Khetan said in a statement that the issue has been approved by SEC but that the timing of the sale was subject to market conditions.