Business

AfDB urges African countries to finance large scale youth-led businesses

Eyewitness reporter

The African Development Bank (AfDB) has called on governments and private sectors in Africa to grow, finance and support large scale youth-led businesses in the continent.

President of the AfDB, Dr Akinwumi Adesina, said this at a virtual High-Level Roundtable on Scaling up Financing for Youth Entrepreneurship and Innovation in Africa from Abidjan, Côte d’Ivoire on Monday.

The webinar was tagged the “Rationale for the Creation of Youth Entrepreneurship Investment Banks”.

The AfDB had approved its Job for Youth in Africa Strategy to help create 25 million direct and indirect jobs and empower 50 million youth over a 10-year period.

The strategy is aimed at reducing barriers to youth innovation and entrepreneurship and addresses the issues of social and economic insecurity.

This is with the aim of preventing illegal migration, terrorism and political instability among African youths.

The bank also established a multi-donor Youth Entrepreneurship and Innovation Trust Fund, funded with 40 million dollars by Denmark, Sweden, Norway, Netherlands, Italy and the UK.

Adesina said that the capacities and entrepreneurial drive of the youth in Africa needed to be unleashed to create jobs, noting that the youth must be supported to go beyond job seeking.

“We must grow, finance and support large scale successes of youth-led businesses in Africa.

“Existing financial institutions have failed to meet the needs of this rapidly growing population of the continent.

“This is due to lack of appropriate financing instruments; archaic credit risk assessments; focus on collaterals which the youth do not have; and lack of long-term financing horizon.

“That can deploy different types of financing instruments, from debt, equity, quasi-equity and guarantees over the life cycle of the businesses of the youth.”

Adesina said the continent had several programmes directed at improving the skills of the youth by countries, supported by bilateral and multilateral finance institutions.

He noted that though such programmes might have helped to impart some skills to support entrepreneurship, the youth still faced financing challenges to turn their ideas into viable businesses.

“It is time to put the capital of Africa at risk on behalf of the youth

“It is time to create new financial ecosystems that are able to support the businesses of the youth, grow them, and unlock the latent demand for financing by millions of the youth.

“This will help to turn Africa’s demographic asset into an economic asset for Africa and for that, we must nurture the businesses of young people.

“We must tackle market failures and missing institutions that prevent the youth entrepreneurs from reaching their potential,” he said.

He noted that by developing a new financial ecosystem around the youth, that was systemic, scalable and sustainable, Africa would create youth-based wealth and jobs across the continent.

Also in her address, Ms Arancha Laya, Minister of Foreign Affairs, European Union and Cooperation, Spain, said Africa’s demographic dividends would only come about when the youth were gainfully employed.

Laya noted that entrepreneurship was recognised as a driver for economic growth but pointed out that there were too many hurdles to intra-African trade.

“Spain, therefore, welcomes the AfDB Youth Entrepreneurship Investment Initiative geared towards unlocking entrepreneurship and promoting the growth of businesses of the youth.

“This will be a key instrument to spur youth-led innovations and business ventures and at the same time create quality and decent jobs and turn Africa’s youth demographic advantage into a clear and strong asset for the continent.

“In this endeavour, I believe it will be crucial to give youth access to appropriate financing mechanisms, capacity building and implementing legal and institutional reforms to address the barriers that young people face in accessing financial corporate markets,” she said.

The minister further suggested a focus on reviewing the criteria for client risk; facilitating easier access to savings and credits; insistence on financial education, access to information and the creation of support networks for young entrepreneurship.

She further suggested the advancement of the African Continental Free Trade Area, “and we proceed with removing red tape to doing business in Africa”.

“We need to act now, we need to do it right. This is what Spain has proposed to do with its Focus Africa 2023 strategy; focus on youth entrepreneurship and unlock all its potentials.”

Participants held discussions on the bank’s early-stage proposal for Youth Entrepreneurship Investment Banks, with a focus on its rationale and resource requirements.

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Business

Tantita Security dazzles at OTC, USA

– as Lokpobiri seeks global presence of the company

Gloria Odion

The Tantita Security Nigeria Limited has dazzled the participants at the

Offshore Technology Conference (OTC) held in the United States of America (USA) with array of its cutting edge services which it showcased at the annual event.

Curious participants flooded the stand of the security company, obviously impressed by its technology – driven services.

It could be recalled that the company currently carries out surveillance on the network of oil pipelines in Nigeria which has improved the security at the critical oil infrastructure and boosted the country’s oil production.

An elated Executive Director, Technical and Operations of the security company, Capt. Warredi Enisouh enthused “Nigeria have never been seen in this light here.

” We are currently overwhelmed and swarmed with people who want to hear our story,” he noted.

However, the President of Ijaw Youth Council, Jonathan Lokpobiri, called on Tantita Security to extend its services outside the shores of Nigeria, even as he commended the company for its laudable strides at the global event.

Lokpobiri visited the Tantita Security Nigeria Limited stand at the event and said there was a need for the company to extend its services to the other parts of the globe.

“This is the stand of Tantita Security Nigeria Limited at the ongoing Offshore Technology Conference in America, we want to see Tantita in China, we want to see Tantita in Europe and in other African countries.

“As long as security is concerned, Tantita Security Nigeria Limited should be consulted.

Speaking further he said, “From what I have seen on ground here, all the gadgets, and the slides of how the company carries out its operations, I have no doubts at all of the capacity and capability of the company to deliver, especially when you take into consideration what they have done back in Nigeria.

“They have been able to drastically increase Nigeria’s oil production through effective monitoring and policing the country’s oil pipelines and other oil facilities,” he said.

Business

“You lied” – FG lambasts cement manufacturers over hike in product price

Ahmed Dangiwa

The Eyewitness reporter

The Federal Government has picked holes in the reasons proffered by the cement manufacturers for the sudden jump in the price of the product.

It could be recalled that a few days ago, cement recorded an astronomical increase in price as the 50kg of the essential building materials climbed from N5000 to between N10,000 to N15,000, depending on the location in the country.

Concerned by the sudden hike, which has elicited uproar among already depressed Nigerians, the Federal government summoned the major cement manufacturers and other merchants of building materials in the country such as Dangote Cement, BUA and Lafarge, to an emergency meeting.

Addressing the manufacturers at the meeting, the Minister of Housing and Urban Development, Ahmed Dangiwa, dismissed the reasons given by the cement manufacturers, describing them as untenable.

Whereas the manufacturers blamed the cost of gas and mining equipment for the hike, Dangiwa said key input materials for cement production such as limestone, clay, silica sand, and gypsum, sourced within the nation’s borders, should not be dollar-rated.

He said the price of gas that manufacturers are using as an excuse was not tenable because gas is a raw material found within the country.

The minister further declared that the excuse of an increase in mining equipment should not come up because equipment bought by the manufacturers has been used for decades and not purchased every day.

He however threatened that the federal government may be forced to throw open the borders and allow importation of cement to flood the Nigerian market in a bid to crash the prices of the community should the manufacturers refuse to reduce their prices.

He warned that the cement manufacturers should not push the government into taking this decision which he believed would push them out of business.

The minister said the border was closed to the importation of cement to help local manufacturers.

However, he noted that if the government decides to open the border for mass importation, prices of cement would crash and local manufacturers would be gravely affected.

The minister, who called on the manufacturers to be more patriotic, said BUA Cement, for instance, has been willing and is still willing as at the last time he spoke with them, to crash the price of their cement, lower than the N7000, N8000 agreed by the manufacturers and he sees no reason why the others should not do same.

“The challenges you speak of, many countries are facing the same challenges and some even worse than that but as patriotic citizens, we have to rally around whenever there is a crisis to change the situation.

“The gas price you spoke of, we know that we produce gas in the country. The only thing you can say is that maybe it is not enough.

“Even if you say about 50 percent of your production cost is spent on gas prices, we still produce gas in Nigeria. It’s just that some of the manufacturers take advantage of the situation.

“As for the mining equipment that you mentioned, you buy equipment and it takes years and you are still using it,” he said.

Earlier, Group Chief Commercial Officer of Dangote Cement, Rabiu Umar blamed the high cost of gas and mining equipment for the hike in cement price.

He said: “It is safe to say we are all Nigerians and we are all facing the current head weight that is happening. I would like to speak on the popular belief that most of the raw materials to produce cement are available locally.

“While we have limestone and in some cases, we have gypsum and some cases coal, the reality is that it takes a lot of forex-related items to produce cement.

Business

Marine insurers express frustration, confusion over loosely -worded EU sanctions on Russia.

WESTERN SANCTIONS TARGETING RUSSIAN PRESIDENT VLADIMIR PUTIN’S ABILITY TO SHIP OIL VIA INSURANCE RESTRICTIONS ARE PROVING TO BE A DIFFICULT CHALLENGE FOR THE INSURANCE MARKET TO NAVIGATE.

The lack of detail and loosely worded legislation in Europe’s latest set of sanctions against Russia has posed a series of difficult legal scenarios for the insurance sector to considerMarine insurers are struggling to interpret the ambiguous detail behind the European Union’s sixth package of sanctions targeting Russia and have warned that pending UK legislation may yet complicate matters further.

According to the legal framework released last week, EU countries will phase out imports of seaborne Russian crude over a six-month period and prohibit insurance and reinsurance of maritime transport of crude and petroleum products to third countries.

However, because the EU legislation is not immediate and contains several staging points with multiple caveats allowing continuation in given circumstances, the porous nature of the rules is proving difficult for insurers who demand legal clarity.

There are also concerns over how the UK plans to treat the issue of EU states as ‘Third Countries’.

It is widely expected that the UK, home to the world’s largest shipping insurance market, will follow the bloc’s move with its own insurance bans, however no details have yet been shared by the UK Treasury with the industry.

The UK is a third country from an EU perspective, and it remains unclear whether the UK would treat supplies to the EU differently to supplies to other countries, especially as the EU is treating the UK as a third country.

That means that EU insurers, including the subsidiaries of UK insurers, cannot insure transportation of spot cargoes coming to the UK, and likely vice versa.

‘The issue of supply insurance can be closed at the expense of state guarantees within the framework of interstate agreements with third countries,’ says former president

The lack of details has posed a series of difficult legal scenarios for the insurance sector to consider.

It is not clear, for example, how the Luxembourg-based insuring subsidiary of a P&I Club headquartered in the UK would respond to questions about cover from a Greek member which is asked to carry a spot cargo from Russia to the UK during the wind-down period.

Even if the UK is able to iron out any inconsistencies, the loose wording of the EU’s current guidance has left insurers scratching their heads trying to work out how to apply the EU legislation.

Phrases such as “as soon as possible”, “should be possible” and “exceptional temporary derogation” contrasts with the insurance sector’s requirement for legal black and white.

The EU guidance details an eight-month transition in relation to the transport of crude oil and more than 80 different petroleum products.

There are five wind-down dates, the latest being December 31, 2024 for Bulgaria, with at least 11 other caveats on top.

Specific exemptions such as those detailed under Article ‘3m’ allow for one-off transactions for near term delivery — the implication being that these are for delivery into the EU.

However, Article ‘3n’ does not, so any insurer of a vessel carrying crude or petroleum products to a third country must check that there is a pre-existing contract in place, and not just rely on what could be called the spot cargo exemption.

Lawyers still in the process of interpreting the EU guidance also argue that the notification framework is very unclear in its current format.

The responsibility lies with member states to notify the commission, but there is no guidance on who tells the member state and which one if there is a nexus to multiple different member states.

What happens if a commercial party fails to inform a member state is not yet clear.

Given the extensive nature of caveats and clauses, implementation of the sanctions is likely to prove difficult.

According to guidance note 19 in the EU legislation, states could theoretically declare a temporary derogation.

The clause states: “If the supply of crude oil by pipeline from Russia to a landlocked member state is interrupted for reasons beyond the control of that member state, the import of seaborne crude oil from Russia into that member state should be allowed, by way of an exceptional temporary derogation, until the supply by pipeline is resumed or until the council decides that the prohibition on the import of crude oil delivered by pipeline is to apply with regard to that member state.”

“The implementation of ‘19’ is likely to be particularly challenging in practice as it’s entirely subjective,” explained one senior insurance expert.

EU ban covers ‘insurance and re-insurance of Russian ships by EU companies’.

Compromise will allow Russia’s pipeline oil exports to the EU to continue temporarily, while seaborne shipments are blocked by the end of the year

Despite the lack of clarity, assuming that the UK eventually prohibits the insurance and reinsurance of Russian oil shipments to third countries, lawyers and insurers agree that the combination of jurisdictional approaches will likely prevent many mainstream tanker owners from lifting Russian cargoes.

According to Broker BRS, however, it will not completely choke off Russian exports.

As Lloyd’s List reported this week, alternative, albeit smaller, insurance markets, notably in China and Russia, will remain open.

“Although this will discourage mainstream tanker owners from lifting cargoes, it will not likely discourage ‘niche’ tanker owners whose vessels are already involved in the transport of illicit Iranian and Venezuelan oil,”

BRS said in its latest research note. “Since the sanctions package was finalised, we are already hearing of significant insurance issues.”

Western companies are reluctant to insure voyages passing via the Black Sea.

Meanwhile, due to the restrictions placed on the Russian banking sector, companies are reluctant to insure tankers loading from the CPC terminal close to the Russian port of Novorossiysk.

Although CPC blend is composed of 90% Kazakhstani crude and thus not embargoed, if there was an accident at the terminal, it would be difficult to compensate Russian entities without falling foul of sanctions.

Lawyers and insurers await details from UK Treasury over planned Russian sanctions to match EU sixth package as concern mounts over ‘Third Party’ countries application of rules