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The global economy can withstand an oil price of $100 a barrel,
Kuwait’s oil minister said on Saturday, as other exporters indicated OPEC may
decide against increasing output through 2011 as the market was well supplied.

Analysts have said oil producing countries are likely to raise
output after crude rallied more than 30 percent from a low in May because they
fear prices could damage economic growth in fuel importing countries.

European benchmark ICE Brent crude for February closed at $93.46
on Friday after hitting $94.74 a barrel, its highest level since October 2008.

Arab oil exporters meeting in Cairo this weekend said they saw
no need to supply more crude as stocks were high and prices had been inflated
temporarily by cold weather in Europe.

Asked by Reuters if the world economy could stand a $100 oil price,
Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said: “Yes it can”.

Iraq’s new oil minister and the head of Libya’s National Oil
Corporation both told Reuters that $100 was a fair price, while Qatar’s
Minister Abdullah al-Attiyah said he did not expect OPEC to increase production
in 2011.

“I do not expect an OPEC meeting before June because oil prices
are stable,” he said.

Some delegates even called for exporters to comply better with
agreed production limits. OPEC members’ compliance with promised cutbacks
reached 56 percent in November, according to Reuters estimates.

When asked if output could be raised, Kuwait’s Sheikh Ahmad
said: “No. More compliance, more compliance”.

Market “well supplied”

The Cairo meeting of the Organisation of Arab Petroleum
Exporting Countries (OAPEC) brought together Arab members of OPEC including top
exporter Saudi Arabia, which has traditionally been viewed as a price moderate,
as well as non-OPEC countries Tunisia, Egypt, Syria and Bahrain.

OPEC cut output drastically after the global financial crisis
struck in 2008 to prop up collapsing oil prices.

As demand has risen steeply in 2010 and is expected to rise
further in 2011, the market is watching closely whether OPEC can release at
least some of its spare capacity to prevent prices from soaring to around $150
per barrel as they did before the crisis struck in summer 2008.

OPEC’s most influential oil minister, Saudi Arabia’s Ali
al-Naimi, said on Friday he was still happy with an oil price of $70-80 a
barrel and there was no need for an extra OPEC meeting before the next
scheduled one in June.

Others in the group have been pressing for a higher price,
arguing that quantitive easing and a weakened U.S. dollar that spurred gains
across financial markets mean the oil price strength is partly nominal.

Egyptian Oil Minister Sameh Fahmy said the current increase in
oil prices was the result of higher demand on heating fuel because of the cold
weather in Europe.

United Arab Emirates Oil Minister Mohammed al-Hamli said crude oil
inventories are “quite high. It’s the highest over the five years average…
The market is well supplied”.

Stocktaking is one of the year-end’s favourite handmaidens.
There are few ways better to end the last twelve months than to tote everything
that had transpired, and compare the resulting balance with the targets we set
ourselves at the beginning of the year. The gaps that then show up explain why
this is also the wish and resolution-making season. When, against the backdrop
of the many failures of the outgoing year, one resolves to approach the
challenges of the New Year differently. It affords little solace at this point
that not enough of the resolutions reached at the beginning of the year will
remain come the end of the cycle. Far more significant is the catharsis of the
process.

The process of enquiry, review, and resolve is especially
poignant in the run up to the general elections next year. On an annual basis,
we cannot claim, as a country, to have met the different targets we set
ourselves at the beginning of the year. As a country, consensus is that over
the last five decades, we have failed in every aspiration but one: “to keep
Nigeria one”. And even the utility of that aspiration has come in for some
serious questioning of late.

“How much of our fecklessness, is the result of the apparent
incompatibility of views amongst the constituents of the republic, on
everything from development paradigms, to moral schemes?”

Still, the countless gaps in our lived space push us in one
direction only. At the end of the inventorying exercise, what may we wish for
legitimately? A “better Nigeria” obviously!

This wish list is not without difficulty though.

For instance, how we define “better”. What does it consist of?
In what does it inhere? The most successful experience in living memory of a
country resolving the problem of large-scale poverty on an industrial scale is
provided by Communist China. Proceeding from this example, it is clear that
“better” need not be “democratic”.

Yet, there is that attribute of “democratic rule” that makes it
difficult to find a jurisdiction that is simultaneously democratic and failing
in the way most countries on the African continent are.

A wish list for the New
Year

Increasingly, it is clear that conspiracy theorising won’t do as
an explanation for failings such as ours. Our wish list for the New Year might
thence benefit more from focussing on the local constraints that have held
achievement of our sundry goals back for so long.

Discussing with a friend a week ago over the right person for
the office of president come next year’s elections, the limiting constraint
appeared to be a choice between a better managed economy (the focus over the
last one year of my musings on this page) and what my interlocutor referred to
as the “citizenship question”.

There was so much to do about which of the candidates currently
on offer best epitomise these values. Nonetheless, I’m still uncertain that
these constraints are antipodean enough to have generated that much heat.

Thinking back on the discussion I cannot but wonder how true its
underlying arguments are. I have no doubt that a focus on getting economic
management right lends a stronger fulcrum for leveraging this country’s growth
than concern with “citizenship issues” could.

This incidentally is not just because the latter is conceptually
more challenging. Nor is this to detract from the importance of “citizenship”
properly defined as part of the process of properly managing economies.
However, the tension between “managing the economy for growth” and “resolving
the citizenship question as an integral aspect of governance” reaches back to
the old “basis” and “superstructure” argument that lay at the heart of Marx’s
“dialectic materialism”. Easy to conclude from this, that “it’s the economy,
stupid”.

But is this all? What place does governance play in all of this?
How much would we achieve were we to appraise contestants for political office
on the strength of their grasp of the challenges faced by this economy? Or
based on their understanding of the need to (and best means of) address(ing)
the “citizenship question”.

Not much if you ask me. For be far more important are the structures,
processes, rules, and enforcement mechanisms by which the country is run. If we
do not attend to these, we strive in vain aspiring to other goals. Better
therefore to expend effort in the short time remaining on ensuring that every
vote counts and every vote is counted.

Despite efforts by
the Central Bank of Nigeria (CBN) to curtail demand for foreign
exchange, the country supplied over $12.6 billion (N1.89 trillion) to
meet her burgeoning importation appetite and defend the value of the
naira in the second half of the year. This is compared to $11.16
billion (about N1.7 trillion) supplied in the first half of the year.

This figure does
not include foreign exchange inflow from autonomous sources which
amounted to about $67.17 billion as at October. The highest foreign
exchange demand occurred in September when a total of $3.2 billion was
offered by the CBN. The huge demand has taken its toll on the country’s
foreign reserves. The figure closed the year at $32.19 billion, its
lowest in over four years. The figure stood at $62.24 billion in
mid-May 2008.

Speculative demand

At the November 23
Monetary Policy Committee (MPC) meeting, the last one for the year, the
CBN governor, Lamido Sanusi, raised concerns over speculative demand
for foreign exchange which led to an increase in reserve utilisation to
defend the naira. The MPC communiqué raised concerns about the elevated
inflation levels, rising government expenditure and borrowings with the
possible crowding out effects on the private sector and demand pressure
in the foreign exchange market, leading to reduction in external
reserves.

“The view of the
Committee is that the solution requires both fiscal and monetary
measures, and reiterated the need to eliminate unnecessary subsidies
that add to government expenditure and debt,” the communiqué stated.
The Committee urged greater fiscal responsibility and commitment to
reforms that will enhance the effectiveness of monetary policy. It also
held that, in view of the low price elasticity of demand for imported
necessities, depreciation of the currency would not in itself address
the structural problem of import-dependence.

Legitimate concerns

Olusegun Aganga,
the finance minister, in a telephone interview yesterday said all the
legitimate concerns on issues affecting the value of the naira, foreign
reserves management and the growth of the economy was being looked at.
Mr Aganga said the setting up of the sovereign wealth fund was a step
in the right direction. He said the provision of N500 billion longer
term loans at single digit has been made available to enable companies
refinance their loans while about five textile companies have resumed
production as a result of lifeline from the N100 billion textile
revival fund.

Mr Aganga said
government was addressing the unemployment scourge adding that
Nigeria’s economy has not done badly compared to other developing
economies in view of the global economic crisis which has affected
world economy.

“Figures do not lie, an economy where GDP (gross domestic product)
has grown for the last seven years. As at third quarter 2010, GDP was
7.7 per cent, making it one of the top performers in the world. Oil GDP
growth of about 5.5 per cent and non oil GDP growth of 8.7 per cent and
annual year on year revenue of 42 to 48 per cent.”

Some rescued banks’
shares at the Nigerian Stock Exchange (NSE) saw considerable
improvement in their value this year, despite the general weak
performance witnessed in the banking sector during the year.

From January 4 to
December 23, the share prices of five out of the seven rescued banks
recorded growth within the range of 23.28 per cent to 46.32 per cent;
while their counterparts only showed about 10 to 20 per cent growth in
value.

Finbank’s share
showed 25.45 per cent increase; BankPHB grew by 30.43 per cent; Spring
Bank by 23.28 per cent; while Oceanic Bank and Intercontinental Bank
recorded increase of 25.44 gains per cent and 46.32 per cent. However,
Union Bank declined in value by 31.52 per cent while Afribank followed
with a marginal decline of 1.64 per cent.

Analysts at
Proshare Nigeria, a business advisory company, said although “rescued
banks witnessed volatility as the market swings up and down” during the
year on the back of mixed sentiments, the rescued banks “gained more
points despite the volatility witnessed.”

Investors’ confidence

Bola Oke, a
chartered accountant at WealthZone Company, an investment management
firm, said the performance of the “troubled banks” showed that
investors are beginning to have confidence again in the rescued banks
“following the various reforms by the Central Bank.”

“The improvements
seen in those stocks this year obviously testified to us that the fear
is over. We can only expect that investors’ confidence will grow better
and faster next year when the Asset Management Corporation of Nigeria
(AMCON) kick off as planned,” Mrs Oke said.

Boniface Okezie,
the national chairman of the Progressive Shareholders Association of
Nigeria, also agreed that “until the AMCON clears all the toxic assets
it was created to solve” in the banking sector, investors’ confidence
in the sector may not improve significantly next year.

The genesis

Over a year ago,
the Central Bank sacked the former chief executive officers and top
managements of the seven banks for various atrocities. The banks’ heads
were immediately replaced with new ones. The development, however, led
to the free fall of those banks’ shares at the stock market.

However, some quoted equities at the NSE remained resilient during
the year in spite of the downturn in the capital market that sent
stocks’ prices below their official listed values. Many of these stocks
fall in few sectors out of the 30 sectors listed at the Exchange. They
range from the banking, breweries, building material, conglomerates,
food/beverages, and healthcare sectors.

Global stocks edged
higher on Tuesday on expectations the U.S. economy is on track for
recovery while the dollar slipped as commodity prices surged.

U.S. crude oil
futures rose above $91 a barrel and were near a 26-month high, boosted
by demand for heating oil after a storm hit in the U.S. East Coast and
by a weaker dollar. U.S. Treasury prices fell before a $35 billion
auction of five-year notes.

Trading volumes in
all markets were light due to the Christmas holiday and as the
northeastern United States dug itself out from the winter storm that
disrupted travel.

“Data in recent
weeks have been supportive of the stocks and commodity markets
globally. The U.S. will avoid a double-dip. The Asian region, including
Japan, looks a little bit better, with its industrial production
finally showing an increase,” said David Cohen, director of Asian
Economic Forecasting at Action Economics.

The MSCI All
Country World index .MIWD00000PUS rose 0.15 percent while the Thomson
Reuters global stock index .TRXFLDGLPU gained 0.02 percent.

But investors were
reluctant to take large new positions after weaker-than-expected U.S.
data on consumer confidence and home prices.

The S&P/Case
Shiller home prices indexes showed prices of U.S. single-family homes
fell almost double the expected pace in October, while confidence
unexpectedly deteriorated in December over increasing worries about
jobs.

While the data were
a negative surprise, “it’s not impacting the market so much due to the
light volume and lack of activity,” Peter Cardillo, chief market
economist at Avalon Partners in New York, said.

The Dow Jones
industrial average .DJI was up 2.91 points, or 0.03 percent, at
11,557.94. The Standard & Poor’s 500 Index .SPX was down 0.68
point, or 0.05 percent, at 1,256.86. The Nasdaq Composite Index .IXIC
was down 7.87 points, or 0.30 percent, at 2,659.40.

The pan-European
FTSEurofirst 300 .FTEU3 index of top shares closed up 0.3 percent at
1,140.44 points. Volume was extremely low at just one-quarter of the
30-day average.

Many traders closed
their books for the year, while a holiday in Britain and bad weather in
the U.S. Northeast thinned trading floors. The UK market will reopen on
Wednesday.

Shares in Japan and
China eased on Tuesday on concerns further Chinese monetary tightening
will cool the engine of world economic growth. Those worries
overshadowed Japanese data that pointed to improving demand.

Japan’s Nikkei .N225 closed down 0.6 percent.

The dollar fell
against major currencies, with the U.S. Dollar Index .DXY down 0.11
percent as a rise in oil and gold prices kept the dollar pressured.

The euro EUR= was down 0.24 percent at $1.3126 after climbing as high as $1.3274 overnight.

“Dollar weakness is
basically on the back of commodities,” Dean Popplewell, chief
strategist of FX brokerage OANDA in Toronto, said. “Both oil and gold
are seeing robust demand. The market seems to have shrugged off the
interest-rate hike in China over the weekend.” The dollar also hit an
all-time low against the Swiss franc CHF=EBS at around 0.9435 francs on
year-end buying by Swiss corporates.

The yen rallied
against the dollar after data showed Japanese factory output rose for
the first time in six months in November. Against the Japanese yen, the
dollar JPY= was down 0.72 percent at 82.190.

Commodities rally, bonds eyed

Crude oil prices
CLc1 rose 0.43 percent to $91.38 a barrel, just shy of the $91.88
reached on Monday — the highest since October 2008.

Spot gold prices XAU= rose $20.24, or 1.46 percent, to $1,403.80 an ounce as the dollar fell.

“The end of the
year loss of confidence in the dollar value has brought gold players
back into the market on the long side,” said George Nickas, a broker at
FC Stone in New York.

U.S. government bonds were mixed in thin volume before the auction of new five-year notes.

The benchmark 10-year U.S. Treasury note US10YT=RR was down 23/32,
with the yield at 3.4168 percent. The 2-year U.S. Treasury note
US2YT=RR was up 3/32, with the yield at 0.7196 percent. The 30-year
U.S. Treasury bond US30YT=RR was down 46/32, with the yield at 4.4865
percent.

Uncertainty
surrounds last Thursday’s expiration of the controversial extended
deadline for the payment of 30 per cent bid security for the sale of
the Nigerian Telecommunications Limited (NITEL) and its mobile
subsidiary, MTel.

Several calls to
the Director General, Bureau of Public Enterprise (BPE), Bolanle
Onagoruwa, prior to close of official working hours last Thursday went
unanswered.

Spokesman to the
privatisation agency, Chukwuma Nwoko, said he did not have information
about the issue. “I don’t know anything about whether the payment has
been made or not. I am on leave. I am in my village as I am talking to
you. We have closed for the year,” he said.

Special Assistant
to the Director General, Azeez Aderemi, could neither confirm nor deny
that New Generation Consortium failed to meet the deadline for the
payment.

“Nobody is in the
office to confirm whether the payment has been done or not. The
Director General has travelled out of the country at the moment. I only
read in the media that the payment has not been made, and that
government is considering inviting the reserve bidder. I don’t know
where they got the story from,” Mr. Aderemi said.

Letters instead of payment

But, Usman Gumi,
the Chief Operating Officer, New Generation Consortium, confirmed
yesterday that his company has not paid the $750 million into BPE
account; even though the expiration of the December 23 extended
deadline in line with the provisions of the bid guidelines spelt out by
the National Council on Privatisation (NCP).

“What we (New
Generation Consortium) did was to send a letter from our financiers to
the BPE last Thursday, December 23 at 3.15 p.m., which is verifiable,
to prove that we have the fund in place to pay once the global finance
world has returned from the current holidays,” Mr Gumi said.

“We did not stop
there. We followed up with another letter with additional proof to
reassure everyone that we are capable and ready to fund the payment.
What we want to do is not just to pay for the initial bid security of
30 per cent, but the entire amount of $2.5billion at a go,” Mr Gumi
said.

Following
Presidency approval last October for the BPE to take steps to conclude
the privatisation process, New Generation was, on October 25, asked to
pay the initial bid security of $750 million within 10 calendar days
from the date of its receipt of a demand letter conveying its
acknowledgment as winner.

But, following a
request for 30 days extension to enable it mobilise funds for the
transaction, the NCP on November 5 granted the consortium 20 days
extension, to help the consortium “clarify all compliance and due
diligence issues and also to remit the funds into BPE’s account.”

The BPE claims the deadline extension did not take effect until
November 19 when the letter conveying the approval by the Vice
President and Chairman of the NCP, Namadi Sabo, was received by the
Consortium. The BPE had earlier announced the extension to take effect
from November 5 based on a verbal approval Mrs Onagoruwa claimed to
have received from the Vice President.

The Bauchi Meat Company is negotiating a N300 million contract with the Nigerian Army for the supply of minced meat.

The Commissioner
for Commerce and Industries, Yerima Giade, said this in an interview
with the News Agency of Nigeria (NAN) in Bauchi, on Tuesday.

Mr Giade said that
the contract when signed, will enable the company to supply the product
to soldiers in the UN peacekeeping operations abroad.

He said that the
product will be a substitute to the 600 cartons of dry meat (kilishi)
currently being supplied to soldiers in various peacekeeping missions
abroad.

Mr Giade explained that last year, the company had supplied dry meat but that authorities of the army preferred minced meat.

He said that
negotiations have also been intensified to get the various airlines and
the National Emergency Management Agency (NEMA) to patronise the
product. He said that the company has expanded the supply of its
product to Abuja and Lagos to further boost its revenue base.

NAN recalls that
the company which was established in 1964, collapsed 25 years ago,
after it was inherited from the defunct Northern Nigeria Government
company and was resuscitated by the present administration.

The Lagos State
government is collaborating with the World Tourism Organisation (WTO)
to stage a capacity building workshop on the development of tourism in
Badagry in February 2011.

Sewanu Fadipe,
Permanent Secretary, Ministry of Tourism and Inter-Governmental
Relations, told the News Agency of Nigeria (NAN) in Badagry on Tuesday
that the objective was to empower Badagry people through tourism.

He said the state government would also collaborate with the United Nations International Organisation (UNIDO) on the project.

“The UNIDO and WTO
sponsored workshop will hold in February as part of efforts to empower
the people on tourism. Badagry is a tourist destination and it has
hosted international events such as the Black Heritage festival and
Miss Badagry Tourism,” Mr Fadipe said. He said participants would be
drawn mainly from stakeholders in the tourism sector.

“The ongoing
construction of Lagos-Badagry 10-lane expressway is one of the projects
being designed by the Lagos State government to boost tourism in the
ancient town,” Mr Fadipe said.