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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.