Nigeria is heavily dependent on the oil sector as a major revenue source. The Nigerian National Petroleum Corporation (NNPC) has oversight of the country’s petroleum trade and keeps records on domestic crude oil sales and reconciliation statement with the Central Bank of Nigeria (CBN). The NNPC is widely considered as one of the most powerful corporation’s in Nigeria, so when in 2013, one of Nigeria’s most respected central bank governors, Sanusi Lamido Sanusi, told a senate committee that $49 billion was missing from the state coffers, all hell broke loose.
“I had for many years expressed concerns that reserves are not going up but it never really hit me. I always thought there was some explanation of maybe the production sharing contracts were not favorable to Nigeria, the oil company was taking the bulk of the revenue, maybe we had some sort of financing arrangement with the oil companies and the revenues were going towards paying those debts, maybe NNPC had borrowed from banks and the revenue was going towards paying off the banks,” says Sanusi, who now goes by the name of Emir Muhammadu Sanusi after being crowned as the Emir of Kano in 2014.
The shocking revelation will forever haunt Sanusi as his worst day in business. It all began in a quarterly meeting at the CBN.
“We have within the central bank what’s called the Government Consultative Committee and it is made up of all the departmental directors, the deputy governors and the governor. We met once in a quarter to review the economy. At several of these meetings I had complained that I was not at all satisfied that we had understood what was going on with revenues because the numbers were not adding up to me,” says Sanusi.
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“So the initial report I got was that we had been seeing a huge and increasing gap between the value of crude oil shipped from Nigeria and the amount of money paid in by NNPC. So I said ‘why don’t you go back to just January last year ‘til now and bring out from your records how much crude we exported and how much revenue we got in’. He came back with numbers that showed a difference of $49 billion and I said ‘I don’t believe this’. So I got his deputy governor and other directors to look at the numbers again and they came back with the same number.”
After reconciliation, $29 billion was explained through a production sharing agreement where the money was paid to the state through the Federal Inland Revenue Service (FIRS) account instead of the CBN account. The remaining $20 billion however could not be accounted for. Sanusi had to make the difficult decision either to keep quiet and finish the remainder of his term as governor of the CBN or speak up. He decided to speak up.
“I thought the best thing to do was to write to the president and draw his attention to this and the reason is because, as governor of the central bank, I have the fiduciary responsibility to my customer to let them know if something is going wrong. So I wrote to the president and said to him ‘Mr President, I am concerned that reserves are not going up’ and explained to him what was happening. This was in August 2013; the president received the letter and did nothing. I saw him several times in meetings after that but he said nothing,” says Sanusi.
After being ignored for months, Sanusi’s letter mysteriously ended up in the hands of the former president, Olusegun Obasanjo, who wrote an open letter to the Goodluck Jonathan administration. The media frenzy that ensued resulted in Sanusi being summoned to the president’s office.
“I got a call and he said I should see him at 3PM and when I got there the place had been swept, there was no one apart from the security services, it was as if everybody had been asked to go. He says to me he is calling because he is surprised a letter I wrote to him got to Obasanjo and I said to him I was surprised as well. And he said he is calling me because he thinks I know who gave Obasanjo the letter. I said the letter was in different places, and Obasanjo had been a former president and lived in this villa for eight years and therefore he is more likely to have sources inside this villa than inside the CBN,” says Sanusi.
“He said he is convinced that the letter left the CBN to Obasanjo and I have 24 hours to find out who leaked the letter or sack somebody, and if I didn’t sack them then that was proof that I leaked the letter and that I should resign.”
The exchange was unexpected for Sanusi. The focus was not on the missing $20 billion but rather on who leaked the allegations to the former president. Sanusi redirected the focus of the conversation back to the missing funds and put the blame on the NNPC and the former Minister of Petroleum Resources, Diezani Alison-Madueke. From that moment, he knew he had signed his professional death warrant.
“I knew that taking on the NNPC was taking on the most powerful minister in Jonathan’s government and nobody who had touched Diezani had survived; so it was not a question of what would happen, I just didn’t care at that time. I did not want to go down in history as having seen this and kept quiet. Once I mentioned the minister he got very angry, his countenance changed and he said ‘you know, whether you like it or not, you are going to leave that office, I cannot continue to work with you, either you or I will leave government’.”
The following months were full of threats and allegations of corruption against Sanusi, which led to his eventual suspension by Jonathan on the grounds of financial recklessness and misconduct. His term as the governor of the CBN had come to an end just a couple of months before the end of his official tenure. The authorities seized his passports and made life uncomfortable, according to Sanusi.
“I always said that I didn’t see the role of being Governor of the Central Bank as an end; it was never really an ambition for me. It was a job and, if I wasn’t sacked, my term would end anyway. The only reason I stayed is because I believed if you are called to serve your country, don’t just walk away. You have a five-year term, complete the term and go. So it wasn’t an issue, the real issue for me was to get to the bottom of what had gone wrong,” says Sanusi.
These days, Sanusi still spends his time in service to his country but this time as Emir Sanusi, and the religious leader of the Kano Emirate. The role is a hereditary role and has been in existence for thousands of years, with his particular dynasty ruling Kano for over 200 years. The role has tremendous influence in terms of advice to political authorities and collaboration in the delivery of public services. As he looks back on the events that transpired just a few years ago, his resolve is as strong as ever when asked if he would have done anything differently.
“I am a prince and you need to understand the psychology of princes. The best place for a prince to be is a place where he can be a hero; at that point we had reached a point where I could not lose. If the president brought me down, I would be brought down while defending $20 billion of the Nigerian people’s money and if I brought the president down I am a hero for bringing the president down while defending $20 billion of the Nigerian people’s money, I could not lose. The only way the president was going to win was to sack his petroleum minister and investigate the money.”

The Pain Of The Banker Who Investigated The  Missing  $20 Billion

Diezani Alison-Madueke turns heads, not only because of her sartorial elegance. With a record-breaking career of many firsts, she is a force to reckon with in Nigeria’s corridors of power and among titans of industry.
Her list of career firsts could fill up an entire chapter in Nigeria’s book of powerful people.
Alison-Madueke is the country’s first female Minister of Petroleum Resources, a post she has held since 2010. She was the first woman to lead a country delegation to the annual Organization of Petroleum Exporting Countries (OPEC) conference. She was Nigeria’s first female minister of the mega Transportation Ministry and the first woman to be appointed to the board of Anglo-Dutch oil giant, Shell Petroleum Development Company of Nigeria. She recently added more feathers to her cap when elected the first female president of OPEC, and also the Gas Exporting Countries Forum.
Alison-Madueke’s rise to the top in an aggressive male-dominated industry has been studied by critics and admirers alike.
As sliding crude oil prices (expected to go down to $30 a barrel according to a recent Goldman Sachs report) send volatile tremors across economies and sectorial bottlenecks linger, there is no hotter seat than Alison-Madueke’s.
OPEC’s decision (largely driven by Saudi Arabia) to maintain production in the face of decreasing oil prices has been called a double-edged sword. One that defends the market share of member countries, yet hurting a few key economies, Nigeria included.
In the scheme of things, Alison-Madueke’s optimism is unmistakable – and unshakeable. She is confident and articulate.
“I am not shaken by the vagaries and viciousness that surrounds the sector, the economy and the politics of Nigeria,” she says when we meet her in February in Abuja, Nigeria’s capital city.
She says this with gusto; you can tell she has had this attribute all her professional life. She admits her early experience as an architect provided the foundation.
“When you study architecture, you fundamentally have to make structures stand up, the integrity of a building is crucial; it is otherwise a failed project,” she says.
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Early life
Being a creative person, Alison-Madueke decided a career in architecture, at Howard University in the United States (US), would complement her personality. Studying her chosen subject well, and with an MBA from Cambridge, she moved very quickly into construction, facilities and project management in the US, before returning to her home country Nigeria. There is where she understood the nuts and bolts of the oil and gas industry.
“I returned to Nigeria to take up a job in the civil infrastructure section of Shell at the time. I moved into public affairs and soon joined venture relations which [found] me working directly with the major governmental organizations in the oil and gas sector under my domain now. I had to learn the hardcore operational details of the oil and gas industry during that period. Having understood the operational details, I took the position of External Affairs Director – the first time a woman had been made a director in Shell Nigeria in over 70 years of it being in operation.”
With each new step, came even bigger global – and social – responsibilities. The topic of women’s empowerment is not far from her mind.
“All the firsts, each time they came, were very humbling and a great privilege. When you realize that the steps you are taking and the glass ceilings you are breaking open the door for other women to enter into that arena, it is something very pleasing to me. I believe that as women, it is important to remember that there are many other women who have been shut out of many areas of professional expertise and as you rise up the ladder, always remember to turn back and give a helping hand to other women to rise along with you,” she says.
Alison-Madueke identifies her parents as early influencers. Her father had been a teacher in colonial days and attained a scholarship to study in the United Kingdom whilst her mother joined him to study nursing and midwifery. Her father returned to Nigeria to take on a senior position with Shell-BP. To their young daughter, they were strong role models.
“I don’t see how I would have had the innate confidence and strength that I had without that sort of a background and influence,” says Alison-Madueke.
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Confronting challenges
As Nigeria’s Minister of Petroleum Resources, Alison-Madueke sits at the helm of a sector that has been plagued by operational challenges. When she took on the role, her mission was to change the narrative of Nigeria’s core revenue-producing sector, and boost investment.
“This is a period [rife] with challenges as we have seen with the drop in the price of crude over the last few months which has of course, affected the federation’s budget quite drastically as well as [that of] many other crude-producing countries around the world. We are grappling with that, reviewing our processes in the oil and gas sector here to make us much more competitive, to have a much more enabling environment for investors and to begin to look at future investment and ring-fence them now to ensure we have them over the medium to long term,” she says. Nigeria is Africa’s foremost oil producing country and Alison-Madueke’s ministry oversees the Nigerian National Petroleum Corporation (NNPC), one of Africa’s largest state-owned petroleum enterprises. A lot of hope is pinned on the sector to take the country forward.
Alison-Madueke’s tenure has recorded some transformatory highs in Nigeria’s oil and gas sector. Her drive to empower local enterprises saw her champion the passage of the Nigerian Oil &amp; Gas Industry Content Development Bill.
The bill was signed into law by Nigerian President Goodluck Jonathan in 2010, influencing indigenous participation and the development of local capacities thus changing the face of the sector. It saw a notable growth in the number of Nigerian-owned exploration and production companies and indigenous entrants, which was a first for the industry. Importantly, it created more jobs.
“The act has ensured that well over 300,000 jobs have been created because of the trickledown effect it has had on the economy but more than that, it has brought into play a whole host of new players, across society, into the downstream service sector of the oil and gas industry – from supply, fabrication of parts for the downstream service sector, fabrication of pipe mills, a massive rise in ownership of rigs and marine gold vessels for use in the oil and gas sector. It has given Nigerians first consideration in many areas of the oil and gas sector.”
Stability of supply, distribution of petroleum products and a uniform price regime in Nigeria are still challenges. Alison-Madueke’s leadership has seen to the revamp and rehabilitation of key depots to restore product supply.
The Petroleum Industry Bill (PIB), a bid to ensure the oil and gas industry is more transparent in order to attract investment, is yet to be promulgated. While Nigerians wait with bated breath, the Minister sheds more light on its intricacies.
“Despite the fact that the PIB has not been promulgated, the Gas Master plan and areas of fundamental reforms in major oil and gas parastatals such as the NNPC and the NPDC (Nigerian Petroleum Development Company) have been pulled out. The Gas Masterplan is being worked very stringently and has ensured we have not only moved for gas to power but also for gas to industry and to ensure we get value for our gas to export. Quite a lot of reforms have taken place in this area in the last three years to ensure we are not only creative about putting in place the formerly non-existent infrastructure for gas to power, but at the same time, the framework that will allow Nigeria in the next four to five years to become a regional hub for industrialization based on gas.”
In a quest to boost Nigeria’s position as a global oil and gas powerhouse, Alison-Madueke’s ministry has had to deal with the scourge of illegal refineries, crude oil theft, as well as the issue of over 5,000 kilometers of vandalized pipelines.
But Alison-Madueke remains resolute.
“There are no bottlenecks that cannot be overcome,” she says, “but we need to very carefully delineate aggressive responses to a number of issues that we have to deal with. We are working very hard with security services to mitigate this bottleneck. Over the last three years, we have been able to drop the rate of bunkering from 200,000 to about 60,000 barrels per day. It is one of the most irresponsible issues we are faced with as a government because it affects the entire country.”
Identifying pricing frameworks in the gas sector is the next frontier for Nigeria and Alison-Madueke says the sector needs to equip itself better with infrastructure.
“We have put in place over 400 kilometers of pipelines in the last three and half years. We have another over 470 kilometers as we speak for gas infrastructure. We are also trying to attract the necessary investors to help us with that,” she adds.
How does she do it all?
On juggling an incredibly busy professional life with family responsibilities, Alison-Madueke offers a simple formula, which is achieving the right balance.
“Women have really come into their own in all spheres of expertise in this day and age. A woman not only has professional responsibilities to deal with, she is a mother, she is a wife, and she is a sister. A woman handles many roles rolled into one. All my professional roles don’t stop me from playing my other roles. I still have my family-related obligations that I attend to.”
In spite of a hectic schedule, Alison-Madueke takes time off whenever she can.
“The most precious things in life are not the things money can buy. What give me satisfaction in life are the things you cannot pay for: the love of a family, seeing them do well as they grow into their professions and start their own families. When I am standing by a football pitch in the mud and rain, screaming out for our youngest son to make that goal, or just enjoying time out or indoors with them is very refreshing,” she says.
The African woman
Alison-Madueke sees the African woman’s place in society as evolving and her presence now acknowledged with a “no-limit view” on how far she can go. She thanks the Nigerian leadership for effecting the mind-set change in gender issues – at least in government.
“For the first time in the history of Nigeria, we have had a president confident enough to place over 35% of women in top nominated positions in his government. Women are not in tokenism positions anymore. It has been very rare for women to be placed in key positions in government. The Nigerian president has gone out on a limb which is historical where women of this country are concerned and I see this happening all over the continent because African women have come into their own. The times for women have changed. I see, over the next 10 years, major progress for women across the board in Africa and I think it will be quite an accomplishment we will all live to enjoy.”
Among Nigeria’s other powerful female leaders is the globally-famous Nigerian economist and Nigeria’s Coordinating Minister for the Economy and Finance, Ngozi Okonjo-Iweala, and Arunma Oteh, who served as Director-General of the country’s Securities and Exchange Commission.
Alison-Madueke says networks and support structures amongst women are key to ascending the corporate ladder.
“Women are in competition with each other. This is highly unfortunate. Leadership is not about being liked. It is about making tough decisions for the betterment of the whole and as women rise, they should learn to begin to network among themselves. Creating clusters where other women support each other. Men do this very well.
“I envision an Africa with a lot of strong women in a lot of very powerful positions.”
By the same token, she encourages young adults to be more assertive.
“Don’t wait for your ship to sail into harbor. Swim out to it and climb onboard. Learn to recognize opportunities when they present themselves. They may turn out to be the most critical opportunities and game changers in your entire life.”
Alison-Madueke may have derived these words from her own life, seeing resources as sustainable opportunities, but how does she counter opposition and critique?
“For every stage I have come into in life, I have been responsible to a certain segment. That we can open up sectors like the oil and gas industry and allow so many Nigerians an opportunity to benefit from the natural resource that runs under their feet, and that lives can be changed completely from their involvement in a sector which hitherto was a great mystery.
“The responsibility to impact positively on the lives of so many Nigerians is what drives me. Every day, I face this work with a certain fuel and passion and I am not feeble about it. Even in the face of opposition, I channel my energy into the sector that I run.”
Energy. Power. Fuel. Drive.
The words of the oil and gas industry fit the woman.

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The Queen of Black Gold

<ol>
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<h4>Akinwumi Adesina</h4>
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<h4>Nigeria’s minister of agriculture and rural development</h4>
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Akinwumi Adesina is a man on a mission. As Nigeria’s minister of agriculture and rural development since 2011, his methodologies have rejuvenated and elevated a once comatose sector into an emerging economic El Dorado.
Once renowned for its peanut pyramids, cocoa, timber and oil palm exports, the last time Nigeria took agriculture seriously was in the 1950s, around the same time the country discovered crude oil.
Adesina is currently unleashing a positive shake-up on Nigeria’s agriculture ecosystem. His purposeful and transparent leadership has changed Nigeria’s agriculture governance, cleansing the Augean stables, attracting much needed investments and effectively reversing the social economics of the sector.
“I am a minister on a mission,” he told FORBES AFRICA in Abuja, Nigeria’s administrative capital.
“Our farmers have waited for too long for people to develop ways of creating wealth for them, and I am determined to unlock the enormous potential of agriculture in Nigeria.”
Unlocking that trapped potential has meant changing the perception of the sector as a development case and dumping the sector’s bad habits. Nigeria currently imports one billion naira worth of rice daily—that’s almost $2.5 billion annually—and even as the largest producer of citrus in Africa, and number two after China globally, it still buys citrus fruit and concentrate from around the world.
These acquired tastes for foreign foods showcase the opportunity and biotechnology gaps in the sector, which was worth $99 billion in 2012. Adesina believes he can grow Nigerian agriculture into a $230 billion wealth generator over the next five years and has embarked on a tropical wheat and rice revolution. The aim is to reduce Nigeria’s wheat bill by 50% and make Africa’s hungriest nation self-sufficient in rice by 2015. Many do not believe this is achievable.
Adesina is undaunted. He argues that there is plenty of space for expansion. Not more than 10% of Nigeria’s 84 million hectares landmass is optimally cultivated. For the first time in a while, Nigeria’s food import bill declined by $5.4 billion in 2012, far exceeding the set target of $2.2 billion. His Agricultural Transformation Agenda (ATA) last year alone created 2.7 million jobs, added 9 million tons of additional crop output to current production levels and galvanized $4.8 billion into the economy.
“Agriculture is big business and my goal is to make as many millionaires, maybe even billionaires, in the long-term from agriculture as possible,” he says
“My vision for Nigeria’s agriculture sector is that we will use agriculture to produce stupendous amount of wealth; that the sector will be as productive, as efficient and competitive like that of Brazil and others… My dream is that we will become an agriculturally industrialized economy.”
He has curbed the endemic scam of fertilizer allocation and distribution in Nigeria. Faceless cabals in government had previously controlled and mismanaged agricultural subsidies.
“We ended the corruption of 40 years in exactly 90 days. I took the government totally out of the buying and selling of fertilizers; now it’s all private sector driven,” says Adesina.
He reckons that almost $4.9 billion of the over $5.4 billion spent subsidizing fertilizer between 1980 and 2012 has not been accounted for.
“Only 11% of fertilizers bought ever got to the farmers,” he says.
Most of Nigeria’s farmers now have electronic wallets, a scheme which allows them to access fertilizer information and supplies via their mobile phones.
Africa’s most populous nation has certainly benefited from Adesina’s professional acuity, experience and passion for change. He has put his global network and solid grasp of agriculture dynamics at his country’s disposal, helping to lay a solid foundation for Nigeria’s food production value chain. In retrospect, his appointment was a turning point for Nigerian agriculture. He knew that the absence of farmers’ records was antithetical to his big, audacious plans, so barely a few days on the job he promptly embarked on a nationwide farmers registration exercise.
“For decades Nigeria kept spending billions of naira on farmers that it didn’t know. Now, Nigeria is the first country in Africa to have a full biometric database of its farmers,” he says.
Around 15 million farmers have been captured on the database so far. Agriculture currently accounts for 44% of the national GDP.
Asked how he felt on being shortlisted for the FORBES AFRICA Person of the Year, he replied: “I was quite humbled by my nomination. It shows that FORBES AFRICA recognizes that value is more than money, that agriculture’s place in the country has changed forever, and that the most important thing about public service is the impact that we bring to the lives and livelihoods of millions of people… so the magazine’s recognition of that is exciting for me as a person. I am not a billionaire but I can certainly help to make others millionaires and billionaires&#8230;”
Adesina’s resume reveals his intellectual wealth and global positioning. He won the Rockefeller Foundation Social Science Research Fellowship in 1988, thereafter going to work and consult for some of the foremost agricultural institutions in the world. A globally recognized agriculture expert, he received a bachelor’s degree in agricultural economics with first-class honors from the University of Ife, Nigeria, in 1981, and his PhD degree in agricultural economics in 1988 from Purdue University, USA, where he won an award for his research work. In 2009, he was appointed by the United Nations secretary-general Ban Ki-moon as one of the 17 global leaders to spearhead the Millennium Development Goals. He remains an adviser to several international development agencies and African governments.
Adesina has revived trust and global confidence in the ability of Nigeria’s agriculture sector to fuel economic growth. As Nigerian banks queue to lend to Nigerian farmers using the government-backed Growth Enhancement Scheme (GES), international financial institutions have posted around $2 billion to support Adesina’s initiatives this year. The sector has also attracted $8 billion of private sector funds over the last two years.
“That covers fertilizer manufacturing, seed companies, food processing firms and so on… it’s never happened in Nigeria or in the history of any African country,” he says.
A new dawn has arrived on the door steps of Nigerian agriculture.

A Minister First  In The field

From the famous words in Shakespeare’s The Merchant of Venice: “All that glitters is not gold; often have you heard that told: many a man his life hath sold.”
Put simply, things that often appear precious may not always turn out to be so. This month, however, I will explore a commodity that proves the opposite to be true. A seemingly unglamorous, not particularly attractive commodity, which has sparked the interest of many: crude oil. It is a topic that is luring huge investment opportunities on our continent.
Even though alternative energy sources abound, crude oil is likely to remain a vital source of energy across the world for many decades to come. Life without oil would be virtually impossible. It is the most important raw material; generating heat, driving machinery and fueling vehicles and airplanes. Its components are used to manufacture most chemical products, including plastics, detergents, paints and even medicines.
Most countries are significantly affected by developments in the oil market, either as producers or consumers, or both. Oil catered for about 34% of the world’s energy needs in 2008. It is expected to continue being a leading component of the world’s energy mix – 30% in 2030, according to the International Energy Agency (IEA).
About two-thirds of oil is used for transportation in the United States and Canada. In the rest of the world it is more commonly used for heating and power generation.
Brent crude oil is derived from the ‘Brent blend’. It is a combination of crude oil from 15 different oil fields in the North Sea, off the coast of the UK and Norway. This blend is used to price two-thirds of the world’s internationally traded crude oil supplies, making it an obvious choice as the benchmark of crude oil.
Brent crude oil is excellent for making gasoline, and is highly sought after, particularly in industrialized nations. It is a ‘light’ or ‘sweet’ crude oil because it contains less sulphur.
This type of ‘sweet’ crude oil is also produced in a few countries in Africa, with Nigeria being our leading exporter. In fact, Nigeria is the largest producer of sweet oil in the Organization of Petroleum Exporting Countries (Opec). Known as ‘Bonny light’, it is similar in composition to the petroleum extracted from the North Sea.
There are two widely used Brent crude oil futures: the West Texas Intermediate (WTI) and the Opec price basket.
Opec is an organization of 12 oil-producing countries that effectively controls the world’s oil. Opec members pump out 42% of the world’s annual supply, thereby controlling 61% of exports. These 12 countries hold 80% of the world’s proven oil reserves, to last for 113 years. Opec’s decisions, therefore, are critical to countries that depend on oil imports.
Opec has stated quite adamantly that its goal is “to manage the world’s supply of oil”, which it does “to make sure its members get what they consider a good price for their oil”.
Opec’s second goal is to reduce oil price volatility. Oil and energy minis-ters from Opec members meet at least twice a year to coordinate their oil production policies. Each member country must abide by an honor system, where it agrees to produce only a certain amount. But countries that produce more suffer no sanctions or penalties.
The Opec members are: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Vene-zuela. Saudi Arabia alone produces enough oil to materially impact the world’s supply.
Opec has a basket price – an average of the prices of oil from Algeria, Indonesia, Nigeria, Saudi Arabia, Dubai, Venezuela and Mexico – which is used to monitor world oil market conditions.
The WTI is a blend of several US domestic streams of light sweet crude oil. It is also considered a key driver of growing global crude oil supply because of its unique immediacy, breadth and depth of pricing. In times of uncertainty, of massive political unrest or financial crisis, the market tends to flock to the WTI instead of the Opec price basket.
Brent crude originally traded on the open outcry International Petroleum Exchange in London. But after 2005, it traded on the Electronic Intercontinental Exchange, known more commonly as ICE. Brent crude financial futures are also traded on the New York Mercantile Exchange. One contract equals 1,000 barrels, quoted in US dollars.
From the mid-1980s until 2003 Brent crude oil averaged $25/barrel.
My technical analysis shows that Brent crude oil (listed on the ICE) is consolidating within a symmetrical triangle on the monthly chart. This triangle is a horizontal cone-shaped pattern, which could break out in
either direction. It often forms after a rally or a decline. In this case, it has formed within the major bull trend.
A positive breakout of this pattern would be signaled above $120/barrel, with the long-term objective situated at $162/barrel – through the 2008 all-time high of $147/barrel. Alternatively, Brent crude oil could breach the lower slope of the pattern, which would be signaled below $96/barrel, in which case the downside objective would be at $54/barrel. I foresee an upward break through $120/barrel, and a 34% appreciation in price in one to five years – a very brave call. However, this surge won’t happen in a straight line. Brent crude may or may not fulfill that objective, but historically, the longer it takes a pattern to form, the bigger the breakout. And as my leading indicators are bul-lish, a positive breakout seems more probable.
However, the question is twofold: how will a positive breakout in the Brent crude oil price affect African economies, and how will such a breakout benefit our oil companies?
Oil is one of the most powerful tools of trade in the world, and after the Middle East, Africa is one of the world’s largest oil producers. Further analysis sees great potential in Africa, but a lot of challenges have hindered this prospect.
Sixteen African countries are oil exporters, with 500 oil companies participating in African hydrocarbon exploration. According to the EIA, Africa’s proven oil reserves have grown by nearly 120% in the past 30 years, from 57 billion barrels in 1980 to 124 billion barrels in 2012.
In 2012, the BP Statistical Energy Survey reported that the continent produced an average of 8.8 million barrels of crude oil per day in 2011, which is just over 10% of the global output.
In November 2012, Chatham House research found that only 500 wells have been drilled in East Africa to date, compared to the 15,000 wells that exist in West Africa. In 2010, Africa’s oil production represented 12.4% of the world’s total crude oil output, with exporters achieving a higher share, at nearly 20% of the world’s total exports of crude.
Africa remains largely untapped for oil, and at present, many of the oil-producing countries with great promise are finding ways to create a safer haven for investors.
The abundant oil reserves in Africa are undoubtedly the glitter that is attracting many overseas investors. It comes at a time when minerals such as iron ore and copper, which were once economic mainstays, have reached a gradual decline.
But will a higher oil price affect the African economy negatively or positively?
Bear in mind that oil prices are still lower than they were in the late 1970s and early 1980s in real terms, if inflation is adjusted. High oil prices will affect certain African economies differently, depending on whether they are net exporters or net importers.
Oil-exporting economies have a greater advantage because an increase in oil revenues improves their balance of payments. These countries will stand to benefit from the influx of foreign revenue. It can accelerate the implementation of poverty-reduction strategies and develop infrastructure, which ultimately increases employment levels.
However, the biggest challenge of the coming boom will be to ensure that these benefits filter down to ordinary Africans.
There are only 16 net oil-exporting countries in Africa, with 38 countries being net oil importers. High oil prices in these nations will have an adverse impact on businesses, consumers and government budgets in particular. Their terms of trade could deteriorate, thereby affecting their balance of payments, which could lead to lower economic growth.
For oil-importing economies, high prices could increase import bills with adverse effects on inflation, production and employment.
In July 2009, the African Development Bank found that the real impact of high oil prices on African economies is relative. African economies are changing and significant improvements in terms of macroeconomic management are being reported, especially a reduction in inflation. Governments have passed on price increases to consumers, moderated them with subsidies and tax reductions, or have placed pressure on oil companies to keep prices down.
Revenues of the big oil companies in Africa will obviously surge. The world’s population is increasing, becoming more middle class and prosperous, buying more cars and using more oil. For example, the UK reported about 30 million cars with a population of 70 million. It is evident that Brent crude oil will be in demand in the long term, which ultimately advocates my call of a positive breakout of the long-term symmetrical triangle.

All that glitters is  not gold…

Nigeria’s Niger Delta region is renowned for its rich deposits of crude oil, simmering tensions and resident activism, but is now developing into a tranquil country getaway following an amnesty granted by the government in 2009.
From Edo State in central southern Nigeria—which is home to the legendary city of Benin—to Cross River State on the southern border with the Cameroon, an estimated 38 billion barrels of oil lies beneath this tropical nation. Oil has been the dominant source of revenue to the country’s economy since its discovery in the 1950s. From the 1980s until the past year, it is estimated that over $400 billion has been accrued to Nigeria’s government and the international oil companies that are its joint venture partners.
<div id="attachment_1032" style="width: 235px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-1032" class="wp-image-1032 size-medium" src="/wp-content/uploads/2017/04/IMG_0097-225x300.jpg" alt="" width="225" height="300" />Abraka Turf and Country Club in the Niger Delta</div>
Delta State’s economy is largely built around the oil industry but in the town of Abraka, a few miles away from the Escravos River where the global giant Chevron has its main production facility, a veteran entrepreneur is banking on developing the tourism industry in this beautiful, but scarred area of Nigeria.
Polo enthusiast and optimist Albert Esiri has invested in developing the Abraka Turf and Country Club. Nestled on the banks of the fabled Ethiope River, which is reputed to have the clearest waters in West Africa, the club offers a tranquil country getaway from the bustling activities of the towns and cities in Africa’s most populous country.
Surrounded by rich tropical rain forests, the club was developed to project the natural beauty of the region, while offering a range of leisure and luxury activities such as horseback riding, quad biking, massage and spa treatments, golf, squash, swimming and even a rainforest trek.
A man-made lake, which was dredged from the Ethiope River, lets tourists enjoy canoeing and kayaking, among several other activities. Given the relative quietness of Abraka, a town that is a far cry from the boisterous commercial cities and towns, Esiri appears to have taken a major gamble by developing a facility for the more affluent in a little-known town in Nigeria’s countryside. To him, this is precisely what makes the club special.
“Abraka is a beautiful place, the climate is tropical with a combination of mild and heavy rains in the wet season and warm summer days in the dry season; the vegetation is green and fertile, providing a spectacular backdrop over the land, and the town is peaceful and easy going, which makes it all the more relaxing and enjoyable.
“These combine to make our club a unique proposition and one that is unrivalled by any of the resorts in Lagos or elsewhere,” says Esiri.
A lover of arts and a painter himself, Esiri had an art gallery installed and often hosts viewing sessions for art enthusiasts. The club also encourages budding artists by allowing them to stay for free for a period every year so that they can draw inspiration from the natural surroundings. Several artefacts by local artists, including a distinctive sculptured horse that is housed in the courtyard by the stables, are strewn around the club—which has over 30 chalets, duplexes and bungalows.
A key highlight of the resort is the equestrian activities, which are inspired by Esiri’s love for polo. Having developed an affinity for the game in his youth, he decided to incorporate polo into the activities at the club and has been hosting an annual international polo tournament over Easter weekend for a number of years.
The stables house over 30 horses, some of which were bred there. Esiri notes that he had been warned that it was not possible to breed horses in Abraka.
“When I mentioned my plans about breeding horses down here back when I was starting to develop the place, I was told that it wasn’t possible to breed ponies because of the tsetse fly, which is said to carry a virus that could fatally infect the horses. I went ahead, nonetheless, based on my instincts, and today I’ve bred a number of horses here, in addition to those which were brought in from abroad.”
Esiri believes that the club is a reflection of the potential for tourism in Nigeria.
“We’ve got all the ingredients in this country to make it a tourist haven. Although we lack a few things such as a proper service culture, which is perhaps the most vital ingredient in terms of tourism, I believe that with just a bit of commitment from the stakeholders something significant can be made out of the resources and potential that we possess.”
He says that the government has not done much to encourage entrepreneurs like him, who do not require funding, and that basic infrastructure needs to be put in place. But despite the odds, he is determined to continue to champion the cause of tourism. When asked how he has been able to overcome the obstacles, he shrugs and responds with a smile saying, “I enjoy swimming against the tide.”

Taking A Chance On Tourism In The Niger Delta

With six months to go before South Africa’s governing party, the African National Congress (ANC), goes to its elective conference, incumbent president Jacob Zuma looks set to get another term. And with that, a renewed focus on continental politics, for which his critics have chided him.
Zuma’s opponent, Julius Malema, the party’s rebellious youth league president, is not contesting the ANC presidency but is the spokesperson of a disparate group united in wanting the 70-year-old former political prisoner and intelligence operative removed from power. Their campaign though, has been dealt a huge blow.
Malema is facing several disciplinary charges and the party’s internal disciplinary committee has found him guilty on some, meaning that whatever the outcome, the young man looks set for the political rubbish dump. Unless a worthy challenger emerges between now and the December conference and goes on to defeat Zuma, he is set to remain at the helm of the 100-year-old political party and the head of Africa’s most powerful economy.
Among Malema’s most stinging criticisms of Zuma’s reign was that he had failed spectacularly where his predecessor Thabo Mbeki had done extremely well—in pursuing the African agenda. It was a criticism, and a comparison, that hurt Zuma and one that he has since looked eager to correct.
So, on March 20, when Zuma walked into the Sandton studios of pan-African television channel CNBC Africa for a live hour-long interview, with some of the continent’s CEOs and board chairpersons in the audience, he knew he had a mission to accomplish, or as his aides would have probably preferred to put it, he had a myth or two to debunk.
Sitting opposite CNBC Africa’s chief editor Godfrey Mutizwa, and occasionally fielding questions during crossings to CEOs in countries like Nigeria and Kenya, Zuma showed composure for someone who has countenanced perhaps harsher criticism than any post-apartheid president.
While some of the condemnation prior to his election had a lot to do with his indiscretions, which in turn led to sexual assault charges against him, others were in subtle ways questioning whether a man with only a primary-school education, would be able to fill the shoes of his Sussex-educated predecessor and intellectual, Mbeki. Was he best suited to preside over an ambitious country that not only likes to punch above its weight, and which likes to be loved, but is also the most sophisticated African economy?
The more Zuma sold his optimistic disposition of the continent to the CNBC viewers and the studio audience, the more friends he seemed to be making among the attendant captains of industry, many of whom wasted no time in praising him for his “insightful comments” and for “answering questions”.
One of the continent’s biggest “strides”, he said, was the formation of the African Union. “For the first time, we could define ourselves as one, as Africans and not as former British, Belgian, French colonies.”
The AU has been credited with bringing about continental political stability through promoting the culture of democratic elections as well as the principle of non-recognition of people who grab political power through coups d’état.
Zuma shared with his audience how the AU had advanced in getting member states to commit to investor friendliness, infrastructure development, better and responsible management of natural resources, environmental sustainability, education, and had now started talks about the integration of the continent’s five regional economic blocks. Asked to give timelines for the “practical implication” of the integration process, he replied: “It took two world wars before Europe could come together. Africa should be given a chance.”
A welcome sign of confidence in Africa’s future, Zuma added, was the inclusion of South Africa in BRICS, the increasingly influential group of emerging economies: Brazil, Russia, India and China. “Africa is now part of countries that are going to determine (the world’s economic) direction,” he said.
“I don’t see a crisis. I see prosperity in Africa,” he told the audience, and with a great deal of satisfaction, not to mention his trademark coy chuckle that usually signals cynicism. “Other people speak positively about Africa. Sometimes it’s Africans themselves who are negative; who feel Africa is in trouble.”

Tag: Crude oil

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