Markets bullish after Saudi Royal becomes oil minister
Saudi Arabia has appointed Prince Abdulaziz bin Salman as its new oil minister, the first time a royal has held the position. Market reaction was positive with Brent jumping 1.98% to $62.76pb.
The biggest challenge for Abdulaziz (the new oil minister), a known protagonist of OPEC production cuts, is how to consolidate oil supply and restore OPEC to a position of price leadership. He is also expected to push for higher revenues to meet Saudi’s growing fiscal deficit. This comes at a time when Nigeria has set a prudential budget benchmark of $55pb and production of 2.2mbpd.
South Africa Vs Nigeria: When two elephants fight, it is the grass that suffers
The xenophobic tussle between the African giants is a threat to domestic and regional macroeconomic stability. The attacks reduced economic activities and hampered diplomatic relations. At a time that the African countries should be preparing for the full implementation of AfCFTA, a squabble between the region’s two largest economies is a major setback.
Nigeria: Revisiting the Malthus theory
Whilst some countries are witnessing declining birth rates, others are facing population explosion. For example, average birth per female in the US is 1.8 compared to 4.1 in Ethiopia. This explains the renewed interest in the Malthus theory that says ‘population growth is likely to be at a geometric (exponential) progression while food supply will be at an arithmetic (linear) progression’.
Nigeria is a classic example of a country whose population growth (2.6%) outpaces economic growth (1.94%). To bridge the gap, an increase in gross capital formation is urgently required. Nigeria’s capital investment to GDP ratio is a miserly 14.72% compared to other densely populated countries such as China (42.57%) and India (28.87%).
In this edition of the FDC Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
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