News & Analysis: Oil prices
“Nigeria’s oil dependence has come back to haunt it once again, as the government battles to manage a severe contraction of revenues and foreign currency in the wake of plummeting oil prices brought on by the COVID-19 global crisis.”
“The COVID-19 pandemic coupled with low oil prices have drastically affected South Sudan’s financial calendar. For the past few months, South Sudan has been running without an annual budget as the Cabinet approved supplementary budgetary allocations to keep the country running.”
“Nigeria’s mounting inflation in parallel with growing costs of energy are driving small and medium businesses away; at a time when the whole economy is suffering from the impact of the pandemic.”
“As the world continues to grapple with the impact of the COVID-19 pandemic, the value chains across the oil and gas industry have not been left out, as Nigeria suffered a 60.5 per cent decline in crude oil exports in the second quarter.”
“Nigeria’s economy contracted the most in at least a decade in the second quarter as the crash in oil prices and the global fallout from COVID-19 hit output. Gross domestic product shrank 6.1% in the three months through June from a year earlier, compared with growth of 1.87% in the previous quarter, the Abuja-based National Bureau of Statistics said.”
“Banks’ earnings and profitability will weaken in the medium term. This reflects lower activity (slower loan growth in particularly), the low interest rate environment, low yields on government securities, lower income from debt relief measures and rising credit costs. That said, most banks are expected to remain profitable in 2020 due to their revenue-generating capacity and low cost of funding.”
“Central and commercial banks across Africa are working together to increase liquidity and improve access to finance in an effort to keep the economies within which they operate functioning during the COVID-19 lockdown.”
“The economic challenge of the global COVID-19 crisis has hit Nigeria hard, making the country enter its worst recession in four decades.”
“It is worth considering what it would take for any of these strategies to work, and more crucially, whether the current pandemic and the global after-shock affect how they might be implemented.”
“The economic fallout for the continent from COVID-19 is likely to be severe and enduring. This burden falls heavily on countries with a high dependence on commodity exports to China, weak sovereign balance sheets, high debt burdens, and volatile currencies, among other external fragilities.”
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