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West African nations break off French colonization, name common currency

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Eight West African countries Saturday agreed to change the name of their common currency to Eco and severed the CFA franc’s links to former colonial ruler France.

The CFA franc was initially pegged to the French franc and has been linked to the euro for about two decades.

Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo currently use the currency. All the countries are former French colonies with the exception of Guinea-Bissau.

The announcement was made Saturday during a visit by French President Emmanuel Macron to Ivory Coast, the world’s top cocoa producer and France’s former main colony in West Africa.

Ivory Coast President Alassane Ouattara, speaking in the country’s economic capital Abidjan, announced “three major changes”.

These included “a change of name” of the currency, he said, adding that the others would be “stopping holding 50 percent of the reserves in the French Treasury” and the “withdrawal of French governance” in any aspect related to the currency.

Macron hailed it as a “historic reform”, adding: “The Eco will see the light of day in 2020.”

The deal took six months in the making, a French source said.

The CFA franc’s value was moored to the euro after its introduction two decades ago, at a fixed rate of 655.96 CFA francs to one euro.

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The Bank of France holds half of the currency’s total reserves, but France does not make money on its deposits stewardship, annually paying a ceiling interest rate of 0.75 percent to member states.

The arrangement guarantees unlimited convertibility of CFA francs into euros and facilitates inter-zone transfers.

CFA notes and coins are printed and minted at a Bank of France facility in the southern town of Chamalieres.

The CFA franc, created in 1945, was seen by many as a sign of French interference in its former African colonies even after the countries became independent.

The Economic Community of West African States regional bloc, known as ECOWAS, earlier Saturday urged members to push on with efforts to establish a common currency, optimistically slated to launch next year.

The bloc insists it is aiming to have the Eco in place in 2020, but almost none of the 15 countries in the group currently meet criteria to join.

Stumbling Blocks

ECOWAS “urges member states to continue efforts to meet the convergence criteria”, commission chief Jean-Claude Kassi Brou said after a summit of regional leaders in the Nigerian capital Abuja.

The key demands for entry are to have a deficit of less than 3 percent of gross domestic product, inflation of 10 percent or under and debts worth less than 70 percent of GDP.

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Economists say they understand the thinking behind the currency plan but believe it is unrealistic and could even be dangerous for the region’s economies which are dominated by one single country, Nigeria, which accounts for two-thirds of the region’s economic output.

Nigeria’s Finance Minister Zainab Ahmed told AFP “there’s still more work that we need to do individually to meet the convergence criteria”.

ECOWAS was set up in 1975 and comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo — representing a total population of around 385 million.

Eight of them currently use the CFA franc, moored to the single European currency and gathered in an organisation called the West African Monetary Union, or WAMU.

But the seven other ECOWAS countries have their own currencies, none of them freely convertible.

AFP

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AfDB urges central banks to cut interest rates

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The African Development Bank (AfDB) has urged central banks on the continent to act quickly by cutting interest rates to inject liquidity in view of impact of COVID-19 pandemic.

The AfDB , in its African Economic Outlook 2020 supplement amid coronavirus pandemic released on Tuesday gave the advice.

According to the bank, the targeted interventions should be implemented for affected firms and sectors and use macroprudential and unconventional monetary policy to support the economy.

It added that central banks could resort to their own forms of quantitative easing, targeted at funding the most affected sectors such as firms in the hospitality and entertainment industry.

The bank noted that other sectors to be assisted are airlines, hotel chains, logistics and sports by temporarily reprofiling or restructuring their debts.

AfDB emphasised that the apex banks could also support vulnerable groups by designing programmes targeted at micro enterprises and the unbanked in the informal sector, financed by government and potentially run by other agencies closer to the ground.

“The impact of COVID–19 on Africa’s labour markets will have disproportionate impacts on vulnerable groups, notably youth and women, who are engaged in the informal sector, or with only casual job opportunities in the formal sector.

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“Assist vulnerable groups, especially youth and women. The COVID–19 pandemic can have differentiated socioeconomic impacts,” the AfDB said.

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BUA set to establish ultramodern 3million metric tonnes cement plant, 50mw power plant in Adamawa

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One of West Africa’s largest Cement companies,  BUA Cement has announced that it is set to establish a three million metric tonnes cement plant and 50 megawatts power plant in Guyuk and Lamurde local governments of Adamawa state in the North Easter region of Nigeria. This was revealed when the Chairman of BUA, Abdul Samad Rabiu led the BUA Cement Management team on a courtesy call to the Adamawa State Governor, Ahmadu Umaru Fintiri in the Government House, Yola.

Speaking during the visit, Abdul Samad Rabiu said preliminary findings show that the two local governments of Guyuk and Lamurde are reputed to have good quality of limestone deposits and BUA Cement is ready to begin the investment in the state. He added that the BUA will use new technologies to supply power to the proposed cement plant and communities of Guyuk and Lamurde in addition to providing three thousand direct and five thousand indirect jobs.

The Chairman stressed that the Guyuk Cement Plant will be the major investment in the North East by BUA and solicited for support of Governor Umaru Fintiri to set up the factory in Guyuk. Rabiu said the company made a decision to source its raw materials locally and it has invested billions of dollars in various sectors across Nigeria and therefore urged the state government to support BUA to actualize the Guyuk Cement project. In addition, he praised the commitment of the governor within one year in office in many sectors of development despite the economic challenges in Adamawa.

Responding, Governor Ahmadu Umaru Fintiri said his administration’s effort in exploring local contents has started yielding results and thanked BUA for showing interest in establishing the cement plant in Guyuk. He further assured the management team of BUA that government will make whatever is needed and provide the necessary support which will create enabling environment so that the BUA Cement company in Guyuk will become a reality.

He also expressed readiness of the government to protect the investment once it is established and told them that his administration will maintain the good relationship with the company for the benefit of the state.

BUA is Nigeria’s second largest Cement Producer by volume with cement plants in Sokoto and Edo States. The Company’s newest plant in Sokoto is expected to be operational in 2021. When completed, the Guyuk Cement Plant will bring BUA’s total capacity to 14million metric tonnes per annum.

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Dangote cement sustains 54,000 jobs in 4 African countries

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Aliko Dangote

President of Dangote Group, Alhaji Aliko Dangote has said that despite the challenging economic situation in 2019, Dangote Cement  was able to sustain 54,000 jobs in four African countries, where the company has its operations. The countries are Nigeria, Ethiopia, Senegal and South Africa.

The business mogul who disclosed this to shareholders at the company’s 11th Annual General Meeting in Lagos said that more jobs would be created as the company intensifies the export of clinker to other neighboring countries from Nigeria.

“According to our 2019 socio-economic impact assessment study specifically on our operations in Nigeria, Ethiopia, Senegal, and South Africa, we sustained 54,005 jobs (direct, indirect, induced) in these four markets in the year under review,” he said.

Dangote told the shareholders that the year 2019 was a strong year given the tough business environment across most of its operating geographics, disclosing that the group recorded volumes of 23.7 million metric tons and revenues of ₦891.7 billion.

He said: “We recorded a strong EBITDA margin of 44.3 percent. As a result of this performance, the board has recommended for your approval a dividend of ₦16.00 per ordinary 50 kobo share.”

Speaking on the local Nigerian operations, he said: “Nigeria’s cement market grew slightly in 2019. We estimate that total market consumption was up between 2 per cent-3 percent on the 20.7Mt estimated in 2018.”

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Dangote explained that the modest performance was in spite of the fact that the market generally was impacted negatively by the disruptions related to the 2019 election cycles, heavy rains and the loss in land export volumes due to the border closure.

“Dangote Cement’s Nigerian operations remained at 14.1Mt in 2019, including export sales of 0.45Mt. Domestic sales in Nigeria were nearly 13.7Mt, compared to 13.4Mt in 2019. This implies a 2 percent growth mirroring the estimated GDP growth for the year. However, land exports reduced to 0.45Mt from 0.7Mt for the full year owing to the border closure in the last few months of 2019.

“The Bag of Goodies promotion, launched in July, drove strong increases in our Nigerian volumes in the third quarter”, Dangote pointed out, adding that the innovative marketing effort enabled the company to maintain its market share despite the 4.5Mt new capacity which came into the market during the year.”

He alluded to the new feat by Dangote Cement in commencing export of clinker via shipping from the Apapa and Onne ports to West and Central Africa, adding that the management was encouraged by the performance of its offshore operations.

Recall that the Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, while lauding the investment drive of Dangote recently said that he was excited with the progress made at Dangote Refinery and Petrochemical plant so far, said that when it becomes operational, the refinery and petrochemical plant would increase its workforce from the current 34,000 to over 70,000.

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