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Looking Beyond Oil Price Collapse Towards Post Recovery Savings (Part 2)

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By Austin Okere

I will attempt to share the justification for this projection from the insights expressed by experts at various fora, and my own informed postulations.

Depending on which expert you talk to, and the perceived direction of the Chinese economy, you get three different views; a school of thought holds that the price of oil may be far from the top but closer to the bottom, while others believe that oil price will bottom out at about $20 per barrel. Yet another group holds that Oil price has reached equilibrium and will oscillate between $40 and $45 per barrel.

The optimists believe that oil price will recover to between $70 and $80 per barrel towards the end of the year, and remain within that band, as a sustainable balance between demand and supply is reached.

According to the 2015 OPEC annual statistics bulletin, world crude production in 2014 was 73.4 million barrels per day (mbpd) while demand was 91.3mbpd.

With the significant scale back in shale production arising from the steep price drop from late 2014 to levels that make shale production unviable, it will be safe to assume that production has dropped considerably while demand has more or less remained steady.

The major issue for me is the question of the so called glut. If there is indeed a glut, what is the accurate size of the glut and therefore, how long will it take for supply and demand to balance out.

I listened to an expert at a recent forum argue very eloquently against the widely touted 850 million barrel excess crude inventory.

Based on the data he and his firm have meticulously collected, he believes that the excess supply cannot be more than a quarter of the touted figure.

This means that the glut is overstated by 600 million barrels. Meanwhile, Iran’s return to the market has been less dramatic than the Iranians said it will be, adding only 220,000 barrels per day (bpd) in February 2016 according to the International Energy Agency (IEA); only a fifth of their forecast of 1mbpd.

The IEA also believes that non-OPEC output will fall by 750,000 bpd in 2016, while US production alone will decline by 530,000 bpd this year.

The other possible disrupter to oil is the incentive to explore alternative forms of energy such as renewables, majorly solar and wind, in response to the impending carbon tax fuelled by fears of global warming and pollution.

According to Amy Jaffe and Jeroen van der Veer, leading experts on global energy policy, factors such as technological advancements, the falling price of batteries that power electric vehicles, and a post-COP21 (UN Climate change conference in Paris in 2015) push for cleaner energy could drive oil use below 80 million barrels a day by 2040.

These threats to oil do not seem practical on a meaningful scale in the near to medium term.

The example in Germany seems to buttress the fact that renewables may not make sense in Europe and other cold climes, and that they can only be achieved with very steep and unsustainable subsidies.

It is reported that Germany, the poster boy for renewables has so far invested about $500b on wind and solar energy. And yet renewables account for only 3.5% of global energy use, while oil and gas accounts for as much as 60% (this excludes shale, peat and coal, which account for 10%).

Electricity accounts for 18%, while biofuels and waste account for the balance 12%. In simple terms, the eight major oil companies, with a cumulative valuation of $1.4trillion generate as much as 20 million barrels per day versus the $2trillion invested so far to generate the equivalent of 7million barrels of oil per day in renewable energy. How sustainable is this huge subsidy?

For the switch to electric cars to happen, we would need to replace refineries producing petrol with power plants that will produce the additional electricity required to charge the electric cars. How quickly can this switch happen, even if it were practical?

My theory on the oil narrative is as follows: Saudi Arabia being the biggest reserve holder wanted to drive the shale producers, whom they saw as ‘squatters’ out of the market.

They opened their taps to drive prices down, knowing that shale needed an oil price of above $40 to produce at break even.

The high oil prices were driving cheap capital into shale and improving technology and yielding high returns and thus attracting more capital and repeating the cycle, thereby iteratively making shale a bigger threat.

I believe that the Saudi plan was hijacked by the Oil traders, who thrive on price arbitrage fuelled by uncertainty.

They rode on the back of increased Saudi production to shout ‘oil glut’! They increased the FUD (fear uncertainty and doubt) with news of huge inventories coming on stream following the lifting of sanctions against Iran, but the general view is that Iran’s oil was already finding its way into the market through the back door, resulting in an insignificant net increase in supply.

It then became a self-fulfilling prophesy which snowballed, with the producers pumping recklessly to maintain market share and preserve earnings, which drove prices further down, exacerbating a bad situation.

I believe that the oil traders and bankers are trying to make up for a lost bet on the back of overenthusiastic exposure to the oil market. This is captured by the screaming headline in the Financial Times of March 22, 2016 ‘$150b losses on energy company bonds spur default fears’.

 The article further states that the total debt among oil and gas companies including loans almost tripled from $1.1trillion in 2006 to $3 trillion in 2014 quoting the Bank for International Settlements.

Twenty of Europe’s biggest banks have energy loans totalling $200b, enough to wipe out a quarter of their common equity, while twenty of the leading US banks have loans totalling $115b or 11% of their equity.

With the desperation arising from a risky bet gone awry, one does not need to dig too deep to glean a motivation to drive prices down, buy on the cheap and subsequently sell on the high to cover the huge debts.

I believe that in the end, the market will wave its magic wand, and supply and demand will correct themselves and reach equilibrium with price. You cannot hide a pregnancy for too long.

It is not at all surprising that the heads of the world’s largest oil trading houses, six of which sell enough oil to meet almost a fifth of global demand were unanimous in calling for an end to the two year price slump at a Financial Times conference in Lausanne.

What should be more important to all of us, beyond these theories is whether Nigeria will finally learn from her past mistakes and institute a mechanism for saving when oil prices rebound, as I believe they eventually will. And what if the optimists are wrong, and prices do not rise. We would have lost nothing.

We would have learnt to diversify away enough from oil to live comfortably within the current price. If on the other hand the optimists are right, then we will save the equivalent of $36.5b per year (i.e. 2.5mbpd X extra $40per barrel X 365 days).

In any case we would have nothing to lose by preparing and having to wait a while longer than anticipated. Success only happens when opportunity meets preparation.

 

Austin Okere is the Founder CWG Plc and Entrepreneur in Residence, Columbia Business School, New York. He also serves on the World Economic Forum Business Council on Innovation and Intrapreneurship.


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60 Hearty Cheers to Chioma Ekeh, Africa’s Leading Unusual Female Tech

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The story has often been told in tech circles of how a relatively unknown Nigerian female student became a sensation of sorts among the international student population back in the early 80s in India owing to the unusual course of study she was undertaking.

60 Hearty Cheers to Chioma Ekeh, Africa’s Leading Unusual Female Tech

Chioma Ekeh

Electing to study Mathematics at Bachelor’s degree level – a course that required not only battling differential equations, calculus, advanced algebra, and so on, but also pitting one’s wits against that of wizened professors – is not a task for the faint-hearted. But that was the path that this unusual lady took at Punjab University, located in the culturally rich and aesthetically pleasing city of Chandigarh, India.

It was a decision that would lead Chioma Ekeh (nee Emelonye) along the path of meeting the love of her life, a certain Leo Stan Ekeh and returning to Nigeria with him to play a leading role in shaping the course of technology distribution in Africa.

Undoubtedly, unusual may also be a word that defines Chioma and Leo Stan Ekeh’s remarkable journey together. A power couple and exemplary partners who have worked together for over 30 years building a successful technology empire is a rarity, one that is not often seen.

That sojourn to India and her subsequent career trajectory laid the groundwork for the impressive reputation Chioma Ekeh has built in the highly competitive technology space. Business associates and representatives of global brands never fail to cite her intellect and brainpower.

Job seekers who cross her path during interviews often recall being asked to solve a simple arithmetic problem. For those who eventually become employees, there is never-ending adulation.

Her husband, Leo Stan Ekeh, describes her as the integral analytics, the backbone behind the brilliant success of the Zinox Group where she has continued to support all the businesses across the board.

Such is the cerebral aptitude of this unusual woman that she is reported to have taken the stage once at a company-wide business review to present a financial report punctuated by humongous accurate numbers, figures and percentages, all from memory and without recourse to any notes, a device or an actual presentation document.

Born on April 25, 1964, the story of the impressive diffusion, accessibility, useability and affordability of cutting-edge technology devices and solutions in Nigeria and indeed, sub-Saharan Africa will be grossly incomplete without a detailed citation on Chioma Ekeh and the leadership role she has played – one she has continued to play as a silent innovator and disruptor–alongside her legendary spouse.

A Fellow of the Chartered Institute of Certified Accountants (FCCA, UK), Mrs. Chioma Ekeh is the brains behind TD Africa, a regional technology distribution powerhouse headquartered in Nigeria and with branches across Africa and in four other continents.

A company she led from start-up stage, TD Africa with Chioma Ekeh as CEO, pioneered ICT distribution in Sub-Saharan Africa and has remained the industry leader by market share in the region and the biggest provider of credit to resellers.

Founded in 1999, TD Africa is Africa’s leading distributor of technology and lifestyle products, boasting an unmatched and growing network of partnership with global brands like HP, Microsoft, Apple, Starlink, IBM, Dell Technologies, Ring (by Amazon), Cisco, Lenovo, APC by Schneider Electric, Samsung, Bosch, Phillips, Logitech, Vivo, among several others. Under Chioma’s exemplary leadership, the company has achieved numerous milestones, earned a long list of local and international awards/accolades and ensured Nigeria and indeed Africa is reckoned with at the global table of technology conversations and discussion-making.

However, this remarkable story may have turned out differently, had Chioma not returned to Nigeria under the guidance of her husband.

Armed with a formidable Mathematics degree after completing her studies in India, Chioma had the world at her feet and was the toast of leading companies the world over.

Moving to the United Kingdom at the invitation of her husband, Chioma joined the exalted league of Chartered Accountants and thereafter, bagged an MBA at the reputable Heriot Watts University.In 1987, she joined Sterling Deveraux as an Investment Analyst, engaging in researchand analyzing assets, such as stocks, bonds, currenciesand commodities.

Her acumen and exceptional skills were growing in demand and before long, she left Sterling Deveraux, joining the London Borough of Lewisham as an accountant in 1988.

Between 1988 and 1991, Chioma’s sterling work saw her rise swiftly through the ranks at the London Borough of Lewisham, moving from Accountant to Senior Auditor and then to Financial Auditor.

Certainly, Chioma Ekeh had a clear path to becoming CFO and possibly CEO at the London Borough of Lewisham or even going on immediately to taking up other elevated roles at other organizations. But the love of motherland and the call of her husband – Leo Stan Ekeh – to return home to Nigeria with him and build a technology legacy for Nigeria and Africa proved too strong.

Back home, Chioma Ekeh’s initial area of responsibility was with Task Systems Ltd., the first of many companies in the Zinox Group set up by Leo Stan Ekeh.

She took up the position of Financial Controller and spent six achievement-filled years at Task before driving the vision of technology distribution birthed by her husband in launching TD Africa where she became the company’s pioneer CEO.

A quiet, unassuming tech icon, Chioma Ekeh has acquired a well-deserved status as unarguably one of Nigeria’s top three leading Women-in-Tech, a female technology business leader with extensive years of proven capacity in building high-performing teams and transforming businesses beyond stakeholders’ expectations.

In partnership with her husband, Chioma Ekeh has played immense roles in growing and nurturing partner businesses, launching several thriving new businesses and successfully closing some of the biggest acquisitions in the technology space in Nigeria.

The Tech Experience Centre – Africa’s first technology experience centre – located at Yudala Heights, a sprawling edifice in the heart of Victoria Island – is another project that has Chioma Ekeh’s indelible signature on it.

The launch of the Tech Experience Centre in October 2020 received high praise from the Nigerian government and representatives of global Original Equipment Manufacturers (OEMs).

Under her guidance, Celebrating You, an annual showpiece celebratory event hosted by TD Africa has become unarguably the biggest year-end event in the Nigerian technology industry for over a decade.

Also, she has spearheaded several CSR projects, including The Herwakening – an empowerment programme for female entrepreneurs– and Girls in ICT – a project targeted at encouraging young girls to take up STEM (Science, Technology, Engineering, Mathematics) disciplines and considering careers in technology.

As she turns 60, Chioma Ekeh deserves rarefied mention and unmitigated encomiums. An amazon, this unusual female tech icon who has shattered several glass ceilings, knows no fatigue and has continued to innovate, effortlessly leading from the front.

 

 


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Academic Technologists Propose N350,000 Minimum Wage

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National Association of Academic Technologists (NAAT), has proposed N350,000 as the new minimum wage for Technologists in the tertiary institutions.

Academic Technologists Propose N350,000 Minimum Wage

Comrade Ibeji Nwokoma, national pesident of NAAT, stated this at 5th National Delegate Conference in University of Abuja.

Nwokoma, said the proposal was based on the present economic situation in the country occasioned by the removal of fuel subsidy, high inflationary rate and the attendant hardship.

Nwokoma maintained that technology rule the world and advanced development and shaping the landscape of education in developed countries.

Prof. Tahir Mamman, minister of Education, said the federal government will soon introduce the policy that will make skill acquisition compulsory for primary and secondary schools.

The minister said global space is driven by technology which the advanced world is using to solve problems and gaining grounds.

The Union protect, defend, and promote the rights and well being and interests of all members and to advance the cause of members, employed in Nigerian Tertiary Institutions Universities, Polytechnics, and Colleges of Education.

The theme of the conference is, “Technology, a recipe for national development and socioeconomic growth in the 21st century: the Nigeria quest for a better tomorrow.”

 

 


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9mobile Partners Microsoft to Host Impactful Training Session for Journalists

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9mobile, telecommunications company, recently partnered with tech giant, Microsoft to host a capacity-building session for journalists aimed at empowering them with innovative tools to improve their skills for maximum performance in their field.

The learning session held at Microsoft Africa Development Center had in attendance media partners from print and online platforms and publications.

The training session provided a platform to introduce journalists to the benefits of Microsoft Copilot and its potential to revolutionize the profession.

Microsoft Copilot is an advanced AI-powered tool which offers a wide array of functionalities designed to streamline workflow, enhance productivity, and elevate the quality of their output.

Through this partnership, 9mobile and Microsoft sought to equip journalists with the skills and knowledge necessary to leverage Copilot effectively in their day-to-day work.

Speaking at the training session, Chineze Amanfo, PR Lead, 9mobile, expressed her enthusiasm and satisfaction with the session, emphasizing the company’s commitment to fostering innovation and empowerment within the media industry.

She stated, “We are thrilled to collaborate with Microsoft in providing this invaluable training opportunity for journalists. At 9mobile, we recognize the pivotal role that the media plays in shaping public discourse and driving societal change.

Therefore, equipping them with the requisite knowledge and tools such as the Microsoft Copilot, will enhance their capability to deliver on their respective assignments efficiently by disseminating accurate and impactful information to the public.”

“We prioritize our relationship with the media hence, the need for the periodic capacity building session for journalists. With this training, we have clearly demonstrated our unwavering commitment to sustaining the initiative.

“We will continue to explore new avenues for collaboration and innovation, ensuring that our partners in the media industry have access to the tools and resources they need to thrive, Amanfo added.”

Yemi Orimolade, The Senior Business Programme Manager, Marketing Communications, Microsoft Africa Development Center, appreciated the participants for their contributions in making the session an engaging experience and enjoined them to champion the message of AI responsibility.

He said, “Microsoft’s Copilot is poised to be a game-changer for journalists. It is a reliable tool for generating and optimising content, staying informed, and enhancing productivity. Our commitment is to harness the transformative potential of AI for societal betterment. Welcome to the future of journalism, working smarter with Microsoft Copilot.”

The capacity-building session received an overwhelmingly positive response from participants, who lauded the practical insights and demos provided.

Attendees expressed their appreciation for the opportunity to familiarize themselves with a tool as powerful and versatile as Microsoft Copilot, acknowledging its potential to revolutionize their workflow and enhance their journalistic endeavors.

With the successful hosting of the capacity-building session, 9mobile and Microsoft look forward to more areas of sustained collaboration to drive positive change and innovation within media ecosystem in Nigeria.


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