29 Jan

Gas Flaring Law Error Cost Nigeria Billions of Dollars

Africa’s top oil producer plans to make gas flaring more costly for companies that have escaped the payment of billions of dollars despite being fined, Nigerian Finance Minister Kemi Adeosun said.

In the “legal framework for the gas-flaring penalty, it was drafted as a charge. A charge is tax deductible,” Adeosun said in a Jan. 23 interview. “So, what do the international oil companies do? They flare, they pay the charge on which they get tax relief. That’s just bad drafting.”

The government is approaching lawmakers to amend the law and have the word ‘penalty’ replace ‘charge,’ the minister said in her office in the capital, Abuja. “Just that one word has potentially cost us billions of dollars.”

Oil companies flare natural gas that is produced along with crude instead of harnessing it because that can be costly or difficult for security reasons. Nigeria has sought to limit the practice over the years as it pollutes the environment and contributes to global warming.

Seeking Revenue

The West African nation is recovering from a contraction of its economy in 2016, the first in 25 years, and is seeking revenue sources to plug a $25 billion infrastructure gap and fund a record 2018 budget presented in December by President Muhammadu Buhari.

The government is also updating the tax law and going after defaulters, with the intention to boost collection and raise the country’s tax-to-GDP ratio, currently at 6 percent and among the lowest in the world.

Nigeria in the past never focused much on tax revenue because of its reliance on oil income that funds most of the government spending, Adeosun said. The OPEC member produced 1.8 million barrels per day in December, according to data compiled by Bloomberg.

Source: https://www.bloomberg.com/news/articles/2018-01-29/gas-flaring-law-error-cost-nigeria-billions-of-dollars

22 Aug

West Africa: Morocco’s Controversial Plan to Strengthen Ties With West Africa

ECOWAS

Morocco is launching a charm offensive as the kingdom seeks to expand its influence in West Africa by joining the economic union ECOWAS. But Nigeria is reluctant to see Morocco join as it stands to lose power.

Morocco’s King Mohammed VI is making his country’s membership application to the Economic Community of West African States (ECOWAS) a top priority. Earlier this year, he visited Ghana, Ivory Coast, Guinea and Mali to promote his cause.

At its June summit in Monrovia, ECOWAS confirmed that Morocco’s membership was possible, at least in principle.

Back in January, Morocco had rejoined the African Union after 33 years. Since then, the king has been busy signing dozens of bilateral trade agreements with other African countries.

In recent years, at least 85 percent of Morocco’s direct foreign investment went to African countries. In 2016, it was the largest African investor on the continent, to the tune of $8 billion (6.8 billion euros). Of this, $2.7 million went to Ivory Coast alone.

However, trade with Africa overall is stagnating: In 2015, just 1.4 percent of Morocco’s imports and 7 percent of its exports were traded with sub-Saharan Africa. If Morocco were to join ECOWAS as a full member, it would have access to the 15-member free market.

A ‘win-win’ situation

From an economic standpoint, there is nothing preventing Morocco from achieving ECOWAS membership – the country is far better off than most other members in this regard. According to the economic community’s constitution, geography is also not a criterion to exclude the North African country.

Christoph Kannengießer, the chief executive officer of the German-African Business Association, says it’s a win-win situation: “ECOWAS will not be weakened by an economically strong country such as Morocco, and as an ECOWAS member, Morocco would be better able to fulfill its desired role as a bridge between Africa and Europe.”

However, before Morocco can formally join ECOWAS, the organization says the political, economic and social implications should be thoroughly considered. Although it is primarily considered an economic-based group, members of ECOWAS also aim for political integration. Morocco and ECOWAS already have opposing views on important issues: ECOWAS recognizes Western Sahara as an autonomous state, while Morocco believes the annexed region is a legitimate province of its kingdom. Although the June summit openly discussed the possible membership of Morocco, King Mohammed VI did not attend due to the presence of Israel’s Prime Minister, Benjamin Netanyahu. The Moroccan government explained the monarch’s absence by saying that Morocco had no official diplomatic relations with Israel.

Searching for new allies

Morocco is currently a member of the Arab Maghreb Union (AMU). However, economic and political disagreements – especially between Morocco and Algeria – have prevented the group from making any real progress. No major meetings have taken place since 2008.

In addition, the economy of Morocco’s most important trading partner, the European Union (EU), is faltering. New allies and new markets for Moroccan products are needed – and with a combined population of 350 million, ECOWAS could turn out to be the perfect partner.

“The Moroccans are pursuing a double-edged political strategy,” Kannengießer told DW. On the one hand, the country is seeking a privileged relationship with Europe. On the other hand, it is also trying to strengthen its integration with other countries on the African continent.

“The Moroccans know that the African continent, especially West Africa, is an important region of growth, not only from an economic perspective, but in terms of political influence as well,” he says. He says it is necessary to discuss whether economic intergration necessarily leads to political integration.

‘An attack on Nigeria’

However Nigeria, the strongest economic player in ECOWAS, is reluctant to see Morocco receive membership. A number of interest groups have already lobbied the government in Abuja, calling on it to try and stop the North African country’s admission.

Nigeria currently makes up more than two-thirds of ECOWAS’ economic power. If Morocco were to join, it would become the second-strongest member, with more economic clout than Ghana, Ivory Coast, Senegal and Mali combined.

“Morocco’s accession to ECOWAS is clearly an attack on Nigeria and its strategic position in West Africa,” says former Nigerian Foreign Minister Bolaji Akinyemi. He argues that supporters of Morocco’s candidacy want to weaken Nigeria’s influence in the region and that in the event of its accession, Nigeria should leave ECOWAS.

“I don’t think ECOWAS would survive that,” says Akinyemi. In order not to jeopardize economic cooperation, he instead recommends the development of bilateral agreements between Nigeria and Morocco.

“I think that economic pragmatism will play an important role in Nigeria as well,” says Kannengießer.

He says he can imagine several possible outcomes of Morocco’s application to ECOWAS, including full membership, privileged integration status or even simply observer status as an interim solution.

“But perhaps the whole thing could fail in the event of Nigeria’s veto,” he added.

Source from allAfrica