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Naira falls sharply as presidency denies currency swap deal with China

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  • As U.S.-led coalition blows up $500 million in Islamic State cash

The naira took a downward swing on Thursday after federal government’s disclosure that there was “no yuan swap” deal signed by Nigeria and China.

The naira, which traded between 315 and 317 on Wednesday, sunk sharply to a position between 320 and 322 on Thursday after the disclosure at the federal executive council meeting on Wednesday.

Earlier, Nigeria was reported to have agreed a yuan-swap deal with China, although it has not been finalised. Godwin Emefiele, governor of the central bank of Nigeria (CBN), had spoken about the deal, adding that it would be concluded by the People’s Bank of China, with the Industrial and Commercial Bank of China (ICBC), the world’s biggest lender, as CBN’s representative.

He said the deal will take pressure off the dollar in Nigeria and help conserve Nigeria’s foreign reserves. However, Geoffrey Onyeama, minister for foreign affairs, said the deal was not a currency swap, but a deal for the flow of the yuan into Nigeria, adding that the dollar is still in use for international trade.

“It’s not really a swap. What it takes is that as the Chinese economy goes strong, there is some pressure on them from the trading partners, international financial institutions. They agreed that the money should be internationalised,” he said while briefing the press after FEC meeting on Wednesday. “They started that for a while. They were protecting it also. They did not allow it to be fully exchangeable. But now, their economy is fully strong, they are looking for a way to internationalise the currency.

“They were saying essentially that they wanted to segment it. For Southern Africa, South Africa is going to be the sort of a hub for the currency. So, they are going to be the focal point for the Chinese to make that available for trade in that area. “In West Africa, they are looking for a hub. Ghana is interested in being the hub for the currency, to circulate it for those who want to use it. It is not compulsory. But Nigeria is a bigger country with bigger economy. So that does make sense, they became a kind of attracted to Nigeria to be the hub.” He said the currency gives Nigeria flexibility in buying Chinese goods with yuan rather than dollars, corroborating Emefiele’s stance.

“We still use the dollar. But if it not enough and there are some people who want to invest in the country, instead of crying that they cannot take dollar out, there might be yuan that they would be happy to take out because it is now internationalized as a currency and they can use it. So, it gives us a much larger option.

“As you know, a lot of importers now are complaining that they are not able to access the dollars to buy good and things like that. So, if we have in addition to dollar, we have yuan, then they can also have that available.” The deal has not been totally consummated by all parties involved, but the prospects are bright for Nigeria as remnibi hub in West Africa.

In the meantime, the U.S.-led coalition air campaign has incinerated about $500 million of the Islamic State’s cash stockpiles and cut its oil revenues by an estimated 50%, according to a senior defense official.

The Islamic State has been forced to ration fuel in some areas and cut pay by half to its fighters and government officials in regions it controls, according to the official, who asked not to be named in order to discuss intelligence issues.

U.S. officials have said the air campaign combined with local ground forces in Iraq and Syria have dealt the Islamic State setbacks in recent months, saying the terror group has lost 40% of the territory it once controlled in Iraq. “We’ve got the momentum,” Defense Secretary Ashton Carter said last week.

The statistics for the first time quantify the impact the air campaign and U.S.-backed local ground forces have had on the Islamic State’s finances and its military capabilities.

Two years after the Islamic State swept into Iraq, capturing large swaths of territory and defeating a large portion of the Iraqi army, the terror group remains badly weakened and on the defensive.

At its peak, it moved forces and equipment boldly around the battlefield and established its often brutal rule over towns and cities. The group posted videos of its fighters killing captured Iraqi soldiers. Foreign fighters flocked to the group in Iraq and Syria, where it pledged to set up a caliphate and appeared unbeatable.

Today, the group has to move around Iraq and Syria in small teams to avoid airstrikes and is increasingly shifting to guerrilla tactics.

The Islamic State, which is also called ISIS or ISIL, is struggling to replace its fighters who are now being killed at a rate of 1,500 to 2,000 a month, the official said. Only enough foreign fighters enter Iraq and Syria to replace about 25% of those who are being killed every week.

That has forced the Islamic State to replace fighters by conscripting men in areas they control. As their territory shrinks they have been turning to younger and less experienced fighters and have also had to press some government officials into military service, the official said.

Alarmed by the losses, Islamic State’s leaders in Raqqa met and decided to overhaul much of their military hierarchy, firing some combat leaders and executing others, the official said. Some of those who were executed were combat leaders in eastern Syria, where the Islamic State has suffered recent defeats at the hands of U.S.-backed opposition forces.

The official cautioned that the Islamic State is not defeated and remains a potent threat in the region that is also capable of striking in Europe and elsewhere. The Islamic State still controls Raqqa, a city that serves as its de facto capital in Syria, andMosul, Iraq’s second largest city. They have dedicated fighters, many of whom would fight without a paycheck.

Analysts agree. “ISIS is getting weaker, but that doesn’t mean their demise is around the corner,” said Stephen Biddle, a professor at George Washington University and an analyst at the Council on Foreign Relations.

The official and analysts said the group has been forced to make some tough decisions about what terrain is worth defending, since it is spread too thin to protect everything it once controlled. “It looks like a strategic choice to marshal resources in areas that have more economic importance,” Biddle said.

Last year, Iraqi forces backed by U.S. airstrikes took Ramadi from Islamic State militants, in a major defeat for the militant group. The militants held the city as long as they could and then withdrew when they realized they were doomed.

Iraq’s forces have continued to drive militants out of the Euphrates River Valley westof Ramadi, most recently recapturing the town of Hit.

“Hit was a linchpin for ISIL,” Army Col. Steve Warren, a spokesman in Baghdad, said. “Clearing Hit hampers their ability to move foreign fighters and supplies into the Euphrates River Valley, and sets the stage for future offensive operations.”

Iraq’s U.S.-backed forces face a more formidable challenge in Mosul. They will likely experience a militant force of about 6,000 fighters, 10 times the size of the militant force in Ramadi. Any final assault in the city is likely months away, though initial operations to isolate the city have already begun.

Unlike al-Qaeda and other terrorist groups, the Islamic State has seized and attempted to govern territory and manage resources. This gave the group a propaganda advantage, because it claimed to be restoring an Islamic caliphate, but it also provided the coalition with more opportunities to attack them.

Last year the U.S.-led coalition expanded its air campaign to target the group’s revenue sources. The terror group was hauling in about $80 to $90 million a month last fall, the official said. About 50% of it came from oil revenue.

By targeting the Islamic State’s oil infrastructure, the coalition estimates it has reduced production by 30% and the group’s oil revenue by 50%, since most of what it is selling now is inferior quality, the official said.

It has also targeted the group’s large stores of cash, which is mostly in U.S. dollars. The coalition has targeted cash warehouses and distribution sights about 15 times in recent months. Intelligence estimates range from $200 million to $1.3 billion, the official said. He said the most plausible estimate is $500 million.

The Cable with additional report from USA Today

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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