Flow Of FDI: Impact Of Peace Between US & Iran

[00:00:00][music] [music] >> Welcome back to watching Business Morning right here on Channels Television. We discuss trade now, and this follows um a story that the United Arab Emirates has said that its long-term economic commitment to Nigeria remain intact, citing growing trade volumes, increased investments um activity, and emerging opportunities in technology and infrastructure.

[00:00:29]Talking about evolving economic relationship between both countries, the UAE Minister of State and Ministry of Foreign Affairs, uh they have said that Nigeria has become increasingly important partner within the UAE's broader engagement across Africa. And we know in the period of this Iran-US war, there's been realignment and uh re-strategizing of trade partnership and trade routes.

[00:00:57]And now that's uh we hope the war will soon be over, let's find out what's in store for country like Nigeria in relations with not just the United Arab Emirates, but of course other parts of the world. We have the President, Africa Canada Trade and Investment Venture, Mr. Ken Ugozie, joining us from Abuja studio. Mr. Ugozie, good morning.

[00:01:16]Welcome to the program.

[00:01:20]>> A very good morning, and thanks for having me.

[00:01:22]>> Great. So, um we are hopefully seeing the end of the war, the um Iran-US war. Uh perhaps uh President Trump said yesterday maybe like 24 hours, hopefully we would see that. But has anything changed when it comes to the flow of investment and trade routes, trade volumes between Nigeria or Africa, let's not be selfish, and the other parts of the world?

[00:01:50]>> Well, um I think I think like every other thing, we we know the implications of war, um you know, and um, instability as a whole.

[00:01:58]Um, and I think ever since this whole war started, there's been a lot of issues. Um, I mean, starting off from the Strait of Hormuz, which everyone knows, um, you know, where 20% of the, you know, oil oil movement comes from.

[00:02:11]And um, of course, with the whole global crisis, that has impacted a lot of things. Um, prices went up, um, cost of production, import and export. So, a lot did change and of course, that then sort of, you know, transcends into investment as well, because um, majority of the stakeholders, investors, had to start taking sort of a risk-averse approach because of the uncertainty. So, people didn't know what direction it was going.

[00:02:36]Um, and so, what that meant was investment sort of paused a little bit.

[00:02:41]Um, and that, I mean, of course, not in totality, but a lot of investors started taking a bit more cautionary approach, you know, especially those ones from the global west. But then, the good news as well is that, like you alluded to earlier, um, we we also had a lot of new trade and investment partners, um, in terms of stepping up. Um, so, more like from the Middle East, from China, Southeast Asia and some of these countries. Um, and for for most of the emerging country countries like Nigeria, West Africa and some of them, that was actually a good thing. So, we're hoping that now that there's going to be a bit more stability, we might see more improvement or increase in in terms of inflow of capital into the continent.

[00:03:22]>> Yeah, so, um, COVID came and COVID left us with a lot of lessons, which are still useful even up till today. Um, hopefully, the war would end. Can we say that we have perhaps lessons that we have learned? Um, you know, talking about re-partnering, re-strategizing. Have we seen any one for Nigeria or for the continent?

[00:03:47]>> Well, I I think I think one of the main lessons which, um, COVID just taught all of us is sort of the need to be able to pivot real quickly because we I don't even think we've recovered fully from COVID in terms of production, global supplies, and all of that. And then all of a sudden we are hit with the war as well. So, I think the lessons is really clear. It's just about being able to pivot and of course always having that contingency plans. So, a very good example is more like crude oil where, you know, during the war when it started it hit almost $100 a barrel.

[00:04:22]But of course with this head now it's probably going to drop. It's already dropping anyway, so we might even have up to drop all the way to 80%, which could be an issue for countries like Nigeria that are, you know, rely a lot on crude oil exports.

[00:04:36]So, the idea is that I hope, you know, I hope these policy makers have been able to make a lot of contingencies because a lot of times countries plan in terms of those income. They they they put forecast based on the prices remaining like that for a long time. So, from from an outlook I I really am I I really hope and I'm optimistic that you know the policy makers and the government has been able to factor the price that, you know, the the war premium like we like to call it during when the the the the war was ongoing was going to be short-lived. So, you had to ensure that you you you put in a lot of places put a lot of things into place just to, you know, maximize that short return but ensure that you diversify, you know, so that when things normalizes you still have a steady source of flow of income.

[00:05:22]>> And that's why we keep talking about non-oil exports, you know, diversifying the economy and all of that. Would you say Nigeria at this point has made any progress on that front?

[00:05:36]>> Yes. Yes, I think I think that's one of the you know, that's one of the positives I've seen in the last couple of years especially in the areas of things like agriculture, spaces like that. I must really commend, you know, the government in terms of that. I've seen a lot of you know, exporters ramp up. You know, the other day I was speaking to a major exporter of you know, palm oil, Evo oil. You know, they work in a new grand all of that. And you know, I was speaking to the CEO and we were talking about it and you know, he was talking about some of the how the positive some of the economic policies in the last couple of years has really helped them in terms of expanding to Canada, keeping their prices this low and all of that.

[00:06:16]Of course, the war actually then you know, sort of in that some of those but thankfully some of the manufacturers or exporters were still able to keep their prices at a minimum for the global market. But I think overall agriculture is one piece.

[00:06:31]That's one piece I've I've really seen a lot of diversification and it's huge of course. Nigeria Nigeria is an is a is a country that has a lot of young population and we have a lot of arable land and there's a lot of things that you know, the global the global south the global south needs you know, in terms of agriculture products which Nigeria is able to continuously position itself.

[00:06:53]But most importantly value add because I've always been an advocate of value add in terms of agricultural products.

[00:07:00]We should not be pushing out raw materials to meet the needs of the of the west and the you know, the the Middle East and all of that. So being able to really help in terms of investing in local manufacturers, providing subsidies, providing fertilizer, whatever it is just to really ensure that we we we add a lot of value in Nigeria before we export because that with that helps us with forex. That helps a lot of the producers or agriculture or farmers being able to scale up and of course give them a long-term stability which is what which is really what every country needs.

[00:07:34]>> And now that the war is ending, can we expect any changes?

[00:07:40]Obviously revenue government revenue will reduce. And we've already seen oil has dropped to $78 an oil. So, can we expect any other issues apart from oil?

[00:07:52]Should we prepare ourselves for anything at the end of this war?

[00:07:59]>> Well, um, I think I think obviously, um, the the with the war, there was a lot of issues around cost of, um, goods. So, you know, when when you have to import, um, you know, we we import a lot of stuff into Nigeria. That's, um, that's not news to anyone. And, um, when the war started, because of all the whole blockages of the Strait of Hormuz and all of that, you know, lead times increased. It became more expensive to bring in some of these goods. And, um, the the the the the end consumers or the end users were the people who had to pay that premium. So, the the the hope right now is the fact that, you know, at least now that we we have in peace talks and the war is coming to an end, prices will gradually return or gradually at least reduce compared to what people are probably paying in the last 6 months to 1 year. Um, so, the that might be we might probably have more money in the hands of consumers. Of course, there's also the the bad news whereby we are we will we'll probably go back to the normal, um, oil prices, which is in terms of, um, you know, crude oil and all of that. But then, there's also going to be a bit more push whereby some of the investors historically who had paused, um, and focused more on safe investment, they might start looking back into higher yield, um, economies emerging economies like Nigeria. So, there's a lot of positives, but the only bad news, which I think, um, and this is just my opinion, is that sometimes it takes a while to see the impact of these positives. So, uh, you know, economies don't just reset overnight. I mean, apart from things like stock markets, which we've seen the up and downs based on when the announcement was made, but usually economies don't just reset overnight. So, you might see it might have to take up to a couple of months.

[00:09:34]So, um, you know, I would say consumers or the common man might have to still brace themselves up a little bit, be patient a bit, but I think there's there's more life coming at the end of the tunnel, I like to say.

[00:09:45]>> All right, at the end of the news.

[00:09:48]>> [laughter] >> Thank you so much for your time, Mr. Ken Uguzie, president, Africa Canada Trade and Investment Venture. We appreciate your time and your views.

[00:09:59]>> Thank you for having me.

[00:10:01]>> All right, now let's go global, and we do have Will I Am in the house.