NBAD Middle East & African Monitor - 14 December 2016
Trump could trigger a world war” – Iranian defence minister
Iran’s Defence Minister, Hossein Dehghan, has claimed that if the US President-elect and his cabinet, initiate some of the foreign policy actions Trump proposed during his campaign and actively provoke Iran, such actions could trigger a major war. “Considering Trump's character and that he measures the cost of everything in dollars, it does not seem likely that he would take strong action against our country, but even though a businessman, the assistants he has chosen may map a different path for him and this has led to unease. Enemies may want to impose a war on us based on false calculations and only taking into consideration their material capabilities. Such a war would mean the destruction of the ‘Zionist regime,’ will engulf the whole region and could lead to a world war,” Dehgan was quoted as saying via Iran’s state media. His statement appears to have been made in response to comments by Israel’s Prime Minister, Benjamin Netanyahu, earlier this week in which the Israeli leader promised to work with the incoming US administration to try and reverse last year’s nuclear deal with Tehran. Meanwhile the Iranian President, Hassan Rouhani, has issued an official directive to the country’s defence industry to begin looking at the possibility of producing nuclear powered naval vessels, a move he says that is a direct consequence of the US government’s decision to extend its remaining sanctions on Iran for a further ten years.
Nigerian Airlines struggling to find enough FX to pay insurance premiums
According to the chairman of the Airline Operators of Nigeria Association, Captain Nogie Meggison, the world’s leading insurer, Lloyds of London, has threatened to blacklist the West African country’s carriers due to their alleged failure to pay their insurance premiums regularly. The primary reason behind this problem appears to be the ongoing hard currency shortage in Nigeria, making it difficult for the airlines involved to source enough foreign exchange to make these payments on time. “Virtually 100% of the aircraft being operated in Nigeria are re-insured in the Lloyd’s market. Hence, Nigeria can’t afford to be blacklisted as a nation because this will have very grave and deleterious consequences, as the entire domestic airlines will shut down since airplanes can’t be operated without being insured . It will take some days at best to switch to the secondary market of Russia and China, whose premiums will also have sky-rocketed if we are blacklisted by Lloyd’s,” Meggison was quoted as saying on the Vanguard website adding, “We therefore use this medium to call on the Minister of State Aviation, Senator Hadi Sirika to as a matter of urgency come to the aid of domestic airlines operating in the country by forging a joint working group with the Federal Ministry of Finance and the Central Bank of Nigeria to brainstorm and cross-fertilise ideas on how the nation can take exigent steps forestall a potential backlash on the Nigerian economy and totally avoid the blacklist in the interest of safety and economic prosperity of the country.” The tight FX situation in Nigeria has also reportedly caused a shortage and a sharp increase in the price of Jet-A1 fuel (which is all imported), and this is forcing many airlines to have to refuel in neighbouring countries such as Ghana and Gambia.
QIA may invest US$10 bio into US infrastructure projects
Qatar’s Sovereign Wealth Fund could invest US$10 bio into US infrastructure projects, according to a recent article published by Reuters. The QIA has previously announced that it intended to invest up to $35 billion in the United States over the next 5 years, although it is not clear if this specific amount of US$10 bio is a part of that investment plan or a separate proposal.
Moodys assigns “stable” outlook for GCC banking sector
Moodys Investor Services has assigned a ‘stable’ outlook for the GCC’s banking sector next year, on expectations it will be able to weather the current difficult economic environment and any related funding pressures. "While operating conditions for banks in the Gulf Cooperation Council will remain challenging, the stabilisation of oil prices, albeit at a low level, and resilient non-oil sectors will moderate pressures on the banking sector from slowing economic growth, fiscal reforms and spending cuts," a spokesperson for Moodys was quoted as saying, adding that the firm also acknowledged each GCC government’s commitment to provide financial support to their respective domestic banks should it be required.
Kenya’s domestic debt hits record high
The sharp rise in local borrowing, especially via T-Bills and T-Bonds, has helped push Kenya’s domestic debt burden to a record level of US$19 bio, according to latest figures published by the Central Bank.
Boeing receives greenlight to supply Saudi Arabia with Chinook helicopters
The US State Department has reportedly approved the sale of 48 CH-47F Chinook helicopters and related equipment to Saudi Arabia in a deal worth around US$3.5 Bio.
Egypt receives US$500 mio from AFDB
The African Development Bank approved the release of a US$500 mio payment to Egypt this week. These funds are the second tranche of a three-year loan program and earmarked specifically for social housing, sanitation and employment projects.
Iran ponders changes to its currency
Iran’s parliament and its ‘Guardian Council’ are set to debate a proposal to change the name of the country’s currency from ‘Rial’ to ‘Toman’ and amend its value. The ‘Toman’ was in use prior to the 1930s when it was replaced with the ‘Rial’ by the Shah. “Switching the national currency from the Rial to the Toman is a measure which is meant to facilitate transactions by the public, to acknowledge what the people generally accept in their current trend of trade, and to match the economics of the society with the realities,” the Central Bank Governor, Valiollah Seif stated. If approved the introductory conversion rate would be 1 Toman = 10 Rials.
Did you know that the population of Lagos was just 60,000 in 1872 but that it is now home to more than 17.5 million people?
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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