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Middle East & African Monitor – 14 March 2018

  • Departure Of Tillerson Suggests A More Hawkish US Administration.
  • Nigerian President Orders Investigation Into Amnesty Program.
  • Iraqi Government lifts Flight Ban On Kurdish Region.
  • IMF Extends Standby Agreement With Kenya.
  • Moody’s Sees Improved Profitability For Saudi Banking Sector in 2018.
  • Qatar Sells Stake In Veolia – CB Holds Bond Auction.
  • GCC To Establish Central Payments System.
  • ADCB Prepares To Conduct US$ Bond Issue.
  • Bahrain Launches Major Fintech Hub.  

REGIONAL COMMENTARY

Departure Of Tillerson Suggests A More Hawkish US Administration.
Although such a possibility had been rumoured for months, yesterday’s abrupt removal of Rex Tillerson as US Secretary of State did come as somewhat of a surprise, especially the way it was conducted. One can have a lengthy debate over Tillerson’s performance during his relatively short tenure, but what is clear is that the man replacing him, Mike Pompeo, will definitely be more hawkish in his global outlook, and also more likely to be in step with the President’s own foreign policy views. This does not bode well for the Iran nuclear accord, which as mentioned in my previous commentary comes up for its next 90-day waiver by the US in May. During a speech back in November 2016 when Pompeo had accepted the role as CIA Director, he claimed that the P5+1 agreement with Iran was “disastrous” and  that he was looking forward to “rolling it back.” President Trump has already indicated that the Iran question was one of the major issues he and his now former Secretary of State disagreed upon, saying yesterday; "If you look at the Iran deal I think it's terrible and I guess he thought it was OK, we weren't really thinking the same."

Nigerian President Orders Investigation Into Amnesty Program.
Nigeria’s President Buhari has called on his national security chief to investigate allegations of corruption surrounding the government’s Niger Delta amnesty program, he also replaced the program’s head, Brigadier-General Paul Boroh with Professor Charles Dokubo. A statement issued by the President’s office and published on the ‘Punch NG’ website yesterday read: “The President directs the National Security Adviser to carry out a full investigation into the activities of the Amnesty Program from 2015 to date, especially allegations of financial impropriety and other acts that are allegedly detrimental to the objectives of the Presidential Amnesty Program.” The program was first initiated in 2009 in an attempt to stabilize the restive Niger Delta region and prevent attacks on oil facilities there by offering members of militant groups in the area, a monthly stipend and job training if they handed in their weapons and signed an agreement to halt such activities.

Iraqi Government lifts Flight Ban On Kurdish Region.
Iraq’s Prime Minister, Haider al Abadi, announced yesterday that his administration was preparing to lift an international flight ban on the country’s Kurdistan region within the next few days, indicating a potential improvement in relations between Erbil and Baghdad. The central government imposed the ban following a controversial independence referendum undertaken by the region in September last year. In reaction the Kurdish Prime Minister, Nechirvan Barzani, was quoted as saying by Reuters that; “The opening of Kurdish airports to international flights is an important step, we hope more significant steps will be taken."

IMF Extends Standby Agreement With Kenya.
The IMF says that it has approved aa request by Kenya to extend its US$1.5 bio standby facility ,(which was due to expire at the end of this month), for a further six months. The international lender warned however that the facility was still subject to the completion of a full review.  “The Executive Board of the International Monetary Fund approved Kenyan authorities’ request for a 6-month extension of the country’s Stand-By Arrangement to allow additional time to complete the outstanding reviews. The reviews are expected to be completed by September 2018. Completion of the reviews will enable the Kenyan authorities to have access to funds available under the precautionary SBA. In support of this request, the authorities have committed to policies that will enable them to achieve the program objectives, including reducing the fiscal deficit and substantially modifying interest controls,” an official statement issued by the IMF read.

Moody’s Sees Improved Profitability For Saudi Banking Sector in 2018.
Moodys Investor Service has said that it expects banks in Saudi Arabia to outperform their regional peers this year as the domestic economy picks up and higher rates help boost margins. “Saudi banks’ profitability improved in 2017 despite a challenging environment and a decline in lending. We expect their profitability to remain broadly stable at this level in the next 12-18 months thanks to higher interest rates, a gradual pick-up in credit growth and fee-based income. We also expect Saudi banking system’s profitability to remain above GCC peers,” a senior Moodys analyst was quoted as saying by the UAE’s National newspaper yesterday.

Qatar Sells Stake In Veolia – CB Holds Bond Auction.
Bloomberg has reported that the Qatar Diar Real Estate Investment Company, (the property arm of the country’s sovereign wealth fund), has completed the sale of its entire stake in France’s Veolia Environnement for EUR 506.80 mio. Meanwhile Qatar’s Central Bank this week raised QAR 2 bio via both a Sukuk and conventional bond issue, its first such action this year. The yield on both papers was 3.95% according to Reuters.

GCC To Establish Central Payments System.
Kuwait’s Central Bank Governor, Mohammad Al Hashel, has announced that the GCC is preparing to establish an entity which would facilitate direct money transfers amongst the six GCC member states. The entity will be called the ‘Gulf Payments Company’ and its objective is to create a “safe and rapid means for financial transfers” whilst allowing each country to transfer these funds “without reliance on international currencies”, Al Hashel was quoted as saying by the Kuwait Times and the UAE’s National newspaper this week. Each member state will contribute towards the company’s operating capital and the six Central Bank governors will sit on the board.  GPC will be headquartered in Riyadh and another office is to be situated in the UAE.

ADCB Prepares To Conduct US$ Bond Issue.
The UAE’s Abu Dhabi Commerical Bank is set to begin an investor roadshow this week ahead of an expected 5Y fixed-rate US$ bond issue.

Bahrain Launches Major Fintech Hub.
Bahrain officially unveiled its new Fintech hub this month which is situated within the Bahrain Bay development in Manama. The 10,000 sq feet facility will focus on blockchain as well relevant insurance and regulatory technologies  The Singapore-based fintech incubator Fintech Consortium, via its subsidiary FinTech Consortium Bahrain, will be responsible for managing the hub, as well as integrating it into its numerous Fintech platforms, according to the GDN media outlet.

14-03-2018

AND FINALLY
Did you know that the world’s oldest and still functioning oil refinery is located in Digboi, India? This small facility first began operating in 1901.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
MarketInsights&Strategy@nbad.com
Tel: +971 2 6110 127

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