10/06/2016 World Business Report


10/06/2016

Similar Content

Browse content similar to 10/06/2016. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

with Aaron and World Business Report.

:00:00.:00:18.

Africa's biggest economy faces its worst crisis in decades

:00:19.:00:22.

as airlines pull out and foreign currency runs low.

:00:23.:00:26.

Plus - you've heard of Carlsberg, but what about Hisense?

:00:27.:00:30.

Or the state oil company of Azerbaijan?

:00:31.:00:33.

They're just some of the companies sponsoring Euro 2016.

:00:34.:00:35.

We'll be finding out what's in it for football's brand new friends.

:00:36.:00:47.

It is Friday. We have that feeling. This is a bite-size snapshot of

:00:48.:01:02.

everything in the world of business and money. We have lots going on.

:01:03.:01:04.

We start in Nigeria, because Africa's biggest economy

:01:05.:01:06.

is facing its worst crisis in decades.

:01:07.:01:08.

The price of oil, which is how the country makes most

:01:09.:01:11.

of its money, is less than half what it was two years ago.

:01:12.:01:14.

That's brought growth to a standstill.

:01:15.:01:16.

And there is a chronic shortage of foreign currency -

:01:17.:01:19.

so much so that two major airlines, United and Iberia,

:01:20.:01:22.

have said they will no longer fly to the country because of a lack

:01:23.:01:25.

of demand and trouble collecting payments.

:01:26.:01:30.

Nigeria's currency, the naira, is pegged to the US dollar

:01:31.:01:37.

at this - an official exchange rate of 198.

:01:38.:01:41.

The problem is it's worth nothing like that anymore.

:01:42.:01:46.

In fact, on the black market on Thursday,

:01:47.:01:47.

a US dollar would have cost you 368 naira.

:01:48.:01:52.

Two weeks ago, the government promised to free up the exchange

:01:53.:01:55.

rate so it reflects reality - but they have been stalling.

:01:56.:02:00.

They know it's going to mean a hefty devaluation.

:02:01.:02:04.

That means foreign firms are reluctant to invest in Nigeria.

:02:05.:02:09.

They are fearful of getting their money out again,

:02:10.:02:13.

There has been a plunge in capital coming into the country.

:02:14.:02:24.

In the first three months of this year, it was down almost 75% on last

:02:25.:02:28.

With good reason, perhaps - for instance airlines are now owed

:02:29.:02:34.

$600 million from tickets sold in Nigeria that the government has

:02:35.:02:37.

Still, some economists are hopeful that the promise of currency reform

:02:38.:02:45.

will mean much needed foreign cash coming in soon.

:02:46.:02:52.

It sends a signal even to investors out there because now everybody has

:02:53.:02:55.

been waiting for an adjustment of the currency so now that

:02:56.:02:58.

investors have seen that, yes, this is the line or the path

:02:59.:03:01.

that the central bank is towing, they're likely to bring

:03:02.:03:03.

It was mentioned also that one of the supply

:03:04.:03:06.

sources is from foreign investors, so I expect that at least down

:03:07.:03:09.

the line, now that this message has been passed across,

:03:10.:03:12.

we should see some investment flows coming in.

:03:13.:03:15.

Anna Rosenberg is director for Sub-Saharan Africa Research

:03:16.:03:17.

Great to have you in. For the uninitiated who don't follow this

:03:18.:03:32.

kind of story, we keep saying Nigeria is having a problem with

:03:33.:03:35.

foreign currency. Can you break that down? What does that mean for an

:03:36.:03:42.

economy if it is lacking in foreign currency? For an economy like

:03:43.:03:44.

Nigeria, it means a lot. They depend on imports. It does not produce as

:03:45.:03:50.

much locally. Oil is a major source of foreign currency earnings. It

:03:51.:03:55.

sells it in dollars, so Nigeria gets the dollars and uses it to... Is

:03:56.:04:04.

lack buy products. Does that mean they are importing less? Yes, to

:04:05.:04:10.

some extent, because they can't get access to goods because they can't

:04:11.:04:14.

pay for them. You have a massive problem with inflation because

:04:15.:04:18.

prices are going up for pretty much everything, simple things like

:04:19.:04:23.

tomatoes, 100% price increase. Is that why be Nigerian government

:04:24.:04:32.

Israelite and to put its currency, flight it? If it devalues its

:04:33.:04:42.

currency, then things go up, the prices of everything? Fear of hyper

:04:43.:04:49.

inflation. There is a lot of political fear as well, because the

:04:50.:04:53.

president, who had a brief stint of power in 80s, witnessed massive

:04:54.:04:57.

currency depreciation that was supposed to fuel local

:04:58.:05:01.

industrialisation but didn't, and caused massive price increases and a

:05:02.:05:07.

major economic crisis. He is reluctant to contribute to a new

:05:08.:05:10.

depreciation of the economy. But at this point it is a necessity.

:05:11.:05:16.

Absolutely. Is it almost like a dog chasing its tail that foreign

:05:17.:05:20.

investors are sitting back and looking at what is going on with

:05:21.:05:24.

Nigeria and going, at the moment, I don't want to put money in to that

:05:25.:05:28.

economy? Yes. To some extent is true. We work with Western

:05:29.:05:33.

multinationals that do business across emerging markets. Some have

:05:34.:05:38.

been investing in Nigeria for the past three years aggressively, and

:05:39.:05:42.

they still believe in the long-term opportunity of country. They are

:05:43.:05:46.

more cautious and are revising targets, but remain committed. Then

:05:47.:05:51.

there are those who have been eyeing Nigeria for a while and looking for

:05:52.:05:55.

excuses not to make more significant investments because there are so

:05:56.:05:59.

many problems in the world they preferred to focus on the few big

:06:00.:06:03.

growing economies like India or even Poland. They are more reluctant.

:06:04.:06:06.

Short and sweet, but thank you. To football now - because you can't

:06:07.:06:11.

fail to have noticed that the European Championship -

:06:12.:06:14.

otherwise known as Euro 2016 - It is the most-watched sports event

:06:15.:06:17.

in the world after the Olympics Companies have spent some $450

:06:18.:06:23.

million to be official sponsors - But are they getting good

:06:24.:06:28.

value for money? We've put together a little

:06:29.:06:32.

explainer for you. Jacques de Cock is from

:06:33.:06:46.

London School of Marketing. Great to have you with us. Who are

:06:47.:08:00.

the official sponsors for Euro 2016? The major one doing it every year is

:08:01.:08:04.

Adidas, Donald, Carlsberg and Continental. You saw that clip and

:08:05.:08:12.

that study with people who thought Carlsberg is the official beer, but

:08:13.:08:17.

they thought it was something else. Does it really pay? Some of these

:08:18.:08:20.

companies have paid millions and not getting recognition. Before the

:08:21.:08:25.

event, they know the sponsors of their teams. If you ask an English

:08:26.:08:35.

person who is sponsoring your 216 -- Euro 2016, they will say it Nike.

:08:36.:08:41.

But then never see on television Adidas, McDonald's and all of those

:08:42.:08:46.

people. They will see them. Football seems to have new friends. The state

:08:47.:08:53.

oil company of Azerbaijan? And this Chinese tech company called Hisense?

:08:54.:08:58.

As a vagina is really weird. They want to prove -- Azerbaijan is

:08:59.:09:08.

really weird. What better opportunity than a billion people

:09:09.:09:14.

seeing their brand in the next month. After a month people will no

:09:15.:09:23.

what the state all coming is. Also interesting, this Chinese take them.

:09:24.:09:27.

They are having a big push into football and sports, so it is

:09:28.:09:35.

interesting we have a Chinese them on board. Hisense is a state firm

:09:36.:09:42.

that is growing out of their setup. Televisions, mobile phones, and they

:09:43.:09:45.

will make a push of their own brand in Europe. They will become the new

:09:46.:09:51.

Samsung or whatever. That is right they sponsoring football because

:09:52.:09:54.

they get maximum visibility. It is the biggest tournament by a long

:09:55.:09:58.

while. We appreciate your time. Thank you for coming in. Have a

:09:59.:10:03.

great weekend. Will I have time for this? Let me leave you with a couple

:10:04.:10:08.

of stories making headlines around the world.

:10:09.:10:10.

The downturn in the UK oil and gas sector could could have cost more

:10:11.:10:13.

than 120,000 jobs by the end of this year, according to a report.

:10:14.:10:17.

Oil Gas UK says 84,000 jobs linked to the industry went in 2015,

:10:18.:10:20.

with 40,000 losses expected this year.

:10:21.:10:22.

Many companies have been struggling under the weight of a sustained fall

:10:23.:10:25.

It is not a pretty picture in Asia. All numbers in the red. Will be fed

:10:26.:10:46.

raise the cost of borrowing in the world's the best economy? --

:10:47.:10:55.

biggest. You can find me on Twitter. I will be back to take a look at the

:10:56.:10:58.

pictures. -- papers.

:10:59.:11:03.

Download Subtitles

SRT

ASS