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US removes Ethiopia, Mali and Guinea from AGOA trade programme

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The United States has cut Ethiopia, Mali and Guinea out of a duty-free trade programme over alleged human rights violations and recent coups.

In a statement on Saturday, the US Trade Representative (USTR) said it terminated the three countries from the African Growth and Opportunity Act (AGOA) “due to actions taken by each of their governments in violation of the AGOA Statute”.

It said the US was deeply concerned “by the gross violations of internationally recognised human rights being perpetrated by the government of Ethiopia and other parties amid the widening conflict in northern Ethiopia”, as well as by “the unconstitutional change in governments in both Guinea and Mali”.

There was no immediate comment from the Washington embassies of the three African countries.

The AGOA trade legislation provides sub-Saharan African nations with duty-free access to the US if they meet certain eligibility requirements, such as eliminating barriers to US trade and investment and making progress towards political pluralism.

In 2020, 38 countries were eligible for AGOA.

In its Saturday statement, the USTR said Ethiopia, Mali and Guinea may still rejoin the pact if they met the statute’s provisions.

“Each country has clear benchmarks for a pathway toward reinstatement and the Administration will work with their governments to achieve that objective,” it said.

US President Joe Biden had announced in November that Ethiopia would be cut off from the duty-free trading scheme provided under AGOA due to alleged human rights violations in the country’s north.

The war in Ethiopia’s Tigray region broke out in November of 2020 amid a power struggle between the Tigrayan leadership and Prime Minister Abiy Ahmed Abiy. Tens of thousands of people have been killed in the 13-month-long conflict, while about 400,000 are facing famine in Tigray alone.

The conflict has also destabilised the region, sending tens of thousands of refugees into Sudan, pulling Ethiopian soldiers out of war-ravaged Somalia and using the army from the neighbouring nation of Eritrea.

The US decision to suspend Ethiopia’s trade benefits threatens the country’s textile industry, which supplies global fashion brands, and the country’s nascent hopes of becoming a light manufacturing hub.

It also piles more pressure on an economy reeling from the conflict, the coronavirus pandemic, and high inflation.

Ethiopia’s Trade Ministry said in November it was “extremely disappointed” by Washington’s announcement, saying the move would reverse economic gains and unfairly affect and harm women and children.

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BUSINESS

5G Deployment: Nigeria approves Microsoft’s agreement, migration of C-Band services

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The federal government has approved an Enterprise Licensing Agreement for Microsoft products and the clearing up of C-Band Spectrum in order to accelerate the deployment of 5G services in the country.

In a statement, the Ministry of Communications and Digital Economy, on Thursday, said the approval was given during the meeting of the Federal Executive Council (FEC) last Wednesday.

This agreement is part of the federal government’s effort towards keeping the cost of IT projects within sustainable levels, the statement, signed by the Technical Assistant to Pantami, Dr Femi Adeluyi, revealed.

He said the agreement would give the government access to discounted prices and other cost benefits, as well as reduce project duplication across Federal Public Institutions (FPIs).

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Bitcoin posts its worst quarter in more than a decade

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Bitcoin on Thursday posted its worst quarterly loss in more than a decade.

The world’s largest cryptocurrency has lost around 58% of its value in the second quarter of 2022, according to data from CryptoCompare. Bitcoin has fallen from $45,524 at the start of the quarter and was trading just below $19,000 on Thursday, the last day of the three-month period.

This is the worst quarterly performance for bitcoin since the third quarter of 2011 when it lost 68.2% of its value.

Bitcoin is down 39.8% in June and is on pace for the worst month ever dating back to 2010 when it became available on exchanges, Coin Metrics data shows.

Meanwhile, ether is down 69.3% in the second quarter and is on track for its worst quarter on record, dating back to its inception in 2015, according to Coin Metrics data.

Coin collapse, 3AC liquidation
Cryptocurrency prices have come under intense pressure this quarter amid rampant inflation which has caused central banks around the world to raise interest rates and led to a sell-off in risk assets, such as stocks and digital coins.

The crash in prices has also exposed issues with a several cryptocurrency companies and projects, particularly those in the lending space and firms that are highly leveraged.

A number of high profile issues have come to light during the quarter.

In May, the algorithmic stablecoin terraUSD collapsed along with its sister token luna. A stablecoin is a digital currency pegged to a real-world asset. TerraUSD was supposed to be pegged one-to-one with the U.S. dollar. Some stablecoins such as tether are backed by real assets like fiat currencies and government bonds. But terraUSD was governed by an algorithm which effectively failed.

Then In June, crypto lending firm Celsius paused withdrawals for its customers citing “extreme market conditions.”

Meanwhile, cryptocurrency exchange CoinFlex halted withdrawals for customers last week also citing “extreme market conditions.” But the company also claimed long-time crypto investor Roger Ver owes it $47 million after his account went into “negative equity.” Ver has denied that he owes CoinFlex money.

And the liquidity crisis has also hit prominent crypto hedge fund Three Arrows Capital which has fallen into liquidation, CNBC reported on Wednesday.

The latest downturn is being described as a new “crypto winter” and has also impacted growth and hiring at companies. Coinbase and BlockFi announced plans to lay off staff.

How does this cycle compare to the past?
Jacob Joseph, research analyst at CryptoCompare, notes that in the previous boom and bust cycle, bitcoin fell from a peak of $19,871 in the fourth quarter of 2017 to a low of $3,170 in the fourth quarter of 2018, suffering a drawdown of 8%.

Joseph said a similar fall of 82.2% was seen in 2014 when bitcoin fell from a high of $1,239 in the fourth quarter of 2013 to a low of $221 in the second quarter of 2015.

“This suggests that we could be in for a further drawdown period if the current poor macroeconomic conditions continue to persist,” Joseph told CNBC.

Other investors have expressed bearishness. In May, Guggenheim Chief Investment Officer Scott Minerd, said bitcoin could drop to $8,000. At the time, the cryptocurrency was trading at around $30,000, representing a 70% fall.

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European markets set to retreat as caution persists after worst quarter since 2020

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European markets are set to pull back on Friday after suffering their worst quarter since the onset of the Covid-19 pandemic, as inflation and interest rate hikes continue to weigh on sentiment.

Britain’s FTSE 100 is seen around 38 points lower at 7,131, Germany’s DAX is set to fall by around 123 points to 12,661 and France’s CAC 40 is expected to drop by around 54 points to 5,869.

The pan-European Stoxx 600 index closed the second quarter of the year on Thursday down 9% — the worst three-month period since the early stages of the pandemic in 2020 — and was down 16.6% year-to-date.

Global market sentiment remains gloomy as the war in Ukraine shows no sign of abating and inflationary pressures continue to mount, prompting central banks to embark on aggressive monetary policy tightening and exacerbating fears of a global economic slowdown.

Shares in Asia-Pacific were lower overnight with Japan’s Nikkei 225 leading losses in the region, after the Bank of Japan’s quarterly business sentiment survey posted a sharp decline in the April-June period.

However, China’s manufacturing activity expanded at its sharpest rate for 13 months in June, boosted by resurgent output after the easing of Covid-19 lockdown measures.

U.S. stock futures also retreated in early premarket trade after the S&P 500 closed out its worst first-half performance since 1970, dropping 20.6% year-to-date by Thursday’s close.

Back in Europe, Reuters reported Thursday that the European Central Bank will on Friday begin a process of buying bonds from southern European nations, including Italy, Spain, Portugal and Greece. The ECB will reportedly use the proceeds from maturing German, French and Dutch debt, in a bid to cap spreads between their respective borrowing costs.

On the data front, a flash euro zone June inflation reading is due Friday morning, along with manufacturing PMIs from Germany, France, Italy and Spain.

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