Less than $0, but not everywhere 🛢
How are you taking care of yourself today?
Hello 😊
How are you taking care of yourself today?
It’s been another week of staying indoors and we’d just like to say it’s okay to take a break from the news. We've considered it a couple of times also.
Correction: In last week’s edition, we made a mistake in the story about tests being made, we said there over 6,649 persons tested based on the information on the NCDC’s site.
However, It is actually samples tested not persons tested, 6649 samples tested =/= 6649 persons because some persons are tested multiple times to arrive at a valid result. Currently, the number of persons tested is publicly unknown. We guess roughly 60% of tests done = number of persons tested.
Okay over to the not so COVID related Stories of the week.
Less than $0, but not everywhere.
Earlier this week, Monday to be precise [WTI] Oil price fell below $1 and even closed at a surprising -$37.63/barrel. To the average consumer, it’s easy to get the impression that there’s a singular, worldwide market for Crude Oil but that’s not true as that same day Brent Oil price closed at ~$25/barrel.
Wait, what?
There isn't one singular market for crude oil because multiple factors such as the quality of oil and location (sea or land) affect the value of the oil, hence we have 3 major benchmarks of Oil price.
The 3 major benchmarks for Crude Oil: Brent Crude is the reference for about two-thirds of the oil traded around the world, with West Texas Intermediate(WTI) the dominant benchmark in the U.S. and Dubai/Oman is middle eastern crude and influential in the Asian market.
How the Oil market works
Due to the volatility of crude oil prices, buyers and sellers agree on oil price ahead of time. Using financial instruments such as futures, buyers and sellers can agree on the price of a commodity several months, or even years, in advance. If the price of oil goes higher than the agreed price the buyer is protected, while if the price drops below the agreed price the seller profits, at all times the buyer/seller is obligated to buy/sell at the agreed price. This means the crude oil for the month of May, for example, is often sold out in April.
What really happened
A day (Monday) before the deadline for concluding on the sale or purchase of May Crude Oil, there were almost no buyers. Majorly because there’s also less storage space for crude oil in the US because of the lockdown, as previously purchased crude oil hasn’t been used. For instance, last week, Cushing, the largest oil storage space in the US with a max capacity of 77m reached 55 million barrels in storage and is growing by almost 1 million barrels per day. At its current rate, it’s expected to be full by mid-May.
This forced the price of crude oil to crash as the sellers were desperate. But this doesn’t mean that all of May’s oil was sold at a loss, only those sold close to the expiry date.
As per Alex Gilbert “In practical terms, the collapse in the May contract does not mean that oil is free or that you personally can be paid to take oil. Only a small number of May contracts actually traded at prices below zero.”
What does this mean for the Oil prices in other areas - other benchmarks?
For Brent and Dubai/Oman, they took a hit, although not as low as zero or one digit prices. E.g Nigeria’s Oil - Bonny light which is benchmarked on the Brent Crude - was at $21/barrel on Monday and is now at $16/barrel. But the prices appear to be rebounding as June’s Crude Oil is currently being sold at the following rates per barrel, WTI - ~$16.94, Brent - ~$21, Dubai/Oman - ~$20.6
Big Picture: Oil prices are influenced by multiple factors and we’d have to wait a bit to see how things would pan out for June’s crude prices in May.
Next time you hear oil prices have gone up or down, it’s important to know which oil price in question. You can always look up oil prices here.
Jumia’s opens up again in South Africa
In partnership with other major consumer goods companies, Jumia is leveraging on the current large demand for essential commodities in South Africa to deliver safer shopping experiences for people during this lockdown, including contactless deliveries for prepaid orders.
Jumia Wasn’t in South Africa before now?
They were, but only operated as Zando with a major focus on fashion items but they started experiencing low patronage and had to suspend operations when the coronavirus intensified.
What this launch means for Jumia
After facing reduced business activities with Zando all through the month of March, Jumia’s new move to focus on delivering essential products has now channeled the company’s attention to its key market, the consumer market.
E-commerce sector in South Africa
Unlike China whose biggest strength during quarantine is a full operation of online trading and deliveries, over 4,000 South Africa’s logistic and e-commerce businesses are on compulsory lockdown, this places a restriction on online retail stores where the government banned the selling of non-consumable products, allowing deliveries for just essential goods.
Businesses are on the bricks of collapse
Away from the flourishing market of consumer goods like toiletries and foods, online retailers have now been reduced to selling just hand sanitizers and face masks. This poses a threat to the usual sales volumes of retail businesses in the country, up to 80% losses encountered, causing a major struggle to keep employees on payrolls. Some of the countries e-commerce reveal they expect to lose about $20 million in revenue as a result of the lockdown.
Moving Forward
Just like the rest of the world, South African is still officially on lockdown till the end of April and the government is yet to lift the ban on sales of non-essential products. While other businesses are still appealing to the government to lift the ban on non-essential food deliveries, This might be Jumia’s opportunity to return and do better in a market it recently exited or maybe Jumia has no such lofty aspirations and is just looking for more ways to make money in tough times such as this.
Cryptocurrency and Blockchain in Africa
As blockchain technology is being explored to solve the data privacy concerns in our communities, Bundle Africa has launched a payment platform that lets individuals transact in cash and cryptocurrencies. The company plans to expand its services to 30 countries at the end of the year while currently supporting cryptocurrencies such as Bitcoin, Ether and Binance Coin.
PS: Crypto/Cryptocurrency is a digital currency that uses high-level security to secure financial transactions while Blockchain is the underlying technology behind the security of cryptocurrencies and other digital information.
Sense a Trend?
Well...Some countries in Africa have been seeing the development of blockchain-based solutions in finance and other sectors. For example
Sesacash - A startup that allows cross border payments in 20 traditional cash and digital currencies. It plans to introduce crypto debit cards in the future
RideSafe - Launched a blockchain-based application that ensures motorcycle riders get quick and affordable medical service in the event of an accident. This product emerged because of the high price of emergency services and health insurance products.
The Sun Exchange - Developed a peer-2-peer blockchain-based application that allows people around the world to invest in the creation of energy sunlight rays and its leasing to schools and businesses in Africa.
Regulation
The challenge with cryptocurrencies has always been regulation by the respective Central Banks because of the threat it poses to financial volatility. In Africa, trading with cryptocurrencies has been prohibited in Algeria and Egypt while it is unregulated in sub-Saharan countries such as Ghana, Lesotho, Mozambique, Namibia, Nigeria, South Africa and Zimbabwe.
Zoom Out
While blockchain-based solutions are providing solutions to local problems, Central Banks of African countries bear the responsibility of analyzing the inherent risks of innovation in crypto and other delicate blockchain-based solutions to protect their financial and economic systems.
It might not feel like it right now but…
In 2015, the UN committed to universal health coverage: everyone, everywhere, having access to the healthcare they need without suffering financial hardship.
The health sector is now expanding faster than the world economy. We’re seeing improvements in medicine, more medical professionals, better health information systems.
While averages come with its shortcomings and it’s clear there’s definitely room for improvement, remember some progress has been made.
Worth Reading 📚
Quote of the week 💭
Not everything that is faced can be changed. But nothing can be changed until it is faced.
– James Baldwin
Thank you for reading this week’s edition of Cloout 😊
How can we help you in this period? 💙
Written by Daniel Adeyemi, Bright Azuh and Damilola Amusan.
Cool piece 💜💜