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Real rates are really bad for Bitcoin

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Bitcoin, the most popular and valuable cryptocurrency, has been on a downward trend since reaching its all-time high of nearly $70,000 in April 2021. As of October 2021, the price of Bitcoin has fallen by more than 40%, hovering around $40,000. What is behind this decline? And what does it mean for the future of Bitcoin and other cryptocurrencies?

One of the main factors that affect the price of Bitcoin is the real interest rate, which is the nominal interest rate minus the inflation rate. The real interest rate reflects the true cost of borrowing money and the return on saving money. When the real interest rate is high, people have more incentive to save and invest in traditional assets, such as bonds and stocks, rather than speculative assets, such as Bitcoin.

When the real interest rate is low or negative, people have less incentive to save and invest in traditional assets, and more incentive to seek alternative assets, such as Bitcoin, that can offer higher returns or hedge against inflation.

Since the onset of the COVID-19 pandemic, central banks around the world have adopted unprecedented monetary stimulus measures to support the economy and prevent deflation. These measures include cutting nominal interest rates to near zero or below zero and expanding quantitative easing programs to buy large amounts of government and corporate bonds. These actions have pushed down the real interest rates to historic lows or negative levels in many countries, creating a favorable environment for Bitcoin and other cryptocurrencies to thrive.

However, as the global economy recovers from the pandemic, inflation pressures are rising due to supply chain disruptions, labor shortages, rising commodity prices, and pent-up consumer demand. According to the latest data from the International Monetary Fund (IMF), global inflation is expected to reach 5.9% in 2023, up from 3.2% in 2020. This means that the real interest rates are rising, even if the nominal interest rates remain low or unchanged.

For example, in the United States, the nominal interest rate on 10-year Treasury bonds is around 1.6%, but the inflation rate is around 5.4%, resulting in a negative real interest rate of -3.8%. However, if the inflation rate rises to 6%, then the real interest rate will rise to -4.4%, making it less attractive to hold Bitcoin and other cryptocurrencies.

The rising inflation and real interest rates also increase the likelihood that central banks will tighten their monetary policies sooner or faster than expected, which could further dampen the demand for Bitcoin and other cryptocurrencies.

For instance, in September 2021, the Federal Reserve signaled that it may start tapering its $120 billion monthly bond purchases as soon as November 2021, and raise its benchmark interest rate as early as 2022. Similarly, in October 2021, the Bank of England hinted that it may hike its interest rate as soon as November 2021, in response to surging inflation in the United Kingdom.

Real rates are really bad for Bitcoin because they reduce the relative attractiveness of holding Bitcoin and other cryptocurrencies compared to traditional assets. As inflation and real interest rates rise around the world, Bitcoin may face more downward pressure on its price and market share. Unless Bitcoin can overcome its technical and regulatory challenges and prove its value proposition as a digital store of value or a medium of exchange, it may lose its shine in the eyes of investors and consumers.

Is Bitcoin still the king of cryptocurrencies or is it time to look for alternatives?

This is a question that many investors, traders and enthusiasts are asking themselves as the crypto market evolves and new challenges emerge. Bitcoin, the first and most popular cryptocurrency, has been around for more than a decade and has proven to be resilient, secure and innovative. However, it also faces some limitations, such as scalability, energy consumption and regulatory uncertainty.

This is a question that many investors, traders and enthusiasts are asking themselves as the crypto market evolves and new projects emerge. Bitcoin, the first and most popular cryptocurrency, has been around since 2009 and has established itself as a store of value, a medium of exchange and a global phenomenon. But is it still the best option for those who want to enter the crypto space or diversify their portfolio?

We will explore some of the advantages and disadvantages of Bitcoin, as well as some of the potential alternatives that could challenge its dominance or complement its role in the future. We will also provide some tips on how to evaluate different cryptocurrencies and make informed decisions based on your goals and risk appetite.

Bitcoin has many features that make it attractive for investors and users. Some of these are:

Decentralization: Bitcoin is not controlled by any central authority, government or corporation. It is governed by a network of nodes that validate transactions and maintain consensus through a proof-of-work algorithm. This means that no one can censor, manipulate or inflate the supply of Bitcoin.

Security: Bitcoin is secured by cryptography and a large amount of computing power that makes it practically impossible to hack or counterfeit. It also has a high degree of transparency, as all transactions are recorded on a public ledger that anyone can access and verify.

Scarcity: Bitcoin has a fixed supply of 21 million coins that will ever be created. This creates a deflationary pressure that increases its value over time, as demand grows while supply remains constant. It also makes Bitcoin a hedge against inflation and currency devaluation.

Adoption: Bitcoin has the largest and most active community of users, developers and supporters in the crypto space. It also has the widest acceptance among merchants, platforms and institutions, making it easy to buy, sell and use. It is also supported by most exchanges, wallets and other services that facilitate its access and liquidity.

However, Bitcoin also has some limitations and challenges that could hinder its growth or make it less appealing for some users. Some of these are:

Scalability: Bitcoin can only process about 7 transactions per second, which is far below the demand of its growing user base. This creates congestion in the network, which leads to high fees and long confirmation times. Although there are some solutions to improve its scalability, such as the Lightning Network, they are still in development or adoption stages and face some technical and social hurdles.

Volatility: Bitcoin is known for its high price fluctuations, which can be influenced by various factors such as supply and demand, news, events, regulations, hacks, etc. This makes it risky and unpredictable for investors and users who seek stability and certainty.

Environmental impact: Bitcoin consumes a large amount of energy to power its mining operations, which generate new coins and secure the network. According to some estimates, Bitcoin’s annual energy consumption is comparable to that of some countries, such as Argentina or Norway. This raises concerns about its environmental impact and sustainability in the long term.

Innovation: Bitcoin is often considered as a conservative and slow-moving project, as it prioritizes security and stability over innovation and experimentation. This means that it is less likely to adopt new features or technologies that could improve its performance or functionality. It also faces competition from newer and more agile projects that offer novel solutions or address specific needs or niches in the market.

The Rights/Responsibilities of Air Passengers and Obligations of Airlines in Nigeria

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Aviation Law :- Air Passengers’ Rights/Responsibilities & Airlines’ Obligations

The Nigerian Civil Aviation Authority (NCAA) , in the exercise of its statutory power to regulate the Nigerian Aviation sector, issued a set of regulations on the rights and responsibilities of air passengers as well as the obligations of airlines operating under the reach of the NCAA.

This article will be looking at some of the notable provisions of these regulations as follows :-

Applicability of Regulations

This prescribes minimum rights and responsibilities of passengers and airlines’ obligations to passengers, where:

(a) There is an incidence of Overbooking and passengers are denied boarding against their will ;

(b) A scheduled flight is delayed;

(c) A scheduled flight is cancelled; and

(d) Passengers fail to discharge their responsibilities.

Definitions of Terms

For the purpose of this part, the following definitions shall apply:

– “Aircraft” means any machine that can derive support in the atmosphere from reactions of the air other than reactions of the air against the earth surface.

– “ Air Carrier” means an enterprise that engages in provision of transportation services by aircraft for remuneration or hire.

– “Airline” means any air transport enterprise offering or operating a scheduled international air service.

Note : Notwithstanding the definitions in (2) & (3) above, for the purpose of this part, the words ‘Air Carrier’ and ‘Airline’ are used interchangeably.

– “Assessment” means an initial evaluation of a complaint by the NCAA to determine the appropriate means of redress.

-“Authority” means the Nigerian Civil Aviation Authority.

-“Consumer” means consumer of civil aviation services.

-“Baggage” means personal property of passengers or crew carried on an aircraft by agreement with the operator.

-“Cancellation” means the non-operation of a flight which was previously planned and on which at least one seat was reserved.

-“Cargo” which is an equivalent to the term “goods” means anything carried or to be carried in an aircraft or by means of surface transportation including, but not limited to, road or rail vehicles, except mail, or baggage carried under a passenger ticket and baggage check, but includes baggage moving under an Air Waybill or shipment Record.

– “Compensation” means direct and/or indirect monetary and/or nonmonetary benefits offered to passengers whose rights have been infringed upon.

– “Complainant” means :

(i) An air passenger ;

(ii) One or more air passengers, where there are numerous air passengers having the same interest ; or

(iii) In case of the death of an air passenger, his legal heirs or representatives making or continuing a complaint.

-“Complaint” means an allegation in writing made by an air passenger, a group of passengers or their legal heirs or representatives.

-“Confirmed Reserved Space” means space on a specific date and on a specific flight and class of service on an air carrier which has been requested by a passenger, including a passenger with a zero fare ticket”,and which the air carrier or its agent has verified, by appropriate notation on the ticket or in any other manner provided therefore by the air carrier,as being reserved for the accommodation of the passenger.

-“Denied Boarding “means a refusal by an airline to carry passengers who hold confirmed reservation and valid travel documentation, although they have presented themselves for check-in and/or boarding at the time stipulated by the airline , on grounds of oversold service.

Scope of Application

This regulations shall apply to passengers:

(a) departing from an airport located within Nigeria to another airport within Nigeria ;

(b) departing from an airport located in another country to an airport situated in Nigeria, unless they received benefits or compensation and were given assistance in that other country ;

(c) on foreign air transportation with respect to flight segments originating at a point within Nigeria.

In respect of subsection 19.2.1.1. of these regulations, it shall apply to passengers on scheduled flights including packaged tours, and on the condition that a passenger :

(a) has a confirmed reservation on the flight concerned and, except in the case of cancellation referred to in the regulations, presents himself or herself for check-in, as stipulated and at the time indicated in advance and in writing (including by electronic means) by the air carrier, tour operator or an authorized travel agent, or, if no time is indicated, not later than two (2) hours before the published departure time; or

(b) has been transferred by an air carrier or tour operator from the flight for which he or she held a reservation to another flight, irrespective of the reason.

Exemptions

– The regulations shall not apply to passengers travelling free of charge or at a reduced fare not available directly or indirectly to the public.

– However, it shall apply to passengers having tickets issued under a frequent flyer programme or other commercial programme by an air carrier or tour operator.

– The regulations shall apply to any operating air carrier providing transport topassengers covered in Part 19.2.1.1 and 19.2.1.2. above. 

-Where an operating air carrier, which has no contract with the passenger, performs obligations under these Regulations, it shall be regarded as doing so on behalf of the carrier having a contract with that passenger.

-This Part shall not apply in cases where a packaged tour is cancelled for reasons other than cancellation of the flight.

Notable Provisions of The Regulations

– “No Show” & Overbooking Situations

A passenger who shows-up on a later date or time other than the scheduled date or time of departure on his or her ticket may be considered for wait-listing on another flight subject to seat availability after meeting the airlines’ requirement(s).

An air carrier may overbook a scheduled flight in contemplation of the possibility of some passengers not showing up for that flight.

Denied Boarding

An airline shall have the following obligations in the event of an oversold flight:

(a) ensure that the smallest practicable number of persons holding confirmed reserved seat on that flight are denied boarding involuntarily;

(b) request for volunteers for denied boarding before applying boarding priority.

Any other passengers denied boarding except in accordance with subsection 19.4.1.1 above, is considered for purposes of this Regulation to have been denied boarding involuntarily, even if the passengers accept the denied boarding compensation.

Volunteers shall be compensated in accordance with Compensation Provisions of the Regulations , such assistance being additional to the benefits mentioned in this paragraph.

Boarding Priority Procedures

Every operating air carrier shall establish boarding priority procedures and criteria for determining which passengers holding confirmed reserved space shall be denied boarding on an oversold flight if an insufficient number of volunteers come forward. 

Such procedures and criteria shall:

(a) reflect the obligations of the operating air carrier set forth in the Regulations to minimize involuntary denial of boarding and to request for volunteers;

(b) be written in such manner as to be understandable and meaningful to the average passenger; and

(c) not make, give, or cause any undue or unreasonable preference or advantage to any particular person or subject any particular person to any unjust or unreasonable prejudice or disadvantage in any respect whatsoever.

Delays :

a). Domestic Flight Delays :- For domestic flights, when an operating air carrier reasonably expects a flight to be delayed beyond its scheduled time of departure, it shall provide the passengers with reason(s) for the delay within 30 minutes after the scheduled departure time and the assistance specified below:

(a) after two hours, refreshments as specified under the regulations and telephone calls, SMS and E-mails as specified under the regulations.

(b) Beyond three (3) hours, Reimbursement as specified in NCAA Regulations And Re-routing as specified in the Regulations.

(c) at a time beyond 10pm till 4am, or at a time when the airport is closed at the point of departure or final destination, the assistance specified in the regulations (hotel accommodation and transport); and

(d) In the event of a Lengthy delay When the expected time of departure is more than six hours after the time of departure previously announced, compensation as specified in the regulations.

b). International Flight Delays :- For international flights, when an operating air carrier reasonably expects a flight to be delayed beyond its scheduled time of departure, it shall provide to the passengers the assistance specified below:

(a) between two and four hours, compensation as specified in the regulations and Telephone Calls, SMS, E-mails as also specified in the Regulations; more than four hours, Meal as specified in the regulations and Telephone Calls, SMS, E-mails as specified in the Regulations; and

(b) when the reasonably expected time of departure is at least six hours after the time of departure previously announced, the Hotel accommodation assistance and Transport assistance as specified in the regulations.

c). Tarmac Delays :- If a flight is delayed on the tarmac after the doors of the aircraft are closed for take-off or after the flight has landed, the air carrier shall ensure passengers are provided with the following care free of charge while they wait on board the aircraft:

(a) information about the reason for the delay and status updates every 30 minutes. subsequent updates, including flight status changes, as the carrier deems appropriate;

(b) access to lavatories in working order if the aircraft is equipped with lavatories.

(c) proper ventilation and heating or cooling of the aircraft;

(d) food and drink in reasonable quantities no later than 2 hours after the start of the Tarmac delay.

 

Schedule Change

When an air carrier makes a significant change to a flight, the air carrier shall:

(a) Provide the passengers with notice of the change not later than 12(twelve) hours before the schedule time of departure for domestic flights and not later than 14 (fourteen) days for international flights and the assistance specified below:

(b) Reimbursement or Rerouting as specified in the regulations.

 

Cancellation

In case of cancellation of a flight, the passengers concerned shall:

(a) Be offered assistance by the operating air carrier and ;

(b) Be offered assistance by the operating air carrier in as well as, in the event of re-routing when the reasonably expected time of departure of the new flight is at least the day after the departure as it was planned for the cancelled flight, the assistance specified in the regulations.

(c) In respect of domestic flights, have the right to compensation by the operating air carrier in accordance with the regulations unless they are informed of the cancellation at least twenty-four hours before the scheduled time of departure and

(d) In respect of international flights, have the right to compensation by the operating air carrier in accordance with the regulations unless:

(1) they are informed of the cancellation at least seven days before the scheduled time of departure;

(2) they are informed of the cancellation between three and seven days before the scheduled time of departure and are offered re-routing, allowing them to depart not more than two hours before the scheduled time of departure and to reach their final destination less than four hours after the scheduled time of arrival.

Right to Compensation

– Where reference to compensation is made in this section, passengers shall receive at least :-

(a) 25 % of the fares or passenger ticket price for all flights within Nigeria.

(b) 30% of the passenger ticket price for all international flights.

-When passengers are offered re-routing to their final destination on an alternative flight pursuant to the regulations the arrival time of which does not exceed the scheduled arrival time of the flight originally booked:

(a) by one hour, in respect of all domestic flights ;

(b) by three hours, in respect of all international flights, the operating airline may reduce the compensation provided for in the regulations by 50%.

Right to Re-imbursement or Re-routing

-Where reference to reimbursement or re-routing is made in this subpart,passengers shall be provided any of the following choices:

(a) Reimbursement shall be made by mode of payment. If payment is made in cash, reimbursement shall be made immediately for domestic flights or within 14 (fourteen) days for international flights. If by electronic bank transfer, bank orders or bank cheques, travel vouchers or other services, reimbursement shall be made within 14 (fourteen) days of the full cost of unutilized ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part of parts of already made if the flight is no longer serving the purpose in relation to the passenger’s original travel plan, together with, when relevant, a return flight to the first point of departure, at the earliest opportunity.

Refund for cancelled ticket reservations

– If a consumer cancels a ticket reservation no later than 24 hours after purchasing it, for tickets bought at least seven days before a flight’s scheduled departure date and time, the air carrier shall:

(a) allow such consumer to cancel their reservation and receive a refund, or

(b) allow such consumer to reserve the ticket (place it on hold) for 6 months.

Upgrading & Downgrading

– If an operating air carrier places a passenger in a class higher than that for which ticket was purchased, it may not request any supplementary payment.

(a) If an operating air carrier places a passenger in a class lower than that for which the ticket was purchased, by the means provided for in the regulations, it shall immediately reimburse the difference to the passenger in accordance with the mode of payment within 30 days from the date of travel, plus :

(1) 30% of the price of the ticket for all domestic flights immediately, and

(2) 50% of the price of the ticket for all international flights within 14 days.

Complaints

A passenger may lodge a complaint with the Authority, or any other competent person designated by the Authority, about an alleged infringement of this Part.

Chinese Bitcoin Mines in US spark Security Concerns, Ferrari to accept Crypto for Luxury Car Purchases

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China has been a leader in Bitcoin mining, accounting for an estimated 65% of the world’s computing power. However, in June of this year, the Chinese government launched a crackdown on bitcoin mining, causing many miners to shut down their equipment or migrate to other countries. Some of these countries are the United States, which, according to the New York Times, has become the second largest bitcoin mining market in the world, accounting for about 17% of the hash rate.

Bitcoin is a decentralized digital currency that is not controlled by any government or central authority. Bitcoin operates by relying on a vast network of computing called “miners,” who use high-performance computers to verify transactions and receive new bitcoins as a reward. This process requires a lot of electricity and hardware, so Bitcoin mining farms are often concentrated in areas where electricity is cheap and loosely regulated.

The shift has raised national security concerns among some U.S. officials and experts. They fear that miners of Chinese nationality or ties to China could use their influence in the United States to maliciously attack or manipulate the Bitcoin network, jeopardizing the financial stability and defense interests of the United States. They also worry that China could steal U.S. data and intellectual property through espionage or ransomware.

The New York Times quoted U.S. Senator Robert Menendez as saying, “We can’t let the CCP (the Chinese Communist Party) build a digital Gulf crisis in our own backyard.” Mendes, chairman of the Senate Foreign Relations Committee, has asked the U.S. government to investigate and monitor bitcoin mining.

However, not everyone sees the presence of Chinese Bitcoin miners in the United States as a threat. Some Bitcoin proponents and industry insiders see this as a U.S.-friendly opportunity to increase the diversification and decentralization of the Bitcoin network and drive U.S. innovation and competitiveness in the digital currency space. They also point out that the Bitcoin network is governed by open and transparent rules and protocols, and any attempt to attack or manipulate it will be discovered and resisted by other participants.

The New York Times quoted Coin Metrics co-founder Nic Carter as saying, “I don’t think this is a real problem because Bitcoin is a very robust and resilient system that is resistant to any form of intervention.” Carter is the co-founder of a company that provides data and analysis on bitcoin and other digital currencies.

It remains to be seen how the future of Chinese Bitcoin miners will develop in the United States. On the one hand, the United States may strengthen the regulation and regulation of bitcoin mining to protect its national security and environmental interests. On the other hand, the United States may also welcome Bitcoin miners and support their use of renewable energy and advanced technologies to improve the efficiency and security of the Bitcoin network.

Ferrari to accept Crypto for Luxury Car Purchases

Ferrari, the Italian luxury carmaker, has announced that it will start accepting cryptocurrency as a payment option for its high-end vehicles, according to Reuters. The company said that it will partner with a crypto exchange platform to enable customers to buy its cars using digital tokens such as Bitcoin and Ethereum. Ferrari said that the move is part of its strategy to attract new and younger customers who are interested in innovative technologies and alternative payment methods.

The company also said that it will offer incentives and discounts for crypto buyers, as well as exclusive access to its events and services. Ferrari is not the first carmaker to embrace crypto, as Tesla, Lamborghini and Bugatti have also announced similar plans in the past year. However, Ferrari claims that it will be the first to offer a seamless and secure crypto payment experience for its customers, thanks to its collaboration with the crypto exchange platform. The company expects to launch the crypto payment option by the end of this year.

The move is part of Ferrari’s strategy to attract new and younger customers, who are more familiar with and interested in the emerging technology of blockchain and cryptocurrencies. Ferrari said that it believes that crypto payments will offer more convenience, security, and transparency to its customers, as well as reduce transaction costs and time.

Ferrari’s decision to accept crypto payments is a sign of the growing adoption and acceptance of digital currencies in the mainstream economy. It also reflects the increasing demand and popularity of crypto among high-net-worth individuals and investors, who see it as a store of value and a hedge against inflation. According to a recent survey by Fidelity Digital Assets, 70% of institutional investors plan to invest in or buy digital assets in the near future.

Ferrari’s announcement has also boosted the price of its own token, FERRAR, which is issued on the Binance Smart Chain and allows holders to access exclusive benefits and rewards from the company. FERRAR surged by over 50% after the news broke, reaching a new all-time high of $0.25 per token.

In March 2021, Tesla, the electric vehicle giant, announced that it would accept Bitcoin as a form of payment for its products. However, Tesla later reversed its decision, citing environmental concerns over the high energy consumption of Bitcoin mining. Ferrari said that it will use renewable energy sources to power its crypto transactions, and that it will also support green initiatives in the crypto space.

Ferrari’s announcement was welcomed by the crypto community, who saw it as a sign of increasing adoption and legitimacy of cryptocurrencies in the mainstream economy. Some analysts also predicted that Ferrari’s move will boost the demand and price of crypto assets, especially those that are supported by the carmaker. Ferrari said that it will reveal more details about its crypto payment system in the coming weeks.

How to Survive and Thrive in a Market Downturn

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A bear market is a period of declining stock prices, usually lasting at least two months and dropping by at least 20%. It can be a scary and stressful time for investors, especially those who are not prepared for it. However, a bear market can also be an opportunity to build wealth and resilience, if you know how to navigate it. Here are some tips on how to survive and thrive in a bear market.

Don’t panic. The worst thing you can do in a bear market is to sell your stocks or cryptos in a hurry, locking in losses and missing out on potential rebounds. Remember that stock prices fluctuate over time, and that bear markets are inevitable and temporary. Instead of reacting emotionally, stay calm and rational, and stick to your long-term investment plan.

Review your portfolio. A bear market is a good time to evaluate your portfolio and make sure it is aligned with your goals, risk tolerance, and time horizon. You may want to rebalance your portfolio to reduce your exposure to volatile sectors or companies and increase your allocation to defensive or value stocks that can withstand market downturns better. You may also want to diversify your portfolio across different asset classes, such as bonds, cash, gold, or real estate, to reduce your overall risk.

Look for bargains. A bear market can be a great opportunity to buy high-quality stocks at discounted prices. Look for companies that have strong fundamentals, competitive advantages, loyal customers, and growth potential, but are trading below their intrinsic value due to market pessimism. You can use various valuation metrics, such as price-to-earnings ratio, price-to-book ratio, or dividend yield, to identify undervalued stocks. Be selective and patient, and don’t chase after falling knives or fads.

Keep some cash on hand. Having some cash on hand can help you take advantage of buying opportunities in a bear market, as well as provide you with liquidity and flexibility in case of emergencies or unexpected expenses. However, don’t keep too much cash, as it can erode your purchasing power due to inflation and opportunity cost. A good rule of thumb is to have enough cash to cover six to twelve months of living expenses.

Think long term. A bear market can test your patience and confidence as an investor, but it can also reward you if you think long term. Historically, the stock market has always recovered from bear markets and reached new highs over time. Therefore, instead of focusing on short-term fluctuations, think about the long-term potential of your investments and the compounding effect of reinvesting your dividends and capital gains. Remember that time in the market is more important than timing the market.

A bear market can be a challenging but rewarding experience for investors who are prepared for it. By following these tips, you can survive and thrive in a bear market, and build a stronger and more resilient portfolio for the future.

Thank You That West Africa is Not at War

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To all citizens of Nigeria, Africa and the world who shouted, making it impossible for wars to be triggered after the coups in Niger (and Gabon), thank you. People begin wars with the shouts to right injustice, but during wars, injustice is used to fight wars. At the end, the next war becomes necessary because injustice was left behind. These days, the world seems like a hot place, and no one can predict where the next bomb will be dropped.

We’re truly lucky that West Africa is not a theater where new weapons are being tested as I write. To all the citizens who shouted and contributed, big gboza: “ECOWAS Must AVOID War in Niger Republic”.

This is a pivotal moment for ECOWAS and everyone of us must speak out. From Ghana to Nigeria, Ivory Coast to Guinea, tell your leaders that we do not want a military solution to the crisis in Niger Republic. It must NEVER again be recorded that Africans are attacking themselves. Put the carrots and call for dialogues.