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Coverage of the Nigerian financial sector and the markets in more depth than other news publications and with more breadth than trade publications, distilling what’s on the agenda for key sectors including, Investment Banking, Trading, and Technology, Fund Management, Alternatives, Markets, Commodities, Companies, among others.
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The power crisis in Nigeria is like a malignant disease, infecting the nation’s economy and causing its citizens untold suffering. Small businesses are especially vulnerable, as they struggle to shoulder the burden of providing their power, while individuals face daily frustrations and hardships. Every day, across Nigeria, the power situation has become like a slow poison, creeping into every corner of life. For businesses, it’s a death by a thousand cuts, as profits dwindle and costs mount. For individuals, it’s a constant reminder of their country's shortcomings, a constant frustration. And for the economy as a whole, it’s a drag on growth, an obstacle to progress. The broader consequences of the situation are far-reaching, affecting everything from the cost of living for ordinary citizens to the overall productivity of the economy. As a result, Nigeria’s ability to develop and grow economically is being seriously undermined by the challenges facing the electricity distribution companies (DisCos). These challenges have created a vicious cycle, in which the inefficiencies of the DisCos are leading to an even greater demand for government intervention, which in turn is further straining the country’s already tight finances.
A Dataset Showing Nigeria’s Top 10 insurers by gross written premium (GWP) is giving analysts the encouragement to suggest emerging dynamism in the country’s insurance landscape that could position it for enhanced growth and greater development. The data do not, however, show that insurance penetration in Africa’s most populous country and its largest economy by gross domestic product (GDP) size, is about to improve, but a combined gross premium of N472.6 billion by the 10 top insurers is given comfort to analysts to suggest that something positive lies ahead for the industry. Analysts say the emerging dynamism in the Nigerian insurance market going by the dataset can be seen in the increasing growth of life business against a general business which is traditionally the industry’s mainstay; the fact that indigenous insurers are still holding ground as far as industry leadership is concerned; that bankers have moved into insurance to dominate and bring banking industry Midas touch to the industry to give it a shakeout; and the data showing that the frontier for growth is in the composite model, while that of competition lies in microinsurance, Takaful and insurtech.
In a Nigerian Economic landscape where 2024 poses major challenges for businesses, a survey conducted by multinational insurance and risk management giant, Allianz, and published in its 13th Allianz Risk Barometer, Nigerian business leaders participating in the global survey have identified changes in legislation, cyber and microeconomic developments as the joint top risks that companies will face in Nigeria this year. big issues facing companies right now – digitalization, climate change and an uncertain geopolitical environment. Many of these risks are already hitting home, with extreme weather, ransomware attacks and regional conflicts testing the resilience of supply chains and business models. The fast pace of change, and the growing interconnected nature of risk, likely necessitates a shift up in gear for many companies when it comes to risk management.
A disastrous eight years of Buharinomics, the clueless management of the Nigerian economy under former president Muhammadu Buhari, and a shaky Tinubunomics of the months-old current Presidency of Bola Tinubu are unravelling the extraordinary danger the Nigerian economy faces under the All Progressives Congress (APC) which appears to do more politics than economy management, multiple concerned analysts said over the weekend. “Buhari got us into this cul-de-sac. He was not only clueless about the economy, but there was a free reign of baseless economic policies driven by individual, rather than national, interest,” said a university politics professor who did not want to be named.
A Raft of Initiatives is emerging and getting launched at the ongoing U.N. climate summit, COP28, in Dubai aimed at boosting clean energy and reducing the world’s dependence on fossil fuels, details rolling out of the event show. One of the most widely supported initiatives is expected to lead to a cut in the share of fossil fuels in global energy production, and reduce the greenhouse gas emissions that are driving climate change. Wide support for the initiative is bolstered by its ambitious goal of tripling the world’s renewable energy capacity by 2030 leading to a huge cut in fossil fuels’ contribution to the world’s energy mix. The pledge to triple renewable energy capacity by 2030 was just one of many initiatives that have emerged at the COP28 summit aimed at decarbonising the energy sector and meeting the goal of net-zero greenhouse gas emissions by 2050. One of the key commitments was made by the European Union, the United States, and the UAE, which pledged to phase out unabated coal power by expanding the use of nuclear power, reducing methane emissions, and ending investment in new coal power plants
Africa’s economic landscape as the next frontier for global investments was on song for three days last week in Marrakech, Morocco, where the African Development Bank (AfDB) led by President Akinwumi Adesina of Nigeria, and its development partners successfully showcased the continent’s value chains to international investors, attracting more than 1000 delegates to what is now globally recognised as a go-to annual event for serious financial deals closure, the Africa Investment Forum (AIF) Market Days. To underscore its now global attraction and success, this year’s AIF’s Market Days had no fewer than 80 Japanese companies including at least 50 business leaders, entrepreneurs and investors among the over 1000 delegates in attendance
Nigeria’s Energy Transition Plan with a 2060 target could be really challenged by the need for a clear development policy approach. Early distinct gaps noticeable in the NETP programme include a lack of holistic legal framework; no incentives for transition to clean energy; absence of disincentives for the use of dirty energy; and centralisation of energy provision in Nigeria, according to a report by the Nigerian Economic Summit Group. The federal government, though, had only this year enacted the energy decentralisation law. If properly administered, Nigeria stands to gain from the energy transition, which will offer an excellent opportunity to address its energy poverty by leveraging abundant renewable energy sources. However in the short to medium term, the country will lose significant revenues because of its over-dependence on fossil fuels. However, the NETP projects 340,000 jobs to be created in 2030 and 840,000 by 2060
Foreign investors appear to be carefully avoiding Nigeria’s oil and gas-rich states, also called the Niger Delta region, as data from the National Bureau of Statistics (NBS) on assessment of foreign direct inflows into the nation’s sub-nationals in Q2 of 2022 show that the region’s states were among 32 subnationals which attracted zero dollar foreign inflow since Q2 of 2015. Additionally, the region, between 2015 and 2022, ranks among the least accessed in terms of foreign capital inflow (foreign direct investment (FDI). For example, another NBS data showed that the region received only 0.51% of the entire Nigeria FDI inflow between 2013 and Q1 of 2020. The region, which once held huge chunks of Nigeria’s FDI inflows in the 1970s and 1980s, barely received $474.13 million out of the $92.28 billion total inflow into Nigeria in the seven-year period.
Despite the challenges facing the Nigerian insurance market, microinsurance offers unique and exciting opportunities for both insurers and consumers, as well as the general economy, with its potential to reach millions of people excluded from traditional insurance products and other financial windows of the economy, multiple industry analysts have told Business a.m. The Nigerian market is rapidly expanding, with innovative new products and distribution models. For insurers, this represents an untapped market with significant growth potential, while for consumers, it offers a way to access much needed protection from financial hardship.
Global Banking Posted its best performance in the last 18 months since 2007 on the back of sharp increases in interest rates in many advanced economies, including a 500-basis-point rise in the United States, a world review of the banking sector by global management consulting firm McKinsey, has shown. McKinsey’s just published “Global Banking Annual Review 2023: The Great Banking Transition”, found that on average global banking saw “long-awaited improvement in net interest margins” enabled by higher interest rates which boosted profits by about $280 billion in 2022, lifting return on equity by 12 per cent in the same year with a projection that this will post higher at 13 per cent at the end of 2023.
A new report by the European Investment Bank (EIB) based on a 2023 survey of Banking in Africa has found that banks on the continent have continued to show resilience despite operating in what the EIB described as “ a difficult environment.”The report titled “Uncertain Times, Resilient Banks: African Finance at a Crossroads” released under the EIB’s eighth annual Investment in Africa report and covering the continent’s banking system, found that banking in Africa continues to show resilience and a desire to support private sector development despite operating in a tough environment. Key banking indicators, such as capital ratios, profitability and non-performing loans, have not deteriorated despite the challenges the region is facing,” the EIB report noted. This resilience, according to the report, may rightly be attributed initially to pandemic support measures to bolster the continent’s banking system, but it said such measures have been wound down, and that “most key bank metrics remain solid.”
The Group Of The World’s 20 Leading Economies has admitted the African Union (AU) as a permanent member, a development termed by many as a “later than never” acknowledgement of Africa’s relevance on the global stage. Until now, South Africa was the bloc’s only G20 member and the AU had advocated for full membership for seven years in its quest to gain meaningful roles among the global bodies and also accord the 55 member states access to reforms in the global financial system such as the World Bank which had hitherto played a passive role in cushioning Africa’s debt profile. The AU’s G20 membership which was granted following a concession at the 18th G20 heads of state and government summit in New Delhi, India, is expected to see Africa get investment and political interest from a new generation of global powers beyond the U.S. and the continent’s former European colonists.
The Combination Of Aggressive interest-rate hikes in developed countries, lack of sufficient affordable capital from the World Bank and a failure to consider and address the spillover effects are creating costly spillback economic consequences on low-middle income countries already at high risk of debt distress, a new analysis from One Campaign says. The international, non-profit advocacy and campaigning organisation that fights extreme poverty, particularly in developing countries, finds that ‘rich countries’ actions to control domestic inflation through rises in interest rates are creating unsustainable economic realities for low-and low-middle-income countries. The high interest rates, it explained, are gradually locking emerging economies out of low-cost financing options creating an increasingly divergent global economy and exacerbating an already dangerous debt crisis.
After Over Two Years Of anticipation from the Nigerian populace, the National Bureau of Statistics eventually published Nigeria’s labour statistics, considered an official analysis of the employment level of Africa’s most populous country. Prior to the report, economic and finance experts had difficulty assessing the real-time data on the nature of the labour market and how to measure the impact of government policies and numerous pledges to create jobs. But from the country’s grim economic realities, it was as clear as crystal that the country was facing a dire risk of high unemployment. In fact, the International Labour Organisation had in January 2023, expressed worry that “current monetary tightening to fight inflation could overshoot, potentially leading to high levels of unemployment.”
The new head of the Nigerian treasury, officially designated ‘Minister of Finance’, Wale Edun, will have fully taken charge. But in the quest to see that all the levers of economic policy management are well aligned, the attention of analysts and others following the unfolding direction of the Nigerian economy, will shift to the person to be appointed substantive governor of the Central Bank of Nigeria, and consequently, the person to lead monetary policy during the President Tinubu’s administration. Finance Minister Edun’s assumption of office has already raised high expectations, which will now be taken higher, with regard to the management of the fiscal policy side of executive governance, say multiple economic and financial analysts, many of whom hold the strong view that in the eight years that former president Muhammadu Buhari held sway in the political-administrative landscape of Nigeria, he was abysmally short on fiscal policy governance, with his two appointed ministers of finance arguably among the worst to have held the position in the country.
An expert in the Africa department of the International Monetary Fund has expressed optimism for the future success of Nigeria's e-Naira, Africa's first central bank digital currency and the world's second.Despite its underwhelming performance since its launch in October 2021, Jack Ree, a senior economist in the Africa department of the IMF, who conducted a study on the eNaira last year, suggested in an IMF podcast that with some adjustments to its current model, the digital currency could become popular. However, since its introduction 21 months ago, the e-Naira has struggled to gain traction, with less than one million downloads indicating that Nigeria's vast population has not yet fully embraced it, as this number is less than one per cent (-1%) of the total bank accounts in the banking system.
African currencies have lost ground against the US dollar year-to-date, thereby driving inflation in the import-reliant continent. Policymakers across the continent are left with limited options to arrest the decline as a result of depleting dollar reserves, according to a report adapted from DW. As US interest rate hikes make the dollar more attractive to investors, sub-Saharan African currencies have been weakening. The downward spiral of the African currencies against the US dollar this year has been spelling trouble for citizens and businesses alike.The Nigerian naira is, so far, the biggest loser, falling more than 70 per cent against the dollar this year, chiefly after the Central Bank of Nigeria (CBN) removed trading restrictions on the official currency market.
A Crescendo Of Expectations is building up over Aba, one of Nigeria’s major manufacturing hubs, which for decades has had its stars dimmed by the ill luck of bad and incompetent governance and total neglect of the social and economic infrastructure required to make a manufacturing hub thrive. The expectations are being built around the provenance of having the banker, Alex Otti, on the saddle as governor of Abia State where the city is located and where vultures had reigned in the corridors of political power; of Geometric Power, promoted by the scientist, Barth Nnaji, a two-time former minister of power and of science and technology; and the unleashing of the exports easing African Continental Free Area (AfCFTA), all three coming into play at the same time.
Former President Muhammadu Buhari who doubled as substantive minister of petroleum resources, assisted by a junior minister, Timipre Sylva and Mele Kyari, group chief executive officer of Nigerian National Petroleum Company Limited who was positioned to be running ground operations, may have been taken Nigerians for a big ride on the repairs and rehabilitation of government-owned refineries as work has long hit a dead end. So as millions of Nigerians trudge under the heavy weight of mounting transportation costs, the fall out of the removal of petroleum products subsidy by President Bola Tinubu in his first major policy directive on inauguration day, any hopes of soon seeing a downward move on petrol pump prices from the restart of production at the Port Harcourt Refining Company, the nation’s first and biggest oil refinery, and later Warri Petrochemicals & Refining Company and Kaduna Refining & Petrochemicals Company, appear a forlorn dream.
The World Bank and the International Monetary Fund (IMF), the two Bretton Woods institutions that have spent at least 20 years breathing down Nigeria’s neck to let its currency, the Naira free, are today still in celebratory mood joined by domestic analysts and the markets who continue to express joy over the decision by the new government of President Bola Tinubu to reform the country’s foreign exchange policies through the Central Bank of Nigeria. The head of the IMF Nigeria office, responding to the reforms, said: “The Fund greatly welcomes the authorities’ decision to introduce a unified market-reflective exchange rate regime in line with our long-standing recommendations. We stand ready to support the new administration in implementing FX reforms.
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