Economy
How the Nigerian Economy is Reacting to the Global Crisis
The COVID-19 pandemic is still in full swing. Since the early months of 2020, it has been affecting countries on all continents.
Nigeria is no exception, despite the relatively low death toll. Here is how the global crisis has influenced the national economy so far.
Current Statistics on COVID-19
As of this writing, Nigeria has 4,399 confirmed cases and 143 deaths. This is incomparable to the six-digit figures observed in the US, but the numbers are still growing. Developing countries, in general, have seen relatively few cases, although the danger is still very real.
Declaring of the pandemic sent shock waves across financial markets in early March. However, it is not the only cause of downtrends. In fact, negative dynamics began even before the outbreak. Forecasts of global GDP in 2020 were quite dismal, with only 2.5% growth. The outlook for the emerging markets was especially gloomy.
The Preceding Troubles
Even before the crisis, the local government had a lot to grapple with. The country was still recovering from the oil shock of 2014, and GDP growth was limited — just 2.3% in 2019. The figure was later changed to just 2% by the International Monetary Fund, as a result of oil price collapse and fiscal restrictions.
The debt profile was yet another reason for alarm. According to recent estimates, the debt service-to-revenue ratio stands at 60%. The dismal situation with oil prices is likely to send the figures further down. All these factors should be considered when evaluating the nation’s response to the pandemic.
Key Policy Changes
The Central Bank of Nigeria (CBN) has implemented a fiscal stimulus package. The support scheme provides a credit of 50 billion naira for small and medium-sized businesses, as well as households affected by the crisis. The healthcare industry has been provided with a loan of 100 billion naira. The manufacturing segment has received 1 trillion naira.
Secondly, the institution revised its interest in interventions. The rate has been almost halved, now fixed at 5%. Since March 1, all intervention facilities are put on hold by a one-year moratorium.
Another major issue is the collapse of global demand for crude. Oil is one of the country’s key sources of revenue and foreign exchange. The sharp decline has caused significant damage. Officially, the rate was adjusted from 306 to 360 naira.
Household Consumption: Looming Decrease
Experts predict households to reduce consumption due to several reasons. Spending will be mostly limited to the most essential goods and services. This is inevitable because:
- The population are restricted in movement, either partially or fully;
- Predictions of future income are discouraging, especially for workers in the gig and informal economy;
- The gradual erosion of wealth, but actual and expected, is observed due to downtrends on the stock market and in home equity.
In such desperate times, the population will be looking for alternative sources of income. Online trading, which has recently been embraced by the nation, may see significant growth. For many consumers, it may offer the only source of profit.
FXTM, an international MetaTrader 5 broker, expects more accounts to be opened by residents of Nigeria. The range of instruments includes currency pairs, stocks, CFDs, and other derivatives. Through a licensed broker, these may be traded in Nigeria legally.
Investments by Firms
These are expected to shrink due to the pandemic. It is not yet clear how long it will last, what effect the policies will have, and how economic players will react. The overall turmoil in the finance markets reflects unfavourable market sentiments.
In the realm of stocks, the country has seen a dramatic collapse. The Nigerian Stock Exchange has recorded the deepest fall since 2008. Investors have been hit hard. Given the general uncertainty surrounding the pandemic, and the joyless profit outlook, firms are unlikely to pursue any long-term investment schemes.
Government Expenditure: Projections of Growth
Government spending is predicted to expand as more stimulus packages are released. The measures should compensate for the drop in consumer spending. At the same time, fiscal deficits may soar. This will be exacerbated by the oil prices.
Nigeria is heavily dependent on oil. The commodity accounts for 90% of the country’s exports. The national budget for 2020 was built around predictions of $57 per barrel. However, the price of Brent has been fluctuating around $29 since early April. Since March, the government has already cut its planned expenditure.
A Wake-Up Call?
Overall, Nigeria is bound to experience the dramatic effects of the pandemic and lockdown measures. Despite the government’s efforts to help key industries, its resources are limited. The crash of oil prices is detrimental to the health of the national economy. It remains to be seen whether policymakers can learn from their mistakes and diversify the country’s revenue in the future.
By Aduragbemi Omiyale
The Debt Management Office (DMO) on Monday allotted bonds worth N929.3 billion to investors from the N1.7 trillion bids it received from subscribers.
The exercise, which took place on Monday, July 20, 2026, was oversubscribed by market participants, reflecting the confidence investors have in the government’s ability to redeem the debt instrument on maturity.
On offer for sale for the July auction was N1.2 trillion worth of the FGN bonds, but the DMO allotted below this, despite receiving bids above the offer.
The papers were offered in 10-year, 15-year, and 20-year tenors, at N400 billion each.
For the decade-old note, investors staked N444.47 billion, but the debt office sold N245.73 billion at an 18.34 per cent coupon rate. For the one and a half-decade-old paper, bids valued at N518.00 billion were received by the DMO, with a non-competitive bid of N50.00 billion, with N302.13 billion allotted to investors at 18.40 per cent, and for the two-decade paper, the DMO got competitive bids of N665.19 billion and N381.46 billion was sold to bondholders at 18.35 per cent.
By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, disclosed that Nigeria’s external reserves had risen to $52.5 billion, enough to finance about nine months of imports.
He disclosed this on Tuesday at the end of the 306th meeting of the Monetary Policy Committee (MPC) held in Abuja, where the Monetary Policy Committee (MPC) retained the benchmark interest rate at 26.50 per cent as well as the standing facilities corridor at +50/-450 basis points around the MPR.
Similarly, the Cash Reserve Requirement (CRR) was maintained at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-Treasury Single Account (TSA) public sector deposits.
Speaking on FX developments, the central banker said at the $52 billion level, the country’s external reserves were significantly above the internationally recommended threshold of three months of import cover.
On the Naira exchange rate, Mr Cardoso said the foreign exchange market had deepened and was now operating on a transparent willing-buyer, willing-seller basis.
He said the apex bank remained committed to maintaining a liquid and functional foreign exchange market, adding that daily market turnover sometimes exceeded $1 billion.
According to him, the long-term stability of the naira would depend on key economic fundamentals, including increased oil exports, foreign direct investment, and improved domestic productivity to reduce dependence on imports.
He also added that the MPC welcomed the federal government’s renewed commitment to stronger policy coordination, particularly collaboration between fiscal and monetary authorities, which he said had helped reduce the impact of the Middle East crisis on the Nigerian economy.
Mr Cardoso said members of the committee also commended efforts to improve crude oil production and urged relevant agencies to intensify reforms in other sectors, including solid minerals, to boost government revenue.
On the regulatory forbearance granted to banks during the COVID-19 period, he reiterated that this had been discontinued because it had served its purpose.
According to him, the policy had “outlived its time” and was no longer necessary in assessing the health of the banking sector.
“Forbearance, we felt, had outlived its time. Many of you will recall this is something that came as a result of COVID. And now we are in 2026; we did not see the reason why that should continue to form part of the analysis of the banking system,” he said.
Mr Cardoso explained that banks had begun recalibrating their portfolios following the end of the policy, leading to a temporary reduction in outstanding risk assets.
He, however, assured that the development was part of a transition towards a stronger and more sustainable credit environment.
“It reflects a transition to a more sustainable and better quality credit environment, which is what we all want. We don’t want unanticipated shocks that come in a boom-and-bust fashion,” he said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its recent positive run by 1.17 per cent on Tuesday, July 21, triggered by appreciation seen in four bellwethers.
Leading the pack was FrieslandCampina Wamco Nigeria Plc, which added N12.00 to its value to close at N153.15 per share compared with the previous day’s N141.15 per share. NASD Plc appreciated by N1.90 to N36.00 per unit from N34.10 per unit, Food Concepts Plc improved by 23 Kobo to N2.48 per share from N2.25 per share, and Afriland Properties Plc grew by a marginal 1 Kobo to N15.01 per unit from N15.00 per unit.
As a result, the market capitalisation of the bourse increased by N30.40 billion to N2.637 trillion from Monday’s N2.606 trillion, and the NASD Security Index (NSI) gained 50.70 points to finish at 4,393.97 points, in contrast to the 4,343.27 points it ended a day earlier.
The unlisted securities exchange recorded a price loser yesterday, and it was Geo-Fluids Plc, which shed 1 Kobo to settle at N2.30 per share versus N2.31 per share.
During the trading day, the volume of securities traded by market participants on Tuesday dropped 99.4 per cent to 322,147 units from the previous day’s 52.6 million units, the value of securities dipped by 89.8 per cent to N19.4 million from the preceding session’s N191.2 million, and the number of deals contracted by 3.6 per cent to 27 deals from 28 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis, with 3.4 billion units traded for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units transacted for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 75.4 million units exchanged for N5.3 billion.
GNI Plc also closed the day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units sold for N415.7 million.
