Economy
Economic Recession Outcome of Monetary, Fiscal Policy Failure—Report
By Mike Uzor
The latest edition of Nigeria Banking & Economy 2016, a publication of Datatrust Consulting Ltd, a firm of financial analysts, has been released.
The research report, which is an x-ray of the Nigerian economy and the banking industry, found a major link between the ravaging economic recession and delayed fiscal action on the part of government.
Inability to move decisively on the path of stimulatory intervention, rather than lack of funds, is the main factor that let the slowing economy plunge into a recession in 2016.
With the long delay in approving the 2016 budget, the fiscal authorities failed to provide the critical fiscal stimulus at the same time that monetary policy remained stringent.
Datatrust economists also affirm that the policy of treasury single account hindered the ability of monetary policy to sustain the flow of goods and services within the economy.
Nigeria’s economy in 2016 experienced a macroeconomic policy lull during which neither fiscal nor monetary policy was effectively deployed to sustain the momentum of the nation’s economic activities.
Efforts to prevent economic decline requires swiftness in order to keep production and consumption functions streaming at normal speed. Nigeria missed the critical point of stimulatory intervention to avert economic recession.
Banks were hindered from helping businesses, the capital market windows remained shut and government held back the much needed stimulatory spending force.
The outcome was a financially arid economy in which both producers and consumers lacked adequate liquidity to operate optimally.
The broken capacity of the capital market as a source of new money is a major factor in the cash flow problems facing companies.
The painstaking analysis, running to over 140-pages, identified a combination of monetary and fiscal stimulus as the effective therapy to end economic recession.
The annual publication offers government and regulators policy options based on research findings for addressing critical issues in the economy and the banking sector.
The report takes a special focus on the effects of macroeconomic developments and regulatory policies on the banking sector that constitutes the nerve centre of the economy.
Datatrust study finds that the banking sector has come under much regulatory strain once again even as it was yet to recover fully from the effects of the last global financial crisis.
A sudden enforcement of government’s treasury single account policy has put banks under an unplanned liquidity pressure, which has forced them to liquidate earning assets.
The results are a major slowdown in revenue growth and decline in the size of the balance sheet. It is evidently a wrong time to run a policy that stems the growth in bank lending to an economy in decline.
The general decline in economic activity has again exposed banks to a major operating pressure – loan recovery difficulties.
Rising loan loss expenses at a time of inability to grow revenue is the explanation for declining profit margin, falling profits and losses.
These developments have warranted a cost cutting bandwagon among banks, including layoffs, which are rather reinforcing the economic recession from the angle of domestic consumption.
Assurances that Nigeria will be out of recession in 2017 need to be supported by convincing new policy actions and the authorities need to show the policy transmission mechanism that would lead to reversing these adverse economic trends in the production and consumption functions of the economy.
Money and capital market windows need to be expanded to complement the highly devalued government spending in stimulating economic activity.
Many banks have been trying to achieve full recovery and to resume growth since the downturn induced by the global financial crisis.
Those efforts have been scuttled by the present policy environment so that they are struggling for survival breathes once again.
Policymakers have, as usual, continued to give assurances of good health for the banks; they need to back up their words with policies that empower both banks and their customers.
The banking sector provides the largest meeting point of savers and investors and therefore serves as the nerve centre of the nation’s financial intermediation. It therefore needs to be saved from the type of violent regulatory policy changes to which it is continually exposed.
The report shows details of how each bank is responding to the operating and regulatory challenges and performance prospects going forward. It used a five-year track record of income statements and balance sheets of banks to establish the major operating trends.
With average industry ratio benchmarks, the report makes it clear to see how each bank’s figures compare or contrast from the general industry picture.
The general industry trends as well as individual banks conditions are provided to guide regulatory policies towards ensuring stability and healthy growth in the banking sector. They also provide a reliable guide to strategic decisions and actions on the part of the banks themselves.
The study also shows the various competitive leagues in the banking industry such as leadership by the size of the balance sheet, gross income and profit, etc. The performance charts show the ability to convert assets into revenue and revenue into profit. The analysis brings out clearly each bank’s cost to income relationship and shows how it is either helping or hitting the bottom line.
A major worrisome trend defined by the report is the rapidly growing proportion of revenue devoted to loan loss expenses. This is an unhealthy trend that needs to be checked in order to encourage new lending.
The bearish trend the stock market has taken on banking stocks is a reflection of the uncertain earnings outlook of the sector and regulators cannot afford to ignore this signal. A situation where the banking industry giants have virtually become penny stocks cannot be safely ignored.
Mike Uzor is the Chief Financial Analyst at Datatrust Consulting Ltd
By Adedapo Adesanya
Nigerian businessman, Mr Femi Otedola, has congratulated his billionaire friend, Mr Aliko Dangote, on the Dangote Refinery achieving its full nameplate capacity of 650,000 barrels per day, expressing optimism that this will further strengthen the Naira against the US Dollar in the currency market.
In an X post on Thursday, Mr Otedola described it as a transformative milestone for Nigeria and Africa, noting that the refinery’s operations could ease pressure on Nigeria’s foreign exchange reserves.
“I congratulate my friend and brother, @AlikoDangote, on the remarkable achievement of the Dangote Petroleum Refinery reaching its full 650,000 barrels per day capacity.
“More importantly, it is transformational for Nigeria and Africa. Supplying up to 75 million litres of PMS daily changes our energy narrative and conserving foreign exchange.
“With domestic refining now firmly underway after decades of reliance on imports, pressure on the foreign exchange market should ease significantly. I am optimistic that the Naira will strengthen meaningfully, and trading below N1,000/$1 before year-end is increasingly within reach,” he wrote.
Earlier today, it was reported that all key components, including the naphtha hydrotreater, isomerisation unit, and reformer unit, of the single train refinery are now operating steadily at 650,000 barrels per day. This enables the facility to produce up to 75 million litres of Premium Motor Spirit (petrol) daily, significantly boosting Nigeria’s domestic fuel supply and reducing reliance on imports.
The $20 billion refinery, Africa’s largest, began operations in 2023 and has been ramping up production amid challenges, including crude supply issues.
Mr Dangote announced plans in October 2025 to expand capacity to 1.4 million barrels per day, which would make it the world’s largest refinery, surpassing India’s Jamnagar facility.
Mr Otedola added that his best friend is investing an additional $12 billion in this expansion, including the production of polypropylene and Linear Alkyl Benzene for detergents, with work already underway.
“Aliko is not stopping here. He has embarked on an additional $12 billion expansion to increase refining capacity to 1.4 million barrels per day, alongside 2.4 million tons of polypropylene and 400,000 metric tons of Linear Alkyl Benzene for detergent production. Work has already commenced in earnest.
“Congratulations once again, my brother. Nigeria is proud of you,” he said.
By Modupe Gbadeyanka
The Nigeria Customs Service (NCS) has approved the activation of the Lagos Free Zone Green Channel to enable the seamless and controlled movement of Free Zone cargo directly from the Lekki Deep Sea Port to the Lagos Free Zone (LFZ).
This development makes LFZ the first and only zone in the country to operate a sanctioned green channel, reflecting globally recognised port-to-free-zone logistics and customs integration models successfully implemented in leading trade hubs in the Middle East and Asia.
With this, businesses in the Lagos Free Zone can now scale their industrial output with total peace of mind, as every consignment is protected by an unbroken chain of 24/7 CCTV surveillance, telemetry, and tamper-evident digital logs that ensure absolute cargo integrity.
This integration not only secures the supply chain but also builds unrivalled investor confidence by establishing a transparent, high-compliance trade environment monitored directly by the customs.
For manufacturers and distributors, the outcome is a predictable, ultra-fast logistics flow that solidifies LFZ as the most efficient regional hub for Nigerian and West African operations.
“This approval is a testament to our commitment to trade modernisation. The Lagos Free Zone Green Channel will enhance Customs visibility while significantly improving investor confidence in Nigeria’s Special Economic Zones,” the Comptroller-General of Customs, Mr Bashir Adeniyi,” stated.
On her part, the chief executive of LFZ, Mrs Adesuwa Ladoja, said, “The activation of the Lagos Free Zone Green Channel is the latest testament to our customer-centricity and our commitment to continually deliver enhanced ease of doing business for our tenants.
“The Green Channel solidifies the advantages of Lekki Deep Sea Port being physically and digitally integrated into our zone. We have effectively removed the ‘last mile’ uncertainty that has historically challenged Nigerian logistics.
“Our tenants no longer need to navigate the complexities of traditional port exits; instead, they benefit from a high-velocity, customs-integrated corridor that moves cargo with precision and speed.
“This is a game-changer for manufacturing and regional distribution, reinforcing Lagos Free Zone as the premier gateway for those looking to dominate the West African market.”
By Adedapo Adesanya
Dangote Refinery has reached its full capacity of 650,000 barrels per day following the successful optimisation of critical processing units, marking a turning point for Africa’s largest refinery, located in Lagos.
The $20 billion facility is now operating at full capacity, a world-record milestone for a single-train refinery.
This achievement comes after the completion of an intensive performance testing on the refinery’s Crude Distillation Unit and Motor Spirit production block.
According to the chief executive of Dangote Refinery, Mr David Bird, the refinery is now positioned to supply up to 75 million litres of petrol daily to the domestic market, a dramatic increase from the 45 million – 50 million litres delivered during the recent festive period.
The development can reshape Nigeria’s energy landscape and reduce the country’s longstanding dependence on imported refined products.
“Our teams have demonstrated exceptional precision and expertise in stabilising both the CDU and MS Block,” Mr Bird said. “This milestone underscores the strength, reliability, and engineering quality that define our operations.”
The refinery has completed a 72-hour series of performance test runs in collaboration with technology licensor UOP, a Honeywell company, to validate operational efficiency and confirm that all critical parameters meet international standards.
The tests covered the naphtha hydrotreater, isomerisation unit, and reformer unit, which together form the backbone of the facility’s gasoline production capability.
The milestone marks another achievement for the businessman and majority stake owner at the facility in his ambition to transform Nigeria from Africa’s largest crude oil producer into a refining powerhouse.
Since the commencement of the facility in 2016, it has faced numerous setbacks, including pandemic-related delays, foreign exchange challenges, and technical complications.
It was finally commissioned in May 2023 to help wean Nigeria off imported petroleum products, due to the chronic underperformance of its state-owned refineries.
Despite being Africa’s largest crude producer, the country has not been able to self-produce, even with four state-owned refineries with a combined capacity of 445,000 barrels per day. This has led to decades of high dependency on importation.
The Dangote refinery’s emergence at full capacity has the potential to eliminate this import dependence while positioning Nigeria as a net exporter to West African markets.
Yet, the refinery faces difficulty securing adequate crude oil supplies from Nigerian producers, forcing it to import feedstock from the US, Brazil, Angola, and other countries.
Mr Bird also confirmed that Phase 2 performance test runs for the remaining processing units are scheduled to commence next week, suggesting further capacity optimisation ahead.
The official emphasised the refinery’s commitment to “enhancing Nigeria’s energy security while supporting industrial development, job creation, and economic diversification.”
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