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
The NASD Over-the-Counter (OTC) Securities Exchange further appreciated by 0.23 per cent on Thursday, April 23, with the Unlisted Security Index (NSI) adding 8.99 points to close at 3,969.96 points against the previous day’s 3,968 points.
The rise in the share price of Central Securities Clearing System (CSCS) Plc by N2.86 to N69.34 per unit from N66.48 per unit raised the market capitalisation of the NASD bourse by N5.38 billion to N2.380 trillion from N2.375 trillion.
Yesterday, there were two price losers, led by Food Concepts Plc, which lost 29 Kobo to sell at N2.65 per share versus N2.94 per share, while UBN Property Plc dipped by 22 Kobo to N2.03 per unit from N2.25 per unit.
During the session, the volume of securities traded declined by 97.9 per cent to 451,522 units from 21.5 million units on Wednesday, the value of securities depreciated by 52.32 per cent to N23.6 million from N49.5 million, and the number of deals depreciated by 3.6 per cent to 27 deals from 28 deals.
At the close of business, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by CSCS Plc with 59.5 million units exchanged for N4.0 billion, and Okitipupa Plc with 27.8 million units traded for N1.9 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, trailed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion.
By Adedapo Adesanya
Fresh foreign exchange (forex) demand pressure saw the Naira depreciate against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, April 22, by N5.46 or 0.4 per cent to trade at N1,353.91/$1 compared with the preceding day’s value of N1,348.45/$1.
It was the same outcome for the local currency in the official market after it depreciated against the Pound Sterling by N4.13 to close at N1,825.88/£1, in contrast to the preceding session’s N1,821.75/£1, and against the Euro, it dropped 72 Kobo to finish at N1,582.72/€1 versus N1,582.00/€1.
But the Nigerian Naira appreciated against the US Dollar at the GTBank FX desk by N2 during the session to quote at N1,361/$1 compared with Wednesday’s closing price of N1,361/$1, and at the parallel market, it closed flat at N1,375/$1.
FX Pressure came as data showed that NFEM interbank turnover was N28.117 million, lower than the N66.084 million recorded the previous day.
Concerns over liquidity pressures, policy transparency, and confidence in Nigeria’s FX market continue to grip the market while the country’s foreign reserve declines further, even as the Central Bank of Nigeria (CBN) recently said that the recent decline in Nigeria’s external reserves should not be a cause for concern.
Global developments also played a significant role, as rising geopolitical tensions boosted demand for the US Dollar, further weakening emerging market currencies, including the Naira.
As for the cryptocurrency market, there was a mixed outcome as traders reacted to rising geopolitical tensions from the Iran war and fresh inflation data from Japan.
Japanese inflation ticked higher in March, stoking expectations that the Bank of Japan may soon signal rate hikes, which could strengthen the yen and unsettle global risk assets.
The Iran conflict has disrupted oil flows through the Strait of Hormuz, raising energy costs and inflation risks worldwide and potentially complicating efforts by the Federal Reserve to cut interest rates.
Ethereum (ETH) declined by 1.8 per cent to $2,316.53, Bitcoin (BTC) lost 0.6 per cent to sell at $77,935.53, Solana (SOL) fell by 0.5 per cent to $85.67, and Binance Coin (BNB) dropped 0.4 per cent to sell for $634.85.
However, Dogecoin (DOGE) appreciated by 1.4 per cent to $0.0976, Ripple (XRP) grew by 0.7 per cent to $1.43, Cardano (ADA) expanded by 0.6 per cent to $0.2493, and TRON (TRX) improved by 0.2 per cent to $0.3279, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Aduragbemi Omiyale
The resilience shown by Nigerian Breweries Plc in the 2025 fiscal year, despite a volatile macroeconomic environment, which consumed several businesses, has not got without notice.
Shareholders of the brewery giant applauded the board and management for the strong recovery and improved profitability recorded in the year.
At the company’s 80th Annual General Meeting (AGM) on Wednesday, April 22, 2026, in Lagos, they attributed these achievements to disciplined cost management and a significant reduction in finance expenses.
“We are proud of how the company has withstood the ups and downs of a challenging environment. The return to profitability and the reversal of the negative cash position recorded in the previous two financial years are commendable,” a member of the Noble Shareholders Association, Mr Owolabi Opeyemi, said at the gathering.
Also, the immediate past Secretary of the Independent Shareholders Association of Nigeria (ISAN), Mr Eke Emmanuel, noted that the company’s resilience reflects strong leadership and a sound strategic direction.
“It is good news that we have been here for 80 years. There is no reason why we will not be here for the next 80 years with what we have achieved. To return to this level of profitability and cash position shows the Board has done an enormous amount of work,” he said.
Addressing investors at the AGM, the board chairman, Mrs Juliet Anammah, expressed confidence that the company is firmly on a recovery path following the net losses recorded in the past two years due to macroeconomic pressures and fiscal reforms.
She thanked shareholders for their continued support and reaffirmed that the company will build on its 2025 performance as it accelerates growth ambitions.
“We have a solid foundation built over eight decades, anchored on a strong portfolio of brands, an extensive nationwide sales and supply chain network, ongoing digital transformation, and most importantly, our people. These strengths remain critical to sustaining our leadership position,” the former chief executive of Jumia Nigeria said.
Ms Anammah also addressed the company’s dividend position, noting that the decision not to declare a dividend reflects the need to rebuild retained earnings impacted by prior macroeconomic shocks, particularly foreign exchange-related losses.
“We recognise the importance of dividend payments to our shareholders and sincerely appreciate your continued understanding. While we are not declaring a dividend at this time due to negative retained earnings, we are working diligently to restore the company’s financial position and return to dividend payments as soon as it is sustainable to do so,” she added.
She further noted that the board remains vigilant to external risks, including the Middle East crisis and broader macroeconomic challenges, which may impact the pace of improvement in the 2026 financial year.
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