Economy
IMF Says Foreign Exchange Shortages Threaten Nigeria’s Economy
By Aduragbemi Omiyale
The Nigerian government has been advised to quickly address the foreign exchange (FX) shortages so as to give the nation’s economy a lifeline.
This advice was given by the International Monetary Fund (IMF) in a statement issued on Monday to announce the outcome of the Article IV consultation with Nigeria on January 27, 2021.
In the statement made available to Business Post, the global money lender acknowledged that Nigeria’s economy was hit hard by COVID-19 pandemic last year and commended the prompt support offered by the government to cushion the effect.
It attributed the weakening of the nation’s economy to “a sharp drop in oil prices and capital outflows” as the real gross domestic product (GDP) was estimated to have contracted by 3.2 per cent in 2020 amidst the pandemic-related lockdown.
“Headline inflation rose to 14.9 per cent in November 2020, a 33-month high, reflecting core and food inflation increases emanating from supply shortages due to the lockdown effected to curb infections alongside, the land-border closure and continued import restrictions.
“The unemployment rate reached 27 per cent in the second quarter of 2020, with youth unemployment at 41 per cent,” the statement noted.
The IMF said it observed that socio-economic conditions have deteriorated, with rising food inflation, elevated youth unemployment, mass protests in October 2020, and surveys show worsening food insecurity with a significant impact on the vulnerable.
“Risks are tilted to the downside and include the resurgence of the pandemic, security situation and unfavourable external environment.
“Capital outflow risks arise from the record-low domestic interest rates and large foreign holdings of domestic securities.
“On the upside, recovering oil prices and completion of the Dangote oil refinery could catalyse more domestic crude oil production and boost growth,” it added.
The IMF emphasised that “multiple rates, limited flexibility, and foreign exchange shortages are posing challenges,” recommending a “gradual and multi-step approach to establishing a unified and clear exchange rate regime with the near-term focus on allowing for greater flexibility and removing the payments backlog.”
It further said the accommodative monetary stance remains appropriate in the near term, although tightening may be warranted if the balance of payments or inflationary pressures were to increase.
“In the medium term, the monetary policy operational framework should be reformed and Central Bank financing of budget deficit phased out in order to reduce inflation,” the statement said.
The lender called for continued vigilance to contain financial stability risks, advising that COVID-19 debt relief measures for bank clients should remain time-bound and limited to those with good pre-crisis fundamentals.
By Aduragbemi Omiyale
The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has called for regional collaboration among African nations for a stronger capital market.
Speaking at the launch of the Ethiopian Securities Exchange (ESX) recently, he stated that working together would unlock the continent’s economic potential, especially with innovative market solutions.
He disclosed that strategic investment of the Nigerian bourse in ESX underscores its leadership in advancing Africa’s capital market infrastructure.
“The launch of ESX represents a pivotal moment for Ethiopia and the broader African financial landscape.
“ESX will serve as a crucial mechanism for capital formation and market liquidity, driving sustainable economic growth,” Mr Popoola said.
Expounding on NGX Group’s investment rationale, he highlighted Ethiopia’s immense market potential and the shared vision of fostering economic growth through innovation.
“Our partnership transcends traditional investment parameters.
“It is about ensuring that ESX evolves into a key player in Africa’s financial ecosystem, enabling cross-border investments and setting benchmarks for market development,” he said.
Mr Popoola also drew parallels with global success stories like India, which has leveraged its capital markets to achieve significant economic transformation.
He emphasized the importance of responsible market opening to attract local and continental capital, noting, “By following this path, Ethiopia can become a financial hub in Africa.”
Drawing from NGX Group’s six decades of experience, Mr Popoola shared insights on diversifying financial instruments and expanding access to investment opportunities.
“With the right mix of innovation, policy support, and regional collaboration, Ethiopia’s capital market can play a transformative role in driving economic development and establish itself as a leader in Africa’s financial ecosystem,” he concluded.
On his part, the Prime Minister of Ethiopia, Mr Abiy Ahmed, lauded the launch of ESX as a transformative milestone in the country’s journey toward economic modernization.
“Today, we have officially rung the bell to launch the Ethiopian Securities Exchange, our nation’s first stock exchange,” the Prime Minister announced on X.
“This is a call to global investors: Ethiopia offers immense potential, a fast-growing economy, and a clear trajectory toward shared prosperity,” he added.
The chief executive of ESX, Mr Tilahun Esmael Kassahun, expressed confidence in the partnership with NGX Group.
“We are pleased to welcome NGX Group as a strategic partner, building upon the existing support we continue to receive from them,” he said, emphasising the value of NGX Group’s expertise in shaping ESX’s growth and success.
With the ESX poised to redefine Ethiopia’s financial landscape, NGX Group’s involvement highlights the critical role of partnerships and shared expertise in advancing Africa’s economic narrative.
By Adedapo Adesanya
Daily average oil production in Nigeria rose by 152, 000 barrels per day in November 2024, according to the latest data by the Organization of the Petroleum Exporting Countries (OPEC).
According to the OPEC Monthly Oil Market Report (MOMR) for December 2024, the country’s production, including condensates rose by 11 per cent from 1.333 million barrels in October to 1.486 million in November 2024.
The analysis puts the daily increase to 152,000 barrels per day and about one million barrels increase between October and November last year.
This is as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in its latest oil production data indicated that on a month-on-month basis, daily average oil output in December 2024 declined by 1.35 per cent from 1.690 million barrels per day recorded in November 2024 to 1.667 million barrels per day.
Data from the commission also indicated that daily peak oil production in December 2024 was 1.79 million barrels per day while the lowest daily production was 1.57 million barrels per day
Cumulatively, oil output in December 2024, was 51.69 million barrels, a marginal increase of 1.9 per cent when compared to 50.71 million barrels produced in November 2024.
Further analysis of the data showed that the highest oil output in December 2024 was recorded at Forcados Terminal at 8.49 million barrels followed by Bonny Terminal, 7.78 million barrels and Qua Iboe, 4.15 million barrels.
The data showed without condensate, daily oil production was 1.484 million, indicating that Nigeria, again, failed to meet its oil production quota of 1.5 million barrels per day allotted to it by OPEC.
A recent survey by Reuters, however, shows that Nigeria crossed the 1.5 million barrels per day target in December.
The December 2024 average daily oil output also means that Nigeria failed to meet the 1.7 million barrels per day benchmark set for the 2024 budget all through the year.
NUPRC data on daily average production showed that oil production including condensate in January 2024 was 1.64 million barrels per day; February, 1.53 million barrels per day; March, 1.44 million barrels per day; April, 1.45 million barrels per day; May, 1.47 million barrels per day; June, 1.50 million barrels per day; July, 1.53 million barrels per day; August, 1.57 million barrels per day; September, 1.54 million barrels per day, October, 1.54 million barrels per day November, 1.69 million barrels per day and December, 1.67 million barrels per day.
By Dipo Olowookere
The trio of Wema Bank, FBN Holdings, and Universal Insurance topped the activity chart of the Nigerian Exchange (NGX) Limited last week with a turnover of 1.679 billion shares worth N20.838 billion transacted in 4,922 deals, contributing 35.74 per cent and 24.50 per cent to the total trading volume and value, respectively.
Data from Customs Street showed that in the five-day trading week, investors bought and sold 4.698 billion stocks valued at N85.043 billion in 72,562 deals versus the 2.618 billion stocks sold for N69.742 billion in 47,953 deals in the preceding week.
The financial services industry attracted the attention of the market participants with 3.470 billion equities worth N40.791 billion traded in 34,364 deals, contributing 73.86 per cent and 47.97 per cent to the total trading volume and value, respectively.
The services sector followed with 407.032 million shares worth N2.226 billion in 4,996 deals, and the ICT space transacted 237.680 million stocks valued at N3.628 billion in 5,280 deals.
Business Post reports that 51 shares appreciated in the week versus 82 shares in the previous week, 39 equities depreciated compared with 18 equities a week earlier, and 62 stocks closed flat versus 52 stocks in the preceding week.
Multiverse was the best-performing stock with a a price appreciation of 53.42 per cent to N12.35, Honeywell Flour gained 31.67 per cent to close at N10.02, DAAR Communication expanded by 25.71 per cent to 88 Kobo, MTN Nigeria leapt by 21.00 per cent to N242.00, and NCR Nigeria soared by 20.66 per cent to N7.30.
On the flip side, Sunu Assurances was the worst-performing stock after it went down by 36.52 per cent to N7.30, Caverton shed 15.00 per cent to N2.38, Consolidated Hallmark slumped by 15.00 per cent to N3.40, RT Briscoe slipped by 14.33 per cent to N2.57, and Jaiz Bank depreciated by 10.77 per cent to N2.90.
At the close of business, the All-Share Index (ASI) and the market capitalisation gained 1.80 per cent to close the week at 105,451.06 points and N64.303 trillion, respectively.
Also, all other indices closed higher apart from the insurance, AFR Bank Value, AFR Div Yield, MERI Value, consumer goods, energy, and industrial goods, which depreciated by 6.91 per cent, 0.08 per cent, 1.11 per cent, 0.17 per cent, 0.34 per cent, 0.34 per cent and 0.26 per cent, respectively, as the ASeM closed flat.
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