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Major Indicators That Will Shape Nigeria in 2023

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shape Nigeria in 2023

The year 2022 has been an eventful one. As we close out on all activities of the year and look forward to a new one, it is important that we begin to envisage what the new year portends and be better prepared. The outgoing year has been marked with some remarkable incidences: President Muhammadu Buhari signed the Electoral Act 2022, the CBN issued a string of controversial announcements, the Nigerian government plans to wean off the subsidy regime starting next year, and 5G made it to Nigeria; however, rollouts have been slow.

These and many more are the highlights that shaped 2022, but in this article, we will be focusing on major events that have been projected to shape Nigeria in 2023.

General Elections

The upcoming general election in February 2023 will be Nigeria’s seventh democratic election. It has been recognized as one of the most significant electoral events in the country’s history of elections as there are more candidates contesting for the presidential seat, with more Nigerians becoming politically aware and involved.

And in a historic move, Nigeria will be transmitting its election results electronically for the first time in the upcoming elections, as is contained in the Electoral Act 2022, that promises of a credible election. Political analysts have praised the signing of the Act, as it foretells a more transparent electoral system to allow for the smooth running of the country’s democratic processes. The outcome of the elections will, in no small measure, determine the extent of the economic growth of the country.

CBN’s Domestic Card

The Central Bank of Nigeria (CBN) had announced plans to develop a National domestic card scheme which it expects to take off in January 2023. Among its reasons for the card scheme launch, the CBN listed financial inclusion, consumers’ data sovereignty and Enabling banks to offer differentiated products and services.

The big question, however, is, does the CBN need to launch a domestic card to achieve these? Currently, in Nigeria, there are existing local and international card schemes that are meeting these needs already. These card schemes, notably Mastercard, Visa, and Verve cards, are enabling banks to offer enough differentiated products and services, among other card payment benefits.

The Verve card particularly is a Nigerian home-grown domestic card scheme and one of Africa’s most successful indigenous payment cards. It has grown its value proposition and market base to be accepted in over 180 countries and issued in countries across Africa, providing secure and ubiquitous payment options.

Not only are these card schemes delivering on the goals of the proposed domestic card scheme, telecommunication operators, Payment Service Banks (PSBs), Fintechs, Commercial banks, and Microfinance banks are playing in this space to create a more financially inclusive, data secure, and product differentiated payment ecosystem.

Another question the CBN will be forced to answer in the new year while launching its domestic card is the ethical question of fairness. Will the CBN be playing fair now that the regulator has also become a player? There has been widespread concern over the ethical disposition of this move. Experts believe the CBN will want to coerce the banks and even Nigerians (cardholders) to subscribe to the government-owned card.

CBN’s entry into the card business; experts project it will effectively crowd out competition and directly compete with homegrown cards as well as other international card companies. They further suggest that instead of playing in the field, the apex bank should remain in its role as a regulator while providing institutional support for existing players, ensuring that they meet the set standards for the benefit of the domestic economy.  2023 will decide.

Slow Economic Growth

The World Bank adjusted its projection for Nigeria’s economic growth for 2023 from 3.3 per cent to 3.2 per cent. The global financial institution noted that the slow growth would be propped by an increase in private consumption, which will be driven by subsiding inflationary pressures.

2022 saw Nigeria record its highest inflation figure since 2005 at 21.15 per cent. This inflation was majorly instigated by; disruptions in the food distribution network resulting from insecurity, high importation costs, currency depreciation, and a bump in the cost of production.

As the new year unveils, keen expectations will be for the government, through the CBN, to be more intentional about its fiscal and monetary policies and proffer business-friendly initiatives that will help tackle the challenges affecting macroeconomic growth.

5G Rollout

It’s the era of the 5th generation mobile network, which sets to drive faster and enhanced communication. As of June 2022, about 70 countries have deployed the 5G technology, with projections that more users will be onboarded. Earlier this year, Nigerians joined the list of 5G users after an auction process was announced by the National Communication Commission (NCC) for the 3.5GHz 5G spectrum.

With this, the NCC will enable licensed operators with existing infrastructure to provide 5G services to Nigerians while providing a regulatory framework that will guide these providers of the 5G network on how to protect users.

Although the rollout is not as extensive yet, experts believe the technology holds a trove of benefits for Nigerians, both individuals and businesses. It is expected that the adoption of this technology will increase opportunities and throw up new businesses with the evolution of blockchain in 2023, which will determine just how much work needs to be done to ensure that advanced technologies are accessible to more Nigerians.

2023, as with any election year, holds a lot of uncertainties, but the hope is that the theme of collaboration endures. Collaboration between the government and private sector players, and collaboration between the government and the citizens to create a robust and efficient economy.

Growth in the Oil Sector

As Europe completely wane itself off the Russian energy and the promises the recently passed Petroleum Industry Act (PIA) holds, Nigeria poses as a more attractive destination for foreign direct investment for oil and gas.

The government has recently redesigned its security strategy along the Niger Delta corridor to curb installation vandalization and oil theft. The new strategy of engaging the militants in addition to the military operations in the Niger Delta is expected to increase the daily oil production from 1.22m b/d towards the OPEC stipulated 1.7m b/d.

The government has also speculated it will be removing oil subsidies from its spending in the new year.

Other growth indicators in the oil sector include the recent commercialisation of the government-owned Nigerian National Petroleum Company (NNPC) Limited, which will further liberalise the sector. The completed Dangote Refinery, with its 650,000 b/d is expected to meet Nigeria’s fuel requirement, provided domestic oil prices are cost-effective, and fuel imports are lowered.

With all these efficient components brought together; expected foreign investment, increased security, increased daily oil production, removal of oil subsidy and the take-off of the Dangote refinery- the oil sector is going to be a major contributor to the economy’s balance of payment.

The new year indeed looks viable; the supposition is that the key players, government, businesses, and individuals will take their roles assiduously and deliberately work towards making the new year a productive and prosperous one for all.

Economy

Employment Growth Quickens Amid Efforts to Deal With Workloads

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Manufacturing Activities PMI

The Nigerian private sector registered a slight loss of growth momentum in January, with output and new business rising further markedly, though at softer rates than at the end of 2022.

On a more positive note, firms raised employment at the fastest pace since June 2018 as part of efforts to complete work on time.

On the price front, rates of inflation of input costs and output prices softened in January but remained elevated.

Analysis by Stanbic IBTC Bank showed that the headline figure derived from the survey is the Purchasing Managers’ Index (PMI®).

Readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show a deterioration. The headline PMI dipped to 53.5 in January from 54.6 in December. Although still signalling a solid monthly strengthening of the private sector and the thirty-first in consecutive months, the rate of improvement was the softest since August 2022.

Business activity increased at a much slower pace at the start of the year, despite the rate of growth remaining marked. The latest rise was the weakest in five months. Demand continued to improve, but some firms reported a moderation in customer numbers.

Activity increased across each of the four broad sectors covered by the survey. The rate of expansion in new business also softened in January but remained sharp nonetheless, again reflecting higher demand from customers.

A desire to try and complete projects on time led companies to ramp up their hiring activities at the start of the year. Employment increased at a solid pace that was the fastest since June 2018.

Despite expanded staffing levels, backlogs of work increased for the first time in three months. Firms reported having been hindered by issues with machinery and power supply.

Higher workloads and positive expectations regarding the outlook for activity led companies to expand their purchasing activity sharply again, with the rate of growth unchanged from December. In turn, stocks of purchases also rose further. Efforts to secure inputs were helped by improving supplier performance.

Competition among vendors, quiet road conditions and prompt payments all contributed to a shortening of delivery times, one that was the most pronounced in four months. The rate of input cost inflation softened for the second month running in January, and was at a one-year low.

The slowdown in overall cost inflation largely reflected a softer rise in purchase prices, albeit one that was still substantial. Purchase costs increased on the back of rising fuel and raw material costs, exacerbated by currency weakness.

Meanwhile, staff costs rose at the fastest pace in 11 months as companies increased pay in line with higher living costs. Output price inflation also remained elevated as higher cost burdens were passed on to customers.

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Economy

NASD OTC Market Appreciates by 0.95%

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NASD Market capitalisation

By Adedapo Adesanya

The duo of FrieslandCampina WAMCO Nigeria Plc and Central Securities Clearing System (CSCS) Plc buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.95 per cent on Thursday, February 2.

They lifted the market capitalisation of the bourse by N8.80 billion to settle at N940.51 billion compared with the previous day’s N931.71 billion. They also raised the NASD Unlisted Securities Index (NSI) by 6.70 points to wrap the session at 715.76 points compared with 709.06 points recorded in the previous session.

During the session, the price of FrieslandCampina went up by N3.23 to settle at N68.06 per unit, in contrast to the previous day’s N64.83 per unit, while CSCS Plc appreciated by 50 Kobo to sell at N13.50 per share compared with the preceding session’s N13 per share.

The volume of transacted stocks decreased by 4.3 per cent to 261,439 units from the 273,038 units traded in the preceding session. However, the value of shares traded went higher by 38.9 per cent to N15.7 million from N11.3 million, while the number of deals recorded an improvement, as it grew by 300 per cent to 20 deals from five deals on Tuesday.

Business Post reports that there was no price loser at the session.

Geo-Fluids finished the day as the most traded stock by volume on a year-to-date basis with 321.2 million units worth N317.2 million, UBN Property Plc stood in second place with 35.8 million units valued at N25.8 million, while FrieslandCampina Wamco Nigeria Plc was in third place with 2.4 million units valued at N159.4 million.

Geo-Fluids Plc also maintained its summit position as the most active stock by value on a year-to-date basis, with 321.2 million units sold for N317.2 million, FrieslandCampina WAMCO Group Plc was in second place with 2.4 million units valued at N159.4 million, while VFD Group Plc was in third place for trading 561,810 units for N137.0 million.

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Economy

Continuous Bargain Hunting Leaves Local Stock Exchange Higher by 0.93%

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Local Stock Exchange

By Dipo Olowookere

The local stock exchange closed higher by 0.93 per cent on Thursday amid continuous bargain hunting by investors, who are digesting a flurry of full-year corporate earnings.

It was observed that the growth reported during the session was strongly influenced by buying pressure in the energy sector, which rose by 5.17 per cent on the back of gains posted by Seplat, MRS Oil and others.

The banking and insurance counters depreciated on Thursday by 0.44 per cent and 0.39 per cent, respectively, as the consumer goods and the industrial goods sectors closed flat.

At the close of trades, the All-Share Index (ASI) of the Nigerian Exchange (NGX) Limited increased by 498.44 points to 53,998.12 points from 53,499.68 points, and the market capitalisation grew by N271 billion to close at N29.411 trillion compared with the midweek session’s N29.140 trillion.

MRS Oil topped the gainers’ chart after it gained 10.00 per cent to finish at N17.60, Northern Nigerian Flour Mills appreciated by 9.88 per cent to N8.90, International Energy Insurance rose by 9.76 per cent to 90 Kobo, Seplat went up by 9.50 per cent to N1,325.00, and Cornerstone Insurance improved by 9.09 per cent to 60 Kobo.

On the flip side, Sunu Assurances topped the losers’ log after it lost 8.11 per cent to trade at 34 Kobo, Mutual Benefits fell by 7.69 per cent to 36 Kobo, Linkage Assurance dropped by 6.25 per cent to 45 Kobo, Veritas Kapital declined by 4.76 per cent to 20 Kobo, and PZ Cussons depleted by 4.65 per cent to N10.25.

Business Post reports that the market breadth was positive as there were 27 price gainers and 12 price losers, indicating a strong investor sentiment.

Investors transacted 2.9 billion shares worth N8.1 billion in 3,940 deals, in contrast to the 200.4 million shares worth N5.5 billion transacted in 3,716 deals on Wednesday, showing an increase in the trading volume, value and the number of deals by1,331.88 per cent, 47.27 per cent, and 6.03 per cent, respectively.

Universal Insurance traded 2.7 billion shares due to an off-market deal to close as the most active stock and was followed by AIICO Insurance, which sold 14.0 million stocks, GTCO transacted 13.9 million equities, Sterling Bank exchanged 10.3 million stocks, and Fidelity Bank traded 9.9 million equities.

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