Economy
Naira, Fuel Scarcity Sharply Weakens Nigerian Business Activity
By Aduragbemi Omiyale
For the first time in many months, the Nigerian business activity index fell into the negative region in February 2023 due to the scarcity of fuel and Naira in the financial system.
The Central Bank of Nigeria (CBN) redesigned the N200, N500, and N1,000 banknotes last year and gave Nigerians till January 31, 2023, to swap their old notes for the new ones.
However, after calls from various quarters, the deadline was shifted to February 10, 2023.
Two days before the expiration, three state governments went to the supreme court to stop the implementation of the policy designed to reduce the amount of cash in the system.
The apex bank asked the parties to maintain the status quo pending the determination of the matter, and before the presidential election last Saturday, many Nigerians and businesses found it difficult to get cash to carry out transactions.
In its Purchasing Managers’ Index (PMI) for February 2023, Stanbic IBTC Bank said it had a reading of 44.7 points compared with the 53.5 points achieved in January 2023.
Business Post reports that readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show deterioration.
In the report, it was observed that cash shortages across the Nigerian economy had a severe impact on the private sector midway through the first quarter of the year. Substantial declines were seen in both output and new orders, while firms scaled back their purchasing activity and employment.
Companies were also impacted by shortages of fuel, which added to price pressures and led to supplier delivery delays.
The 44.7 points recorded last month ended the 31-month sequence of expansion. The decline in operating conditions was the sharpest since the survey began in January 2014, excluding the opening wave of the COVID-19 pandemic in the second quarter of 2020.
The most severe impacts of cash shortages were seen with regard to output and new orders, which both fell substantially as customers were often unable to secure the funds to commit to spending.
The decline in new orders was the first since June 2020, while the fall in output ended a seven-month sequence of growth. In both cases, the reductions were the most pronounced in the survey’s history, apart from during the opening wave of the COVID-19 pandemic.
With new orders and output falling, companies reduced their input buying and staffing levels accordingly. The declines were the first in 32 and 25 months, respectively. The decrease in purchasing reflected not only a drop in customer demand but also difficulties for companies to find the funds to pay for items.
Alongside cash shortages, the private sector was also impacted by a scarcity of fuel in February. This had a notable impact on suppliers’ delivery times, which lengthened for the first time in close to six-and-a-half years and to the greatest extent since April 2016.
The slump in PMI shows that while the central bank has managed to reduce the amount of cash held outside the banking system to a record low, it has come at a cost to the economy.
“The lingering cash shortages will likely continue to dampen economic activities and could depress economic growth” this quarter, said the Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, adding that the Nigerian economy could grow at 3 per cent in 2023 due to the challenges.
“Furthermore, persistent fuel shortages from the beginning of the year saw petrol pump prices increase, which both increased production costs for firms and led to supplier delivery delays. Sure, the lingering cash shortages will likely continue to dampen economic activities and could depress economic growth in Q1:23,” he stated.
In turn, shortages led to a rise in fuel costs which were widely mentioned as having been behind a further marked increase in purchase prices.
Higher raw material costs and currency weakness were also factors pushing up purchase prices. The rate of inflation was the softest since June 2020 but marked nonetheless and stronger than the series average. Staff costs also rose again in February, but at a modest pace.
The passing on of higher input costs to customers resulted in a further sharp rise in output prices, albeit one that was the weakest in four months.
Hopes that economic conditions will improve, alongside business expansion and investment plans, led to confidence in the year-ahead outlook for business activity. The sentiment was at a five-month high but still relatively muted.
By Adedapo Adesanya
Nigeria and the United Kingdom are moving to tackle a long-standing £1.2 billion discrepancy in their trade records, with both countries agreeing to develop a structured data-sharing system aimed at improving transparency and accountability across bilateral commerce.
The agreement was reached during a high-level meeting in London on March 18, 2026, held on the sidelines of President Bola Tinubu’s State Visit, under the Nigeria–United Kingdom Enhanced Trade and Investment Partnership (ETIP).
According to a statement by Nigeria Customs Service (NCS) spokesperson, Mr Abdullahi Maiwada, the talks signal a shift toward deeper operational cooperation between both countries’ customs authorities.
At the centre of the discussions was a persistent mismatch in trade figures. While Nigeria recorded about £504 million worth of imports from the UK in 2024, British records show exports to Nigeria at approximately £1.7 billion for the same period, leaving a gap of roughly £1.2 billion.
To address this, the two countries agreed to explore a pre-arrival data exchange framework that will connect their digital customs systems, with the aim of improving risk management, reconciling trade data, and strengthening compliance monitoring along the corridor.
The meeting was led by Comptroller-General of Customs, Mr Adewale Adeniyi and Ms Megan Shaw, Head of International Customs and Border Engagement at His Majesty’s Revenue and Customs (HMRC), and also focused on customs modernisation and data transparency.
Mr Adeniyi underscored the broader economic implications of the initiative, noting that customs collaboration plays a central role in trade facilitation.
“Effective customs cooperation remains a critical enabler of economic growth and sustainable trade development,” he said.
He added that “customs administrations serve as the frontline institutions responsible for ensuring that trade flows between both countries are transparent, secure, and mutually beneficial.”
The Nigeria–UK trade relationship spans multiple sectors, including industrial goods, agriculture, energy, and consumer products — all of which depend heavily on efficient port and border operations.
Beyond addressing data gaps, the meeting also highlighted ongoing modernisation efforts on both sides. The UK showcased advancements in artificial intelligence-driven trade tools, digital verification systems, and real-time analytics designed to enhance cargo processing, risk assessment, and border security.
The engagement further produced plans for a Customs Mutual Administrative Assistance Framework, alongside technical groundwork for capacity building, knowledge exchange, and a joint engagement mechanism under the ETIP platform.
Mr Maiwada said the outcomes are expected to strengthen Nigeria’s trade ecosystem and support broader economic reforms.
“The NCS has reaffirmed its commitment to deepening international partnerships as part of a broader modernisation agenda designed to promote transparency, efficiency, and competitiveness in Nigeria’s trading environment,” the statement said.
It added that “insights from this engagement will strengthen its operational capacity, enhance trade facilitation, and support Nigeria’s economic reform objectives under the Renewed Hope programme.”
By Adedapo Adesanya
Dangote Petroleum Refinery imported a total of $3.74 billion) worth of crude oil in 2025, to make up for shortfalls that threatened the plant’s 650,000-barrel-a-day operational capacity.
The data disclosed in the Central Bank of Nigeria’s Balance of Payments report noted that “Crude oil imports of $3.74 billion by Dangote Refinery” contributed to movements in the country’s current account position, as Nigeria imported crude oil worth N5.734 trillion between January and December 2025.
Last year, as the Nigerian National Petroleum Company (NNPC), which is the refinery’s main trade partner and minority stakeholder, faced its challenges, the company had to forge alternative supply links. This led to the importation of crude from Brazil, Equatorial Guinea, Angola, Algeria, and the US, among others.
For instance, in March 2025, the company said it now counts Brazil and Equatorial Guinea among its global oil suppliers, receiving up to 1 million barrels of the medium-sweet grade Tupi crude at the refinery on March 26 from Brazil’s Petrobras.
Meanwhile, crude oil exports dropped from $36.85 billion in 2024 to $31.54 billion in 2025, representing a 14.41 per cent decline, further shaping the external balance.
The report added that the refinery’s operations also reduced Nigeria’s reliance on imported fuel, noting that “availability of refined petroleum products from Dangote Refinery also led to a substantial decline in fuel imports.”
Specifically, refined petroleum product imports fell sharply to $10.00 billion in 2025 from $14.06 billion in 2024, representing a 28.9 per cent decline, while total oil-related imports also eased.
However, this was offset by a rise in non-oil imports, which increased from $25.74 billion to $29.24 billion, up 13.6 per cent year-on-year, reflecting sustained demand for foreign goods.
At the same time, the goods account remained in surplus at $14.51 billion in 2025, rising from $13.17 billion in 2024, supported largely by activities linked to the Dangote refinery and improved export performance in other segments.
The CBN stated that the stronger goods balance was driven by “significant export of refined petroleum products worth $5.85bn by Dangote Refinery,” alongside increased gas exports to other economies.
Nigeria posted a current account surplus of $14.04 billion in 2025, lower than the $19.03 billion recorded in 2024 but significantly higher than $6.42 billion in 2023. The decline from 2024 was driven partly by structural changes in oil trade flows, including crude imports for domestic refining, according to the report.
Pressure on the current account came from higher external payments. Net outflows for services rose from $13.36 billion in 2024 to $14.58 billion in 2025, driven by increased spending on transport, travel, insurance, and other services.
Similarly, net outflows in the primary income account surged by 60.88 per cent to $9.09 billion, largely due to higher dividend and interest payments to foreign investors.
In contrast, secondary income inflows declined slightly from $24.88 billion in 2024 to $23.20 billion in 2025, as official development assistance and personal transfers weakened, although remittances remained a key source of inflow, as domestic refineries grappled with persistent feedstock shortages, exposing a deepening supply paradox in the country’s oil sector.
This comes despite the Federal Government’s much-publicised naira-for-crude policy designed to prioritise local supply.
By Aduragbemi Omiyale
An application has been submitted by Sovereign Trust Insurance Plc for its proposed N5.0 billion rights issue.
The application was sent to the Nigerian Exchange (NGX) Limited, and it is for approval to list shares from the exercise when issued to qualifying shareholders.
A notice signed by the Head of Issuer Regulation Department of the exchange, Mr Godstime Iwenekhai, disclosed that the request was filed on behalf of the underwriting firm by its stockbrokers, Cordros Securities Limited, Dynamic Portfolio Limited and Cedar of Lebanon Securities.
The company intends to raise about N5.022 billion from the rights issue to boost its capital base, as demanded by the National Insurance Commission (NAICOM) for insurers in the country.
Sovereign Trust Insurance plans to issue 2,510,848,144 ordinary shares of 50 Kobo each at N2.00 per share on the basis of three new ordinary shares for every 17 existing ordinary shares held as of the close of business on Tuesday, March 17, 2026.
“Trading license holders are hereby notified that Sovereign Trust Insurance has through its stockbrokers, Cordros Securities Limited, Dynamic Portfolio Limited and Cedar of Lebanon Securities, submitted an application to Nigerian Exchange Limited for the approval and listing of a rights issue of 2,510,848,144 ordinary shares of 50 Kobo each at N2.00 per share on the basis of three new ordinary shares for every 17 existing ordinary shares held as of the close of business on Tuesday, March 17, 2026,” the notification read.
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