Economy
Nigeria to Quit Recession 2017, Devalue Naira Again—FBNQuest Research
By Modupe Gbadeyanka
A research carried out by FBNQuest Research has predicted that Nigeria’s economy will leave recession this year and grow by 2 percent.
However, it pointed out that there would be another devaluation of the Naira in 2017.
In June 2016, the Central Bank of Nigeria (CBN) floated the Naira in a bid to give the local currency strength at the foreign exchange market. But this seems not to have worked because the Naira has lost over N150 against the Dollar since then.
At the moment, the Naira is N516 to $1 at the parallel market compared with about N342 it was sold in June 2016.
In the report titled ‘2017 Outlook So much to do; so little time,’ it was noted that the fiscal stimulus for this will be the main driver, supported by a recovery in oil production and selective private investment.
“Beyond our forecast horizon, household consumption will recover, leading to an acceleration in growth,” part of the report said.
According to FBNQuest Research, “The 2017 budget proposals are still more expansionary than the previous year’s, set a heady target for capital releases and maintain the level of personnel costs. If the FGN is able to hit its revenue targets and implement its proposals, we will see a sizeable fiscal stimulus. We could have the rare bonus of a relatively fast passage of the budget.”
It described the 2017 budget proposals as “ambitious”, noting that it contains aggregate spending of N7.30 trillion including unprecedented capital releases of N2.24 trillion, aggregate revenues of N4.94 trillion and a mouth-watering FGN deficit of N2.36 trillion.
The report identified these as “hefty increases on the 2016 budget and even larger increases on the likely outturn for 2016. “
It said one change for the better is that the FGN has produced more realistic projections for non-oil revenue collection, and assumed that the oil economy will generate more revenue than the non-oil.
“The fiscal expansion is the base of our GDP growth forecast of 2 percent for this year. We hear that we are being overly hopeful: we would reply that the population is said to be growing at 3.2 percent per year and that we are forecasting a decline in per head incomes.
“Our forecast is supported by selective private-sector investment (as in agriculture and petrochemicals) and by a pick-up in oil production.
“Our thinking is that the FGN has no choice but to reach a compromise to restore stability to the Niger Delta.
“It has said repeatedly that the diversification of the economy hinges ironically upon healthy oil revenues.
“Initially, it did not want to continue paying the allowances to militants in the delta but has reluctantly changed its position,” the report noted.
FBNQuest Research says it sees a rise in crude production including condensates to 2.10 mbpd this year from an estimated 1.82 mbpd. The FGN is assuming 2.20 mbpd in its proposals.
It said further that, “On the average oil price assumption of $44.50/b for this year, in contrast, the proposals are conservative.
“Our expectation is $57/b with some upside. The FGN therefore should have some welcome headroom, which it will value if production underperforms. Our thinking is based on hints from OPEC that, when it next meets in May, it may make further cuts in production quotas if it is not happy with the direction of the price.”
Also, the report observed that the “signals from the CBN, the MPC and the political leadership indicate otherwise but we think that there will be devaluation in Nigeria in 2017.”
It explained that, “While we cannot detect any changes in the official mindset on the exchange rate, we see another devaluation this year in the ‘last resort’ category. The CBN will struggle to resist the urge to manage the rate in some way.”
It pointed out that the economy has need of sizeable autonomous forex inflows to meet legitimate import demand, close the gap between the interbank and other forex markets, and create a market in which the CBN is not the dominant player.
The report argued that the monetary authorities are not equipped to counter both GDP contraction and rising inflation. Their task will be clearer when positive growth returns and inflation starts to slow on positive base effects.
It said, “The next rate moves by the MPC should be downwards, in line with (or perhaps anticipating) steady declines in headline inflation.”
Commenting on the stock market, the report said it expects the market to trade sideways for the most part until some clarity on the forex situation emerges.
“If a resolution leads to a free float regime (or very close to it), we expect a surge in capital inflows. Our base case scenario is a 10 percent rise in the ASI for 2017 based on our fair value forecasts. A resolution of the forex situation could lead to a gain of at least 20 percent.
“We see upside potential of up to 10 percent for the banks sector on average; a marked resumption of capital inflows from offshore portfolio investors could lead to a much stronger performance.
“We forecast the average ROAE for our universe of banks to move up to 18.3 percent in 2016E, thanks to forex-related gains, but subsequently fall sharply to 11.2 percent in 2017E (assuming forex-related gains are not material in 2017E).
“Among the non-financials, we prefer the cement and palm oil names for which we see upside potential of 56 percent and 6 percent respectively on average.
“The other sectors continue to struggle with the headwinds stemming from forex devaluation given their high dependence on imported raw materials and/or FCY loans.”
On the federal government’s bonds, the report said, “FGN bond yields are likely to drift higher before the policy rate cuts due to the fiscal expansion and substantial issuance programme.
“Active investors will prefer the better returns on longer tenor NTBs. After three years of consecutive losses, we expect equities to regain some lost ground this year. We forecast the ASI to return 10 percent, implying an end-year target of 29,560.”
By Adedapo Adesanya
The United Kingdom via the British High Commission in Abuja has launched two flagship economic reform programmes – the Nigeria Economic Stability & Transformation (NEST) programme and the Nigeria Public Finance Facility (NPFF) -as part of efforts to support Nigeria’s economic reform and growth agenda.
Backed by a £12.4 million UK investment, NEST and NPFF sit at the centre of the UK-Nigeria mutual growth partnership and support Nigeria’s efforts to strengthen macroeconomic stability, improve fiscal resilience, and create a more competitive environment for investment and private-sector growth.
Speaking at the launch, Cynthia Rowe, Head of Development Cooperation at the British High Commission in Abuja, said, “These two programmes sit at the heart of our economic development cooperation with Nigeria. They reflect a shared commitment to strengthening the fundamentals that matter most for our stability, confidence, and long-term growth.”
The launch followed the inaugural meeting of the Joint UK-Nigeria Steering Committee, which endorsed the approach of both programmes and confirmed strong alignment between the UK and Nigeria on priority areas for delivery.
Representing the Government of Nigeria, Special Adviser to the President of Nigeria on Finance and the Economy, Mrs Sanyade Okoli, welcomed the collaboration, touting it as crucial to current, critical reforms.
“We welcome the United Kingdom’s support through these new programmes as a strong demonstration of our shared commitment to Nigeria’s economic stability and long-term prosperity. At a time when we are implementing critical reforms to strengthen fiscal resilience, improve macroeconomic stability, and unlock inclusive growth, this partnership will provide valuable technical support. Together, we are laying the foundation for a more resilient economy that delivers sustainable development and improved livelihoods for all Nigerians.”
On his part, Mr Jonny Baxter, British Deputy High Commissioner in Lagos, highlighted the significance of the programmes within the wider UK-Nigeria mutual growth partnership.
“NEST and NPFF are central to our shared approach to strengthening the foundations that underpin long-term economic prosperity. They sit firmly within the UK-Nigeria mutual growth partnership.”
By Aduragbemi Omiyale
A strategic partnership aimed at accelerating the growth, digital capacity, and sustainability of Nigeria’s 40 million Micro, Small and Medium Enterprises (MSMEs) has been signed by MTN Nigeria and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
The collaboration will feature joint initiatives focused on digital inclusion, financial access, capacity building, and providing verified information for MSMEs.
With millions of small businesses depending on accurate guidance and easy-to-access support, MTN and SMEDAN say their shared platform will address gaps in communication, misinformation, and access to opportunities.
At the formal signing of the Memorandum of Understanding (MoU) on Thursday, November 27, 2025, in Lagos, the stage was set for the immediate roll-out of tools, content, and resources that will support MSMEs nationwide.
The chief operating officer of MTN Nigeria, Mr Ayham Moussa, reiterated the company’s commitment to supporting Nigeria’s economic development, stating that MSMEs are the lifeline of Nigeria’s economy.
“SMEs are the backbone of the economy and the backbone of employment in Nigeria. We are delighted to power SMEDAN’s platform and provide tools that help MSMEs reach customers, obtain funding, and access wider markets. This collaboration serves both our business and social development objectives,” he stated.
Also, the Chief Enterprise Business Officer of MTN Nigeria, Ms Lynda Saint-Nwafor, described the MoU as a tool to “meet SMEs at the point of their needs,” noting that nano, micro, small, and medium businesses each require different resources to scale.
“Some SMEs need guidance, some need resources; others need opportunities or workforce support. This platform allows them to access whatever they need. We are committed to identifying opportunities across financial inclusion, digital inclusion, and capacity building that help SMEs to scale,” she noted.
Also commenting, the Director General of SMEDAN, Mr Charles Odii, emphasised the significance of the collaboration, noting that the agency cannot meet its mandate without leveraging technology and private-sector expertise.
“We have approximately 40 million MSMEs in Nigeria, and only about 400 SMEDAN staff. We cannot fulfil our mandate without technology, data, and strong partners.
“MTN already has the infrastructure and tools to support MSMEs from payments to identity, hosting, learning, and more. With this partnership, we are confident we can achieve in a short time what would have taken years,” he disclosed.
Mr Odii highlighted that the SMEDAN-MTN collaboration would support businesses across their growth needs, guided by their four-point GROW model – Guidance, Resources, Opportunities, and Workforce Development.
He added that SMEDAN has already created over 100,000 jobs within its two-year administration and expects the partnership to significantly boost job creation, business expansion, and nationwide enterprise modernisation.
By Adedapo Adesanya
The Nigerian Exchange (NGX) Limited is seeking review of the controversial Capital Gains Tax increase, fearing it will chase away foreign investors from the country’s capital market.
Nigeria’s new tax regime, which takes effect from January 1, 2026, represents one of the most significant changes to Nigeria’s tax system in recent years.
Under the new rules, the flat 10 per cent Capital Gains Tax rate has been replaced by progressive income tax rates ranging from zero to 30 per cent, depending on an investor’s overall income or profit level while large corporate investors will see the top rate reduced to 25 per cent as part of a wider corporate tax reform.
The chief executive of NGX, Mr Jude Chiemeka, said in a Bloomberg interview in Kigali, Rwanda that there should be a “removal of the capital gains tax completely, or perhaps deferring it for five years.”
According to him, Nigeria, having a higher Capital Gains Tax, will make investors redirect asset allocation to frontier markets and “countries that have less tax.”
“From a capital flow perspective, we should be concerned because all these international portfolio managers that invest across frontier markets will certainly go to where the cost of investing is not so burdensome,” the CEO said, as per Bloomberg. “That is really the angle one will look at it from.”
Meanwhile, the policy has been defended by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, who noted that the new tax will make investing in the capital market more attractive by reducing risks, promoting fairness, and simplifying compliance.
He noted that the framework allows investors to deduct legitimate costs such as brokerage fees, regulatory charges, realised capital losses, margin interest, and foreign exchange losses directly tied to investments, thereby ensuring that they are not taxed when operating at a loss.
Mr Oyedele also said the reforms introduced a more inclusive approach to taxation by exempting several categories of investors and transactions.
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