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
Nigeria attracted $10.37 billion in capital importation in the first quarter of 2026, representing an 83.8 per cent increase from the $5.64 billion recorded in the corresponding period of 2025, according to the National Bureau of Statistics (NBS).
The latest Capital Importation Report released by the stats bureau also showed that capital inflows rose by 60.97 per cent from $6.44 billion recorded in the fourth quarter of 2025.
The report stated, “In Q1 2026, total capital importation into Nigeria stood at $10.37bn, higher than $5.64bn recorded in Q1 2025, indicating an increase of 83.83 per cent. In comparison to the preceding quarter, capital importation increased by 60.97 per cent from $6.44bn in Q4 2025.”
Analysis of the inflows showed that portfolio investment remained the dominant source of foreign capital, accounting for $9.86 billion or 95.09 per cent of the total amount imported into the economy.
The stats office disclosed that foreign direct investment stood at $135.08 million, representing only 1.30 per cent of total capital inflows, while other investments accounted for $374.48 million or 3.61 per cent.
“Portfolio Investment ranked top with $9.86bn, accounting for 95.09 per cent, followed by Other Investment with $374.48m, accounting for 3.61 per cent. Foreign Direct Investment recorded the least with $135.08m, representing 1.30 per cent of total capital importation in Q1 2026,” the report added.
A further breakdown showed that money market instruments attracted the largest share of portfolio investments at $6.50 billion, while investments in bonds amounted to $3.23 billion.
Equity investments under the portfolio category stood at $131.81 million.
The banking sector emerged as the biggest destination for foreign capital during the quarter, attracting $7.55 billion, representing 72.79 per cent of total inflows.
The financing sector followed with $2.43 billion or 23.42 per cent, while the production and manufacturing sector attracted $152.27 million, accounting for 1.47 per cent of total capital imported.
Other sectors that received foreign investments included shares, trading, agriculture, information technology services, telecommunications, oil and gas, transport, construction, healthcare, education, and consultancy services.
The United Kingdom remained Nigeria’s largest source of foreign capital, accounting for $5.08 billion or 49.01 per cent of total inflows. The United States followed with $3.18 billion, representing 30.69 per cent, while South Africa accounted for $983.83 million or 9.49 per cent.
Among financial institutions, Standard Chartered Bank Nigeria Limited received the highest capital inflow during the quarter at $4.41 billion, representing 42.56 per cent of the total.
Stanbic IBTC Bank Plc followed with $2.78 billion or 26.79 per cent, while Rand Merchant Bank handled $930.82 million, accounting for 8.97 per cent.
Other banks that facilitated capital inflows into the country during the period included Citibank Nigeria, Access Bank, First Bank of Nigeria, Guaranty Trust Bank, Zenith Bank, FCMB, Ecobank, Fidelity Bank, and United Bank for Africa.
By Aduragbemi Omiyale
The 2026 licensing round for oil fields is expected to commence in the third quarter of 2026, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has disclosed.
This followed the approval of President Bola Tinubu, who doubles as the Minister of Petroleum Resources.
A statement issued by the spokesperson of NUPRC, Mr Eniola Akinkuotu, on Wednesday said the authorisation is in compliance with the Petroleum Industry Act (PIA).
“We are also fortunate that the President and Minister of Petroleum Resources has approved the 2026 Licensing Round,” the chief executive of the agency, Mrs Oritsemeyiwa Eyesa, was quoted as saying in the statement when she received representatives of Meren Energy (formerly Africa Oil) in Abuja yesterday.
Mrs Eyesan, who expressed satisfaction with the conduct of the 2025 Licensing Round so far, stated that the commercial bid would take place in July, after which the next licensing round would commence.
The NUPRC boss said the heightened participation in the 2025 Licensing Round was a testament to the fact that Nigeria was headed in the right direction.
She said the rise in investments, coupled with the upswing in production, was evidence that Nigeria’s oil and gas sector, under the leadership of President Bola Tinubu, had become attractive.
“We are in the process of finalising the 2026 launch, which will happen by the third quarter at the latest. So, this is the make-or-break point, and we want to make sure we make it,” she stated.
In his remarks, the chief executive of Meren Energy, Mr Oliver Quinn, said the current reforms had inspired the company to increase its investments in Nigeria, hence its interest in asset divestments and licensing rounds, revealing that his company’s investment priority is Africa, of which Nigeria ranks as number one.
“We have operated in Agbami, Akpo and Egina world-class fields. I think till date, in 20 years, about $11bn in capital from our side has gone into these assets, and about $4bn has gone to tax and royalties,” he said, adding, “Nigeria remains the core of our business today because of the quality of these assets.”
According to Mr Quinn, Meren Energy is pressuring its partners on these assets to deepen their investments and then increase overall production, noting that the energy firm was the first in Nigeria to sell crude oil to the Dangote refinery and will continue to fulfil its Domestic Crude Supply Obligation so long as the price remains right.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its gains by 0.91 per cent on Wednesday, June 3, spurred by three price gainers led by FrieslandCampina Wamco Nigeria Plc, which rose by N13.90 to sell N210.41 per share versus the previous day’s N196.51 per share. MRS Oil appreciated by N10 to N190.00 per unit from N180.00 per unit, and Food Concepts Plc added 5 Kobo to sell at N3.00 per share versus N2.95 per share.
As a result, the market capitalisation increased by N23.91 billion to N2.660 trillion from N2.636 trillion, and the NASD Unlisted Security Index (NSI) gained 39.97 points to finish at 4,446.27 points, in contrast to Tuesday’s 4,406.30 points.
The NASD exchange witnessed three price losers at midweek, led by Nipco Plc, which shrank by N21.30 to close at N325.97 per unit compared with the previous session’s N347.27 per unit, Nitrox Industrial Gases Plc went down by N1.20 to quote at N24.30 per share versus the preceding session’s N25.50 per share, and Central Securities Clearing System (CSCS) Plc weakened to by 69 Kobo to N75.41 per unit from N76.10 per unit.
The volume of trades yesterday significantly improved by 71.5 per cent to 527,221 units from Tuesday’s 307,363 units, as the value of transactions soared by 49.9 per cent to N64.2 million from the preceding session’s N49.9 million, and the number of deals surged by 9.5 per cent to 46 deals from 42 deals.
When trading activities ended for the day, 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 Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 64.6 million units exchanged for N4.4 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn