Economy
Nigeria’s Inflation to Hit 12% in 2019—Fitch
By Dipo Olowookere
Global rating agency, Fitch Ratings, has said the path to full economic stability and recovery for the Nigerian economy is very rough.
In a statement affirming the nation’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’, Fitch said weak party discipline in parliament and frequent disagreements between the presidency and legislature point to a continued high risk of delays to parliamentary approval of key legislation.
The rating firm said it expects policy continuity with the implementation of only piecemeal reforms, resulting in slow progress on tackling long-standing impediments to growth and weaknesses in macroeconomic management.
While it projected that inflation will average close to 12 percent in 2019-2020, well above the projected current ‘B’ median of 4.8 percent, propped up by cost-push factors, the Gross Domestic Product (GDP) growth is anticipated to average 2.2 percent in 2019-2020, below its previous 10-year average of 4.2 percent and the current ‘B’ median of 3.4 percent.
Business Post reports that in April 2019, according to the National Bureau of Statistics (NBS), the country’s inflation rose to 11.37 percent year-on-year from 11.25 percent year-on-year in March 2019.
Fitch noted that high unemployment and inflation will constrain private consumption while investment is held back by tight credit supply, a weak business climate and regulatory uncertainty in the oil sector.
It said a large infrastructure deficit, which is illustrated by acute power supply shortages and security challenges, also dampen the medium-term growth outlook.
The renowned rating agency disclosed that Nigeria’s ratings are supported by the large size of its economy, a track record of current account surpluses and a relatively low general government (GG) debt-to-GDP.
“This is balanced against poor governance and development indicators, structurally low fiscal revenues and high dependence on hydrocarbons. The rating is also weighed down by subdued GDP growth and inflation that is higher than in rating peers,” it said.
Continuing, it stated that Nigeria’s fiscal performance mostly remains a function of fluctuations in oil revenues, noting that the implicit subsidy of petrol prices (around 0.6% of GDP in 2018), the gradual clearance of joint-venture (JV) cash call arrears (outstanding stock of 1% of GDP at end-2018) and the conversion of government oil proceeds to naira at a below-market exchange rate continue to constrain budget receipts from hydrocarbon extraction.
“Fitch estimates that the GG deficit narrowed to 3.6% of GDP (federal government, FGN: 2.3% excluding transfers to state and local governments, SLGs) in 2018 from 4.5% in 2017 (FGN: 3.2%), mostly reflecting the recovery in oil prices.
“Fitch forecasts the GG deficit to widen to 3.8% of GDP (FGN: 2.6%) in 2019 and further to 4.6% in 2020 (FGN: 3%) as the rise in oil production with the coming on stream of the Egina oilfield will be offset by the decline in oil prices under our baseline. Public finances are vulnerable to disruptions to production caused by recurrent acts of vandalism or other force majeure affecting Nigeria’s aging oil infrastructure. A $10 change per barrel in the Brent oil price against our assumptions would, all else equal, impact the GG balance by around 0.6% of GDP.
“Nigeria’s particularly low non-oil fiscal revenues averaging only 3.7% of GDP over 2016-2018 are a key rating weakness, reducing the fiscal space and resulting in a high fiscal Brent breakeven price of USD129 per barrel in 2019 and USD149 in 2020, according to Fitch’s estimates. A two-thirds rise in the minimum wage entered into force in April and could cause pressures on public finances, particularly for cash-strapped SLGs, although there is high uncertainty regarding its effective implementation date and fiscal cost. The government is contemplating offsetting measures, including a VAT rate increase, which faces strong opposition across the political spectrum.
“Interest payments consumed 27% of GG revenues (FGN: 53%) in 2018 based on Fitch’s estimates, double the current ‘B’ median of 13% and will rise to 30% of revenues (FGN: 65.6%) in 2020, highlighting the risks to debt sustainability arising from low fiscal receipts. The authorities aim to contain the rise in the interest cost by substituting external concessional and commercial borrowing to onerous domestic financing. They also plan to reduce debt through partial privatisations of oil JV assets, which we do not expect to materially reduce their oil revenues.
“GG debt will rise from 25% of GDP (FGN: 20%, including central bank overdrafts) in 2018 to 28.2% of GDP (FGN: 22.4%) in 2020, still well below the projected current ‘B’ median of 56%, under Fitch’s forecasts. Around 71% of GG debt was naira-denominated at end-2018, limiting refinancing and exchange rate risks but high direct and indirect foreign holdings of local-currency debt expose Nigeria to shifts in investor sentiment and global funding conditions. The debt of the Asset Management Corporation of Nigeria (AMCON) of 3.2% of GDP at end-2018 constitutes a contingent liability for the sovereign, and could rise in the context of high non-performing loans in the banking sector of 11.7% of total bank loans and an elevated proportion of restructured loans,” a statement from the agency said.
Economy
Unlisted Securities Gain 0.04% as UBN Property, Three Others Appreciate
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.04 per cent appreciation on Tuesday, January 14 after the share prices of six stocks on the platform recorded movements.
Business Post reports that the bourse ended with four price gainers and two price losers during the session trading session of the week.
FrieslandCampina Wamco Nigeria Plc lost N2.50 yesterday to finish at N39.50 per share versus the previous day’s N42.00 per share and Central Securities Clearing System (CSCS) Plc dropped N1.15 to wrap up the day at N22.05 per unit compared to Monday’s N23.20 per unit.
On the flip side, 11 Plc gained N25.53 to close at N280.84 per share versus N255.31 per share, UBN Property Plc increased by 20 Kobo to N2.20 per unit from N2.00 per unit, Industrial and General Insurance (IGI) Plc added 10 Kobo to close at N16.20 per share compared with the previous day’s N16.30 per share, and Geo-Fluids Plc gained 10 Kobo to settle at N4.66 per unit versus N4.56 per unit.
When trading activities ended for the day, the market capitalisation went up by N410 million to remain relatively unchanged at N1.061 trillion as the NASD Unlisted Security Index (NSI) inflated by 1.19 points to 3,096.19 points from 3,095.00 points.
The volume of securities traded in the session was up by 28.4 per cent during the session to 3.97 million units from 3.1 million units, the value of shares jumped by 161.8 per cent to N8.3 million from N3.2 million, and the number of deals declined by 16.7 per cent to 25 deals from 30 deals.
FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 3.4 million units worth N134.9 million, Geo-Fluids Plc occupied the second spot with 8.9 million units valued at N43.0 million, and the third position claimed by Afriland Properties Plc with 690,825 units sold for N11.1 million.
IGI Plc ended the session as the most active stock by volume (year-to-date) with a turnover of 23.5 million units valued at N5.3 million, followed by Geo-Fluids Plc with 8.9 million units sold for N43.0 million, and FrieslandCampina Wamco Nigeria Plc with 3.4 million units worth N134.9 million.
Economy
Nigeria’s NaFarm Foods Gets $1m Zayed Sustainability Prize
By Aduragbemi Omiyale
A pioneering agricultural solutions provider based in Kaduna, Nigeria, NaFarm Foods, has been named as the winner of the food category of the 2025 Zayed Sustainability Prize for its Hybrid Solar Food Dryer.
The company clinched the accolade for its groundbreaking innovation in reducing post-harvest losses, improving food security, and promoting sustainable agricultural practices across Nigeria.
Hybrid Solar Food Dryer was designed by NaFarm Foods to address the critical issue of food spoilage by combining solar heat and electricity generated from solar panels for efficient, all-weather drying of food, even during rainy or cloudy days.
With a capacity of 500kg per unit and the ability to retain the nutritional quality of food while minimising energy costs, the technology has already benefited over 80 communities across six Nigerian states.
By reducing post-harvest losses for over 65,000 farmers, the dryers contribute significantly to food security and rural economic empowerment.
The Hybrid Solar Food Dryer is transforming food preservation by reducing spoilage rates, decreasing greenhouse gas emissions from decomposing food, and lowering reliance on fossil fuels.
With a whole-of-life cost of less than 1 cent per 100 litres, the dryers are accessible and economically viable for smallholder farmers and food processors.
By 2030, NaFarm Foods aims to empower two million farmers and reduce carbon emissions by 50,000 metric tonnes annually.
Business Post reports that NaFarms Foods has won $1 million from Zayed to scale its operations by manufacturing and distributing 100,000 dryers across Nigeria and West Africa.
“We are deeply honoured to be recognised as a winner of the Zayed Sustainability Prize. It signifies global recognition of our efforts to tackle food insecurity and promote equitable and sustainable agriculture in Nigeria and beyond.
“This opportunity inspires us to continue pushing boundaries, knowing that our work is not only transforming lives locally but also contributing to a more sustainable and equitable world. For us, this is more than an achievement; it’s a call to action to drive greater impact,” the chief executive of NaFarms Foods, Ms Fatima Jimoh, said.
The Director of the Zayed Sustainability Prize, Dr Lamya Fawwaz, said, “NaFarm Foods’ innovative approach to sustainable food preservation not only improves food security but also empowers rural communities, particularly women and youth, by creating income-generating opportunities. This aligns with the Prize’s mission to drive progress and improve livelihoods.”
NaFarm Foods plans to expand training programmes to empower an additional 25,000 women and youth, fostering entrepreneurship and sustainable economic growth.
Additionally, it intends to establish distribution hubs and implement advanced cluster mapping systems to ensure technology accessibility and improved marketability of produce.
Each year, the Zayed Sustainability Prize rewards organisations and high schools for their groundbreaking solutions, fostering innovation on global challenges. Over the past 17 years, through its 128 winners, the prize has positively impacted 407 million lives worldwide.
Economy
Naira Falls Further to N1,549.65/$1 at Official Market, Gains N5 at Black Market
By Adedapo Adesanya
The Naira depreciated against the United States Dollar for the third straight session by 0.05 per cent or N1.36 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday, January 14.
During the second trading day of the week, the exchange rate closed at N1,549.65/$1 in the official market, in contrast to Monday’s closing price of N1,548.89/$1.
The renewed pressure on the Naira occurred as analysts expected the introduction of the electronic matching FX market system, increasing foreign portfolio inflows, greater access to dollar-denominated debt, rising FX reserves, and a positive current account balance to support the domestic currency in 2025.
Investment banking firm, CardinalStone Securities Limited, said the Naira movement, which has contributed about 20.0 per cent – 30.0 per cent to inflation in the last few years, is likely to be relatively stable in 2025.
Also in the spot market, the local currency weakened against the Pound Sterling yesterday by N2.22 to trade at N1,879.64/£1 compared with the preceding day’s N1,877.42/£1 and against the Euro, the Nigerian currency lost N7.17 to quote at N1,586.05/€1 versus the N1,578.87/€1 it was traded a day earlier.
However, in the black market, the Naira appreciated against the greenback during the session by N5 to finish at N1,650/$1 compared with the previous day’s value of N1,655/$1.
In the cryptocurrency market, the bulls took charge of reports that US President-elect Donald Trump is preparing first-day executive orders that will benefit the crypto industry. The advance continued today, supported by softer-than-expected US Producer Price Index (PPI) readings for December.
Mr Trump’s expected crypto policies and broader economic plans have brought back positive sentiment among traders — bumping up crypto prices.
Ripple (XRP) added 12.1 per cent to its value to close at $2.84, Cardano jumped by 6.8 per cent to trade at $1.02, Dogecoin (DOGE) rose by 5.0 per cent to $0.3589, Litecoin (LTC) grew by 3.2 per cent to $101.80, Bitcoin (BTC) expanded by 2.2 per cent to $96,866.89, Binance Coin (BNB) appreciated by 1.5 per cent to $699.45, Solana (SOL) also gained 1.5 per cent to end at $188.57, and Ethereum (ETH) improved by 1.3 per cent to $3,219.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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