Economy
NIPC Says Investment Announcements in Nigeria Plunge 44%
By Adedapo Adesanya
Nigeria’s economy recorded a sharp drop in foreign investments in 2020 as investors’ commitments declined by 44.1 per cent to $16.7 billion from $29.9 billion in 2019.
This is according to the investment announcements captured by the Nigeria Investment Promotion Council (NIPC).
Analysis of the data released by the NIPC showed that investments declined in the first three quarters of the year.
In the first quarter of the year, $4.8 billion was recorded compared to $12.7 billion in the same period of the preceding year, showing a 62 per cent decline.
Similarly, in the second quarter of the year under review, $250 million was recorded, 89.8 per cent lower than the $2.44 billion achieved in Q2 of 2019.
Also, in the third quarter of last year, there was a decline of 58.1 per cent in the investments to $3.9 billion from $9.3 billion in the same period of 2019.
However, investments in the fourth quarter of 2020 surpassed that of the same time of 2019 as announced investments stood at $7.76 billion in Q4 2020 versus $5.47 billion in Q4 2019.
According to NIPC, the $16.74 billion investments announced last year were committed to a total of 63 projects across 21 states of the federation, the FCT, and the Niger Delta region.
The manufacturing sector got the lion share of the investments as it received $8.4 billion, representing 50 per cent of the total investments announced last year.
The transportation sector got $4.61 billion, which is 28 per cent of the total investments announced. The Information and Communication Technology (ICT) sector was the third favourite sector for investors $1.81 billion, representing 11 per cent of the total sum, was committed to projects in the sector.
Mining and quarrying sector attracted $1.07 billion in investments in the period under review, thus accounted for six per cent of the total investments.
Other sectors of the economy such as Agriculture, Finance and Insurance, Health and Social Services shared the remaining $0.88 billion, which is five per cent of the investments. In terms of destinations, $6 billion, representing 36 per cent of the total investments went into projects in Rivers State.
In terms of state, Kaduna State got 2.81 billion, representing 17 per cent of the total investments. Projects in Kogi and Lagos states attracted $1 billion and $0.89 billion respectively, which is six per cent and five per cent of the total investments.
Other states of the federation attracted $6.05 billion, representing 36 per cent of the investments.
In terms of countries of destination, the NIPC report explained that $6 billion, representing 36 per cent of the total investments came from Singapore, while $3.71 billion, representing 22 per cent of the investments came from Chinese investors.
The report indicated that $2.44 billion, representing 15 per cent, was from the United States of America, while $1.6 billion, representing 10 per cent of the total announced investments came from South Africa.
A total of $2.99 billion (18 per cent) came from other sources including Nigerian investors.
The NIPC also said top 10 investing organisations in the Nigerian economy last year include, Indorama Petrochemicals and Fertilizer from Singapore; Bank of China and Sinosure; 328 Support Services GmbH from the USA; MTN South Africa; Sinoma CBMI from China; Torridon Investments from the UK; African Industries Group from Nigeria; Savannah Petroleum from the UK; Stripe from the USA; and NESBITT Investment Nigeria Limited.
Looking ahead, global Foreign Direct Investments (FDIs) has been projected to drop by 50 per cent this year, being the worst in the last 20 years.
The Executive Secretary of the NIPC, Ms Yewande Sadiku, explained that global FDI is expected to plummet from $1.54 trillion recorded in 2019 to $924 billion in 2020 and further slump to $831.6 billion in 2021.
She said the downturn in the global FDI flow, occasioned by COVID-19, was not expected to record recovery earlier than 2022.
The NIPC boss advised that Nigeria would need to formulate and implement bold and coherent policy changes and deep economic reforms to reverse the expected declines in FDI between 2020 and 2022.
She said, “Investment interest in Nigeria was under pressure before COVID-19; coherent investment-supporting policies are urgently required to reverse the trend.”
“A more proactive all-of-government approach to investor support, across federal and state governments, is required to convert more announcements to actual investments,” she added.
Economy
NASD OTC Bourse Declines Further by 0.16%
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.16 per cent decline on Tuesday, January 21, extending its loss this week to two.
This further depleted the market capitalisation of the alternative stock exchange by N1.65 billion at the close of transactions to N1.071 trillion from the N1.073 trillion it closed in the preceding session.
In the same vein, the NASD Unlisted Security Index (NSI) slid by 4.79 points to wrap the session at 3,100.33 points compared with 3,105.12 points recorded in the previous session.
The bourse ended with two price losers yesterday led by Geo Fluids Plc, which gave up 32 Kobo to trade at N4.38 per share versus Monday’s closing price of N4.70 per share and FrieslandCampina Wamco Nigeria Plc, which depreciated by 15 Kobo to close at N39.50 per unit compared with the previous day’s N39.65 per unit.
On the second trading day of the week, the number of deal carried out slightly went up by 8.3 per cent to 13 deals from the 12 deals executed at the previous trading session.
Also, the value of transactions increased by 97.2 per cent to N4.5 million from the N2.5 million recorded a day earlier, while the volume of securities traded in the session declined by 71.6 per cent to 183,780 units from the 767,610 units recorded on Monday.
FrieslandCampina Wamco Nigeria Plc remained the most traded equity by value (year-to-date) with 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with 9.1 million units valued at N44.0 million, and 11 Plc with 55,358 sold for N14.5 million.
Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume (year-to-date) with 25.3 million units worth N5.9 million, trailed by Geo-Fluids Plc with 9.1 million units sold for N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units valued at N162.9 million.
Economy
Naira Crashes to N1,552/$1 at NAFEM, N1,670/$1 at Black Market
By Adedapo Adesanya
Pressure further mounted on the Nigerian Naira in the different segments of the foreign exchange market on Tuesday, making its value to shrink against the United States Dollar at the close of business.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency crashed against its American counterpart during the session by 0.18 per cent or N2.73 to settle at N1,552.78/$1, in contrast to Monday’s closing price of N1,550.05/1.
But against the Pound Sterling and the Euro, the local currency traded flat in the official market yesterday at N1,906.98/£1 and N1,613.48/€1, respectively.
As for the black market segment, the Naira weakened against the Dollar on Tuesday by N5 to sell for N1,670/$1 compared with the preceding day’s value of N1,665/$1.
Meanwhile, the cryptocurrency market heaved a sigh of relief during the session as President Donald Trump created a crypto task force dedicated to “developing a comprehensive and clear regulatory framework for crypto assets.”
The task force will be led by Commissioner Hester Peirce, a long-time advocate for the crypto industry, and will work closely with the crypto industry to develop regulations. This is after Mr Gary Gensler, an opponent of crypto, officially stepped down as chairman of the US Securities and Exchange Commission (SEC) after Mr Trump’s term started.
The task force will also work with Congress, providing “technical assistance” as it crafts crypto regulations.
Solana (SOL) recorded a 9.2 per cent growth to sell at $257.09, Dogecoin (DOGE) rose by 7.6 per cent to $0.36789, Ripple (XRP) added 4.0 per cent to finish at $3.18, and Bitcoin (BTC) increased by 3.7 per cent to $105,515.03.
Further, Binance Coin (BNB) appreciated by 2.8 per cent to close at $699.01, Cardano jumped by 2.1 per cent to trade at $0.9972, Ethereum (ETH) soared by 2.0 per cent to settle at $3,308.21, and Litecoin (LTC) went up by 1.5 per cent to end at $116.72, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
Economy
Brent Falls Below $80 as US Signals Boost to Oil Output
By Adedapo Adesanya
The price of the Brent crude oil grade went below the $80 mark on Tuesday after it shed 86 cents or 1.1 per cent to trade at $79.29 per barrel after the US President, Mr Donald Trump, signaled the possibility of his country boosting its oil production.
This move raised concerns of higher US output in a market widely expected to be oversupplied this year, with the US West Texas Intermediate (WTI) crude futures falling by $1.99 or 2.6 per cent during the session to $75.89 per barrel.
On his first day in office, the US President signed an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by former President Joe Biden.
As pledged in the campaign, the executive order follows the declaration of a national energy emergency.
The declaration includes measures to expedite energy infrastructure delivery, and emergency approvals by agencies “to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources, including, but not limited to, on Federal lands.”
This will likely confirm expectations that the oil market will be oversupplied this year after weak economic activity and energy transition efforts weighed heavily on demand in top-consuming nations the US and China.
President Trump also said he was considering imposing 25 per cent tariffs on imports from Canada and Mexico from February 1, rather than on his first day in office as promised.
The delay helped ease concerns of an immediate tightening of the market among US refiners, many of which are geared to process the type of crude oil supplied by these countries.
The US Energy Information Administration (EIA) reiterated on Tuesday its expectations for oil prices to decline both this year and next.
On its part, the Organisation of the Petroleum Exporting Countries (OPEC) projects robust demand growth in the world both this year and next.
In 2025, OPEC says demand is set to grow by 1.4 million barrels per day leaving its projection unchanged from the December report.
However, losses were also limited after the US president said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.
Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea.
Yemen’s Houthis said on Monday they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.
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