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Economy

Why Nigeria May Hike Pump Price, Raise Interest Rate, Devalue Naira in 2019

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Nigerian consumer wallets

By FSDH Research

Certain key events, both at the global level and in Nigeria, will influence economic and business activities in 2019.

FSDH Research examines a few of these events and discusses the implications for businesses and investments in Nigeria.

The expected hike in interest rates in major advanced countries will lead to an increase in global yields and may put pressure on currency in Nigeria.

There are strong indications that the US Federal Reserve, Bank of England and European Central Bank will increase interest rates in 2019. The expected increase in the interest rate in the international market may also lead to an increase in the interest rate in Nigeria because of monetary policy adjustments to reduce capital flight.

Nigeria may lose a substantial amount of its projected crude oil revenue due to a limit on crude oil production and the drop in the global crude oil price. This may also lead to a drop in the supply of foreign exchange into Nigeria, resulting in a possible depreciation or devaluation of the Naira.

Nigerian businesses should look for local alternatives, where possible, for the raw materials needed for their production process.

They should also limit or eliminate foreign debt, particularly if they do not have foreign exchange receivables to mitigate the possible foreign exchange risk.

FSDH Research also advises that businesses should put in place appropriate foreign exchange hedging strategies. The Q3 2018 Balance of Payment (BoP) report that the Central Bank of Nigeria (CBN) published shows that earnings from crude oil and gas accounted for 94.4 percent of total export earnings during the period.

The external trade report that the National Bureau of Statistics (NBS) published for Q3 2018 shows that crude oil exports accounted for 85 percent of total exports. Therefore, any adverse movement in crude oil price or production has high negative implications on the Nigerian economy.

Although FSDH Research expects the general election in 2019 to be peaceful, its outcome will determine economic activity and business in Nigeria.

A peaceful election will ensure stability of the Nigerian economy and pave the way for the flow of investments, both Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) into Nigeria. Certain longterm business and investment decisions may be taken immediately after the election if the current government retains power.

However, if there is a change in power, investors may wait until after the presidential inauguration on May 29 before they take long-term investment decisions, to give them enough time to access details of the policies of the incoming government.

There are certain macroeconomic realities that the Nigerian government must contend with in 2019.

FSDH Research believes the fiscal deficit in 2019 may be higher than in 2018, and higher than what is projected for the year 2019. In order to execute certain plans that will move the economy forward, government may have to increase borrowing or partner with private sector operators on key projects.

An increase in borrowing will increase the interest rate, while partnership with the private sector will expand economic activity and create new job opportunities.

Already, the ratio of government’s debt service to revenue is high and at an unsustainable level. Therefore, additional debt, in an environment of rising interest rates, may reduce government’s ability to execute critical programmes that will improve the business environment.

While fixed income investors may enjoy higher yields in 2019 than in 2018, businesses may suffer under rising interest costs.

FSDH Research analysis shows that electricity and the pump price of Premium Motor Spirit (PMS) are two key prices that government will need to adjust in 2019 to free up funds for developmental purposes.

The adjustment may increase the inflation rate in the short-term, but it will benefit the economy in the long-term. More investments are required in the power sector than are currently available.

However, the sector may not attract investment in the absence of a cost-reflective tariff. Government already allows an off-grid power supply arrangement based on ‘willing buyer, willing seller’. The tariff at which this arrangement is settled is higher than the tariff for the power from on-grid supply. Appropriate policy responses from government and strategies from the business community may ameliorate the likely negative impacts of these key events in 2019.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

Trump’s Tariff: Alake Woos Investors to Nigeria’s Solid Minerals Sector

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solid minerals production

By Adedapo Adesanya

The Minister of Solid Minerals Development, Mr Dele Alake, has called on foreign investors to consider Nigeria amid prevailing barrage of tariffs imposed by the United States, which he says may be a blessing in disguise for African countries.

Speaking during the Fireside Chat session on Foreign Direct Investment in Abu Dhabi, United Arab Emirates, the Minister called on African countries to adopt an introspective approach by looking inward and adjusting their domestic policies to focus more on intra-African trade, with less dependence on external forces.

In a statement by his Special Assistant on Media, Mr Segun Tomori, on Sunday in Abuja, it was stated that the Minister’s remarks were part of his contribution to the discourse on the impact of the tariffs on Africa’s economic climate.

“The barrage of tariffs imposed carries wide-ranging implications for the global economy, U.S. trade relationships, and developing nations, including those in Africa,” he said.

He stressed the need need for African countries to organise economic imperatives to ensure a balance of trade and strengthen intra African trade among countries.

Mr Alake highlighted the persistent challenge faced by African countries, where rare mineral resources were exported without any value addition, noting that the old ‘pit-to-port’ model, where resources are extracted and sent out of the continent can no longer be allowed to continue.

“Interested investors, who wish to come into Africa are welcome to set up their factories in the continent, add value to our mineral resources and create jobs here, rather than just shipping our wealth out of our shores”, he stated.

The minister said that his stance on protecting Africa’s mineral wealth has been adopted by many African countries, particularly mineral-producing nations, where he served as the pioneering chairman of the African Minerals Strategic Group (AMSG).

He reaffirmed that Nigeria’s policy on mineral sector development remained strictly focused on value addition and boosting the local economy through job creation.

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Economy

Arnergy Raises $18m to Boost Solar Energy Access in Nigeria

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Arnergy

By Adedapo Adesanya

Arnergy, a cleantech startup, has raised a $15 million Series B extension, on top of a $3 million B1 round last year, bringing its total for the round to $18 million to boost solar energy access in Nigeria.

According to TechCrunch, the new funding round was led by Nigerian private equity firm CardinalStone Capital Advisers (CCA) and saw participation from Breakthrough Energy Ventures as well as British International Investment, Norfund, EDFI MC, and All On.

Launched in 2013, Arnergy was established to provide solar systems to homes and businesses across sectors like hospitality, education, finance, agriculture, and healthcare.

The firm raised a $9 million Series A in 2019 backed by Bill Gates’s Breakthrough Energy Ventures.

The Lagos-based cleantech is in talks to raise additional local debt from banks and development financial institutions (DFIs) to support some of its projects including energy-as-a-service (EaaS) solutions for multinationals.

The cleantech is planning to install more than 12,000 systems by 2029 to help boost access to solar energy, which Nigerians have began to adopt increasingly following policy shifts, particularly the removal of fuel subsidies, that led to rise in energy costs.

Arnergy has so far deployed over 1,800 systems across 35 Nigerian states, totaling 9MWp of solar and 23MWh of battery storage.

Over the next four years, it will be targeting a 567 per cent increase to the set 12,000 systems goal.

According to the founder, Mr Femi Adeyemo, there has been increased adaptation of solar energy and this presents the perfect opportunity.

Its lease-to-own product, Z Lite, has gained more traction as customers pay fixed monthly fees over 5 to 10 years before owning the system while outright purchases comprised 60 per cent to 70 per cent of revenue in 2023, accounting for just 25 per cent of sales last year, as per TechCrunch.

“Imagine paying N200,000 (~$125) every month for power. With our product, that drops to N96,000 (~$60). Over five years, it’s a no-brainer what you’ll save,” Mr Adeyemo told the tech publication.

Recall that the federal government has also announced plans to ban importation of solar panels as part of efforts to boost local capacity. This has been projected to see a substantial increase in prices.

Speaking on this, Mr Adeyemo said, “We’re advocates for local manufacturing. But let’s build capacity before shutting the door on imports. Otherwise, we risk doing more harm than good, both to the industry and to the millions of Nigerians who now rely on solar as their primary energy source.”

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Economy

Value of NASD OTC Exchange Rises 0.40% to N1.919trn in Week 15 of 2025

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NASD below 700 basis points

By Adedapo Adesanya

The total value of stocks at the NASD Over-the-Counter (OTC) Securities Exchange increased by 0.40 per cent or N9.21 billion to N1.919 trillion in the 15th trading week of 2025 from the N1.911 trillion it ended in Week 14.

The growth was mainly influenced by the inclusion of new shares of Infrastructure Credit Guarantee Company Plc (InfraCredit) to the trading platform in the week.

InfraCredit joined the alternative stock market on March 6 and last week, it brought addition 11.166 million equities, which increased its total securities at the NASD OTC exchange to 26.421 million units.

However, the NASD Unlisted Securities Index (NSI) went down by 0.20 per cent or 31.89 points to 3,277.57 points from the 3,309.46 points it ended a week earlier.

In the week, the total value of trades ballooned by 29,234.5 per cent to N4.79 billion from the N16.3 million recorded in the previous week, and the total volume of transactions increased by 1,485.1 per cent to 171.4 million units from 10.8 million units.

The bourse recorded seven price losers led by Nipco Plc, which depreciated by 20.2 per cent to close at N199.00 per share versus N220.00 per share, Central Securities Clearing System (CSCS) Plc lost 2.5 per cent to finish at N22.70 per unit versus N25.21 per unit, FrieslandCampina Wamco Nigeria Plc shed 1.3 per cent to sell for N35.55 per share against the former value of N36.80 per share, and Afriland Properties Plc went down by 0.6 per cent to N17.80 per unit from N18.42 per unit.

Further, Geo-Fluids Plc slipped by 0.5 per cent to N2.00 per share from N2.48 per share, Acorn Petroleum Plc slid by 0.2 per cent to N1.17 per unit from N1.30 per unit, and InfraCredit Plc declined by 0.09 per cent to N2.34 per share from N2.43 per share.

On the flip side, Mixta Real Estate Plc improved by 0.4 per cent to N4.55 per unit from N4.14 per unit, Lagos Building Investment Company (LBIC) Plc expanded by 0.2 per cent to N2.63 per share from N2.80 per share, First Trust Microfinance Bank Plc appreciated by 0.04 to 62 Kobo per unit from 58 Kobo per unit, and Paintcom Investment Plc gained 0.02 per cent to end at N10.74 per share compared with the preceding week’s N10.72 per share.

The most active stock in the week by value was Okitipupa Plc with N4.6 billion, Paintcom Investment Plc recorded N190.9 million, FrieslandCampina Wamco Nigeria Plc traded N28.0 million, Nipco Plc transacted N3.5 million, and 11 Plc recorded N1.7 million.

Okitipupa Plc was also the most traded stock by volume with 152.1 million units, Paintcom Investment Plc transacted 17.8 million units, FrieslandCampina Wamco Nigeria Plc recorded 0.751 million, Geo-Fluids Plc traded 0.356 million units, and Food Concepts Plc exchanged 0.180 million units.

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