This week saw more news flow regarding the status of the 2016 budget, NNPC restructuring plans and the CBN’s short to mid-term monetary policy objectives. The Joint National Assembly Committee on Appropriation on Tuesday assured that the budget would be passed on the 17th of March after earlier controversies regarding the authenticity of the document submitted by the Presidency led to the breach of the initial deadline of 26th February, leaving the current fiscal year without appropriations.
Almost a year after winning an election on promises to fix Nigeria, Muhammadu Buhari's grand vision of reform is fading, with power centralised in his increasingly remote presidency and the bureaucracy in disarray.
After axing almost 50 top civil servants and 40 ambassadors and shaking up ministries in a bid to excise endemic graft, the 73-year-old former military ruler has even started cancelling some weekly cabinet meetings.
After depreciating 17.2% YtD in 2015, the Nigerian equities All Share Index is down 13.8% so far in 2016. The overhanging macroeconomic challenges that persisted all through 2015 lingered on in 2016 as investors’ sentiment on equities continue to wane. Full year corporate earnings are expected to remain pressured across sectors as observed in Q3:2015 where performance scorecards were broadly unimpressive.
The Debt Management Office (DMO) noted in a publication this week that Nigeria’s total debt (external and domestic) rose 12.1% Y-o-Y or N1.4tn to N12.6tn (US$65.4bn) in 2015, relative to N11.2tn (US$67.7bn) in 2014. Federal Government (FG) debt worth N10.1tn (US$52.2bn) accounted for 79.8% while State Governments debt (N2.5tn or US$13.2bn) accounted for 20.2% of the total debt. External debt amounted to N2.1tn (US$10.7bn) representing 16.8% of total debt stock.
First City Monument Bank Group Plc (“the Group” or “FCMB”) released its 9M: 2015 earnings result last Friday, 29th January, three months after its due date. The result was largely disappointing as gross earnings grew 2.4% to N109.3bn (weaker than our projection of 9.6%) while PBT fell 84.7% Y-o-Y to N2.6bn and annualized EPS settled at N0.49 relative to our FY:2015 projection of N1.05.
The financial market is currently going through a turbulent time, reflecting the intensity of instability in the global and domestic environment. From slowing growth concerns in China and plunging commodity prices in the global market to fiscal and currency crises in the domestic economy, a dark cloud seems to overshadow the investment landscape. Notwithstanding these challenges, we analyze the performance of the Nigerian economy and financial market in 2015 while stating our expectation for 2016, paying keen attention to key events in the global and domestic economy.
True to his election promises, Nigerian President Muhammadu Buhari has gone all out on corruption, alleging mind-boggling sums plundered from state coffers and giving investigators licence to pull in big hitters once thought untouchable.
Now comes the hard part: making the charges stick.
The first test comes on Wednesday with the opening of the trial of former National Security Advisor Sambo Dasuki, accused of fraud over $68 million of defence spending, part of a wider $2.1 billion in arms deals under scrutiny.
Second week running into 2016, the Nigerian economy and financial market appear to have taken a worse turn. Pressure on global oil prices intensified during the week (Brent Crude declined 22.6% YTD to US$29.2/b) dampening investors' sentiments on Nigerian equities. The falling oil prices signals a further depression on the performance of fiscal budget for 2016 given the dependence of Nigeria on oil revenue. There is an increased need for the fiscal authority to review the assumptions of the 2016 budget in line with current realities.