Opinion

Earnings Review: Resilience amidst Macroeconomic Challenges

In line with the challenging macroeconomic landscape in 2016 which weighed on household, government and investment spending as well as operating and financing cost, the operating environment for corporates has remained tight as reflected in the performance of macroeconomic indicators such as GDP, FX rate and inflation.

Domestic Investors Retain Dominance in Equities Trading

The Nigerian Stock Exchange (NSE) recently released a report on Domestic & Foreign portfolio participation in equities trading for February 2017. The report showed total transactions decreased M-o-M for the first time since November 2016, settling at N74.1bn, a 22.1% M-o-M decline from N95.3bn recorded in January 2017. The figure also came in 36.8% lower Y-o-Y compared to the N117.3bn recorded in the same period in 2016.

Pace of Reform Slows as Nigeria's Ailing Buhari Slims His Schedule

A lingering illness has led President Muhammadu Buhari to reduce his working day to a few hours since he returned from medical leave, slowing down the pace of economic reforms advanced in his absence, diplomats and government sources said.

The Nigerian leader is spending between one and four hours a day in his office to conserve his energy levels, three diplomats and presidency sources said, deepening concerns he is too unwell to orchestrate reforms to the recession-hit OPEC economy.

MPC Maintains Status Quo on Rates but Leaves FX Question Unanswered

At the just concluded MPC meeting held on 20th and 21st of March, 2017, the Monetary Policy Committee (MPC) voted to maintain status quo on all rates. The decision was in line with analysts’ consensus expectation and our pre-MPC prognosis where we suggested that the “MPC will maintain status quo on all rates while trying to consolidate on the gains of recent improvements that have been recorded in inflation, parallel market FX rate, increase in oil production and the release of ERGP (Economic Recovery and Growth Plan) by the fiscal authority”.

Pre-MPC Note: Maintaining Status Quo to Consolidate Recent Economic Gains

The Monetary Policy Committee (MPC) will be having its second meeting for the year next week (20th - 21st March, 2017) to review major global and domestic economic developments since its last meeting. This meeting will be coming on the back of a continuous decline in the nation’s domestic output, Inflationary pressures, weak earning scorecards and FX market challenges, though some improvements seem to have been recorded in fiscal policy and foreign exchange administration.

Nigeria Economic Recovery & Growth Plan: Long on Policy, Short on Delivery?

Nigeria’s economic downturn began in H2:2014, after global oil prices tumbled from more than US$100.00/b to less than US$50.00/b and dragged the economy into a recession in 2016. This resulted into increased calls for a road map to redirect the economy from the doldrums. To this end, the much awaited Economic Recovery & Growth Plan (ERGP) was finally released on Tuesday, 7th March 2017, to provide a framework for the Buhari administration to counter challenges in the system as well as reset the economy on a path of recovery and sustainable growth.

GDP Contracts 1.3%; PMI Data Shows Further Weakness

The National Bureau of Statistics (NBS) released Q4:2016 GDP estimates during the week alongside FY: 2016 GDP report. The report showed economic output declined in real terms for the fourth consecutive quarter by 1.3% Y-o-Y in Q4:2016, much in line with Afrinvest’s projection of -1.2%, thus bringing FY: 2016 GDP growth to -1.5% Y-o-Y: the first annual GDP contraction in 25 years.

Buhari's Sick Leave Re-energises Nigeria's Presidency

When protesters marched on Nigeria's presidential villa earlier this month to complain about a biting recession, they were not repelled by baton-wielding policemen, the usual fate for anyone arriving uninvited at the gate of the country's power centre.

Instead, Vice President Yemi Osinbajo, who is standing in for the country's sick leader, sent a vehicle to ferry the protest leaders to his office, where they complained about widespread corruption.

Naira ‘Shock and Awe’ Rally: Dead Cat Bounce or Fundamental Change in Sentiment?

Volatility has been a recurring theme in the Nigerian foreign exchange market, particularly at the parallel segment, since the oil market downturn which began in H2:2014 and subsequent constraints from the capital account due to underwhelming policy responses. The Naira consequently shed 46.5% and 66.3% in the interbank and parallel markets respectively between June 2014 and January 2017, while the spread between the two rates reached an all-time high of N215.00 last week as monetary authorities remain reluctant to implement “short term painful, yet necessary” reforms.

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