reports
NIGERIA DAILY MORNING NOTE: The Fund agrees diplomatically to disagree
The Fund agrees diplomatically to disagreeThe IMF’s executive board has concluded the Article IV consultations for 2016 with the FGN, and released the customary press release to announce as such.The board’s discussions are generally based on a staff report, which is published once the member government gives its go-ahead and which tends to give a few revealing insights.We can see from the press release that the Fund and the FGN have agreed to disagree on exchange-rate policy, and so continue...
Good Morning Nigeria: Some better news on reserves
​Some better news on reservesData from the CBN show that official reserves increased marginally by US$40m in March on a 30-day moving average basis to US$27.9bn. Following a sharp decline in January of US$910m, reserves have stabilised over the past six weeks, for which we offer three possible explanations: that fx sales by the CBN slowed, that it plugged some leakages or that it saw a modest rise in its inflows due to the oil price recovery of about US$10/b in recent weeks. Reserves at end-Ma...
Dangote Sugar Refinery Q4 2015 results review
​Sugar production growth likely in 2016 Slight increase to our EPS est.; maintaining Neutral rating: Dangote Sugar Refinery’s (DSR) Q4 EPS of N2.2bn was in line with our forecast for the period. Management noted on its Q4 conference call that sales volumes at the start of 2016 are much higher than in corresponding periods of 2014/15. As such, we estimate a higher capacity utilisation rate for the Lagos refinery of around 56% in 2016E compared with c.50% in 2015. We also expect DSR to pass-th...
Good Morning Nigeria: E-payment growth prospects still strong
​E-payment growth prospects still strongData from the CBN’s latest Annual Report (2014) reveal that the volume of electronic payments surged by 41% y/y to 456 million while the value increased by 39% y/y to N4.4trn (US$22.1bn). The CBN commentary attributed the significant rise in e-payment transactions to improved public awareness on the back of sensitisation campaigns as well as increased consumer confidence in the utilisation of e-payment channels. A recent study conducted by Moody’s An...
Good Morning NigeriA: A sector in need of resuscitation
​A sector in need of resuscitation The two-day National Economic Council (NEC) Retreat which was held in Abuja closed yesterday. The aim of the retreat was to generate medium and long term policies that will address challenges within discussed areas of the economy at both the federal and state levels. Five specific sectors were addressed and Nigeria’s healthcare sector featured as one of them. The latest national accounts provided by the National Bureau of Statistics (NBS) show that the Huma...
New bolts likely to be placed in auto policy
​New bolts likely to be placed in auto policyThe current situation with fx liquidity in Nigeria has visibly affected importation of goods into the country, automobiles inclusive. The National Automotive Design and Development Council (NADDC) estimates annual imports at about 400,000 vehicles (with 50,000 units as new cars) valued at US$3.45bn. Industry sources suggest that the importation of brand new cars fell by 67% y/y in 2015. Some attribute this decline to yielded fruits from the FGN’s ...
Good Morning Nigeria: Little room for manoeuvre for the MPC
​The next meeting of the monetary policy committee (MPC) takes place in Abuja today and tomorrow. It has to contend with the slowdown in growth (to 2.1% y/y in Q4 2015) and a pick-up in inflation well above the “tolerance†range (to 11.4% y/y in February). The policy rate of 11.00% stands below prevailing inflation, which undermines the case for easing to boost flagging growth. A hike would be the textbook response to the inflation data but would be unlikely in view of the GDP numbers and ...
Good Morning Nigeria: A dire set of GDP numbers
​A dire set of GDP numbersThe latest national accounts from the NBS show that GDP growth (at constant basic prices) slowed to 2.1% y/y in Q4 2015 from 2.8% the previous quarter. These are very poor figures, and worse than expected. The imported macro headwinds did not improve. The fourth quarter is generally the strongest of the year due to enhanced household demand for the end-year festivities. Headline growth was weakened by oil sector contraction of -8.3% y/y. The fact remains that unchange...
A steep rise in domestic debt service
​A steep rise in domestic debt serviceA statement from the Debt Management Office (DMO) in the local media last week noted that total debt service of N1.36trn (US$6.9bn) amounts to 35% of projected FGN revenues in the 2016 budget proposals. Domestic debt obligations account for 96% of the burden. This deterioration in the ratio (from 26% per the unfulfilled 2015 budget) is another consequence of the crashing oil price, masked to a point by the FGN’s ambitious projections for non-oil revenue ...
Good Morning Nigeria: Neat needlework required
​Neat needlework requiredToday we turn our attention to Nigeria’s textile and apparel industry. Industry sources suggest that there are about 30 operational textile mills which are running at an average of 40% of installed capacity. The influx of cheaper fabrics from China and India has been highlighted as one of the reasons for underperformance in this industry. Based on trade data from the National Bureau of Statistics, Nigeria spent N24.7bn (US$130m) on textile imports in Q3 2015. This re...
PMI reading no 35: back just above neutral
​The latest report for our manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria, shows a recovery from 44.6 in January to 50.6. Our partner, NOI Polls, has compiled the data. The index is a familiar data release at the start of the calendar month in developed markets (such as the ISM in the US), the larger emerging markets such as China, and a few other frontiers. It is based upon the responses of manufacturers to set questions on core variables in their businesses. The index...
Good Morning Nigeria: An operating deficit in 2015 for the NNPC
​An operating deficit in 2015 for the NNPCThe NNPC, in its new spirit of accountability, has reported a group operating deficit of N267bn (US$1.36bn) for 2015, compared to the budget for the year of a surplus of N469bn. The corporation notes that the deficit is 61% attributable to claimable pipeline repairs (N104bn) and losses due to vandalism (N60bn). On a divisional basis three units were responsible for the underperformance: the Nigerian Petroleum Development Company (surplus of N17bn vs bu...
Good Morning Nigeria: And now there is just one
​And now there is just oneOur chart shows average exchange rates for the naira through to December. The CBN abandoned the Dutch auction system in February 2015 due to perceived abuse, and has this year halted the sale of fx to bureaux de change for the same reason. A chart updated today would have just the one line, and would not capture the wildly fluctuating parallel market rates cited by the wire services and derived, we assume, from different sources. The widening gap with the bureaux, and...
Good Morning: Payout by FAAC well below target
​Payout by FAAC well below targetThe total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government in February (from January revenues) declined marginally to N370bn (US$1.88bn) from N388bn the previous month. The net distribution from the federation account and the VAT pool combined is projected at N5.72bn this year in the expenditure framework for 2016-18. We can see that the payout in both January and February fell far short of the projected pro ...
Good Morning Nigeria: A variation on fiscal recoveries
​A variation on fiscal recoveriesThe template for premium motor spirit (PMS, petrol) on the website of the Petroleum Products Pricing Regulatory Agency (PPPRA) shows that the FGN should be benefitting from a negative subsidy. The agency’s data for 19 February has the open market price, the sum of the landing cost and margins, at N69.7/litre (l). The difference between this price and the retail pump price amounts to N16.3/l or N240bn over a full year on daily domestic consumption of 40 millio...
Good Morning Nigeria : Some talk of a second fx window
​Some talk of a second fx windowWe have seen the commentary in the local media about the adoption by the CBN of a second foreign exchange window. Since we can find no official endorsement, we are treating the policy as perhaps the subject of a discussion paper that has somehow entered the public domain. The idea, we understand, is that the current rate is available for priority transactions and a second, less managed rate covers all other goods and services. We assume that the CBN would regula...
Good Morning Nigeria: A loser from consumer spending squeeze
​A loser from consumer spending squeezeNigeria’s hospitality industry has been hit hard by the current macro challenges. We suspect that the hotel and restaurant segment in particular is experiencing these difficulties. The squeeze in consumer spending has forced households to revise their spending priorities. As such, industry players are tasked with identifying innovative methods to retain and if possible increase their clientele. The recent inflation data released by the National Bureau o...
Aggressive target for non-oil revenue
​Our chart shows gross monthly collections of non-oil revenue (before distribution to the three tiers of government) through to November 2015. These total N3.15trn over 12 months, while the FGN projected N4.06trn for the calendar year and its 2016 budget proposals forecast N5.72trn. This underperformance for 2015 did not extend to November, when total monthly receipts were 17% ahead of budget and 78% above the previous month. The positive variation was achieved due to unseasonally strong flows...
Slowdown in non-oil exports
​Slowdown in non-oil exportsThe latest monthly Economic Report from the CBN puts non-oil exports provisionally at US$244m in November, indicating a decline of 25% from the preceding month and a 75% decrease on a y/y basis. The fall in receipts from the food products and minerals sectors was the major driver for the m/m decline. The largest proceeds came from industrial products, which earned US$79m. The breakdown by sectors shows that proceeds from manufactured products, agricultural products ...
An old-fashioned expansionary budget
​The FGN has submitted an expansionary budget for 2016 in an effort to reverse the slowdown in the economy, unlike its counterparts in Ghana and Kenya. In its favour it has set a deficit of N2.22trn (US$11.3bn), equivalent to 2.2% of GDP, whereas Kenya’s is approaching 8% and Ghana has gone cap-in-hand to the IMF. The core of the FGN proposals, subject to the agreement of the National Assembly, is capital spending of N1.85trn (including the capital element of statutory transfers and interest...
Unfortunately, this report is not available for the investor type or country you selected.
Report is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.