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Nigeria Marches into Q3 with A Mission to Stabilize



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Lukman Otunuga, Research Analyst at FXTM writes: It’s quite interesting how, despite several months of disappointing domestic data and ongoing recessionary woes, Nigeria remains resilient, with the nation on a mission to stabilize by the end of 2017.

Although this year has dished out a myriad of trials ranging from internal concerns, external shocks and falling oil prices, the macro fundamentals of the largest economy in Africa continue to stabilize with a recent string of positive data verifying this statement.

The subtle signs of recovery can already be seen across GDP, inflation, FX and even the balance of trade, all of which should support the growing confidence over the nation’s health. As we enter the third quarter of 2017, foreign investors will be watching Nigeria closely to see whether the country is able to maintain the current momentum and ultimately break away from its recessionary chains.

Nigeria’s persistent inflation concerns eased slightly in June following reports that the rate of inflation declined for the fourth consecutive month in May to 16.25%, the lowest figure for the year so far.

This continued price stability has played a crucial role in boosting foreign investor risk sentiment towards the nation and has also heavily supported the Nigerian Stock Exchange (NSE).

With the Consumer Price Index visibly cooling, the Central Bank of Nigeria should have some breathing room to cut interest rates in the future and consequently boost business confidence, ultimately supporting further growth.

Although disappointment initially flooded the Nigerian markets a few months ago following a soft first quarter GDP growth of -0.52%, it must be kept in mind that this was actually the best GDP performance seen for four quarters.

With a variety of non-oil sectors in Nigeria ranging from manufacturing to agriculture and transportation already turning positive, the overall outlook is very encouraging with the impact potentially being felt in the second, third and final quarters of 2017.

Economic growth for the second quarter of 2017 is speculated to hit 1.3%; if this is confirmed, then Nigeria will have officially broken away from recession after five quarters of decline. Such a scenario will be highly beneficial for the nation as a display of stability will magnetize foreign investors.

Speaking of foreign investments, the MSCI’s recent decision to delay a potential removal of the MSCI Nigeria Index until this November should further support confidence and sentiment towards the nation.

It is highly likely that the stabilizing economic environment and noticeable improvement in liquidity across major market segments played a key role in MSCI’s decision to re-evaluate Nigeria’s position in its Index.

With the internal investment community displaying optimism over Nigeria’s medium to longer term outlook, there is a likelihood that MSCI will keep Nigeria on its Frontier Index. While positive signs are already visible with Nigeria’s weighing on the MSCI Frontier rising, the threat of MSCI removing the nation could still negatively impact its current recovery.

The Central Bank of Nigeria should find itself in the spotlight in the second half of 2017 as investors wait to see whether interest rates will be hiked or trimmed.

Although the Central Bank may be commended on its logical decision to maintain key interest rates at 14% as the nation recovered some ground and continued its quest to diversification beyond oil exports, it may be time to make a move.

With inflation cooling, data improving and the Naira supported on the parallel markets, a potential interest rate cut to 12% could be on the cards.

While the seeds of diversification have already been planted, Nigeria still remains vulnerable to falling oil in the short to medium term. A sharp and sustained depreciation of oil not only presents a serious threat to the implementation of the approved 2017 budget but also to the Naira’s current stability.

It must be understood that oil prices directly impact Nigeria’s foreign external reserves and a drop in the commodity will most likely reduce Dollar supplies, consequently impacting the stability of the Naira Exchange.

Instability in the Naira exchange will not only punish Nigerians but would also repel foreign investors. With oil prices officially in a bear market, this should be the green lights for Nigeria to switch up gears on the quest to diversification.

Focusing on the Naira, the currency currently trades around 365 against the Dollar as the CBN repeatedly injects Dollars into the foreign exchange markets to maintain liquidity. While this method has boosted sentiment towards Nigeria and created stability, questions should be raised of this strategy’s sustainability.

As discussed earlier, falling oil prices have the ability to create instability in the Nigerian foreign exchange and such should not be the case.

The multiple exchanges is still an issue lingering in the background that the Central Bank must strive to rectify while allowing the natural forces of supply and demand to determine the true value of the Naira.

All in all, the sentiment towards the Nigerian economy is taking a turn for the better as the economy continues to improve.

Much attention will be directed towards MSCI’s decision of Nigeria’s Index and the pending GDP report for Q2 which should provide further insight as to how the nation has fared so far this year.

While external risks such as higher US interest rates and falling oil may enforce some downside pressures, the nation should prove resilient as it continues its ongoing quest to diversifying and achieving a stable macroeconomic climate.

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Bitcoin Smashes Through $8,000 for the First time



Bitcoin hit a new record high on Monday after smashing through the $8,000 level for the first time over the weekend, marking an almost 50 percent climb in just eight days.

The new high came after leading U.S. payments company Square Inc said late last week that it had started allowing select customers to buy and sell bitcoins on its Cash app.

Bitcoin traded as high as $8,197.81 on the Luxembourg-based Bitstamp exchange, up over 2 percent on the day and around 48 percent up since dipping to $5,555 on Nov. 12.

An eye-watering eightfold increase in the value of the volatile cryptocurrency since the start of the year has led to muliple warnings that the market is in a bubble, and institutional investors are broadly staying away.

Retail investors, however, as well as some hedge funds and family offices, are piling into the market. The “market cap” of all cryptocurrencies hit an all-time high of over $242 billion on Monday, according to trade website Coinmarketcap.

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ePayment Stakeholders’ Seek Review of Policy on PoS to Boost Growth



Worried by slow pace of growth in the use of Point of Sale terminal (PoS) as a means of payment in the country, stakeholders have called on Central Bank of Nigeria (CBN)to review its policy direction in that ecosystem.


This is coming as Nigeria CommunicationsWeek investigations revealed fluctuations in the figure of registered and deployed terminals between August and October this year.


According to a report released by NIBSS the industry Payments Terminal Service Aggregator (PTSA), the number of deployed  terminals increased in August to 141, 531 and dropped to 140, 448 in September and increased again in October to 145, 350.


Also, same was noticed on the number of registered terminal with August recording 173, 815 and came down to 169, 318 in September while October witnessed increase to 176, 185.


Sarafadeen Fasasi, president, Association of Mobile Money Agents in Nigeria, attributed this slow growth to a number of factors which includes lack of support to drive the business.


“Support I mean is providing financial backing for transactions on the PoS just the way ATMs are loaded with cash for withdrawals. Today, there are no facility for PoS agency business by the banks which is the major determinant of success or failure of PoS innovation,” he said.


He decried lack of structure on ground to resolve issues arising from PoS transactions.


“If customer’s account is debited without ATM paying, the individual will go to the bank and fill form for reversal, but in PoS transactions there is no such thing which has pushed customers to resolve to holding on to PoS attendant to ensure that the issue is sorted out. As at today, all issues arising from ATM, switching, PoS, online among others, are under NIBSS which does not have the capacity to coup with these issues,” he said.


He however, urged CBN to review her policy on PoS for it to witness the desired growth, such review he said could come in creating a unit to address issues arising from PoS transactions.


“If the policy is reviewed it will build trust and confidence in the use of the platform for payment. More so, PoS fixed charge is high at .075, this means that customer is charged N750 on N100,000 transaction compared to N65 charged on withdrawal outside of customer’s bank ATM,” he added.


Onajite Regha, executive secretary/CEO, E-Payment Providers Association of Nigeria (E-PPAN)said: “So far, E-PPAN in its advocacy nature has taken steps ahead to break the barrier of this poor adoption. We are looking into capturing the lower part of the pyramid with the mobile payments awareness which will see more people included financially and thereby increase the adoption of the Cashless policy.”


“We are also open to discussions on advocacy and sensitization from financial bodies who have products and services to render in the pursuit of the success of this policy. From time to time we carry out sensitization, financial literacy and education programme and we partner with stakeholders to expose the benefits of electronic payments to consumers across the strata”.


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Africa FinTech Foundary set to Disrupt FinTech Ecosystem



L-R: Victor Etuokwu, Executive Director, Personal Banking, Access Bank Plc; Averi Thomas-Moore, Company Builder, Venture Lab, ACCION and Victor Okigbo, Head, Africa Fintech Foundry (AFF) at a press conference to announce the maiden edition of ‘AFF Disrupt’ Conference 2017 in Lagos.

Africa FinTech Foundary, an Access bank accelerator which seeks to create new opportunities in sub-saharan Africa by providing a platform designed to inspire and challenge African innovators and entrepreneurs is set to launch with a conference on FinTech ecosystem.

The conference dubbed ‘AFF Disrupt’ is scheduled to hold on December 14, 2017 in Lagos.

Victor Etuokwu, executive director, Access bank, said that AFF will provide African companies seeking to launch their products, with capacity building and training in business development, provide connectivity to global innovation grids, promote access to capital, create opportunities for partnership as well as showcase best practices and successes in African-led innovation solution.

“Every FinTech seeks to disrupt the world through product or solution and AFF is here to disrupt. We want to do things that will drive the economy through innovative products and solutions. We are going to gather a team of investors that will help fund innovators that graduates from the accelerator programme of AFF,” he said.

Victor Okigbo, head, Africa FinTech Foundary (AFF), said that the Foundary has lined up activities preceding the main launch event which include master classes on entrepreneurship technology, enterprise design, collectively referred to as the AFF Innovation Tour, holding in four African cities this November.

He said AFF is in partnership with global technology giants such as IBM, Microsoft, Systemic Logic, Kantar TNS, SAS and Access bank as part of the AFF Disrupt programmes.

Adekele Adekoya, Event Coordinator for the AFF Disrupt conference, said that AFF seeks to create new opportunities in sub-Saharan Africa by providing a platform designed to inspire and challenge African Innovators and entrepreneurs.

“We want to engage with startups in all the locations we visit. This is a very good opportunity for startups to take advantage of the partner network created by AFF DISTRUPT and its partners to create linkages and networks that can help grow their businesses,” he said.

The vetting process is currently going on, and a total number of 12 starts-ups would be selected from a pool of about 400 start-ups, to demo at the AFF Disrupt 2017 conference holding in Lagos and also get to be part of the Africa FinTech Foundary’s 3-month accelerator programme.

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