General News
Nigeria Economic Outlook Threatened by Coronavirus Outbreak
By Lukman Otunuga, Senior Research Analyst at FXTM,
The dramatic and fast-moving consequences of the coronavirus COVID-19 outbreak threaten an otherwise resilient outlook for Nigeria’s economy, following GDP results for Q4 showing an expansion of 2.55 percent. The growth was the highest seen since 2015 and above the International Monetary Fund’s (IMF) 2.1 percent forecast.
The economy is supported by the Central Bank of Nigeria’s (CBN) policies to boost credit growth like hiking the loan-to-deposit ratio and other monetary policy tools. On top of that, Oil production increased to two million barrels per day amid recovering global Oil prices versus 1.0 million bpd in Q3.
However, since then, risks to the economy have multiplied.
Like many other economies at the time of writing, Nigeria is vulnerable to the spread of the COVID-19 virus in economic and health terms because one of its main trading partners is the epidemic’s epicenter China. For the time being, the sizable manufacturing sector in China has been slowed by large-scale workforce disruptions and it is expected that GDP growth for the quarter will be pressured amid a fall in business confidence.
While it is too early to tell the precise extent of the slowdown, the impact on the supply chain and trading with China’s trading partners is already evident. Nigeria’s crude Oil exports to China fell in February amid weaker Oil prices as the outlook for global Oil demand weakens.
Nigeria’s Q1 GDP remains exposed to external uncertainties in the form of weaker Oil prices, the coronavirus COVID-10 outbreak, slowing growth in China and the global economy.
Focusing on the global coronavirus outbreak, so far there are over 83,000 confirmed cases with over 2800 deaths. The World Health Organisation (WHO) has identified Nigeria as one of its top 13 priority countries because of the direct links and travel volume to-and-from China. It is positive that Nigeria’s authorities are taking measures to stop the virus spreading, but the risks remain.
Since the onset of the virus outbreak early in the year, Oil prices have slipped over 15 percent amid demand-side concerns, the USD has appreciated against G10 and emerging market currencies against a background of risk aversion and Gold has jumped to fresh seven-year highs.
If it continues to spread, the virus outbreak and subsequent slump in demand from China present major risks to the Nigerian economy. Crude Oil revenues account for less than 10 percent of GDP but remain the biggest source of foreign exchange for the nation, 90 percent of export sales over 50 percent of government revenues.
Falling Oil prices would reduce foreign exchange reserves and ultimately complicate the CBN’s efforts to defend the Naira, meaning potentially heightened pressures on inflation and consumption with an eventual impact on growth. Lower Oil prices also impact the 2020 budget which was based on 2.18 million bpd at an Oil price benchmark of $57 per barrel.
Moreover, China is one of Nigeria’s biggest trading partners with total trade flows in Q3 2019 worth over $3.2 billion. It is important for the economy for the virus outbreak to be brought under control because if trade flows decline on the back of slowing growth in China, the impacts are likely to be felt in Nigeria.
The situation may prompt a greater focus on monetary and fiscal policy to shield the economy from external risks. The CBN meet in March but the economy remains under inflationary pressure so it is unlikely we’ll see an interest rate cut. Instead, the central bank may implement more unconventional tools to stimulate the economy.
Finally, it is even more clear that diversification is the key to reducing Nigeria’s reliance on Oil revenues and reducing the risks to growth. On the upside, there is still a possibility that the virus outbreak will be brought under control, meaning a return to full power for China and Asia and a relief to health authorities and policy makers in Nigeria and other countries.
Nigeria Immigration Service (NIS) has announced an ongoing upgrade and maintenance of its passport portal for applicants within Nigeria.
In a public notice shared on Sunday via its official ‘X’ page, the NIS reassured Nigerians that other services, including passport applications for citizens abroad, remain fully operational during the maintenance period.
The service stated that its team is “working tirelessly” to complete the upgrade and restore full functionality within 72 hours.
“We sincerely apologise for any inconvenience this may cause and deeply appreciate your patience and understanding,” the notice read. It emphasized that the upgrade is part of efforts to enhance service delivery.
Reaffirming its commitment to excellence, the NIS pledged to provide efficient services to Nigerians at home and abroad.
FBNQuest Asset Management, a subsidiary of FBN Holdings Plc., has been awarded an A+ rating by Agusto & Co. Limited. This rating reflects the firm’s stable outlook, robust risk management, and strong investment capabilities, highlighting its impressive operational performance and outstanding business profile.
It emphasizes FBNQuest Asset Management’s ongoing commitment to providing exceptional investment services to its clients.
The rating was issued in a recent report by Agusto & Co., a leading rating agency in Nigeria. This recognition underscores the company’s strong operational record, excellent corporate governance, and professional management of fund assets.
The organisation’s impressive performance demonstrates its unwavering dedication to delivering exceptional value to clients through a variety of products and services tailored to meet their investment needs.
Ike Onyia, the Managing Director of FBNQuest Asset Management, expressed his satisfaction with the rating, stating, “We are truly delighted to receive the A+ rating from Agusto & Co. This recognition is a testament to our strong expertise in investment portfolio management and the achievements we have realised over the years.
“We take pride in this positive acknowledgement, which stems from our well-thought-out business strategies and the exceptional performance of our skilled workforce, cementing our position in the hearts of our stakeholders.”
FBNQuest Asset Management was also recognised as the Best Asset Manager at the 2024 EMEA African Banker Awards. The organisation continues to maintain a consistently strong position in the investment services subsector in Nigeria, leveraging its rich pedigree in intellectual capital, strong research capabilities, and cutting-edge technology to provide clients with value-adding insights, advice, and service.
“Our mutual funds offer diverse investment options that enable the creation of unique and value-enhancing investment strategies for different client segments.
Additionally, our range of mutual funds encompasses various asset classes, including equities, bonds, and money market instruments,” he added.
Agusto & Co. is a Pan-African leader in credit ratings and credit reports, having assigned over 1,500 ratings across various sectors. Their ratings are globally recognised, with a broad client base relying on them as benchmarks to gauge business success.
TikTok has resumed services to its 170 million users in the US after President-elect Donald Trump said he would issue an executive order to give the app a reprieve when he takes office today, January 20.
On Saturday evening, January 18, the Chinese-owned app stopped working for American users, after a law banning it on national security grounds came into effect.
Trump, who had previously backed a ban on the platform, promised on Sunday to delay the implementation of the law and allow more time for a deal to be made. TikTok then said that it was in the process of “restoring service”.
Soon after, the app started working again and a popup message to its millions of users thanked Trump by name.
In a statement, the company thanked the incoming president for “providing the necessary clarity and assurance” and said it would work with Trump “on a long-term solution that keeps TikTok in the United States”.
TikTok CEO Shou Chew is expected to attend Trump’s inauguration today.
Posting on Truth Social, a social media platform he owns, Trump said on Sunday: “I’m asking companies not to let TikTok stay dark! I will issue an executive order on Monday to extend the period of time before the law’s prohibitions take effect, so that we can make a deal to protect our national security.”
TikTok’s parent company, Bytedance, previously ignored a law requiring it to sell its US operations to avoid a ban. The law was upheld by Supreme Court on Friday and went into effect on Sunday.
It is unclear what legal authority Trump will have to delay the implementation of a law that is already in effect. But it expected that his government will not enforce the ban if he issues an executive order.
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