The Economic and Business Climate in Nigeria – Week in Review

The Nigerian economy is still in a shaky state after the ratification of the 2016 budget. Herein are some of the findings pertinent to business investments in country. 

Federal Government directs MDAs to submit priority projects’ list

The Federal Government has directed all its Ministries, Departments and Agencies (MDAs) to forward the list of ongoing and new projects in order of priority to the Ministry of Budget and National Planning.

According to the Ministry of Budget and National Planning, the move is to fast-track the release of funds from the Finance Ministry for capital projects. The 2016 budget must be fully and  effectively implemented, urging all MDAs to accelerate their procurement activities for new and ongoing projects as stipulated in the budget.

Women and children threshing rice on Jame Farm, Idashu Village Katsina State, Nigeria. October 2015. Photo/The Nation

Tin can port handled N4M rice in nine months

The importation of rice, a major staple in Nigeria, has declined in volume due to the scarcity of foreign exchange occasioned by falling oil prices globally.

Statistics obtained from the Tin Can Island port in Lagos indicated that in the past nine months,  the country imported 13.4 metric tons of the product.

In September 2015, the volume of rice imports was five metric tons; it declined to one metric ton in October and peaked at five metric tons in November of the same year.

In December, when rice import was expected to be high due to the holiday season, only one metric ton was imported through the Tin Can port. The volume further dipped to 0.5MT in February 2016, but rose slightly to 0.8MT in March, while 0.1MT was recorded for May 2016.

However, in the first three months of 2015, rice occupied the third position in the list of imported products with a value of N33.44bn, and dropped to the fifth position with a value of N25.38bn in the second quarter of the year.

Agip, Aiteo lose 140,000bpd of crude oil

Following attacks by militant group, the Niger Delta Avengers, the Nigerian Agip Oil Company and Aiteo Oil are losing about 140,000 barrels of crude oil per day from their oilfields in Bayelsa State.

At about $48 per barrel, an estimated $6.72m daily is lost by the two operators due to attacks on oil export pipelines operated by them.

Delayed forex policy deepens capital market woes

The Nigerian capital market is still awaiting the planned flexible foreign exchange policy framework announced by the Central Bank of Nigeria.

The uncertainty surrounding the current forex regime was aiding the sub-optimal performance of the capital market in recent days.

NASD OTC market capitalization hits N145. 62bn

The market capitalization of admitted securities on the NASD Over-The-Counter market as of May 2016 stood at N145. 62bn.

This was represented by 107.64 billion shares in issue out of which only 16.72billion shares had been dematerialized (15.54 per cent).

The dematerialized volume of 16.72billion shares represents an increase of 1.46 percent on the previous level of 16.48 billion shares. The NASD OTC Securities Exchange currently trades on equities and bonds.


Oil and gas stocks lost last week

Investors to profit on most oil and gas stocks lost last week, as the Nigeria Stock Exchange OilG5 index pared by 5.29 percent week-on-week, while six stocks declined in value.

Oando Plc (-17.87 percent week-on-week) topped the decliners’ list, as the company’s announcement of the decision to seek further extension of the release of its 2015 financial results was met with negative sentiments from investors.

IATA: Member Airlines to earn $39.4b in 2016

The outgoing Director-General and CEO of the International Air Transport Association (IATA), Tony Tyler has announced that member airlines would earn about $39.4 billion this year.

Speaking at the opening of the 72nd IATA Annual General Meeting in Dublin, Tyler explained that airlines would earn more this year than initially projected.

Mobile POS will influence last-mile banking

Innovectives, a major player in the mobile Point of Sales (mPOS) in collaboration with the Nigeria Inter Bank Settlement System  (NIBSS) and some deposit banks, will hold the quarterly Ennovators Breakfast Series (EBS) to examine how Nigeria could benefit from the rapid growth of mPOS solution that us influencing the businesses of banks, FinTechs, vendors and non-bank players.

The forum is expected to address how mPOS could influence last-mile banking activities in today’s cashless economy. There has been an increase in the retail sector, online trade, and proliferation of smartphone and card users, which led to the exponential growth of mPOS.

GSK divested drink business

The management of Glaxosmithkline Consumer Nigeria Plc has said the divestment of its drink bottling and distribution business would not affect its financial fortunes.

Suntory Beverage of Japan had in 2013 bought British drinks brands Luxozade and Ribena from GSK for 1.35 billion pounds. Since then the company had outsourced production and sales of the drinks in Nigeria to GSK Nigeria. However, Suntory Beverage Nigeria Limited has made an offer to take over the assets and begin the production and sale of Ribena and Luxozade by itself.

Nigerians are looking forward to a review of the half year report of different institutions to further analyze what future economic projections will look like for the year 2016.

(With information from the Punch and This Day newspapers)