This is a preview of what to expect in the Nigerian Economy for the period March 11th to 17th, 2018. As usual, we begin this preview with a review of some of the big stories in the economy in the week ended March 10th, 2018.
This BIG OUTRAGE
Last week was dominated by the expected backlash of the Lagos State Land Use Charge Act (LUC). Lagosians initially had a lacklustre response to the bill until they started receiving their LUC bills. The outrage was expected;
- Some Landlords complained that their bills rose between 200% and 400%
- Others raged that the valuation metrics enshrined in the law was unfair and arbitrary. They believed using current valuation was a bad way of assessing property prices for taxes.
- Others also claimed that the difference between the 0.076% for Owner Occupier houses and the 0.76% for residential properties not occupied by owners created an arbitrage situation.
- A notable Big 4 Audit firm appeared to view the Law in good light, so much they called it a VIBRANIUM for Lagos State.
- Lagos State also pushed back on the law. In addition to the 15% discount offered for early payment of the charges, they claimed it was done in the best interest of the state. The government sent officials to defend the law on nearly all radio stations.
- Lagos State believes it was proper to charge higher taxes considering that rent had risen since the original law was signed in 2004.
This BIG ERROR
And then there was that BIG ERROR! The LUC signed by the Governor of Lagos State Akinwunmi Ambode included a clause that with the name “Alpha Beta”.
- Alpha Beta is reportedly owned by the man down the road on Bourdillon Street, Ikoyi
- The company has been at the forefront of tax collection for Lagos State since the days of former Governor, Senator Bola Ahmed Tinubu.
- It was embarrassing to the government and they scrambled to explain it to no avail.
This BIG LIE
The Minister of Agriculture Audu Ogbeh was quoted saying Nigeria’s local rice policy, which is hugely promoted by the APC led government, had led to massive job losses in Thailand. But it turned out to be, well, a lie.
- Even though local rice imports from Thailand had dropped significantly in 2017, Thailand still posted one of its best years for rice exports, with the neighbouring Benin Republic leading the fray as the top destination for rice exports from Thailand.
- It is believed that most of this rice often find their way into Nigeria.
- And yes, the Thai Ambassador in Nigeria vehemently making those comments.
This BIG RESULT
MTN released its 2017 full year results and as expected, it was massive.
- Over N1 trillion in revenue made from Nigeria alone. That’s N83 billion a month and N2.7 billion a day. Let that sink!!
- MTN also reported that it made about N127 billion from data subscription and another N112 billion from Digital Revenue. All from Nigeria
- Soon, Nigerians may have an opportunity to share in this pie. They confirmed listing this year, in what might be the largest IPO in Nigeria’s corporate history.
Penny Stocks doing BIG THINGS
The stock market closed the week positively again last week as investors looked forward to more results. Sadly, the only big result we saw was from NASCON. Nevertheless, the week ended strong on the back of….you guessed right….Penny Stocks
- Japaul gained 54% last week and is now up nearly 100% on the back of its latest announcement of its acquisition by Milost Global.
- It wasn’t only Japaul. Consolidated Hallmark, ABC Transport, First Aluminium, AG Leventis, Lasaco all made the top ten best performers last week.
Other BIG NEWS
- Nigeria’s external reserved crossed $42 billion for the first time in 5 years
- The DMO sold FGN Savings bond last week at yields at; 2-Year FGN Savings Bond due March 14, 2020, is 10.746% per annum, 3-Year FGN Savings Bond due March 14, 2021, is 11.746% per annum
- A report by the National Bureau of Statistics released this week shows 13,394,945 passengers travelled through Nigerian airports in 2017. This comprised of 6,693,687 at arrivals and 6,701,258 at departures. The figure was an 8.03% decline from 2016, mainly due to the six-week closure of Abuja airport in March 2017.
- Lagos, Abuja, Port Harcourt, Owerri, and Kano airports served over 92% of total passengers in the fourth quarter of 2017. The fourth quarter of a year is for the months October-December.
The BIG week Ahead
It’s another BIG week for the Nigerian Economy. This week the National Bureau of Statistics will be releasing BIG numbers that typically have a potential impact on business models and household consumer spending. The BIG pricing data is expected this week.
- This week the NBS releases the Consumer Pricing Index which measures the rise in the prices of goods and services in the country.
- Inflation rates have trended downwards every month for over a year and this is likely to persist this month.
- Last month, the inflation rate was 15.13% and will likely drop to below 15% for the first time since April 2016.
- Nairametrics predicts an inflation rate of about 14.6%
- The NBS will also release its monthly select food price index. The Index measures the prices of food items across the country.
- Also expected are the Fuel, Diesel and Gas price watch as well as the Transport sector price trackers.
Last week we anticipated results of some of Nigeria’s biggest companies. This did not materialize. We will expect these results this week. The stock market bulls should continue to dominate the bears this week as investors position for positive results. Dividend announcements are also in play.
- More results to be released this week and the blue chips should begin to roll in with their numbers.
- Zenith, GTB, Dangote Cement, Access Bank are all expected this week.
- Japaul and the band of Penny Stocks? They should begin to fizzle out, so we do not expect the sort of price appreciations we have seen in the last two weeks.
The CBN is not expected to sell Treasury Bills this week, at least going by the published treasury bills calendar for the quarter.
On Cryptocurrencies, the price of Bitcoins dropped to below $9,000 as at Friday, in what Crypto followers believe is due to its inability to break a psychological technical analysis indicator. According to coin desk, “Bitcoin’s (BTC) repeated failure to beat inverse head-and-shoulders neckline resistance saw bears come in full force, pushing prices to a one-month low of $8,371 Friday. ” Most major cryptocurrencies also recorded price drops as investors panicked to sell-offs.
We won’t bet on this price drop being sustained and expect another surge in the latter part of the week. Bitcoins appear to have discovered a price floor which is around $8,000.
That’s it for this week. What do you think we missed?