The much-awaited Purchasers Managers Index (PMI) was released on May 29th by the Central Bank of Nigeria. According to the latest data, Manufacturing PMI in the month of May stood at 42.4 index points, indicating contraction in the manufacturing sector for the first time after recording expansion for thirty-six consecutive months.

The figure compares to 51.1 and 49.2 index points in March 2020.

The latest number now falls squarely within recession numbers and this is a clear sign that Nigeria is closer to recording a major contraction in the second quarter of the year.

Meanwhile, the nation’s PMI’s number hit a year low in April 2016 of 43.7, before plummeting further to 41.9 in June 2016. Nigeria subsequently fell into a recession by the end of the second quarter of 2016 and remained in recession throughout the course of the year.

The nation’s non-manufacturing PMI fell for a consecutive month to an all-time low of 25.3. The decline in manufacturing PMI was significant following thirty-six consecutive months of expansion, while the non-Manufacturing PMI contracted for the second consecutive month.

A further look into the report shows that the manufacturing sector employment level index stood at 24.5 points in May, a decline compared to 47.1 points recorded in March and 56.4 points in February 2020.

This downturn is mostly attributed to the halt in economic activity as businesses in Nigeria result in layoffs and pay cuts in order to survive the effect of the lockdown.

Also, all 14 subsectors of the manufacturing sector, reported lower raw material inventories, consequently contracting the inventories index to 37.4 points in May 2020. An effect of the supply chain bottleneck associated with the lockdown measures implemented in most countries of the world.

Specifically, this figure translates the effect of lockdown procedures and trade restrictions implemented by Nigeria’s major trade partners in response to the COVID-19 pandemic. Note that Nigeria’s major trade partners; China, USA, Spain, and the Netherlands account for about 45% of our import.

What you need to know:  PMI is a survey that is conducted by the Statistics Department of the Central Bank of Nigeria. The respondents are purchasing and supply executives of manufacturing and non-manufacturing organizations in all 36 states in Nigeria and the Federal Capital Territory (FCT).

In his reaction to the data, the Central Bank Governor, Godwin Emefiele, in the Monetary Policy Communique, highlighted how dire the situation.

He said, “The contraction in the manufacturing and non-manufacturing PMIs was attributed to slower growth in production, new orders, employment level, raw materials, and input prices.

“The employment level index for the manufacturing and non-manufacturing PMIs also contracted further to 25.5 and 32.0 index points, respectively, in May 2020 compared with 47.1 and 47.3 index points in March 2020.

“Generally, the purchasing managers’ activities in May 2020, were largely affected by the lockdown of the global economy to curtail the spread of the COVID-19 pandemic.”

The CBN thereafter reduced its monetary policy rate from 13.5% to 12.5% for the first time since March 2019.

What this means: This survey is a bellwether for economic growth in Nigeria and helps the central bank gauge the mood of businesses in the economy.

PMI above 50 typically indicates a positive mood for the manufacturing and non-manufacturing sectors. Two major causes for concern in the data are the new orders and employment levels.

At 42.8 points, the new orders index declined after thirty-sixth consecutive months of growth, indicating declines in new orders in May 2020. Three subsectors reported growth, 2 remained unchanged while 9 recorded declines in the review month.

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to rise as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 11,166 confirmed cases.

On the 3rd of June 2020, 348 new confirmed cases and 1 death were recorded in Nigeria.

To date, 11166 cases have been confirmed, 3329 cases have been discharged and 315 deaths have been recorded in 35 states and the Federal Capital Territory having carried out 69,801 tests.

Covid-19 Case Updates- 3rd June 2020

• Total Number of Cases – 11,166
• Total Number Discharged – 3,329
• Total Deaths – 315
• Total Tests Carried out – 69,801

The 348 new cases are reported from 19 states- Lagos (163), FCT (76), Ebonyi (23), Rivers (21), Delta (8), Nasarawa (8), Niger (8), Enugu(6), Bauchi (5), Edo(5), Ekiti (5), Ondo (5), Gombe (5), Benue(4), Ogun (2), Osun (1), Plateau (1), Kogi (1), Anambra (1).

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

The latest numbers bring Lagos state total confirmed cases to 5440, followed by Kano (970), Abuja at 763, Katsina (371), Edo (341), Oyo (317), Kaduna (297), Borno (296), Ogun (282), Jigawa (274), Rivers (269), Bauchi (246),  Gombe (169), Sokoto (115).

Kwara State has recorded 111 cases, Plateau (109), Delta (106), Nasarawa (88), Zamfara (76), Ebonyi (63), Yobe (52), Osun (47), Akwa Ibom (45), Adamawa (42), Niger (41), Imo (39), Kebbi and Ondo (33), Ekiti (25), Enugu (24), Bayelsa (21), Taraba (18), Abia (15), Benue (13), Anambra (12), while Kogi state has recorded only 3 cases.

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, President Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

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Nigeria’s tier-1 banks — comprised of First Bank, UBA, GTBank, Access Bank, and Zenith Bank (FUGAZ) — generated a total of N18.4 billion from bank maintenance charges in Q1 2020. The sum is 17.12% more than N15.6 billion that was generated by the five banks during the comparable period in 2019.

This is according to recent checks by Nairametrics Research, a breakdown of which revealed that Zenith Bank generated the most income from account maintenance fees, followed by Access Bank and then, GTBank.

See the breakdown below.

• Zenith Bank Plc: N5.7 billion
• Access Bank Plc: N3.9 billion
• Guaranty Trust Bank Plc: N3.3 billion
• First Bank Plc: N3.1 billion
• United Bank for Africa Plc: N2.3 billion

READ MORE: Stocktaking: Ebenezer Onyeagwu’s year as CEO of Zenith bank

What you should know about account maintenance charges

Banks’ earnings from account maintenance charges, though low when compared to other revenue streams, still make up a significant portion of their non-interest income.

According to the latest directive by the Central Bank of Nigeria on bank charges, Nigerian banks are allowed to charge their customers a “negotiable” N1 per mille. What this means is that banks can charge N1 per N1000 debit transactions on current accounts. Banks’ account maintenance charges come in the form of COT (i.e., Commission on Turnover) which is a charge levied on customer withdrawals by their banks. In Nigeria, these charges are mainly applicable to current accounts.

“Current Account Maintenance Fee (CAMF): Applicable to current accounts ONLY in respect of customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank. Note that CAMF is not applicable to Savings Accounts,” said part of the CBN directive.

(READ THIS: You must know these terms if you want to own a bank account in Nigeria)

Customers don’t like account maintenance charges

Interestingly, a lot of Nigerian bank customers are not keen on bank maintenance charges. After all, nobody likes to get debit alerts, especially so when such is coming from their banks. Perhaps, the main reason some customers dislike bank maintenance charges is because they tend to be higher than the interest capitalised entitled to such customers. Professor Ayobami Ojebode of the Department of  Communications and Language Arts, University of Ibadan, recently complained about this, saying:

“Dear bank, I see o! Don’t think I don’t see you! You credit me N50 interest on my savings and debit N150 for account maintenance & card fee etc! Come here, what do you really think you are doing?”