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 9,302 confirmed cases.

On the 29th of May 2020, 387 new confirmed cases and 2 deaths were recorded in Nigeria.

To date, 9302 cases have been confirmed, 2697 cases have been discharged and 261 deaths have been recorded in 35 states and the Federal Capital Territory.

Covid-19 Case Updates- May 29th 2020

• Total Number of Cases – 9,302
• Total Number Discharged – 2,697
• Total Deaths – 261
• Total Tests Carried out – 58.726

The 387 new cases were reported from 14 states- Lagos (254), FCT (29), Jigawa (24), Edo (22), Oyo (15), Rivers (14), Kaduna (11), Borno (6), Kano (3), Plateau (2), Yobe( 2), Gombe (2), Bauchi (2), Ondo (1).

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The latest numbers bring Lagos state total confirmed cases to 4377, followed by Kano (942), Abuja at 564, Katsina (358), Oyo (275), Jigawa (265), Borno (264), Edo (262), Ogun (246), Bauchi (236), Kaduna (232),  Rivers (190), Gombe (154), Sokoto (116), Plateau (101).

Kwara State has recorded 87 cases, Zamfara (76), Nasarawa (62), Delta (57), Yobe (49), Akwa Ibom (45), Osun (44), Ebonyi (40), Adamawa (38), Imo (34), Kebbi (33), Niger (30), Ondo (25), Ekiti (20), Taraba and Enugu (18), Bayelsa (12), Anambra (11), Abia (10), Benue (7), while Kogi state has recorded 2 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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Given the vulnerability of Nigeria to the current global economic disruption, a series of key adjustments have been made to the 2020 fiscal framework. One of such is the fiscal deficit and deficit financing strategy following revisions to projected revenue and planned expenditure.

Reports from the Addendum to the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), reveal that the revised fiscal deficit is estimated at N4.58 trillion from N1.85 trillion in the 2020 Budget Framework passed by NASS.

This level of deficit is 3.29% of GDP and this is above the threshold of 3% of GDP as stipulated in the Fiscal Responsibility Act (FRA), 2007. Section 12 of the Fiscal Responsibility Act (FRA), 2007 (as amended), stipulates that:

(i) “the estimates of aggregate expenditure and the aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three% of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the National Assembly for each financial year”; and,

(ii) “aggregate expenditure for the financial year may exceed the ceiling imposed by the provisions of (i) above, if in the opinion of the President there is a clear and present threat to national security or sovereignty of the Federal Republic of Nigeria.”

(READ MORE: FG discloses how it will finance N5.36 trillion budget deficit)

According to the report, when the revenues and expenditures of the 10 GOEs as well as expenditures financed from project-tied loans are captured in the FGN’s budget, the aggregate fiscal deficit for 2020 will be N4.95 trillion, which is 3.55% of GDP.”

 “We believe that the COVID-19 crisis poses a threat to national security within the contemplation of the FRA 2007, and therefore the President can legitimately approve a deficit in excess of 3% of GDP.” 

The deficit will primarily be financed by new borrowings estimated at N4.17 trillion – N1.98 trillion from external (multilateral) concessional sources like the IMF, World Bank, & African Development Bank, and new domestic debts of about N593.89 billion. N126.04 billion will also be derived from Privatization proceeds, N263.63 billion from the Federal Government’s Special Accounts to fund covid-19 expenditures, and N387.30 billion will be drawn down on multilateral/bilateral loans obtained for specific development projects.

Analysis of the recently released summary of Pension Fund Asset data for the first two months of 2020 by the Pension Commission of Nigeria has shown that pension fund managers are no longer in love with Treasury Bills like they used to be in the past.

Time was when fund managers allocated much of their assets to treasury bills, but that seems to be waning as yields on treasury bills head towards subzero.

According to the analysis, pension fund managers redeemed treasury bills worth N512 million in the two months combined but did not invest any additional kobo into treasury bills within the same period.

READ ALSO: Nigeria’s pension contributors add N186.43 billion to pension asset

Prior to this event, the pension fund had invested a combined sum of N1.88 trillion into treasury bills, representing 18.4% of total pension fund assets.

With that development, pension fund managers allocation to treasury bills now stands at 13%. This is about the first time, in over 5 years that PFM’s are shying away from treasury bills.

The love seems to have shifted to bank placements which attracted additional investment if N420 million from pension fund managers. FGN Bonds continue their camaraderie with pension fund managers as they pumped additional N352 million into FGN bonds in January and February, combined. This seeming reallocation to bank placements is indicative of pension fund managers’ desire to hold on to their cash, while waiting and hoping that yields will trend up anytime soon.

READ MORE: Pension fund multi fund structure performance

Yield Analysis: Fund managers who are out to seek ways to generate positive alpha or returns for their investors are running away because of the low treasury bill yields. The last Treasury Bill option that was conducted on May 13th, 2020, had stop rates of 2.5%, 2.85% and 3.84% for 91-day, 182-day and 364-day treasury bills respectively. Those rates were not enticing enough for the fund managers.

Strong Market Demand: This does not mean that Nigerian Treasury Bills are no longer in demand because, according to the NTB Auction Results sheet of May 13th, 2020, all the three tenors of treasury bills were oversubscribed.

While the 91-day Treasury Bill had N4,384,80,000 on offer, it attracted a total subscription of N22,334,588,000, the 182-day tenor which had N12,920,900,000 on offer saw N41,194,993,000 being subscribed for, while investors bid N102,030,671,000 for the 364-day tenor which had N16,536,720,000 on offer.

READ ALSO: Pension contributions from Nigerians under 30 dwindling at an alarming rate

Pension Fund Asset Allocation: All said and done, FGN bonds continue to be the asset type with the highest allocation from pension managers. Out of the N10.5 trillion total pension fund asset value as at February, 29th 2020, N5.6 trillion sits with FGN Bonds, while bank placements come second with an allocation of N1.48 trillion leaving Treasury Bills in the third position with an asset allocation of N1.37 trillion.