Of all recent government policies the recent closure of the border with the Republic of Benin to goods is having the most immediate effects on prices. These will undoubtedly hit consumers’ pockets and may come through in upcoming inflation data. At the same time there may be positive effects of local rice and poultry production. See page 2.
During September the published FX reserves (three-month moving average) of the Central Bank of Nigeria (CBN) fell at an average of US$400.0m per week, a trend which only slowed slightly in the first week of October and which would set FX reserves to reach US$37.1bn by year-end. We do not think the CBN will tolerate this and we think that it will encourage foreign portfolio investment (FPI) into Naira fixed income securities with interest rates set perhaps as much as 450 basis points (bps) above inflation, with the potential to trend down to a spread of 350bps over inflation if FPI picks up over the coming weeks.
Bonds & T-bills
The yield on a Federal Government of Nigeria (FGN) Naira bond with 10 years to maturity fell by 6bps to 14.32%, and at 3 years fell by 64bps to 13.73% last week. The yield on a 364-day T-bill fell by 48bps to 14.30%. The yield on a T-bill with 3 months to maturity fell by 122bps to 11.80%.
There was a surplus of liquidity in the Naira fixed income markets last week where approximately N1.0 trillion (US$2.8bn) was bid for the CBN’s offer of N300bn at it’s open market operation (OMO) auction. The yield achieved in the auction was 15.40% but secondary market yields fell much lower (see above). Our sense is that the CBN will not want to see primary market rates trend below 14.50% over the coming weeks, at least until it becomes comfortable with the level of foreign portfolio investment (FPI).
The price of Brent rose by 3.67% last week to US$60.51/bbl. The average price, year-to-date, is US$64.51/bbl, 10.01% lower than the average of US$71.69/bbl in 2018, but 17.84% higher than the US$54.75/bbl average seen in 2017.
The International Energy Agency (IEA) has again cut its global oil demand forecast growth by 65,000 bpd to 1.0 million barrels per day (mbpd) in 2019 and by 105,000 bpd to 1.2mbpd in 2020. September’s attack on Saudi Arabia’s oil facilities dropped global oil supply in September by 1.5mbpd to 99.3mbpd, which is less than originally feared. The downtrend in demand threatens oil prices, in our view. The demand narrative also gives room for the possibility of further cuts by the Organization of the Petroleum Exporting Countries (OPEC).
The Nigerian Stock Exchange (NSE) All-Share Index fell by 1.68% last week, pushing the year-to-date return to negative 15.58%. Last week Forte Oil (+8.11%), Mobil Nigeria (+5.64%) and CCNN (+2.70%) closed positive while Guinness Nigeria (-10.79%), PZ Cussons Nigeria (-10.00%) and Nigerian Breweries (-8.64%) fell.
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The NSE last week announced an amendment to its rules on pricing methods. The NSE has raised the number of shares that must be traded, in various classes of equity, in order to effect a change in published price. This is in addition to the 10% cap on daily price movements, all in a bid to curb price volatility.
AfDB appoints Rabah Arezki as new vice president and chief economist
Before Arezki joined the World Bank, he worked at the International Monetary Fund (IMF).
The African Development Bank Group (AfDB) has announced the appointment of Dr Rabah Arezki as Chief Economist and Vice President, Economic Governance and Knowledge Management, with effect from October 1, 2020.
This was disclosed in a press statement on the bank’s website on July 13, 2020.
Dr Rabah Arezki, who is an Algerian citizen, is currently the Chief Economist for Middle East and North Africa Region at the World Bank, a role he has held since 2017.
At the World Bank, he led the development of the Bank’s “moonshot approach” for the Middle East and Africa which aims to achieve full internet and digital payment connectivity. He championed the agenda on fair competition, data and transparency to empower and unlock the potential of the region’s youth.
Before Arezki joined the World Bank, he worked at the International Monetary Fund (IMF) from 2006 to 2017. He started his career at the IMF as an Economist and became the Chief of the Commodities and Environment Unit in the Research Department. He provided leadership on IMF’s rapid response to the historical collapse in oil prices that started in 2014. He advised authorities all around the world on risk mitigation policies.
Dr Arezki is a senior fellow at Harvard University’s John F. Kennedy School of Government, an external Research Associate at the Oxford University, UK, a research fellow at the CESifo, a global independent research network. Dr. Arezki is also a resource person for the African Economic Research Consortium and a Research Fellow at the Economic Research Forum. He has been a non-resident Fellow at the Brookings Institute, USA.
He has published extensively both in top academic journals and policy-oriented outlets and is a co-editor and co-author of five books including Shifting Commodity Markets in a Globalized World. Many of his research papers have been cited extensively in academic circles and in prominent media outlets.
In his statement after his appointment, Dr Arezki said, “The African Development Bank is making excellent progress in accelerating Africa’s development. I am excited with the opportunity to work with President Adesina and the Bank’s leadership and teams to further provide top notch policy, knowledge and capacity building support for African countries.”
Dr Arezki holds a Masters in Economics and Statistics from Ecole Nationale de la Statistique et de l’Administration Economique (ENSAE) – France (2003), and a PhD in Economics from the European University Institute – Italy (2006). He is multilingual and fluent in French, English, and Arabic.
In his own response, the President of the African Development Bank Group, Akinwumi Adesina, said, “I am delighted that Dr. Rabah Arezki is joining the African Development Bank Group following an impactful career at the World Bank and the IMF. Rabah is an outstanding researcher and policy expert with extensive experience in research, policy and reforms.”
“His leadership will be especially important as the Bank designs and deploys policy-based operations to address COVID-19, advances policy reforms, and supports African countries growth recovery efforts from the pandemic,” Adesina added.
NSE simplifies investing in the capital market with comic book
StockTown is dedicated to providing financial literacy education to Nigerians.
The proliferation of dubious investment schemes that often result in loss of money by unsuspecting members of the public continues to make the role of financial literacy imperative. To play its part, Nigeria’s leading bourse, The Nigerian Stock Exchange (NSE or The Exchange) has issued the second edition of its comic, StockTown, dedicated to providing financial literacy education to Nigerians.
The comic, available in digital format on a dedicated website at www.nse-stocktown.com builds on The Exchange’s advocacy for safe and trusted investment schemes.
The story picks up from the first edition, following the life of Mora Johnson as she seeks to liberate her family from their financial struggles by investing in the capital market. This second edition highlights some major lessons for potential and existing investors including the need for vigilance in avoiding Ponzi schemes and unregulated investments, whilst advising prospective investors to seek proper guidance before making investment decisions. Readers can look forward to a simplified explanation of the history of the capital market, its evolution over the years, and how anyone can start making investments today in the Frequently Asked Questions (FAQs) section of StockTown.
Commenting on the importance of this comic book, Head, Corporate Communications, NSE, Olumide Orojimi said, “Investor Education is a priority for us at The Exchange. We have identified the need to empower individuals across all levels to make good financial decisions and better their lives now and in the future. As the investment landscape continues to evolve to accommodate more retail participants, we are excited to leverage new and existing platforms to present investment products and processes in ways that are both appealing and easy to understand, particularly in this new normal. We hope that StockTown becomes a widely-read resource for potential and existing investors, the financially excluded, millennials and the larger public.”
StockTown is just one of the many ways NSE demonstrates its strong commitment to promoting financial literacy in Nigeria. Even amidst the Coronavirus pandemic and the temporary closure of The Exchange’s facilities, NSE continues to host virtual financial literacy workshops with students and young upwardly mobile professionals. Furthermore, The Exchange has hosted several webinars on various products including Exchange Traded Funds (ETFs), Green Bonds, and Securities Lending to provide more information to the market on available securities and how to trade them.
It should also be recalled that NSE is a member of the Financial Literacy Technical Committee of the Securities and Exchange Commission (SEC); as well as the National Finance Inclusion Steering Committee led by the Central Bank of Nigeria with a mandate to reduce the level of financial exclusion in Nigeria to 20%.
5th evacuation flight for Nigerians in the US scheduled for July 31; see details
The evacuees are to forward the details of tickets and contact addresses of their next of kin.
The Federal Government has approved the 5th Evacuation flight for Nigerians stranded in the United States of America, for July 31.
According to a tweet from the Minister for Foreign Affairs, Geoffrey Onyeama, the Ethiopian airline, flight number ET547 will leave George Bush international airport Houston, Texas on Friday 31, July 2020 by 16:00 hours and arrive Murtala Muhammed International Airport Lagos on Saturday 1st August 2020 by 20:00 hours.
Notice on the FIFTH Evacuation Flight from the United States of America to Nigeria. #StayHomeSaveLives #COVID19Nigeria #COVID19 #PTFCOVID19 @NigeriaGov @DigiCommsNG @USinNigeria @FMICNigeria pic.twitter.com/JtKJn977ow
— Geoffrey Onyeama (@GeoffreyOnyeama) July 13, 2020
An official statement released by the Consulate General of the Federal Republic of Nigeria, Atlanta, Georgia in collaboration with other Nigerian missions in the United States of America, states that Nigerians registered with any of the three Nigerian missions in the USA, and interested in boarding the flight, can purchase their one-way tickets.
“The airfare is $1,500 for economy class and $3,000 for business class for adult/child fare, including all taxes, with the usual percentage reduction for infants under 2 years,” it read.
In addition, the intending evacuees are also expected to forward the details of purchased tickets together with the contact address of their next of kin in Nigeria to the consulate.
In line with the protocols announced by the Presidential Task Force on COVID-19, all of the returnees are to present a negative COVID-19 test result (not older than 14 days), and undergo a temperature check before boarding the evacuation flight, and upon arriving Nigeria, are expected to proceed on a 14-day self-isolation.
In the last couple of months, the federal government, through the ministry of foreign affairs has evacuated hundreds of stranded Nigerians from different countries including the United States of America, the United Kingdom, Egypt, Malaysia, and Thailand.
The returnees bear the cost of their flight tickets and are expected to self-isolate for two weeks, upon their return to Nigeria. Returnees, who receive a clean bill of health after the isolation, are given their passports and allowed to go home.