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Business News

World Bank, IMF forecast sluggish growth for Nigeria in 2020

The World Bank has forecasted that Nigeria’s economy will further slowdown in 2020 with a growth of 2.1% amidst several policy uncertainties. On the other hand, the IMF disclosed that Nigeria’s economy will continue its sluggish trend. #IMF #WORLDBANK

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The World Bank and its sister organisation, International Monetary Fund (IMF) have forecasted sluggish growth for the Nigerian economy in 2020.

In its January 2020 Global Economic Prospects report, the World Bank forecasted that Nigeria’s economy will further slowdown in 2020 with a growth of 2.1% amidst several policy uncertainties.

On the other hand, the IMF disclosed that Nigeria’s economy will continue its sluggish trend with a 2.5% growth rate in 2020.

Growth in Sub-Saharan Africa and Risks in 2020

According to the IMF, in sub-Saharan Africa, growth is expected to strengthen to 3.5% in 2020–21 (from 3.3% in 2019). The IMF stated that the slow growth forecast for the region reflects downward revisions for South Africa (where structural constraints and deteriorating public finances are holding back business confidence and private investment) and for Ethiopia (where public sector consolidation, needed to contain debt vulnerabilities, is expected to weigh on growth).

[READ: Devaluation: Experts highlight trends clouding Nigerian economy]

Meanwhile, the World Bank disclosed that the growth in the region is projected to stabilize as investors’ confidence in some of the large economies improve and oil production in major oil exporters picks, while activities among exporters of agricultural commodities remain solid.

On the downside, the World Bank stated that Per capita growth will remain below 1%. It added that several downside risks could materialize and these include slower-than-expected growth in major trading partners. Others are episodes of financial stress given rising debt vulnerabilities, disruptions to activity amid increased displacement of populations and growing climate risks.

Also, the global lender stated that Insecurity, conflicts, insurgencies and food security would weigh on economic activities of several economies like Burkina Faso, Chad, Ethiopia, Mali, Niger, and Nigeria.

Nigeria’s policy environment remains unconducive

According to the World Bank, activity in Nigeria is lackluster, as both macroeconomic policy and the business environment remain unconducive to strong domestic demand.

The financial institution stated that the growth of Nigeria, Angola and South Africa (the three largest economies in the region) were subdued in 2019, below historical averages and contracting for a fifth consecutive year on a per capita basis.

In its report on Nigeria, it said, “Growth in Nigeria is expected to remain subdued. The macroeconomic framework – characterised by multiple exchange rates, foreign exchange restrictions, high persistent inflation, and a central bank targeting manifold objectives – does not provide a firm anchor for confidence.

[READ: Devaluation: Experts highlight trends clouding Nigerian economy]

“Growing uncertainty about the direction of government policies is expected to further dampen the outlook. Growth is projected to remain broadly unchanged, rising only to an average of 2.1% in 2020-22.”

Stanbic 728 x 90

“This is weaker than previous projections, reflecting softer external demand, lower oil prices, and a slower-than-previously-expected improvement in oil production in view of the lack of the much-needed reforms.”

The world Bank had earlier warned that Nigeria may fall back into recession, highlighting conditions that may drag the nation’s economy into the downturn witnessed in 2016. The bank disclosed in its Economic Update for Nigeria that a decline in oil prices to the levels seen in 2016 would significantly reduce growth, potentially leading to another recession in Nigeria.

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Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Business News

Heavy sell-off in Guinness shares leads to N6.9 billion market value loss in a single day

Shares of Guinness Nigeria Plc suffered a 9.89% loss today.

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Guinness Nigeria Plc Reports Full Year F19 Results

Guinness Nigeria Plc suffered a 9.89% loss today following a heavy sell-off in the shares of the brewer. This triggered a market value loss amounting to about N6.9 billion at the close of trading activities on the Nigerian Stock Exchange, as investors scaled-down stakes in the brewer.

Data tracked at the close of the market today revealed that the shares of GUINNESS declined from N31.85 per share at the market open, to N28.70 per share at the close of the market today, to print a loss of 9.89%.

This decline saw the market capitalization of the leading maker of beer and spirits fall from N69.75 billion to N62.86 billion at the close of trading activities today, putting the total market value loss at N6.89 billion.

The shares of Guinness at the close of the market today cleared at N28.70 per share, 9.89% lower than the closing price of N31.85 per share yesterday.

At the current price, Guinness shares are currently trading 20.27% lower than their 52-week high of N36.00 per share. However, the shares of the company have returned about 120.8% gains for investors who bought them at their 52-week low trading price of N13.00 per share last week.

During trading hours on the Exchange today, about 159,380 ordinary shares of Guinness Nigeria Plc worth about N4.57 million, were exchanged in 27 executed deals.

The shares of Nigerian Breweries Plc and Golden Guinea Breweries Plc closed flat at N50.1 per share and N0.81 per share respectively, while the shares of International Breweries Plc shed 0.88% to close low today at N5.65 per share.

What you should know

  • At the close of trading activities today, the NSE All-Share Index and market capitalization appreciated by 0.29% to close higher at 39,128.34 index points and N20.477 trillion respectively.
  • The NSE Consumer Goods Index, an investable benchmark designed to track the performance of the shares of consumer goods companies like Guinness Nigeria Plc, depreciated by -0.35% to close the day lower at 553.26 index points.

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Business News

NAICOM revokes operational licence of UNIC Insurance, appoints Receiver/Liquidator

NAICOM stated that it had appointed Hadiza Baba Gimba as the Receiver/Liquidator to wind up the affairs of the company.

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Recapitalisation: 26 firms get NAICOM's approval

The National Insurance Commission (NAICOM) on Wednesday announced the withdrawal of the operational licence issued to UNIC Insurance Plc.

Although no official reason has been provided for the revocation of the insurance firm’s operating license, NAICOM, however, stated that the decision of the regulator was in the exercise of the powers conferred on it by the enabling laws.

According to a report from the News Agency of Nigeria (NAN), this disclosure is contained in a notice which was issued by the commission in Lagos to the general public and policyholders, where it noted that the revocation of the operational license, RIC 043, is with effect from March 25.

NAICOM, thereafter stated that it had appointed Hadiza Baba Gimba as the Receiver/Liquidator to wind up the affairs of the company.

NAICOM in its statement said, “The general public/policyholders are by this notice required to direct all inquiries and correspondence regarding UNIC Insurance to the receiver/liquidator.

The receiver/liquidator will be dealing with the company’s liabilities in accordance with the provision of Insurance Act 2003.’’

What you should know

  • It can be recalled that NAICOM, for the third time in June 2020, gave insurance firms in the country a one-year extension to meet the recapitalisation obligation that was recently set for them apparently due to the coronavirus pandemic which had disrupted the activities of most insurance companies.
  • Some insurance companies had been going through some bad patches with a good number of them struggling to meet up with their obligations and the recapitalization requirements.
  • The recapitalisation programme requires life insurance firms to meet a minimum paid-up capital of N8.0 billion, up from N2.0 billion previously. In the same vein, general insurance companies are required to raise their minimum paid-up capital to N10.0 billion from N3.0 billion previously.
  • The regulatory capital for composite insurance was raised to N18.0 billion from N5.0 billion previously while reinsurance businesses are now required to have a minimum capital of N20.0 billion from a previous N10.0 billion.

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