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BLOODY WEEKS: Coronavirus costs investors N1 trillion, triggers devaluation fears

It’s a bloodbath: Oil price crash, Coronavirus spreads, stock markets crash, devaluation fears stoked, it’s 2008 all over again.



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The rampaging Coronavirus (COVID-19) may have cost Nigerian investors a whopping N1 trillion in the last 6 weeks. The virus, which originally broke out in China, has spread across the globe with Nigeria reporting its first case two weeks ago.

Over 100,000 cases have been reported with over 3,000 deaths, representing a 3% mortality rate.

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The virus is yet to be designated as a global pandemic by the World Health Organization. Despite this, global markets have fallen sharply as investors fly to the safety of gold and risk-free bonds.

Economic Impact

Last week, Nigeria’s Minister of Finance, Zainab Ahmed, lamented the effect of the sprawling virus on Nigeria’s 2020 budget. Nigeria’s oil benchmark for 2020 is $57 per barrel of crude compared to current Brent crude oil prices of $45 per barrel, stoking fears of a widening budget deficit.

According to Zainab, “The current crude oil price of $53 a barrel is below the budget benchmark. So what we are doing is studying the situation. We are committed to doing a midterm review. We are concerned about the current drop in oil price because it’s now below our budget. We will do a mid-term review, and if the impact is so much, we will need to do an adjustment in the budget, working together with the National Assembly.”

[READ MORE: Coronavirus: FG to review budget as oil price plunges)

Assuming prices remain the same, a midterm review could result in a reduction of total revenue expected from crude in 2020.

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At the current price of $45, Nigeria’s budget deficit could widen to as much as $10 per share and could cost Nigeria as much as $20 million per day, assuming a daily crude oil output of 2 million barrels per day. Nigeria exports about 85% of crude oil production. The Federal Government relies on crude oil for as much as 50% of its accruable revenue, most of which is used to fund budgetary spending on capital and recurrent expenditure.

Brent Crude crashed to $36 as on Sunday, March 8th, 2020 its lowest since 2016.

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FEC reviews Ajaokuta-Kaduna-Kano gas project contract, approves $2.571 billion

Zainab Ahmed, Finance Minister

It gets worse

According to Wale Okunrinboye, Head of Research at Sigma Pensions, Nigeria faces a perfect nightmare. “If oil averages $45 per barrel in 2020 and Nigeria does not take action to restrain import demand growth as we saw in 2019, then we could see the current account deficit go towards $20-25b. While the fiscal deficit will blow beyond the 3% statutory limit.”

Data from the CBN reports that Nigeria’s current account deficit was at $9.17 billion (as of September 2019) when the average crude oil price was $65 per barrel of crude.

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Stock market reels

The Nigerian stock market is down 2.1% year to date, following a turbulent February that reversed all the gains made in January. Since February, when Coronavirus gained global notoriety, the Nigerian Stock market has lost a whopping N1.16 trillion in market capitalization.

The stock market capitalization closed January at about N14.85 trillion and ended the week of March 5th, 2019 at N13.69 trillion.

Investors continued to dump stocks despite stronger than expected results from the biggest companies on the exchange, as fear of a global contagion spooked them. In the US, the Dow Industrial Average Index closed down 970 points, or 3.6%, marking its fifth-worst single-day point drop on record, according to CNN.

European stocks fell by nearly 4% at the end of last week, as investors panicked over the spread of the virus in Italy and other major cities in Europe.

To make matters worse, the Chinese also reported during the week that their exports fell in the first two months of 2020 by as much as 17.2%, blaming this on the coronavirus outbreak that began in the East Asian country.

The outbreak has caused massive disruptions to supply chains around the world as transport restrictions continue to be imposed by government, airlines and shipping companies.

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[READ ALSO: Coronavirus outbreak to impact tourism across Africa)


Division in the oil cartel, OPEC, has also exacerbated the fear of a possible devaluation in Nigeria. Saudi-led OPEC and Russia disagreed on output cuts during the week, with both countries now declaring an all-out price war that could see nations like Nigeria suffer its consequences.

Saudi Arabia’s Aramco declared during the week that it was going to crash prices to stimulate demand for its oil across the globe. The Russians, angry at the seeming exploitation of the situation by shale oil producers in the US, made a-turn and are asking for a halt in output cuts.

The Russian Strategy instead is to run the Americans out of the market by pushing for a drop in crude oil prices as Shale oil becomes unprofitable with prices falling below $30 per barrel.


For countries like Nigeria, this means a fragmented crude oil market where price determination and output advantages are no longer within our control. Nigeria already relies heavily on crude oil export to India, but could now face stiffer competition from other OPEC and OPEC+ countries like Russia.

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Devaluation Fear

With Nigeria’s oil exports under threat, foreign exchange earnings could be jeopardized, further worsening Nigeria’s current account deficit of $9 billion.

According to Ugodre, Nairametrics Founder, “Several factors could impede the CBN’s ability to continue to defend the naira, but none other than oil is more important. If oil prices continue to drop, further affecting Nigeria’s external reserve position, then the CBN will have no choice but to consider a devaluation.”

Nigeria maintains several exchange rates, with its official rates being N305/$1.
Ugodre explains that the government “could first consider merging exchange rate to the quasi-market driven I&E window of N360/$1 before a full swing devaluation.”

Government revenues and officially benchmarked prices are quoted at N305/$1, an indirect subsidy that feeds into cost inputs for sectors heavily reliant on foreign exchange.
Nigerians may have avoided the Coronavirus, but as Western nations face a possible epidemic, Nigeria remains at risk of an economic contagion which may perhaps be far worse than imagined.

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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FG signs new Sustainable Development Goals agreement with UN

The Agreement is for new development cooperation with initiatives towards achieving Sustainable Development Goals set in the UN Agenda 2030.



Xenophobia, FG reacts to inclusion of Nigeria on religious freedom blacklist by United States

The Nigerian Government has signed a deal with the United Nations to develop new cooperation towards achieving Sustainable Development Goals.

This was disclosed by the Minister of Foreign Affairs, Geoffrey Onyeama, in a statement on Thursday after the agreement was signed with the United Nations Office for Project Services, UNOPS, represented by Ifeoma Charles.

The Minister said, “On behalf of the Nigerian Government, I signed an agreement with the UNOPS represented by Ifeoma Charles Multi-Country Office Rep. The Agreement is for a new development cooperation with initiatives towards achieving Sustainable Development Goals set in the UN Agenda 2030.”

What you should know 

The 17 Sustainable Development Goals are:

No Poverty; Zero Hunger, Good Health, and Well-being; Quality Education; Gender Equality; Clean Water and Sanitation; Affordable and Clean Energy; Decent Work and Economic Growth; Industry, Innovation and Infrastructure; Reducing Inequality; Sustainable Cities and Communities; Responsible Consumption and Production; Climate Action; Life Below Water; Life on Land; Peace, Justice and Strong Institutions; and Partnership for the Goals.

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Business News

Best payment gateway platforms to avoid scams in your business

A payment gateway is a technology used to accept and hasten debit or credit card purchases from customers.



Many businesses in Nigeria have adopted the online payment method because it is safe, fast, secure, and convenient. In recent times, fintech startups in Nigeria have developed safer payment channels to help businesses conveniently receive online payments.

What is a payment gateway?

A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. Integrating a payment gateway into your business is highly beneficial as it offers a more secure transaction process for your customers. It can also expand your customer base exponentially because many people will have access to your business at all times. The payment gateway offers faster transaction processing and customers can avoid the inconvenience of long queues.

In Nigeria, there is a wide range of payment gateways to choose from as a business owner. Before choosing a payment provider, you have to find out what each provider is offering and at what cost. Also, look out for PCI-compliant and SSL certificates in order to avoid security problems.

Here is a list of the top payment gateway providers and what they offer.


Paystack is a growth engine for a new generation of innovative, forward-looking organizations operating in Africa. The company makes it easy for businesses to accept secure payments from multiple local and global payment channels, while also providing tools to help you retain existing customers, and acquire new ones.

Onboarding and approval take approximately 30 minutes, Paystack accepts payment in USD, GHC, NGN; and offers a wide range of payment methods like Card, Bank Account, Bank Transfer, USSD, Visa QR, and Mobile Money.


  • Integrating Paystack is 100% free.
  • Paystack charges 1.5% + ₦100 for local transactions and 3.9% + ₦100 for international transactions.
  • ₦100 fee is waived for transactions less than ₦2500.


Flutterwave provides the easiest and most reliable payment solution for businesses anywhere in the world. The company makes it easier for Africans to build global businesses that can make and accept any payment, from anywhere across Africa and beyond.

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Onboarding and approval happen immediately. Flutterwave offers a wide range of payment methods like Mastercard, VISA, Bank Account, USSD, Bank Transfer, POS, and Visa QR (for local payments); and Mastercard, VISA, and AMEX (for international payments).


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  • Integrating Flutterwave is free.
  • Flutterwave charges 1.4% for local transactions and 3.8% for international transactions.
  • Processing fees are capped at a maximum of NGN 2,000.


Remita is a payment solution that helps individuals and businesses make and receive payments, pay bills, and manage their finances across multiple banks. Remita accepts payment in Naira and USD.

Remita offers a wide range of payment methods including Internet Banking, Debit/Credit Cards, Bank Branch, POS Terminals, Mobile Wallet, Cash Agents, mPOS, Direct Debit, Standing Order, and Electronic Purse.


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  • Setting up Remita for your business is free.
  • Remita charges 2% for local transactions and 4% for foreign transactions.

Interswitch Webpay

Interswitch is Nigeria’s leading technology-driven digital payments company, helping to shape the payments ecosystem across the growing e-commerce sector in Africa. Interswitch offers a wide range of payment methods including all Nigerian cards, Verve, MasterCard, and Visa. Onboarding and approval take 1 – 2 weeks approximately.


  • Interswitch charges a one-time integration fee of N150,000.
  • For transactions below N133,333, a fee of 1.5% applies, and N2,000 flat fee for transactions above N133,333.


PayU is a global payment platform that provides a secure way for individuals and merchants to accept and process online payments without the need for their own websites. PayU offers a variety of payment methods including Mastercard credit and debit cards, Verve, Visa and EFT bank transfer.


  • PayU has a free setup cost.
  • It has a 2% service charge on all transactions.


Voguepay is an online payment gateway that allows businesses to process payments in any currency from customers all around the world. Vogue accepts payments via local and international payment methods including Verve, Visa, Mastercard, Bank Transfer, and Voguepay wallets.


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  • Vogue pay charges N1500 (with Corporate Affairs Commission Certificate) and N2500 (with Government issued Identity cards) for setup.
  • Local transactions attract a 1.5% charge, while international transactions attract a 3.8% charge.
  • Onboarding and approval to Voguepay take between 1-5 days.


Monnify is a payment gateway that allows businesses to seamlessly process payments from customers from multiple payment channels. It provides an easier and faster way for businesses to receive payments from customers on their web and mobile applications.

Monnify accepts payments via USSD, Internet banking, mobile banking app, and all Nigerian debit cards.


  • Monnify setup fees and maintenance costs are free.
  • The fee for account transfers is capped at N500 per transaction or a flat rate of N300 (excluding VAT).
  • The card fee is capped at N2000 per transaction.



Adopting a payment gateway for your online business can reduce the risk of fraud and also help you retain your customers. This means that your business is open 24/7 and your customers can shop at any time from the comfort of their homes.

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