Like many other country in the world, Nigeria is currently navigating through uncertain economic times. Lots of Nigerians were not surprised when the Finance Minister, Zainab Ahmed disclosed that the country had requested $3.4 billion from the International Monetary Fund, $2.5 billion from the World Bank, and $1 billion from African Development Bank.
Nigeria is currently feeling the heat. This is because the country’s sole dependence on oil has made it susceptible to a Twin Shock. The shocks, as disclosed by analysts at KPMG, are the COVID-19 pandemic and Oil Price Shock.
The multinational professional services firm explained that Nigeria’s vulnerabilities to the impact of these external shocks can be adduced to increased dependencies on global economies for fiscal revenues, foreign exchange inflows, fiscal deficit funding, and capital flows required to sustain the nation’s economic activities.
Effects of crisis on supply, demand and financial
Supply: In 2019, KPMG noted that Nigeria’s imports from China were N4.3trillion (25% of total imports), while imported manufactured goods took up about 70 per cent of total imports.
No doubt, the import figures are expected to go southward by the end of 2020, as China and the rest of the world have shut their factories, imposing travel bans and in most cases total lockdowns.
This development, according to the analysts, would put more pressure on inflation numbers (12.2 per cent year on year as at February 2020).
Demand: The combination of the impact of COVID-19 and the lockdown policy responses implemented to curb the spread of the disease across the globe and locally has affected the global demand.
The depressed demand has filtered to the demand for Nigeria’s major export – oil, even before President Muhammadu Buhari pronounced a lockdown order on Lagos, Ogun states and Federal Capital Territory.
For instance, the top 5 major oil export destinations for Nigeria (India, Spain, Netherlands, South Africa, France and Italy) are all battling the pandemic and are under lock and keys.
The disruption caused by oil market wars, which was instigated by Saudi Arabia and Russia, also complicated issues for Nigeria, as it upset the demand and supply dynamics in the global oil markets.
Oil prices have fallen to a level below $30 per barrel, as inventories are accumulated and demand becomes increasingly dampened.
Coming home, the demand is expected to crash further due to the increasing cases of COVID-19 across various states, which has led to the restriction of movement and closure of businesses in major cities.
What this means: This may worsen as companies adjust to the new economic realities by laying off workers, further worsening the unemployment rate, which was reported at 23.3% according to the latest available data.
The impact of the twin shocks is also expected to disrupt global capital flows to emerging markets, including Nigeria. “Considering the role Foreign Portfolio Investment (FPI) plays as a major source of investment in our capital markets and fixed income markets, and more importantly, as a critical source of foreign exchange inflow to the economy,” as stated by analysts.
How it affects us: The depleting global capital flows is expected to put significant pressure on Nigeria’s foreign exchange reserves and exchange rates.
“Beyond the dynamics of foreign portfolio inflows, these Twin Shocks could potentially impact the banking sector’s access to trade lines from international banks, which will in turn impact external trade activities in the domestic economy,” the analysts said.
You may follow KPMG Nigeria’s analysis of the COVID-19 pandemicanalysis of the COVID-19 pandemic by clicking here.
Hyundai and Kia to set up an assembly plants in Ghana by 2022
The automobile giants will join Toyota-Suzuki, Nissan, Kantanka, Volkswagen, and Sinotruck who already have plants in Ghana.
Few weeks after Twitter announced its plans to open its first African office in Ghana, Hyundai and Kia have also concluded plans to set up an assembly plants in Ghana by 2022. The automobile giants will join Toyota-Suzuki, Nissan, Kantanka, Volkswagen, and Sinotruck who already have plants.
Ghana’s Minister for Trade and Industry, Alan Kyerematen announced this on Twitter.
Pleased to announce that Hyundai & KIA are set to establish assembly plants in Ghana by the end of 2022 to join Toyota-Suzuki, Nissan, Kantanka, Volkswagen & Sinotruck. The Ghana Auto Development programme = 3,600 assembly & 6,600 manufacturing parts jobs in Ghana. #InvestforJobs pic.twitter.com/JMHAmlM5VI
— Alan John Kyerematen (@AlanKyerematen) April 22, 2021
“Pleased to announce that Hyundai & KIA are set to establish assembly plants in Ghana by the end of 2022 to join Toyota-Suzuki, Nissan, Kantanka, Volkswagen & Sinotruck. The Ghana Auto Development program = 3,600 assemblies & 6,600 manufacturing parts jobs in Ghana.
“The local assembly of vehicles, 3,600 direct and indirect jobs would be created in Ghana, and the addition of components and parts manufacturing will also add about 6,600 direct and indirect jobs.”
Why this matters
More foreign companies are shunning Nigeria in favour of Ghana. Recently, Nairametrics reported that Amazon is set to situate its African Headquarters in South Africa, a multi-billion dollar investment that is projected to create over 20,000 jobs both directly and indirectly.
Following its move to Ghana, Twitter CEO, Jack Dorsey cited a number of human rights-related reasons for the choice of Ghana over Nigeria. Added to this are rising insecurity, stifling government regulations and the gapping infrastructural deficit bedevilling Nigeria. Consequently, our nation is steadily losing opportunities to attract foreign companies that could be very instrumental in bridging its unemployment gap which is currently over 30%.
Passports: Backlog of undelievered passports to be fixed before May 31st – Minister
The government also announced the launch of a new passport application system, which would be aided by fast track services nationwide.
The Federal Government disclosed that all backlogs of undelivered passport requests would be fixed before May 31st, and announced the launch of a new passport application system, which would be aided by fast track services nationwide.
This was disclosed by Minister of Interior, Rauf Aregbesola, in a press briefing with newsmen on Thursday.
What the Minister said
“On or before May 31st, all backlogs of undelivered requests for passports will be totally met, unless such applications have a problem,” he said.
“But before the deadline, the problematic application would be contacted, so that we know what’s wrong with the applications. Assuming there would be no problem, every successful application for a passport would be given a passport on or before May 31st,” he added.
The new passport process
The Minister disclosed that the FG will launch a new passport application process which would come into effect soon.
“When you finish your application process, there would be a waiting period of six weeks to collect your passport, however, if you want an express service, there would be fast track centres nationwide, to meet requests for express passport users,” he said.
What you should know
- Recall Nairametrics reported last month that the Federal Government inaugurated the Nigeria Immigration Service Passport Express Centre, which is a partnership with the private sector to enable the government offer passport services to Nigerians and make passports available in a maximum of 72 hours of a successful application.
- The FG also launched the Electronic Temporary Passport to cater for Nigerians desirous of returning home but whose national passport is not available.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- FCMB approves FY 2020 dividend pay-out of N2.97 billion to shareholders.
- Africa Prudential Plc posts profit after tax of N381.35 million in Q1 2021.
- Sovereign Trust Insurance Plc notifies stakeholders of 26th Annual General Meeting.
- Dangote Cement Plc to hold AGM on May 26th
- Linkage Assurance Plc proposes N500million as final dividend for 2020, and a bonus issue on its existing shares.