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COVID 19: Impact and Opportunities for Financial Services Agents in Nigeria

COVID-19 has had a significant impact on the global economy,with surging infections, cities in lockdown, businesses shutting down and staff layoffs



Financial skills everyone should master (1), , Essential soft skills that will help you succeed in your business, COVID 19: Impact and Opportunities for Financial Services Agents in Nigeria

COVID-19 has had a significant impact on the global economy, with surging infections, cities under lockdown, businesses shutting down, travel restrictions, and staff layoffs. Forbes recently reported on the four basic ways the virus is impacting the world. First, supply chain failures because of the impact of the pandemic on China. The second harm results from the direct effects of illness in lost work by those who are sick or attending to the sick. The third and biggest impact to date is the indirect effect of quarantines, travel restrictions, restaurant and store closures, and so forth. These are weighty and trigger the fourth implication which is a surge in demand shocks as the incomes of many people diminish.

According to a recent report by the United Nations Development Programme, the socioeconomic impact of COVID 19 on poor and developing countries will take years to recover from, with income losses in developing countries forecast to exceed $220bn. It estimated that nearly half of all jobs in Africa could be lost.

In Nigeria, people began the year 2020 with high hope of measuring increased financial inclusion by the end of the year.  The effect of the pandemic has hit hard on the federal government as the country is now facing U.S dollar shortages due to the crash in oil prices. It has also impacted low-income households and businesses due to government measures to curb the spread of the virus.

Most states have banned all public gatherings and closed major markets and schools. The federal government recently announced lockdowns in commercial hubs, including Lagos, Ogun State and the nation’s capital, Abuja. These measures are having sweeping implications on the low income and financially excluded population with high reliance on their informal day-to-day business transactions for survival.  According to the EFInA Access to Financial Services in Nigeria 2018 survey, 44.3 million adults own businesses and about 23 million adults earn their income daily or weekly.


What does this mean for financial services agents?

Financial services agents are also being affected as they are experiencing diminishing transactions and income due to the closure of a significant number of businesses and low economic activity. Other challenges faced by agents as a result of the pandemic include limited support from the financial service providers that hired them, as most financial institutions have implemented working remotely. Agents now rely on rebalancing through ATMs where they face cash withdrawal charges, increasing their cost to serve. They are also coping by rebalancing through accessing funds from family and friends, a method that can be unreliable.

Financial services agents are faced with more threat of harassment by law enforcement agents including the police and local council officials who lack knowledge of agent banking during the lockdown. Upon this realisation, some providers have offered special banners that read ‘Approved Essential Financial Institution’ to minimise agent harassment during this crisis.

The Central Bank of Nigeria in its recent press release excluded super-agents from the list of financial institutions exempted from government lockdown restrictions. This has triggered conversations among industry stakeholders about whether agents should operate during this period. Because transacting at an agent location requires some in-person engagement, some suggest that allowing agents to continue to operate is not worth the risk. On the other hand, agents can serve as critical access points for financial services that are essential, such as sending money to family members whose income has suddenly been interrupted due to restricted movement. Countries such as the U.S., UK, Italy, Spain, China and South Korea are opting to quarantine potentially contaminated cash to reduce the risk of spreading the coronavirus. The World Health Organization has not said that coronavirus can be transmitted through cash; however, they are advising consumers to switch to contactless payments to reduce risk. It is important for the financial services agents to be enlightened on precautionary measures to protect themselves, customers and reduce the risk of spreading the virus.

(READ MORE: How to Get Up To A 6-Million-Naira Loan In 24 Hours From Rosabon Financial…)

Call to Action

Agent banking is an important rail for providing financial services, especially in hard to reach areas. Both the federal and state governments are coming up with various palliative stimulus measures such as cash transfers and distribution of foodstuffs to cushion the effect of the pandemic. Agent networks should be a veritable channel to distribute these palliatives to households. Although exact figures are difficult to determine, there may be approximately 300,000 financial services agents spread across the country. The Nigerian government can use financial services agents to drive account opening among beneficiaries of cash transfer programmes, which will not only cushion the effect of the pandemic but also contribute to Nigeria’s financial inclusion drive.

Borrowing money, COVID 19: Impact and Opportunities for Financial Services Agents in Nigeria

Financial service providers (FSPs), on the other hand, should come up with measures to support agents during this pandemic period. This could be through provision of soft loans, equipping agents with personal protective equipment (PPE), and online training on precautionary measures that agents can take to reduce the risk of infection. FSPs also need to seek business collaboration that can stimulate transaction flow at agents’ locations to help agents remain active and profitable.

For years, financial services agents have played an important role in their communities by extending access to financial services to underserved Nigerians. They can now play a critical role in helping those communities through the COVID pandemic. We must work together to support agents in operating safely and to identify ways in which agent networks can help us weather the coming storm.

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Written byHenry Chukwu Agent Networks Specialist at EFInA


Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform.To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

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How Nigeria can make more money from Oil?

A hedged economy might create additional revenue needed for the country to rebalance its reserves.



Crude oil still remains a major source of revenue for Nigeria despite a tumultuous 2020 for oil prices. The commodity contributes 90% of our export earnings and will still be a major revenue generator for the foreseeable future.

With this in mind, it is high time Nigeria explores other forms of revenues that can be derived from oil. 200 million Nigerians cannot be catered for with the proceeds of a country that has a production capacity of 1.4 – 1.9 million barrels per day (depending on the quota with OPEC). In contrast, Saudi Arabia has a production capacity of 11 million barrels per day and a population of 30 million.

This article does not only relate to the issue of macroeconomic stabilization, but highlights if the Nigerian government can make use of financial instruments ‘hedging’ to diversify and provide the government with added flexibility and additional tools to make more revenue.

Most countries who do not partake in this hedging programme, either have lower costs of production like Saudi Arabia and Russia, or do not want to take the risks associated with the programme.

Case Study: Mexico

Last year, when oil prices crashed and entered negative digits, Countries dependent on oil were adversely affected by the crash. But somehow, Mexico for the fourth time, cashed about $2.5 billion from its oil hedge program.

For over two decades, Mexico has guaranteed oil revenue via options contracts purchased from oil companies and Wall Street investment banks. Mexico’s hedging experiences of its oil exports is often used as an example for other countries to follow.

In 2009, after the financial global crisis, Mexico made $5.089 billion from it’s hedging position. In 2014, when oil prices plummeted and countries reliant on high oil prices were affected, Mexico was “unbothered”. The Ministry of Finance had purchased put options with one year maturity to hedge 228 million barrels of oil, about 28 percent of production, at a strike price of US$ 76.4 per barrel — US$ 31.1 above the actual average oil price in 2015. Mexico earned $6.4 billion from that hedge. In 2016, Mexico earned $2.7 billion from its hedging.

Since Mexico began running the hedge program in 2001, it has made a profit of $2.4 billion — payouts brought in $14.1 billion while the costs of running the programme cost $11.7 billion in fees to banks and brokers.

Last year, people argued that Mexico’s hard stance during the OPEC+ talks in April is directly related to the fact that it had a hedging programme in place. I must add that hedging gives you an edge in the markets but It’s far more technical, risky and in a few cases profitable. Sources within the NNPC say that the Nigerian government has not executed a hedging program yet.

So how does this programme work?

Mexico, a big exporter of oil and a member of OPEC, hedge their oil against declines that may occur in the market. Take for example, last year as a result of the pandemic and an unsuccessful OPEC meeting due to Russia and Saudi Arabia’s oil supply war, oil prices dropped to negative digits.

A government like Mexico, who hedges their oil with trading schemes would have been benefited from the drop. In this case, for every drop below the “strike price” (A strike price is the set price at which an oil derivative contract can be bought or sold when it is exercised) revenue is being made.

Hedging works both ways. It depends on who the hedger is. In the case above, Mexico is an exporter of oil, so it hedges against drop in prices. However, a country like Egypt, which announced it had executed its own hedging programme last year is a net importer of oil. Primarily, it hedges against the rise in prices. As oil prices rise, Egypt generates money despite naturally preferring low prices as an importer.

Additionally, the downstream sector needs to improve. This is another avenue Nigeria can take to make more money from Oil. The Nigerian downstream sector which involves petroleum product refining, storing, marketing and distribution has much room for development and can improve the fortunes of the millions of Nigerians. Oil accounts for 9% of Nigeria’s GDP and if we look at that, it’s very minimal if we take into context how important Oil is to our economy.

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As I wrote in the earlier premise, this is not as straightforward as it sounds. There are insurance premiums to consider (the cost of the hedging programme), timing of the execution and general oil market outlook to examine.


For example, it appears that investors are going long on oil. All commodity analysts and banks are also favouring high oil prices as a result of vaccine availability and global supply cuts. Goldman Sachs forecasts oil to be $70 by Q2 2021 and Morgan Stanley also sees Oil at $70 by the third quarter. It would be highly risky to hedge against declining prices in this environment. (Recall prices going in the opposite direction doesn’t favor the hedger).

A hedged economy might create additional revenue needed for the country to rebalance its reserves.

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PS. I am willing to discuss further with interested stakeholders on the possibility of carrying hedging operations for Nigeria.


Dapo-Thomas Opeoluwa is an Investment Banker and Energy analyst. He holds a degree in MSc. International Business, Banking and Finance from the University of Dundee and also holds a B.Sc in Economics from Redeemers University. As an Oil Analyst at Nairametrics, he focuses mostly on the energy sector, fundamentals for oil prices and analysis behind every market move. Opeoluwa is also experienced in the areas of politics, business consultancy, and investments. You may contact him via his email- [email protected]

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Sell-off of shares by investors extend Flourmillers loss on NSE to N25 billion

Nigerian Flour millers on NSE suffer a decline as wary investors offload shares.



Bloody February: Sell off of shares by investors extend Flourmillers loss on NSE to N25 billion

The sell-off of shares on the Nigerian Stock Exchange has triggered an N24.9 billion loss in the market capitalization of Flour Millers since the beginning of February, as wary investors offload.

It is important to note that the Nigerian Equity Market has been on the downward trend since the beginning of February, as wary investors sell off stakes in companies as the yields in the money market become attractive.

The results of this move led to a decline in the shares of companies listed on the Nigerian Stock Exchange, including a decline in the shares of Flour millers listed on the bourse.

A review of the performance of the stocks of these Flour millers on NSE revealed that the market capitalization of FLOUR MILLS, HONYFLOUR, and Northern Nigeria Flour Mills from the open of trade on February 1 till the close of trading activities on February 24 has declined from N154 billion to N129 billion.

How they have all performed

FlourMills has declined from N142.3 billion to N118.3 billion. However, the market cap of Honeywell Flour Mills has also declined, albeit marginally from N10.31 billion to N9.91 billion, while that of NNFM has declined from N1.72 billion to N1.25 billion. When added up, the three millers have lost N24.85 billion in market capitalization.

However, Flour Mills, the largest miller on NSE lost the most with N23.98 billion, as a percentage of market capitalization. Flour Mills is down by 16.85%.

Market activity

At the end of trading activities on the floor of the Nigerian Stock Exchange, the shares of Flour Mills declined by 6.9% to close at N28.85 per share, as investors sell off 5,029,161 ordinary shares of the company worth N143,009,264.10.

Shares of Honeywell at the close of trading activities today declined by 1.6%, while shares of Northern Nigeria Flour Mills remained unchanged at N7.02 per share.

The Consumer good index to which the Flour millers belong has fallen by 6.1% year since the beginning of February, compared to the Nigerian Stock Exchange All Share Index -5.17%.

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