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The CBN data that can reveal whether we are already in a recession

 COVID-19 has had a major effect on the global economy, which is now stuck between uncertainty and a self-induced fall in demand



National economies and business firms move in cycles of boom and burst, growth and decline.

COVID-19 has had a major effect on the global economy, which is now stuck between uncertainty and a self-induced fall in demand, creating a drag on economic output and productivity.

Is Nigeria in a recession?

Right now, economic activities in Nigeria have ground to a halt, so the economy has slowed down. A slowdown is defined as a “deceleration of the economy.” Nigeria’s economic slowdown may last for a month or more. Meanwhile, economic growth rate may remain positive, even growing, but anemic.


Once economic growth stops, turns negative, and stays negative for 6 months (two quarters), the economy is in a recession. So, a slowdown is still a positive but slowing growth, while a recession is negative growth of at least two quarters. What about an economic depression? An economic depression is a longer and more severe recession, with GDP falling by a minimum of 10% into negative territory.

The business cycle also goes through four major phases: expansion, peak, contraction, and trough. All businesses and economies go through this cycle, though the length varies. Recessions happen or start to show when the economy starts to contract and falls into a trough. It is thus important as an investor to understand business and economic cycles, which as such aid effective planning.

(READ MORE: COVID-19: Signalling the emergence of Big Data analytics in Nigeria)

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The Central Bank of Nigeria (CBN) helps manage the economic cycle with monetary policy; it lowers interest rates to aid an end to a contraction or trough. That is called an expansionary monetary policy. The Central Bank can also raise rates to manage expansion, so it does not overheat. That is a contractionary monetary policy. The Executive may use fiscal policy as well.

5 Signs Nigeria is heading for a Recession,National economies and business firms move in cycles of boom and burst, growth and decline.

If an investor forecasts that an economic contraction is imminent, this means that the Central Bank may drop rates, the investor can take a position in the financial markets to either protect a position of benefit from a fall in rates. Similarly, if the investors forecast that the economy will experience a boom and expand, meaning the likelihood of a Central Bank (CBN) interest rate hike is elevated, another set of positions can be taken to profit from rising interest rates.

To simplify this, knowledge about the future direction of the economy is key in a portfolio planning and asset allocation. Consumer confidence plays a role in managing the economy and the current phase in the cycle.

So how can an economic forecast be done? 

Well not by guesswork. I always look at the Purchasing Managers Index (PMI) as a guide. The PMI is an index of the prevailing direction of economic trends in the manufacturing and service sectors. According to Investopedia, the PMI “summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting. If purchasing managers are buying more raw materials and delivery trucks, that can be interpreted as the economy in growth.


(READ MORE: Nigeria seeks bank documents of former President, others over $9.6 billion P&ID case)


I reference the Central Bank of Nigeria’s (CBN) PMI index as my guide; generally, a composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding. 50 points indicate no change and below 50 points indicates that it is generally contracting. The latest CBN Manufacturing PMI reading is for March 2020, and it does not look good. We summarize as below:

recession, National economies and business firms move in cycles of boom and burst, growth and decline.

The Manufacturing PMI in the month of March 2020 stood at 51.1 index points. The index grew at a slower rate when compared to the index in February 2020 at 58. Drilling down to the manufacturing subsectors index for 2020, the narrative continues.

Inventories: contracted to 49.4 points.

Production grew at 54.4 albeit slower than February.


New orders index grew 52.3, again slower than February.

Manufacturing supplier delivery time contracted at 49.4.

Employment level index contracted at 47.1 points.

All key subsectors saw declines from February 2020, with employment, inventories and supplier deliveries posting negative figures.

Whilst no single data point, especially in economics, is ever conclusive, this fall in Manufacturing PMI does indicate a significant economic slowdown, especially looking at the employment level which fell for the first time after recorded growth for thirty-four consecutive months

Clearly, the economy has slowed and may enter a recession. The question is for how long?


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Economy & Politics

Skills Africa needs for sustainable development

Over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili , will again celebrate Africa Day this year.



From Addis Ababa to Durban, Lagos to Cairo, from the Sahara Dessert to the Nile River, over a billion people with 5 official working languages – Arabic, English, French, Portuguese and Swahili – will again celebrate Africa Day this year.
A day to remember, reminisce and celebrate successes recorded against the struggles for independence, freedom from apartheid and colonization. Although, with the new normal brought about by Coronavirus, the 2020 celebrations would be quite unlike previous years.

The Africa Union (Formerly OAU) has recorded good milestones in terms of political independence and self-governance. So now is a good time for Africa to reflect on our independence.


On reading the objectives of the Africa Union (AU), words like independence, territorial integrity, human rights, security, cooperation are splattered across the pages. Significantly, none of the AU objectives seeks economic autonomy for Africa or her member states. This is a fundamental flaw which speaks directly to Africa’s issue of having a large population without the requisite skills for growth.

Our education is largely dependent on the western curriculum and narrative. There is hardly any major infrastructure, industrial or development project in Africa with 100% African content in manpower, materials or capital.

(READ MORE: Nigerian economy going into recession, might contract by -8.9% – Finance Minister)

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It is now well established and more evident that political independence without economic independence is like a car without an engine. Economic empowerment is the nucleus of national development. No fewer than 14 West African countries currently use CFA Franc, with some having used the currency for at least 75 years. This goes beyond nameplate as the Bank of France holds half of those countries’ currency reserves. This is effectively cutting their growth capacity by 50%.

Skill Up Africa for Sustainable Development

8 of those 14 countries will relinquish the CFA franc for the new ECOWAS currency, ECO (to be launched in July 2020). However, there is no indication that the affected African leaders would ask France for compensation for the years of economic sabotage to their countries. The introduction of the ECO was to bring a ray of hope, but we hope the real difference would not just be in the colour of the currency. This is because the ECO will not be autonomous but would be pegged against the Euro.

France is not alone in the economic sabotage of Africa, they are in the good company of the United Kingdom, the US and Belgium, to mention a few. However, are these foreign countries to blame? Africa got her independence, but African leaders refuse to be independent and the dependent mentality is also enshrined in the AU objectives.

One of the AU objectives states “to work with relevant international partners in the eradication of preventable diseases and the promotion of good health on the continent.” The statement looks good superficially, but it is enlaced with aid orientation, the lack of drive for self-reliance, and a beggarly mindset.


(READ MORE: Sahara Group donates medical equipment to support fight against COVID-19)


Let us educate Africa to pursue the development of its people, with core skills that are necessary to deliver the quality of the progress and growth that Africans desire. African construction companies should make African infrastructure and 100% African content should be the target in automobile engineering, healthcare, information technology,

Necessity is said to be the mother of invention. The need for Africans to lead Africa out of poverty, tyranny and underdevelopment is a matter of great importance, far beyond just necessity. Every African must desire to get skilled, and not just education, as we currently have it. We must have the competence to develop our agriculture system, mine Africa’s natural resources and add value by processing them locally.

Africa Day would only be truly worthy of celebration when African people and countries are skilled enough to accomplish our dreams of self-reliance and economic independence.

Article written by Olatunde Akintola. Olatunde is a Fellow of the Institute of Chartered Accountant of Nigeria and alumni of Manchester Business School. He writes from Lagos.

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Tech News

Tiktok’s In-App revenue surges amid lockdown

ByteDance Ltd’s brainchild, TikTok, together with Douyin ranking tops globally on mobile apps with the highest revenue generated for the month of April.



TikTok announces $250 million pledge to aid combat coronavirus, Does YouTube stand a chance against TikTok?

The meme-making business has proven to be worth all the fuss, with TikTok, as well as its Chinese twin app, Douyin, ranking tops globally on mobile apps with the highest revenue generated for the month of April.

Sensor Tower, notes that just in the first quarter of this year, ByteDance Ltd’s brainchild, TikTok, together with Douyin which caters to the Chinese market, generated 315 million downloads globally, from the 187 million it had just a year earlier.


The ranking, which was based on their in-app purchases, reveal a tenfold increase, as the companies garnered a whopping $78 million in revenue. The Chinese market is said to have contributed 86.6% of Douyin’s revenue, followed by the U.S market which contributed 8.2%.

This places them ahead of older names like Netflix & YouTube. As opposed to using subscriptions like these established brands, TikTok and Douyin allow users to purchase virtual currency to spend on their favorite content creators.

(READ MORE: Does YouTube stand a chance against TikTok?)

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While ByteDance is exploring the world of online commerce, it continues to rely on advertising as its primary income source. However, Emarketer projects that more than 75 million US social network users will make at least one purchase from a social channel in the year 2020.


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Business News

Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office

Some of the projects to be commissioned will be done virtually, while a few will be done on-site.



COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office

Lagos state governor, Babajide Sanwo-Olu, will virtually inaugurate housing, education, and road projects on May 29, as part of activities to mark his first year in office.

According to a report by NAN, the projects are part of the government’s efforts to renew infrastructure in critical sectors and to make the commercial centre a smart city.


Some of the projects to be commissioned will be done virtually, while a few will be done on-site.

The projects

Lagos state Commissioner for Information and Strategy, Mr Gbenga Omotoso, listed some of the projects in an official statement. He said:

”In the education sector, Sanwo-Olu will conduct virtual inauguration of completed classroom blocks in Maya Secondary School, Ikorodu; Eva Adelaja Junior School, Bariga; and Saviour Primary School, Ifako-Ijaiye, among others. 

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“Virtual inauguration of completed works such as the Concrete Jetty in Baiyeku, Ikorodu, Aradagun-Ajido- Epeme Road in Badagry, and the Maryland Signalisation project also form part of the itinerary to commemorate the anniversary.”

(READ MORE: Lagos increases health workers’ allowances, commissions local production of face masks)

Omotoso also stated that the Governor would inaugurate the 360-unit Lagos Homes in Ikorodu, and then visit Igbogbo Baiyeku IIB Estate, Lekki, and the Courtland Villas on Femi Okunnu Estate during the week.

Plans for celebrating Children’s Day

 In a related development, Governor Sanwo-Olu will deliver an address on Wednesday May 27 to mark the children’s day celebration, and the 53rd anniversary of Lagos state.

Omotoso, however, noted that all celebrations would be kept on the low in reflection of the current challenges and realities of the COVID-19 pandemic.


Presenting one-year scorecards

The activities for the week are expected to begin with press briefings at J.J.T Park in Alausa on May 27, where members of the State Executive Council will present their scorecards in line with the six pillars of the state’s T.H.E.M.E.S Agenda.


(READ MORE: Lagos Medical workers call off strike, as IG sends strong warning to security agencies)

According to the information commissioner, there will be two sessions of press briefings daily from May 27 to June 3, as the Governor considers it expedient to render a stewardship account of the last one year.

“Three special publications highlighting the achievements of the Babajide Sanwo-Olu administration and testimonies of beneficiaries of various initiatives of the government are slated for presentation to the public by the governor and his Deputy, Dr Obafemi Hamzat,” he added.

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