Nigeria recorded its lowest foreign trade with the United States since 2015 slumping to N1.5 trillion as of September 2020 compared to N2.1 trillion recorded in the same period in 2019.
The data is contained in the latest foreign trade report from the National Bureau of Statistics.
Falling US vs Nigeria Trade
Nigeria’s foreign trade with the United States has averaged N2 trillion in the last 3 years but is on track to fall to its lowest since 2015 as Covid-19 lockdowns affect trade between both countries.
- The situation is worse for Nigeria which continues to operate a trade deficit with the world’s largest economy swinging from a surplus between 2016 to 2018 to a deficit in 2019 and on track to report the highest trade deficit since 2013.
- Nigeria’s expanding trade deficit with the US is due to a fall in exports in the third quarter of the year. Nigeria only exported N212.75 billion of goods to the country compared to an import of N1.3 trillion.
- The drop in Nigeria’s export to the US this year is mostly due to Covid-19 as the world’s largest economy also doubles as the epicenter for Covid-19 cases in the world.
- Since the Shale Oil Boom shut out US global demand for oil in 2010, demand for Nigeria’s crude has fallen annually and contributed to taking the US out of the top 10 export destinations for Nigeria.
China vs Nigeria Trade
As Nigeria and US trade continues to falter, China remains a stronger and growing trade partner with the largest economy in Africa. According to data from the National Bureau of Statistics, China/Nigeria trade topped N4 trillion in the first 9 months of 2020 compared to N3.6 trillion in the same period in 2019.
- Nigeria is on track to post a larger trade deficit of N3.5 trillion with the world’s second-largest economy.
- According to NBS data Nigeria imports mostly raw materials, manufactured products, solid minerals and agricultural products from China.
- China has since taken over from the United States as one of Nigeria’s largest trading partners and continues to dominate the import of manufactured goods into the country.
- One of the reasons why this is so is due to China’s knack for utilizing sweeteners to cut deals with Nigerian business.
- Small Businesses in Nigeria seem to prefer China for several reasons. For example, obtaining a Visa to travel to China is significantly easier when compared to most European countries.
- Another reason is that in China, businesses in Nigeria can find willing partners able to replicate some goods (especially fashion products) made in other countrues. Perhaps the biggest reason is that China also offers a cheaper production cost at any scale for most Nigerian businesses.
Nigeria vs Africa Trade
Nigeria’s trade with its African neighbours fell by a whopping 42% in the first 9 months of 2020 compared to 2019. Nigeria’s total trade with African countries was N2.29 trillion compared to N3.8 trillion same period in 2019.
- Nigeria did more business with its African neighbours in 2019 after it recorded an all time high of N5 trillion in total trade.
- The poor performance this year is largely due to a fall in exports to its African neighbours. The NBS data does not explain why but this could be attributed to the closure of the borders.
- The last time Nigeria recorded export through the Seme land border was in the fourth quarter of 2019 and it was one of the lowest on record with a value of N23.8 billion only. It has been zero since then.
- Nigeria became the 34th African country to fully ratify and submit its Instrument of Ratification of the African Continental Free Trade Area (AfCFTA) last week.
- The AfCFTA is expected to expose Nigeria to a market of over 1 billion people with a GDP of about N3 trillion.
- If Nigeria’s is to expand its balance of trade, then Africa will need to be a center peice of its trade policies.
- We believe this will lead to an eventual reopening of the land borders.
Billionaire investors in Nigeria you may not know
A compilation of top Investors in companies listed on the Nigerian Stock Exchange, with whom you may be unfamiliar.
As a Nigerian interested in investing or making money, names like Aliko Dangote, Femi Otedola, Mike Adenuga, Tony Elumelu, Jim Ovia, Rabiu Abdulsalam, etc., come to mind as aspirational role models when it comes to net-worth. These men have all made billions of naira investing in companies listed on the Nigerian Stock Exchange either as founders or strategic investors.
- However, there are many other ‘lesser-known investors in companies listed on the Nigerian Stock Exchange who are worth billions (in naira).
- These investors are seasoned and while they may not always be the founders of the companies they are invested in; they own a significant chunk of the business through strategic investment stakes that earn them billions annually in capital appreciation and dividends.
EXCLUSIVE: Best performing banks in Nigeria judging by the numbers
Nairametrics analysed the best banks in Nigeria based on their performance in 2020.
The year 2020 was a remarkable year for the Nigerian banking industry as different policies such as the GSI policy, loan restructuring, etc., were issued in the industry’s favour. The industry became more competitive in the year, with each of the banks striving to increase its market size and revenue.
Tracking the public information of listed banks on the NSE, we analysed them based on popular metrics to determine the leading players in the industry. For the analysis, the full year 2020 results of the following banks were tracked: Access, FBN, FCMB, Fidelity, GTB, Jaiz, Stanbic IBTC, Sterling, Union, UBA, Wema, and Zenith Bank. Ecobank was not considered in the analysis as the bank operates efficiently in other markets besides Nigeria.
The key metrics considered in these analyses are Total Assets, Net Assets, Total Deposits, Profit After Tax, Return on Equity, and Return on Total Assets.
Leading Banks by Total Assets
An analysis of the combined assets of the 12 listed banks that have released their full-year (2020) results (Ecobank excluded) showed that the total assets increased by 27.9% from N38.7 trillion to N49.4 trillion. The increase indicates the stronger financial position of the banks.
Among the 12 banks listed in Nairametrics tracker, the following are the leading banks.
First position – Access Bank: N8.7 trillion
Second position – Zenith Bank: N8.5 trillion
Third position – UBA: N7.7 trillion
Fourth position – FBN Holdings: N7.7 trillion
Fifth Position – GTB: N4.9 trillion
Upshots – Access Bank and Zenith Bank maintained their positions as the banks with the highest total asset in 2020. UBA however, overlooked FBN to stand in the third position, while FBN declined to fourth on the list. Among the leading banks (FUGAZ), UBA had the highest year-on-year growth of 36.95% in 2020, while in the industry generally, Jaiz bank had the highest growth in total assets of 39.3%.
The net asset represents the remainder when all liabilities have been subtracted from the bank’s total asset. It indicates the shareholders’ funds in the banks. Due to the depository nature of commercial banks and the ability of banks to greatly increase their liabilities, the metric is adopted by the CBN in assessing the banking sector’s ability to withstand credit losses.
The combined net asset of our 12 analysed banks increased by 17.9% in 2020 with the largest growth of 25.3% coming from Stanbic IBTC.
The leading banks based on net assets are:
First Position – Zenith Bank: N1.1 trillion
Second Position – Guaranty Trust Bank: N814.4 billion
Third Position – FBN Holdings: N765.2 billion
Fourth Position – Access Bank: N751.0 billion
Fifth Position – UBA: N724.1 billion
Upshots: It is observed that all the banks had significant increases in their net asset in 2020 while the top ones also maintained their positions. However, Union Bank and Wema Bank recorded the least growth in net assets with a 4.75% and 5.9% increase respectively. Zenith Bank’s net asset grew by 18.6%, Guaranty Trust Bank by 18.5%, FBNH by 15.7%, Access bank by 23.8%, and UBA by 21.1%.
Customer deposits remain one of the most competitive items in the banking sector since it is from deposits that loans are issued out and other investments are made.
The total customer deposits of the tracked banks increased by 32.1% in 2020. The bank with the highest growth in customer deposits during the period was UBA growing by 48.1%, from N3.8 trillion at the end of 2019 to N5.7 trillion as of April 31st, 2021.
The leading banks based on Customer Deposits are:
First Position – UBA: N5.7 trillion
Second Position – Access Bank: N5.6 trillion
Third Position – Zenith Bank: N5.3 trillion
Fourth Position – FBN Holdings: N4.9 trillion
Fifth Position – GTB: N3.5 trillion
Upshots: UBA grew significantly in 2020, moving from fourth place in 2019 to the bank with the highest customer deposits at the end of 2020. Generally, all the banks recorded customer deposits growth higher than 20% in 2020 with the exemption of Jaiz bank and sterling bank which grew by 7.2% and 6.5% respectively.
Profits After Tax
Due to the increased capacity seen in the growth of total assets of the banks, the banks under our radar delivered improved PAT except for Fidelity, and Wema Bank.
Banks that declared the most profits are;
First Position – Zenith Bank: N230.6 billion
Second Position – Guaranty Trust Bank: N201.4 billion
Third Position – UBA: N113.7 billion
Fourth Position – Access bank: N106 billion
Fifth Position – Stanbic IBTC: N83.2 billion
Upshots: Zenith Bank and GTB outperformed their peers as done in previous years. Also, UBA again outgrew its 4th position in 2019 moving up the ladder to the third position at the end of 2020. However, in terms of growth in PAT, UBA also grew highest by 27.7% in the period under review.
Return on Equity
The return on equity is an important metric that shows the percentage of profit made on every N1 of the shareholders’ fund. It is used to measure the performance and efficiency of the banks.
This metric will show how well banks have maximised the increase in shareholders’ wealth they enjoyed in 2020.
The leading banks based on ROE are
First Position – Guaranty Trust Bank: 26.8%
Second Position – Stanbic IBTC Holdings: 24.4%
Third Position – Zenith Bank: N22.4%
Fourth Position – Jaiz Bank: N17.4%
Fifth Position – UBA: 17.21%
Upshots- Sequel to the increase in total assets and PAT of GTB, the bank was able to achieve the greatest efficiency in the industry delivering a return rate of 26.8% to its shareholders.
Return on Assets
This metric measures the ability of a bank to sweat its assets and deliver the highest possible profits. In the earlier section of the report, we stated that banks recorded significant increase in their assets, however, the ROA was lower. The ROA is a better measure of efficiency since it takes into cognition the bank’s usage of customer’s deposits.
Best banks based on ROA are:
First Position – Guaranty Trust Bank: 4.6%
Second Position – Stanbic IBTC Holdings: 3.8%
Third Position – Zenith Bank: 3.1%
Fourth Position – UBA: 1.7%
Fifth Position – Jaiz Bank: 1.5%
Upshots: A similar result is seen in ROA just as seen in ROE. The average industry ROA was 2.05% and Access (1.3%), FBN (1.1%), FCMB (1.1%), Fidelity Bank (1.2%), Sterling bank (0.9%), Union bank (1.2%) and Wema bank (0.6%) all performed below the industry average.
Nairametrics | Company Earnings
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- Union Homes REIT proposes final dividend worth N465.03 million for shareholders.
- GT Bank Plc holds FY 2020 investors presentation.
- Cornerstone Insurance Plc notifies stakeholders of late submission of financial statements.
- NSE approves delisting of 11 Plc shares.
- Berger Paints Nigeria Plc reports a 67% decline in Profits in FY 2020.