E-Financial
FXTM Analysis: Nigeria Stumbles into Q4
Prolonged periods of depressed oil prices have punished most oil export dependent countries in 2016 with Nigeria being no exception.
When one factors in that the nation receives over 90% of export and 70% government revenues from oil which is currently struggling below $50 a barrel, it could be understood why the world’s second largest economy in Africa has entered a technical recession.
This has been a rough year for the economy with the CBN taking action on various occasions from the Naira de-peg, to raising interest rates to record highs in a bid to reclaim some stability.
Despite the attempts, unemployment still lingers around 13.3% while inflation skyrocketed to 17.6% in August consequently enforcing additional pressures on the nation already engaged in a painful battle with falling oil.
It has become increasingly clear that Nigeria’s illness can be diagnosed as oil reliance, but the cure can be found in diversification.
The Naira continues to be exposed to downside risks as the terrible combination of oil price volatility and Dollars potential resurgence amid US rate hike expectations entices sellers to attack.
With sentiment towards the Nigerian economy still somewhat bearish in the shorter term, further declines could be expected in the local currency as the natural forces of supply and demand determine its equilibrium value. It should be kept in mind that the ongoing forex scarcity which continues to pressure the Naira has created a firm foundation for bears to install repeated rounds of selling.
There exists a possibility of the Naira strengthening in the longer term but the currency remains heavily exposed to external risks in the short term. From a technical standpoint, the Naira is heavily bearish and this negative momentum could open a path towards 500 and potential higher against the Dollar on the black market exchange.
While the effects of the Naira floatation can be displayed with the sharp drop in currency value and rising inflation, this has also bolstered foreign investment towards the nation.
Since the introduction of the flexible foreign exchange regime, almost 1 billion dollars has entered the country from foreign direct investments with further inflows expected if the Naira continues to decline.
Market participants may focus on the pending inflation figures for September which could provide additional clarity over if the Central Bank of Nigeria takes further action in 2016. With the economy still under pressure, the CBN may be entangled in a three-way battle with attaining growth, curbing inflation while also retaining some credibility.
There have been many discussions over the record high-interest rates of 14% repelling business to borrow consequently obstructing GDP growth, but with central bank caution remaining a recurrent theme, the CBN may be on standby before taking action in November or December.
Nigeria is in need of capital to boost its economy and this has sparked talks of the nation selling its national assets to calm investors, curb currency speculations and potentially stabilize growth.
With the government receiving very little from depressed oil prices and the obstructions in the south depleting production even further, selling the assets could be a solution in the short term. Many have been against the idea of relinquishing the assets and have labelled it as a quick fix which could leave the nation under further pressure in the longer term.
With oil prices trading below $50 and the persistent uncertainty over the conflict in the south of Nigeria weighing on sentiment, this may be an unfavourable period to offload oil assets. When coupled with the state of the economy, the government could find itself in a position of weakness when selling potentially receiving a deal well below the true value.
The world’s second largest economy in Africa faces a dilemma between selling its national assets and borrowing externally to retrieve enough investments to jumpstart growth. It should be kept it mind that diversification and reinforcing infrastructure need capital which the nation does not possess consequently creating a situation where a decisive decision must be taken.
While Nigeria may be commended on its efforts to boosting foreign exchange investments via the floatation and tax reforms to bolstering government revenues, this is still far from the 15 Billion needed to fuel its structural transition.
The African Development Bank, IMF, and even China have all offered loans to help reinvigorate growth but it seems that the nation has decided to think things through before potentially taking action in 2017.
Despite the current gloom and doom, the longer term outlook for Nigeria still looks quite encouraging with the biggest challenge being how the nation weathers the uncertainty and external risks in the short term. With a population of over 180 million and fertile lands, agriculture could be the miracle pill which brings Nigeria back to health. Once the nation can feed its people, the surplus could be exported which could provide the revenues needed for the government to reinvest back into the economy.
If the infrastructure is reinforced, then tourism could receive a welcome boost as safer roads magnetize tourists to the nation. Nigeria’s untapped maritime is a hidden gem that has been estimated to generate roughly 7 trillion Naira annually if properly managed and could be one of the attributes which reflate the economy. The resources needed for Nigeria to steer away from oil dependence are present and the key may simply be proper management and time.
As Q4 commences, Nigeria may be slightly pressured if oil price volatility and a resurgent Dollar punishes the Naira further. Although OPEC shocked the global markets last week by deciding on an agreement to mitigate the oversupply woes, oil still remains somewhat pressured potentially trickling back to oil export nations.
If the Federal Reserve decides to raise US interest rates in December, then both the Naira and Oil could be vulnerable to heavy losses as bears install repeated rounds of selling.
There could be an increasing focus on key domestic economic reports such as inflation, unemployment, and GDP for further clarity on how the Central Bank of Nigeria may jumpstart growth. This is a very critical time for Nigeria and although diversification is the key for the nation to transition away from oil dependence, many will be observing where the funding will come from.
Central Bank of Nigeria (CBN) has directed all International Money Transfer Operators (IMTOs) operating in the country to open and maintain naira settlement accounts with authorised dealer banks, as part of efforts to tighten oversight of diaspora remittances and improve transparency in the foreign exchange market.
The directive was contained in a circular dated March 24, 2026, signed by Dr Musa Nakorji, director of the Trade and Exchange Department, and addressed to IMTOs, authorised dealer banks and the general public.
The circular was published on the apex bank’s website on Tuesday.
The CBN said the measure is aimed at “enhancing diaspora remittances, strengthening transparency, traceability, and effective monitoring of all transactions.”
It stated that “all IMTOs are hereby directed to open naira settlement accounts and ensure that all transactions are routed strictly through their designated settlement accounts, maintained with Authorised Dealer Banks in Nigeria.”
Under the new rule, all inflows, beneficiary payments and related settlements linked to international money transfers are to be processed solely through these accounts.
IMTOs may, however, operate multiple settlement accounts across different banks in line with their operational needs.
The circular also introduced tighter controls on how the accounts can be funded, stating that they “shall only be credited with remittance flows and proceeds of foreign exchange conversions by licensed IMTOs (or their agents)” within the Nigerian foreign exchange market.
Operators are required to clearly designate the accounts and submit the details to the CBN, with updates provided periodically where necessary.
To improve market operations, authorised dealer banks are permitted to process foreign currency transfers from IMTO settlement accounts to other banks and approved participants, including licensed Bureau De Change operators.
The apex bank further directed IMTOs to adopt market-reflective pricing by referencing the Bloomberg BMatch system. It said IMTOs “shall observe real-time market prices from the Bloomberg BMATCH and utilise this as guidance for pricing transactions with their customers and Authorised Dealers.”
According to the CBN, this approach is expected to “improve price discovery, reduce information asymmetry between IMTOs and banks, and encourage increased participation in the official FX market.”
The bank added that all operators must maintain proper transaction records for regulatory checks and comply fully with anti-money laundering, counter-terrorism financing and counter-proliferation financing rules.
“This directive takes effect from May 1, 2026. Please note and ensure compliance,” the circular stated.
The move shows the CBN’s push to channel remittance inflows through formal banking channels, boost liquidity in the official foreign exchange market and strengthen regulatory oversight of cross-border transactions.
E-Financial
DLM Capital Group’s AAA-Rated Sovereign Bond-Backed Composite Notes (“SBCNS”) Strengthens Investor Confidence with Successful First Principal & Interest Payment
Foremost Development Investment Bank, DLM Capital Group has reinforced its position as a leader in innovative fixed income solutions with the successful payment of the first principal and interest (coupon) to investors under its Sovereign Bond-Backed Composite Notes (“SBCNs”) issuance.
This milestone, alongside the consistent delivery of quarterly performance reports, underscores the Group’s commitment to transparency, capital preservation, and investor confidence.
DLM SPV PLC’s 40.62% Hold-to-Maturity return ₦7.30 billion (Tranche A) and 19.07% ₦1.70 billion (Tranche B) Plain Vanilla Series 1 Notes, issued under its ₦30.00 billion Medium-Term Notes Programme and developed by Sonnie Babatunde Ayere, Group CEO of DLM Capital, was recently listed on the FMDQ Exchange with the Tranche A bond becoming the most valuable AAA-rated corporate bond on the market.
This represents a new class of structured debt instruments designed to meet both issuer funding needs and investor expectations. As a platform widely recognised for supporting innovative debt structures, FMDQ provides an enabling environment for instruments like DLM’s SBCNs to thrive.
At launch in July 2025, DLM SBCNs, which achieved a 9-notch upgrade from BBB- (GCR Sponsor ratings at issuance) without securitisation, entered the market with a healthy degree of skepticism, as is typical with pioneering financial instruments. However, after six months of post-issuance, DLM Funding SPV Plc has delivered on its promise by comfortably and successfully meeting its first principal and coupon obligations to its investors.
This performance milestone has significantly strengthened market confidence and validated the robustness of the structure. The notes are rated AAA by Global Credit Rating and AAA by DataPro Limited, reflecting their strong credit fundamentals and low-risk profile. Designed to prioritise capital preservation, liquidity, and above competitive market returns, the instrument stands out as one of the most compelling corporate fixed income offerings for institutional investors currently available in the market.
Investor response has been notably strong and institutional investors who are beginning to recognize the value of a well-structured de-risked, high-return and, high-quality fixed income investment backed by a credible issuer with a proven track record. The combination of timely coupon payments, high credit ratings, and ongoing transparency has positioned SBCNs as a preferred option for investors seeking stability and performance in today’s evolving financial landscape.
As investor interest continues to build towards Series 2, DLM SBCNs are not only demonstrating resilience but also setting a benchmark for innovation in Nigeria’s debt capital markets. In its role as a Development Investment Bank (“DIB”), DLM Capital Group remains committed to delivering structured solutions that align with investor needs whilst maintaining the highest standards of governance and execution.
Securities and Exchange Commission (SEC) said it has handed a six-week deadline to capital market operators to submit board-approved recapitalisation or license downgrade plans.
The directive was disclosed in the revised minimum capital guidelines issued by the Commission on March 18, 2026.
The Commission stated that all capital market operators must submit their board-approved and comprehensive implementation plans within six weeks of the June 30, 2027, compliance deadline.
“All CMOs are required to submit their recapitalization or downgrade plans within six weeks, with clear timelines and execution strategies.”
“Each plan must detail current capital position, minimum requirements, funding strategy, risk considerations, and governance structure.”
“Operators that fail to provide credible plans risk sanctions, including licence restrictions and regulatory delays under the ISA 2025 framework.”
“Pending applicants are not exempt, and applications older than 12 months will lapse and require fresh filings.”
The Commission added that this directive applies across all categories, including brokers, dealers, fund managers, custodians, exchanges, and digital asset operators, reinforcing the urgency of compliance.
The latest development followed its recent announcement on a sharp increase in minimum capital requirements across the capital market ecosystem, signaling one of the most significant regulatory adjustments in recent years.
Broker-dealers are now required to hold N2 billion, up from N300 million, while dealers must meet N1 billion, compared to the previous N100 million threshold.
On the other hand, Registrars face a new requirement of N2.5 billion, rising from N150 million, and Underwriters and clearing firms are benchmarked at N5 billion, while composite exchanges must now have N10 billion.
The Commission emphasised that the recapitalisation is not a one-time exercise but a long-term structural reform aimed at strengthening market resilience and aligning Nigeria with global standards.
A key feature of the new guidelines is the tightening of what qualifies as regulatory capital, which could significantly impact operators’ effective capital base.
The SEC has narrowed the definition to ensure only high-quality, loss-absorbing capital is recognised.
Recognized capital includes fully paid-up ordinary shares, qualifying irredeemable preference shares, share premium, and retained earnings from audited profits.
Unrealised gains are excluded, ensuring capital reflects actual financial strength.
Disallowed items include revaluation reserves, borrowed funds, shareholder loans, client funds, deferred tax assets, and encumbered capital, while Non-cash capital injections are permitted but must meet strict valuation criteria, including quoted equities, CIS units, government bonds, and eligible OTC-traded securities.
The Commission added that exclusion of debt and quasi-debt instruments underscores the regulator’s focus on enforcing genuine capital adequacy rather than leveraged compliance.
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