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.
The sixteenth season of DiamondXtra, a savings and reward account where customers of Access Bank are rewarded with several prizes, have been unveiled in Lagos.
L – R : Doris Okpara, Product Manager, DiamondXtra; Ngozi Igboanugo, Regional sales Manager Festac 1&2 & mainland Access Bank; Bolarinwa Animashaun, Regional Sales Director Lagos 2 Access Bank ; Emeka Ezikeugo, Diamondxtra N200,000 Onsite winner; and Adaeze Ume, Head Consumer liabilities, Access Bank during the launch of Diamondxtra Season 16 held at Alaba International Market Lagos yesterday.
The Season 16th of the special interest yielding hybrid account which allows deposit of both cash and third-party cheques has been upgraded as customers will win prizes to the value of N200 million and three SUVs, amongs other mouthwatering prizes.
Speaking at the unveiling in Alaba International Market, Lagos, Mr Bolarinwa Animashaun, regional sales director, Lagos, said the new season will bring more goodies to the customers as the bank has taken their interest at heart.
“In the last fifteen years, we have been able to ensure customer loyalty, reward committed customers over time and show that we are a bank that is ready to empower people and partner with people.
“If I take it into specific figures, we have rewarded 26,696 customers and we’ve given a total sum of N6.5 billion over the period.
This Season16is interesting, because, we have seen a lot of opportunities to expand into digital opportunities and this time around, we will be rewarding 15,786 customers, and 10,000 of them will be digitally rewarded.
“This is almost half of what we have done over the last 15 years. So that is what is making it special. We have takenit into the possibilities of how technology can expand our business and reward customers”.
The draws for the new season are going to be the same like the previous ones as it will be held in different regions.
“So, we start from the monthly draws, quarterly draws and the annual draws. What makes it extremely interesting this year is that we will be rewarding with up to N200 million in prizes and we have added some very interesting gifts. We will be given out three SUVs as part of the N200 million price for this year”, Animashaun added.
At the unveiling, Access Bank conducted onsite draws where 48 customers who have DiamondXtra accounts and were present at the unveiling won cash prizes ranging from N20,000 to N200,000.
Breakdown shows 40 customers won N20,000 each, five customers won N50,000, two customers won N100,000, while one customer went home with N200,000.
Among winners of the N20,000 prize was Mr Victor Edobor, who said he opened the DiamondXtra accounts 24-hours before the draws.
One of the two winners of the N100,000 prize, Mrs. Maureen Nneka Oforka, said she was surprised to have won at the well-attended event as that was her first time winning any prize.
She said, “I have never won any prize in my life. This is my first. I came here reluctantly and thank God, I am here and I am a winner of N100,000 which has already been paid into my account.
The grand prize winner of N200,000, Mr. Emeka Ezikeugo, a trader in Alaba, said. “I will forever be grateful to Access Bank for the prize as I was not expecting it. I thank the bank for showing leadership among its peers”.
To be part of the winning train and qualify for the DiamondXtra season 16 which is open to both new and existing customers, new customers are required to open a DiamondXtra savings account with just N5,000 by dialling *901*5# or walking into one of our branches to open the account.
However, the more multiples of N5,000 both new and old customers save, the higher their chances of winning at the monthly, quarterly and annual draws.
DiamondXtra is an interest yielding hybrid account which allows deposit of both cash and third party cheques. Hybrid means a combination of both savings and current account features. The DiamondXtra reward scheme has given away over N6.5 billion in cash and household items to over 15,000 loyal customers over the last 15years. Please click HERE to learn more.
Recognising the underrepresentation of women in the technology sector, Lafarge Africa Plc, has launched the Girls in Tech Program, a pioneering initiative aimed at empowering young women in technology.
Meticulously crafted to bridge the gender gap in tech and empower 10 young females between the ages of 18-25 years from Lafarge Africa Host communities in Cross River State, the program is poised to make a significant impact in the region.
The Girls in Tech Program seeks to harness the unique talents of these young women and introduce them to the dynamic world of technology. By providing them with essential skills and opportunities, the initiative aspires to equip them to become self-reliant as well as problem solvers in society.
In collaboration with Aptech and Arena Multimedia,globally recognized leaders in technology incubation and opportunity, as well as The Bridge Leadership Foundation, the boot camp promises to be a transformative experience for the participating girls, who are eager to make their mark in the tech industry.
Speaking during the onboarding to flag-off in Calabar recently, the Plant Manager, Lafarge Africa Plc, Sotirios Valsamakis, who was represented by the Human Resources Business Partner, Lafarge Africa Plc; Barong Ita, revealed that the program was in line with the company’s commitment to diversity and inclusion.
She also added that the initiative is designed to ignite a spark of inspiration, hope, and possibilities in the heart of the selected girls across the host communities.
“As an organization, people are an integral part of our sustainability drive, and we are invested in building lasting progress by empowering members of our host communities. We also recognize the need for greater and greener diversity and inclusivity within the tech sector.”
Today’s event is not just about launching a program. It is about igniting a spark of inspiration, hope, and possibilities in the hearts of these young women. It is about challenging stereotypes.”
Also speaking at the event, the Cross Rivers State Commissioner for Science, Innovation & Technology, Justin Beshel represented by Edwin Adie, Technical Senior Advisor, Cross Rivers State Ministry of Science & Technology commended Lafarge Africa for the initiative adding that it is in line with the State government’s plan towards science, technology and innovation development.
As the country faces economic challenges, the need for adaptive strategies in the fintech industry becomes paramount. In line with this, leading Fintech startup, Hydrogen Payment Services Limited (‘Hydrogen’), has teamed up with Co-creation Hub (‘CcHub’) to host an insightful event themed, ‘Adapting Fintech Business Models to Economic Climes’.
The event, set to take place on Thursday, April 18, 2024, from 12:00 WAT at the CcHub office in Sabo, Lagos, will delve deep into the intricacies of Nigeria’s economic challenges and how these influence the fintech ecosystem.
Participants will gain actionable insights on how to adapt fintech business models to volatile economic conditions by prioritising flexibility, agility, and customer-centricity.
This collaboration underscores the shared commitment of both entities to empower aspiring founders venturing into the Fintech space amidst economic uncertainties.
By leveraging their respective expertise and resources, Hydrogen and CcHub aim to equip emerging entrepreneurs with the knowledge, tools, and support needed to thrive in today’s dynamic economic conditions.
Emeka Awagu, Chief Technology Officer at Hydrogen, commented on the strategic partnership with CcHUB: “Our alliance with CcHUB amplifies our shared commitment to pioneering transformative solutions in Nigeria’s fintech sector.
“By leveraging Hydrogen’s technological expertise alongside CcHUB’s innovative approach, we are primed to set a new standard for fintech excellence and drive impactful change across the industry.”
The event will feature a distinguished panel of industry experts and thought leaders, including, Ina Alogwu, Group Director, Digital Transformation, ARM HoldCo; Emeka Awagu, Chief Technology Officer, Hydrogen, and Miracle Ezechi, Digital Marketing Manager, Hydrogen.
The panel discussion will be moderated to encourage an engaging and insightful conversation on the strategies and innovations required to thrive in Nigeria’s Fintech landscape amidst economic challenges.
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