E-Financial
Is Nigeria Heading for a Technical Recession?
By Lukman Otunuga, Senior Research Analyst at FXTM,
Nigeria’s monetary and fiscal policymakers face enormous challenges as the country confronts a looming technical recession just three years after the last downturn in 2017.
The COVID-19 pandemic circumstances have combined with low Oil demand and prices to brew up a perfect storm. Buffeted by the strong headwinds, Nigeria’s second-quarter GDP shrank by 6.1 per cent, the biggest drop since 2004.
Government revenues which rely on Oil sales shrank along with the demand for crude Oil. Besides that, low Oil prices may pressure foreign exchange earnings and reserves, as 90 per cent of Nigeria’s currency earnings stem from sales of crude Oil.
Country remains exposed to external risks
The second-quarter contraction highlights Nigeria’s exposure to external risks around the Oil markets, redoubling the urgency behind the state’s diversification efforts.
The World Bank expects Nigeria to face the worst economic recession since the 1980s because of the collapse in Oil prices. It projects the economy to shrink by 3.2 per cent for the full-year 2020 on the condition that Nigeria contains COVID-19 by the third quarter. If not, the contraction will be worse, according to the World Bank.
The International Monetary Fund (IMF) is more pessimistic about Nigeria’s economic outlook. It sees GDP shrinking by 5.4 per cent this year, the biggest decrease in 40 years. Goldman Sachs puts the full-year GDP contraction at a five per cent GDP contraction, closer to the IMF’s than to the World Bank.
The coronavirus lockdown weighed on the economy, as domestic and international activity caved in at the same time.
Domestic risks must not be overlooked
The economic contraction presents significant risks around consumer spending and investor confidence. The pandemic also triggered a higher threat of poverty. The World Bank sees the poverty rate rising to 42.5 per cent from its previous estimate of 40 per cent in 2020.
Along with the human cost, a rise in the poverty rate can affect macroeconomic stability and pose setbacks to economic benchmarks like inflation, unemployment, consumer spending and fiscal spending.
These macroeconomic statistics are already highly sensitive to further risks, like a second wave of COVID-19 or another Oil price collapse.
Unemployment stood at 27.1 per cent in the second quarter. The inflation rate rose to 12.8 per cent in July, the highest since March 2018, meaning a reduction of purchasing power. These benchmarks are likely to remain sources of concern in the second half of the year.
US Dollar scarcity remains another threat to growth, with Naira weakness and ongoing foreign exchange restrictions likely punishing the non-Oil sector.
Adding to the macro-economic challenges around COVID-19, Nigeria will have to reduce Oil production in August and September to comply fully with OPEC’s supply cuts. Coming on top of lower Oil prices, reduced production means decreased government revenues and foreign exchange earnings. An accompanying knock-on effect on GDP is likely.
In conclusion, Nigeria is likely heading for a technical recession. If the country contains COVID-19 and pro-actively prepares for more localised outbreaks, the World Bank believes this may support GDP and limit the economic damages. Over the last three months, COVID-19 cases have risen to 52,227 cases with 38,945 recoveries. The number of deaths stands at 1002, at the time of writing. When compared to South Africa’s 607,045 cases, Nigeria is in a better public health position. If the authorities limit the spread of coronavirus and continue to manage the situation effectively, Nigeria’s economy has better chances of recovering in line with a global recovery in the medium term.
Nigeria’s Bank Verification Number (BVN) database expanded to 69.55 million as of July 5 2026 from 69.32 million in June 2026, according to latest data released by the Nigeria Inter-Bank Settlement System (NIBSS).
BVN is an 11-digit biometric identification system introduced by the Central Bank of Nigeria and managed by the Nigeria Inter-Bank Settlement System (NIBSS) to secure customer accounts and reduce fraud.
This means that BVN enrolments increased by 228,947 between June and July 5 this year.
With the BVN database standing at 67.8 million as of December 31, 2025, it also means that the database grew by 1.75 million between the end of last year and July 5, 2026.
Specifically, with less than 1.8 million BVN enrolments so far recorded for this year, it is looking highly unlikely that BVN registrations at the end of 2026 will come close to the 4.3 million total registrations recorded in 2025.
Analysts note that while the expansion in the BVN database last year was largely driven by the introduction of the NonResident Bank Verification Number (NRBVN) initiative, which enables Nigerians in the diaspora to do their BVN enrolment remotely, thereby removing physical barriers and boosting cross-border financial engagement, the Central Bank of Nigeria (CBN) in March this year, announced a revised BVN regulatory framework, that saw it introducing stricter controls on suspected fraudulent transactions, BVN enrollment, and data access within the banking system.
According to the regulator, the amendments to the BVN framework, which came into effect on May 1, 2026, were aimed at strengthening fraud monitoring, improving identity management within the financial system and safeguarding the integrity of banking transactions, by strengthening identity verification and ensuring that BVN registration aligns with legally recognised age thresholds.
Thus, under the revised BVN framework, the apex bank introduced a stricter age requirement for BVN enrolment, limiting registration to 18-year-old individuals and above.
Also, under the new framework, customers will only be allowed to change the phone number associated with their BVN once. The CBN further stated: “Under the new guidelines, financial institutions are required to establish and maintain a temporary watch-list for BVNs linked to suspected fraudulent transactions reported within the banking system.
“A BVN may remain on this temporary Watch-list for a maximum period of twentyfour (24) hours, during which the BVN owner shall be contacted to provide clarification regarding the identified transaction(s).”
Launched on February 14, 2014, by the CBN in collaboration with the Bankers’ Committee, the NIBSS, and the German firm Dermalog, the BVN scheme was designed to capture the biometrics of all bank customers and provide each with a unique 11-digit identification number that can be verified across the Nigerian banking industry.
Central Bank of Nigeria (CBN) has reaffirmed that the standard N100 banknote remains legal tender across the country, warning that its rejection by individuals, businesses and institutions violates the law.
The clarification follows reports that some members of the public have refused to accept the standard N100 note over concerns about its legal tender status following the introduction of the commemorative N100 banknote issued to mark Nigeria’s centenary.
In a statement signed by Mrs. Hakama Sidi-Ali, acting director of Corporate Communications, the apex bank stressed that “both the commemorative N100 banknote and the standard N100 banknote are valid legal tender and must be accepted for all transactions nationwide.”
The CBN explained that the commemorative N100 note was introduced to celebrate Nigeria’s centenary and did not replace the existing standard N100 banknote.
The CBN cautioned individuals, businesses, financial institutions and other economic agents against rejecting the standard N100 note, noting that such action contravenes the provisions of the CBN Act and undermines public confidence in the national currency.
It warned that appropriate enforcement measures would be taken against any person or organisation found violating the law.
The apex bank reaffirmed its commitment to protecting the integrity of the naira, maintaining confidence in all duly issued banknotes and ensuring the smooth circulation of currency across the country.
The CBN also urged members of the public to continue accepting and transacting with all banknotes legally issued by the Bank and advised anyone seeking further clarification to use its official communication channels.
FCMB Asset Management Limited (FCMBAM), the asset management arm of FCMB Group Plc, has received an upgrade to its national scale long-term and short-term issuer ratings of A(NG) and A1(NG), from A-(NG) and A2(NG), by GCR Ratings, a leading pan-African credit rating agency.
The outlook on the ratings remains stable, said the rating agency.
The upgrade is anchored on FCMBAM’s competitive resilience and financial discipline, alongside the strengthened credit profile of FCMB Group.
GCR highlighted FCMBAM’s decade-long track record of strong performance, well-established brand franchise, diversified product suite and robust distribution network as key drivers of its standalone strength.
These are further supported by consistent earnings growth and a disciplined, unleveraged balance sheet, it said.
According to GCR, FCMBAM’s competitive position is supported by “its relatively long track record, strong brand franchise, established product and geographical distribution network and cross-selling opportunities,” with the rating agency noting that FCMBAM ranks among the top five asset managers in Nigeria, with an estimated five per cent share of a fragmented market as of 31 December.
The Company’s financial performance underpinned the upgrade, with revenue growing by 30 per cent and operating cash flow increasing by 13 per cent, enabling the business to be fully funded without recourse to debt.
Liquidity strengthened further, with liquidity sources versus uses improving to 5x as of December 2025, from 3.6x a year earlier, while the EBITDA margin edged up to over 58 per cent.
Commenting on the upgrade, the Chief Executive Officer of FCMB Asset Management, James Ilori, said: “This upgrade is an important external validation of a strategy we have pursued with discipline over many years: building an investment franchise that performs reliably, governs itself rigorously, and earns trust in every market cycle. It speaks to the strength of our membership of FCMB Group and to a culture that holds itself to local and global standards of risk management and capital stewardship.
“As Nigeria’s asset management industry enters a new era of higher capital thresholds and rising investor expectations, we intend to lead from the front – ahead of regulatory timelines, ahead in digital transformation and ahead in the outcomes we deliver for the clients who trust us to assist them in achieving their investment objectives.”
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