General News
Nigeria elections under the spotlight; high-level US-China trade talks in focus
By Lukman Otunuga, FXTM Research Analyst
Tomorrow will be a monumental day for the Nigerian economy, as the presidential elections get under way. Although there was initially a sense of uncertainty after the elections were abruptly postponed last week, this feeling could be washed away by a market-friendly outcome. It will be interesting to see where the Nigerian stock market and Naira trade on Monday.
Global sentiment and risk appetite will be heavily influenced by the outcome of high-level trade talks between the United States and China that began in Washington yesterday.
While there is a growing sense of optimism over both sides securing a deal, a more realistic outcome will be for an agreement to extend the 1 March deadline. Such a development will open the doors to further negotiations down the road – ultimately removing some element of uncertainty over trade, while also reducing tensions. A return of risk appetite amid easing tensions will certainly be good news for global equities and emerging markets but will signal bad luck for King Dollar.
It has not been the best of trading weeks for the Dollar, especially after minutes from January’s FOMC meeting revealed that policymakers were unsure if rate hikes were needed this year. The Dollar is clearly facing multiple headwinds in the form of disappointing economic data and speculation over the Fed taking a long pause on rate hikes this year. While the economic and central bank divergence between the United States and everyone else seems to be supporting the Dollar, the question is – for how long? The Dollar may lose its throne, as fears over US growth slowing down sends investors to other safe-havens like the Japanese Yen and Swiss Franc.
In the United Kingdom, the Brexit saga has dragged on for too long and this fatigue is slowly being reflected in the Pound’s valuation. This was a week filled by Brexit noise, political drama in the UK and endless uncertainty. The pessimism over Theresa May securing any deal with the EU was re-confirmed this morning, after an EU official stated that “there will be no deal in the desert” at the summit in Egypt next week. I believe the Pound could still be offered a lifeline amid the chaos if the government extends Article 50 in an effort to prevent a no deal outcome. Taking a look at the technical picture, bears are seen to be re-entering the scene if a weekly close below the psychological 1.3000 level is achieved.
Taking a peek into the commodity markets, Gold is set to cap two consecutive weeks of gains after briefly reaching its highest level since April 2018 earlier this week. With US President Donald Trump set to meet China’s top trade negotiator, Vice Premier Liu He, later today, investors are left hanging on the edge of their seats just one week before the 1 March deadline. Any positive headlines of a trade deal being struck between the world’s two largest economies may put downward pressure on bullion prices. On the other hand, concerns about global growth momentum may offer support for Gold. Recently, weaker-than-expected economic data out of the US is starting to pose questions about the resilience of the world’s largest economy, especially when set against the slowdown evident in the EU and China.
In regards to the technical perspective, the precious metal seems to be in the process of creating a new higher low. The bullish trend on the daily charts remains valid above the $1303 support level.
Nigeria Atomic Energy Commission (NAEC), has said that there are plans for Nigeria to begin to generate electricity from nuclear sources.
Mr Anthony Godwin Ekedegwa, chief executive, NAEC stated this when he recently visited Mr Umar Yusuf Girei, acting managing director, National Inland Waterways Authority (NIWA),in Abuja.
He was at NIWA’s office to solicit the support of NIWA in achieving the numerous advantages of using nuclear energy technology in the country.
According to him, the partnership of critical stakeholders in Nigeria will position the country well in developing and maintaining its nuclear power plant.
The NAEC chief said Nigeria intends to begin the generation of electricity from nuclear sources instead of fossil-based power plants and hydro-based power plants, stressing that for Nigeria to develop, there is a need for the country to diversify its energy needs.
In his remarks, Mr Girei assured NAEC of his agency’s readiness to collaborate on the advancement of a nuclear power plant in Nigeria.
He promised the full support of NAEC for the success of a nuclear power plant in the country, saying that as the organisation saddled with the responsibility of regulating and developing Nigeria Inland Waterways, his entity is strategically positioned to play a critical role in the federal government’s quest for sustainable energy through the new technology.
In a powerful call for continental solidarity, Ralph Mupita, Group CEO of MTN, has asserted that the future of the African continent depends on the dismantling of xenophobic barriers.
Speaking at the Kgalema Motlanthe Foundation (KMF) Winter Seminar, Mupita framed migration as a fundamental characteristic of the African identity, urging South Africa and other nations to embrace integration over exclusion.
He emphasised that the survival of African enterprises depends on a borderless approach to trade and talent. “The digital economy we’re fast moving to knows no borders.” Mupita declared, noting that the mindset of exclusion is an outdated relic that hinders the continent’s ability to compete globally.
He argued that for Africa to leverage the African Continental Free Trade Area (AfCFTA), the psychological barriers of xenophobia must be eradicated.
Providing a stark financial justification for this stance, Mupita highlighted MTN’s own operational reality as a blueprint for Pan-African success. “We earn about 80 to 82% of our earnings from outside South Africa,” he revealed, illustrating that the prosperity of South African-born entities is inextricably linked to their success across the rest of the continent. This figure underscores the interdependence of African economies and the danger of isolationist policies.
Mupita’s stance was strong advocating for unity: “The future of Africa will not be determined by the borders that separate us, but by the economic opportunities that connect us. Governments must set predictable policy and regulations.
Businesses will follow and allocate resources and capital. Together, we can build a continent where opportunity is more evenly shared and prosperity is more widely created.”
Analysts observing the seminar noted that Mupita’s remarks come at a critical juncture where economic volatility often fuels nationalist rhetoric. By tying the fight against xenophobia to the balance sheet, MTN is positioning Pan-Africanism beyond the moral imperative to its function as a business necessity. The CEO stressed that “Migration is part of who we are,” suggesting that the movement of people is the primary engine for the movement of capital and innovation.
Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government and the National Pension Commission (PenCom) to suspend the proposed increase in Nigeria’s mandatory pension contribution from 18 per cent to 21 per cent, warning that the policy would raise the cost of doing business, threaten jobs and undermine enterprise sustainability at a time of mounting economic pressures.
Dr. Chinyere Almona, director general of the LCCI, said while strengthening retirement security remains an important policy objective, increasing mandatory pension contributions by three percentage points would impose additional financial burdens on businesses already grappling with high borrowing costs, persistent inflation, foreign exchange volatility, rising energy prices and multiple taxes.
According to the chamber, the proposed increase comes at a period when many businesses, particularly micro, small and medium-sized enterprises (MSMEs), are struggling to remain profitable amid Nigeria’s challenging operating environment.
The LCCI noted that Nigeria’s existing mandatory pension contribution rate of 18 per cent comprising 10 per cent by employers and 8 per cent by employees is already broadly aligned with the Organisation for Economic Co-operation and Development (OECD) average of 18.8 per cent.
It argued that raising the contribution to approximately 21 per cent would place Nigeria above several comparable economies, including the United Kingdom, where mandatory contributions stand at 8 per cent; the United States at 12.4 per cent; Kenya at 12 per cent, subject to earnings caps; and South Africa, where there is no equivalent mandatory private-sector pension contribution.
The chamber warned that implementing the proposed increase would significantly raise employment costs for employers, discourage new recruitment, constrain wage growth and place disproportionate pressure on MSMEs, which account for a substantial share of employment in Nigeria.
According to the LCCI, the higher payroll obligations could also reduce Nigeria’s competitiveness as an investment destination, encourage non-compliance with pension regulations and push more businesses into the informal sector.
“A stronger pension system cannot be built on weaker businesses,” the chamber stated, stressing that economic sustainability and business growth remain critical to expanding pension coverage over the long term.
The LCCI therefore called on the Federal Government to defer the proposal until a comprehensive Nigeria-specific actuarial and economic impact assessment is conducted to determine its implications for businesses, workers and the broader economy.
It also urged policymakers to engage in extensive consultations with organised private sector groups, labour unions and other key stakeholders before implementing any changes to the country’s pension contribution framework.
According to the chamber, the government’s immediate priority should be restoring business confidence, preserving existing jobs, encouraging investment and expanding the formal economy, which it described as the most sustainable pathway to improving retirement savings.
As an alternative to increasing contribution rates, the LCCI advised PenCom to focus on developing more innovative investment instruments capable of generating stronger returns on pension assets.
The chamber said improving investment performance would enhance contributors’ retirement savings without imposing additional financial obligations on employers and employees already facing difficult economic conditions.
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