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Nigeria Navigates Through Choppy Global Macroeconomic Waters

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Lukman Otunuga, Senior Research Analyst at FXTM
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By Lukman Otunuga, Senior Research Analyst at FXTM,

The Nigerian economy continues to display resilience against heightened geopolitical risks in the form of trade uncertainty, Brexit, volatile oil prices and global growth fears.

Nigeria’s encouraging economic growth in the third quarter was one of the bright spots in the emerging market universe. GDP defied the slowing trend seen in other large economies to grow by 2.3 percent from upwardly revised 2.12 percent in the second quarter and 2.1 percent in the first quarter.

Nigeria Navigates Through Choppy

Lukman

What is helping to support the country’s growth in the face of growing risks to the global economy?

The Nigerian state’s drive and ongoing quest to diversify the economy has broadened its potential to earn from economic activity other than the commodities sector. It could be said that in this case, state policy is creating new opportunities for economic growth through diversification, slowly leading to less reliance on the Oil sector.

The same cannot be said for inflation, which jumped to 11.61 percent in October thanks to Benin border closures. Although the closure is intended to put an end to smuggling, it has also dampened trade and hiked inflation.

Still, on an annual basis, growth in the manufacturing sector recorded the fastest growth in 2019 by expanding 1.1% during the third quarter. Given how the value added by the manufacturing sector is roughly 8% of GDP, this should support the improving sentiment towards Nigeria. It is worth keeping in mind that growth in the manufacturing sector has escaped many other economies because of the pressure from trade disputes between the US and China.

 

Nigeria’s outlook still influenced by China

If Nigeria’s economy is displaying resilience against depressed Oil prices and trade uncertainty, some of the credit goes to the healthy relationship with China. Total trade with China was worth over $10 billion in 2018 and $3.1 billion in the third quarter of 2019.

The Naira/Yuan swap deal gets around the trade hindrance of a strong USD by allowing importers of Chinese goods to settle payments in Yuan instead of Dollars.

According to the half-year report by the Central Bank of Nigeria (CBN), this has had the effect of increasing liquidity and reducing foreign exchange pressure. It’s also likely to have reduced exposure to the effects of the US-China trade dispute. In addition, the interest rate incentive for deposits in Yuan in Nigeria is not inconsiderable after the CBN left rates unchanged at 13.5 percent.

Having said that, China’s economy cooled to six percent in Q3 and this may start impacting Nigeria’s export sales if the slowdown deepens. Nigeria’s exposure to a slowdown in China may be significant when we remember that three-quarters of its 2017 mineral exports went to the Asian giant. And this is just one example.

A further slowdown in China could also impact Nigeria’s borrowing for much-needed infrastructural projects. The state has borrowed $6.5 billion from China since 2002 and relies on these funds for development. Indeed, around 80 percent of Nigeria’s funding comes from China. Other than that, Chinese companies’ investments in Nigeria hit $20 billion according to Ye Shuijin, the president of the China Chamber of Commerce in Nigeria.

While the Naira/Yuan swap deal may cushion the local economy from the global effects of the US-China trade dispute, a trade deal between the world’s largest economies would be good for Nigeria.

Looking ahead to 2020, other external factors influencing the outlook for Nigeria’s economy are Oil prices, interest rate developments from the Federal Reserve and Brexit. Domestically, I’m watching for more positive signs that Nigeria is diversifying, breaking away from Oil reliance to more sustainable sources of growth. Already, growth in the non-Oil sector rose to 1.8 percent annually, adding 1.6 percent in Q2 on an annual basis, reflecting quickening growth in the agriculture and industrial sectors.

 

 

 


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E-Financial

EFCC Drags Cititrust to Court over Unreported ₦200mTransfers

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Federal High Court in Lagos has fixed July 1, 2025, for the commencement of trial in a money laundering case involving Cititrust Holdings PLC and three of its subsidiaries.

EFCC Drags Cititrust to Court over Unreported ₦200mTransfers

The subsidiaries are Cititrust Funding PLC, Cititrust Credit Limited and Cititrust Financial Services Limited,

The companies are facing an eight-count charge filed by a team of prosecutors from the Economic and Financial Crimes Commission (EFCC), comprising Anasoh Henry Onyekachi, Frankklin Ofoma, Abdulhamid Lamido Tukur, and A.A. Usman.

According to the charge, between 2021 and 2023, the companies, all incorporated in Nigeria, allegedly operated investment management services without a valid licence from the Central Bank of Nigeria (CBN).

This act contravenes Section 57 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and is punishable under Section 57(5) of the same legislation.

The prosecution also alleged that the companies conducted a Collective Investment Scheme without registering with the Securities and Exchange Commission (SEC), another violation of regulatory requirements.

In one of the counts, Cititrust Credit Limited is specifically accused of failing to report high-value financial transactions to the Nigerian Financial Intelligence Unit (NFIU).

These transactions include a N20 million transfer on January 7, 2021; a N200 million transfer on April 4, 2021; and a N200 million lodgement on January 29, 2021.

Additionally, both Cititrust Credit Limited and Cititrust Financial Services Limited are alleged to have made a single transfer and lodgement respectively of N42 million into their bank accounts on January 29, 2021, without proper disclosure to relevant authorities.

The alleged offences are in breach of Sections 11(1)(b) and 11(3) of the Money Laundering (Prohibition) Act 2022, as well as Section 54(1) of the Investment and Securities Act 2007, and are punishable under the respective laws.

The court is expected to begin full proceedings on July 1.

 


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E-Financial

S&P Global Ratings Downgrades Ecobank Nigeria’s Credit Rating to CCC-, Outlook Negative

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Ecobank Nigeria’s long-term issuer credit rating has been downgraded to ‘CCC-’ from CCC, with the outlook placed at negative by S&P Global Ratings. This is a resultant effect of the $150 million bond buyback offer on the bank’s $300 million Senior Unsecured Eurobond.

Part of the tender offer made by Ecobank includes an early tender premium of $12.50 for every $1,000 in principal (equivalent to 1.25%), with the anticipated settlement date set for July 8, 2025. The offer also requests bondholders’ consent to eliminate the capital adequacy covenant on the outstanding notes.

These actions also led S&P to downgrade the $300 million Eurobond from ‘CCC’ to ‘CCC-’. Although S&P notes that it does not consider the tender offer a distressed debt restructuring.

However, this assessment is at risk of changing if the bank does not receive the promised capital injection from the parent group, Ecobank Transnational Incorporated (ETI).

Following the naira devaluation, Ecobank was unable to meet the regulatory Capital Adequacy Ratio (CAR) requirement, as its CAR dropped to 7 per cent. This was below the 10 percent regulatory minimum. The breach of the CAR caused the bank to seek the consent of its bondholders to pause the capital adequacy notes on the Eurobond notes till September 2025.

Following this development, the bank received a $50 million prepayment on promissory notes from its parent company, ETI, along with early repayments on certain foreign currency loans. However, it has been insufficient in restoring the capital adequacy to regulatory levels.

According to S&P, the bank is expected to receive another $50 million capital injection from its parent group before August 2025. However, the ratings agency notes that if the bank is unable to receive this capital injection, it will inevitably default on its bonds. A situation that would cause a further downgrade to ‘CC’.

It was recommended that Ecobank Nigeria consider raising $150 million through additional Tier-1 instruments to strengthen its liquidity buffers. Additionally, the bank was advised to intensify efforts to recover its foreign currency-denominated loans.

 


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Fidelity Bank Uplifts Old People’s Home with Essential Items Donation

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Fidelity Bank Plc, leading financial institution has reaffirmed its commitment to corporate social responsibility with the donation of food and essential items to the Old People’s Home in Yaba, Lagos.

The donation was made possible through the generosity of the bank’s Nexus Inductees Class, under its Corporate Social Responsibility initiative known as the Fidelity Helping Hands Programme (FHHP).

Through the FHHP, staff across Fidelity Bank branches nationwide identify crucial interventions needed in their immediate community and raise funds to execute them. The bank’s management then matches this contribution with an equal amount and disburses it for the selected project.

Commenting on the donation, Divisional Head, Brand and Communications, Fidelity Bank Plc, Dr Meksley Nwagboh, emphasized the bank’s unwavering commitment to impacting its host communities positively noting that the community is an essential part of the bank success story.

“Today’s donation is a token of our appreciation for our incredible parents and guardians who have raised outstanding individuals that trust us with their banking needs.

“Our donation to the Old People’s Home reflects our deep commitment to supporting the well-being and dignity of our senior citizens.

“We are honored to contribute to a cause that ensures they receive the care, comfort, and respect they deserve.” Nwagboh stated.

Appreciating the gesture from the bank, the Director-in-Charge of the Home in Yaba, Adetutu Ipaye, said “Community support initiatives such as this from Fidelity Bank is vital to sustaining our mission and enhancing the quality of life for the elderly.

“We urge other organizations to follow in the Bank’s footsteps as this kind of support will go a long way to ensure that the elderly live with dignity and comfort”.

One of the beneficiaries from the home, Mr. Kamoru Adeyetu noted that, “Your presence today has brought us immense joy, and our greatest happiness lies in seeing the younger generation thrive. Beyond the gifts, your visit means the world to us and please remember to visit us regularly.”

Ranked among the best banks in Nigeria, Fidelity Bank Plc is a full-fledged Commercial Deposit Money Bank serving over 9.1 million customers through digital banking channels, its 255 business offices in Nigeria and United Kingdom subsidiary, FidBank UK Limited.

The Bank is the recipient of multiple local and international Awards, including the 2024 Excellence in Digital Transformation & MSME Banking Award by BusinessDay Banks and Financial Institutions (BAFI) Awards; the 2024 Most Innovative Mobile Banking Application award for its Fidelity Mobile App by Global Business Outlook, and the 2024 Most Innovative Investment Banking Service Provider award by Global Brands Magazine. Additionally, the Bank was recognized as the Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence and as the Export Financing Bank of the Year by the BusinessDay Banks and Financial Institutions (BAFI) Awards.


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