COVID-19 NLPS September 2020 Report: No Respite for Nigerian Households

Six months after the first round of the COVID-19 National Longitudinal Phone Survey (COVID-19 NLPS) carried out by the NBS in collaboration with the World Bank to assess the socio-economic impacts of the pandemic on households, the September 2020 update reveals no reprieve for Nigerian households’ incomes and consumption. The survey maintained the sample of 1,950 respondents but with an improvement in data collection method.

External Sector Struggles to Persist amid Second Wave of COVID-19

Weak global economic conditions due to COVID-19 have hurt oil demand and price for most of 2020.  This has come at a huge cost to the Nigerian economy which is dependent on the oil & gas sector for most of government revenues and over 90.0% of total exports. While oil price has recovered from the over 20-year record low of $15.0/bbl. in early April, the second wave of COVID-19 is dashing hopes of a stronger performance. Oil demand is expected to further weaken, prompting the reduction in oil price to $37.4/bbl. this week, 18.7% lower than the peak of $46.0/bbl.

FGN 2021 Budget: Grand Ambitions, Weak Capacity

The 2021 appropriation bill, which is targeted at boosting economic recovery and resilience amid COVID-19, was presented to the National Assembly by President Muhammadu Buhari on Thursday, exactly same period a year ago and the earliest since November 2017. Much like the 2020 budget, this would hasten passage and implementation. Additionally, the President noted that the Finance Bill 2020, which sets out revenue and fiscal policy plans for 2021, would be sent to the National Assembly for final consideration and approval.

Fitch’s Outlook on Nigeria: A Glimmer of Hope?

After downgrading Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B’ from ‘B+’ with a negative outlook in April 2020 due to COVID-19 pressures, Fitch Ratings has revised its outlook to stable following reduced uncertainties, stable oil prices and the reopening of the economy. The rating action was also largely influenced by CBN’s management of external liquidity pressures through partial exchange rate adjustment, capital controls, FX restrictions and the rise in external reserves following the disbursement of IMF’s $3.4bn Rapid Financing Instrument (RFI).

August 2020 CPI Report: Headline Inflation Soars to a 29-month high of 13.2%

There was persistent pressure on consumer prices in August 2020 as headline inflation rose to 13.2% y/y from 12.8% in July, according to the Consumer Price Index (CPI) report published this week. This is the 12th consecutive rise in inflation and the highest level since March 2018. The sharp increase in headline inflation was driven by a faster m/m inflation, which was up 10bps to 1.3%, the highest since June 2017.

Debt Report: Wide Fiscal Financing Gap and Currency Devaluation Induce Higher Debt Burden

The Q2:2020 debt data recently published by the Debt Management Office (DMO) revealed that Nigeria’s public debt stock grew 20.6% y/y and 8.3% q/q to ₦31.0tn ($85.9bn). This translates to a debt to GDP ratio of 20.4% based on 2020 GDP estimate, from 19.0% as at year-end 2019. The strong increase in the public debt stock was driven by the devaluation of the official exchange rate from N306.00/$1.00 to N361.00/$1.00 as well as external and domestic borrowing used to plug the large fiscal deficit brought by the COVID-19 pandemic.

Merchandise Trade Report: Trade Deficit Plunges Deeper as Exports Plummet

The total value of Nigeria’s merchandise trade in Q2:2020 declined by 37.6% q/q and 27.5% y/y to ₦6.2tn, the weakest since Q4:2017, as reported by the NBS. As a result, the moderation in trade deficit in the preceding quarter was short-lived as it worsened to -₦1.8tn in Q2:2020 from -₦139.9bn in Q1:2020, driven by a sharp decline in exports. This is the third consecutive trade deficit recorded since Q4:2019 and the worst performance on record.

July 2020 CPI Report: Headline Inflation at 28-month High of 12.8%

There was sustained pressure on consumer prices as inflation rose to 12.8% y/y in July 2020 from 12.6% y/y in June based on the Consumer Price Index (CPI) report published this week. This is the highest level of headline inflation since March 2018 while the streak of increasing inflation has been sustained since the land borders were shut around September 2019. The noticeable increase in headline inflation was driven by higher MoM inflation at 1.3%, the highest since June 2017.

Understanding Nigeria’s Indebtedness to China

Nigeria’s indebtedness to China has recently come into sharp focus. This has become a hot topic for good reasons. There is concern about who truly benefits from China’s infrastructure investments in developing economies through direct loans, especially given stringent conditions that could mean handing over sovereign assets to the country in the event of a default.

Insurance Sector Recapitalisation: Launching into the Deep

The Global Insurance Industry maintained steady growth in 2019 as premiums increased by 3.0% to $6.3tn after crossing the $5.0tn mark in 2018, representing 7.2% of Global GDP. Growth was supported by the improvement in both life and non-life insurance segments in China and the non-life segment in advanced markets. The non-life segment printed an impressive 3.5% growth in premiums to $3.4tn in 2019 while life insurance premiums grew by 2.2% to $2.9tn.