The President of the ECOWAS Commission, Mr. Marcel de Souza, says the recession being experienced in Nigeria has a negative impact on the sub-region’s overall economic performance. (Source: Punch)
Comment: The drag down on West Africa’s Gross Domestic Product (GDP) which was attributed to the recession in Nigeria may be true, since Nigeria contributes probably about two third of the sub-region’s gross domestic product. Conversely, West Africa’s GDP may be revitalized if Nigeria rebounds.
European Union (EU) official Fillippo Amato has advised Nigerian government to devalue the Naira as part of measures to tackle economic recession. (Source: Daily Trust)
Comment: Currency devaluation may possibly be used as one of the panaceas to recession. Consequently, devaluation strategy almost certainly thrives in an export oriented country, thus, making imports more expensive as exports become cheaper for trading partners. However, Nigeria is mostly import dependent, hence, we believe that further devaluation of the naira may not rescue the economy from economic downturn.
The International Monetary Fund is prepared to lend money to Nigeria and other countries facing economic crisis at zero interest rate in order to stimulate their recovery. (Source: Punch)
Comment: International Monetary Fund’s (IMF) offer of zero interest rate loan to Nigeria may be attractive, however, Nigeria should thorough consider the terms and conditions attached to the proposed facility before borrowing from IMF. Otherwise, other relevant means of revamping the economy may be implored.
Nigeria's economy is likely to shrink 1.3 percent in 2016, the National Bureau of Statistics executive said on Wednesday, a sharp downward revision of its estimates he said was prompted by sharp falls in the naira after dollar peg was dropped. (Source: Reuters)
Comment: The reduction in 2016 forecast may be explained by the effect of the current economic recession on economic growth prompted by persistent fall in oil revenues, depleted foreign reserves and deteriorated naira. However, this may be reversed through widening of tax net and economic diversification directed at generating non-oil receipts.
Nigeria has dropped three places to the 127th position on the latest World Economic Forum’s (WEF) Global Competitiveness Index (GCI) for 2016-2017, out of 138 countries surveyed. The country was previously ranked 124th on the index. (Source: This Day)
Comment: Nigeria was ranked low on the recent World Economic Forum’s (WEF) Global Competitiveness Index (GCI) probably as a result of weaker macroeconomic indicators, high cost of borrowing, unfriendly business environment, infrastructural deficit, poor health system, fallen standard of education, dwindled national savings and deteriorating current account position.
As the nation’s economy battles recession, there are indications that the banking industry’s stability has come under severe threat. The financial system stability report by the Central Bank of Nigeria, CBN, sighted by Vanguard, yesterday, indicated a steep rise in Non-Performing Loans. (Source: Vanguard)
Comment: The upsurge in bad loans in the banking sector may likely be occasioned by increased loan impairments, ensuing from the depreciation of naira, incapability of obligors to service foreign currency denominated loans, exposure to oil price volatilities, increased cost of funds, and decline in assets quality. Consequently, the credit risk of most banks may perhaps increase as a result of the rise in default risk.
The Nigeria Deposit Insurance Corporation (NDIC) has reassured Nigerians that the Deposit Money Banks are healthy despite recession, saying that 90 per cent of depositors are covered by the corporation. (Source: The Sun)
Comment: Nigeria Deposit Insurance Corporation declaration about the financial health status of Nigerian Banks may reignite confidence on the Nigerian Banking Sector. Nevertheless, given the emergence of “wonder banks” in the country, customers should ensure to transact business only with Money Deposit Banks insured by the NDIC.
FirstRand Limited, a South African bank and the leading lender by market value on the continent, plans to buy assets in Nigeria. (Source: This Day)
Comment: FirstRand decision to buy assets in Nigeria may be aimed at the expansion of its operations in Nigeria buoyed by the volatile environment that has eroded investors’ confidence in South Africa. Similarly, the Bank’s interest in assets in Nigeria may be for the reason that most assets in Nigeria are underpriced.
Securities and Exchange Commission (SEC) plans to increase the minimum capital requirements for various functions of sub-brokerage. A new amendment being considered by SEC. (Source: The Nation)
Comment: The increase in sub-brokers’ minimum capital requirement by the Securities and Exchange Commission (SEC) most likely could be part of the commission’s drive to restore confidence, ensure transparency and stabilize the Nigerian Capital Market.
The federal government at the weekend officially made a case for the lifting of the suspension placed on Nigeria’s export of cocoa to the United States’ market. (Source: This Day)
Comment: Federal Government’s call for the lifting of the suspension placed on Nigeria’s Cocoa exports to the United States market may be the right step to realign trade deficit with the U.S. Conversely, Nigeria should ensure best cocoa production practices that meet export standards to the U.S. market.