Nigeria’s economic compass: Navigating through turbulent markets

From the desk of Samuel Okocha:

As the sun ascends over Nigeria, marking the advent of a new week, I am thrilled to share with you the freshest insights from 234Digest. As the mastermind behind this newsletter, my mission remains steadfast: to slice through the din of economic chatter and furnish you with news that is not only clear and concise but also impartial and insightful.

Today marks a significant milestone for 234Digest as we transition to a weekly delivery—every Sunday. This change ensures that, even amidst the hustle of our daily lives, we continue to provide the rich, contextual updates that you have come to expect.

This week’s edition delves into the Naira’s dramatic fall, now dubbed the world’s weakest currency, and we unravel the consequences of the re-imposed fuel subsidy poised to consume a substantial portion of Nigeria’s oil revenue. We scrutinize the IMF’s consistent growth forecast for Nigeria in the face of mounting food prices and cast a spotlight on the launch of Nigeria’s inaugural business credit card by American Express and O3 Capital, a strategic move to enhance dollar accessibility for Nigerian businesses. And more.

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Up first: Nigeria’s naira plunge pressures central bank for action

Nigeria starts the week with its currency, the naira, in a precipitous decline, hitting a record low of 1,466.31 to the U.S. dollar and becoming the world’s weakest currency over the past month, according to Bloomberg. This plunge has put the Central Bank of Nigeria (CBN) under intense scrutiny as it considers further monetary tightening measures.

The drop in the naira’s value coincides with a significant decrease in the availability of U.S. dollars, which fell by 50% to just $84 million last Thursday. In response to soaring inflation, which reached 31.7% in February, the CBN previously raised the key interest rate to 24.75% in March. Analysts are now questioning whether additional rate hikes will bolster the naira or merely postpone a deeper financial crisis.

Since President Bola Tinubu unified official foreign-exchange windows last June, the naira has depreciated by about 68% against the dollar. The currency’s volatility is further fueled by the upcoming maturity of $1.3 billion in naira futures at the end of the month, increasing the demand for dollars.

As the CBN’s policy meeting on May 21 nears, the pressure mounts to stabilize the naira without derailing economic growth. The naira’s performance is under intense scrutiny in both official and parallel markets, making the central bank’s impending policy decisions critical for setting Nigeria’s economic course.

Long stories short

Fuel subsidy’s back, and it’s costly

Gasoline subsidies are back in Nigeria, and they’re set to eat up nearly half the oil revenue. The IMF’s pegging the cost at a massive 8.43 trillion Naira ($5.9 billion). Bank of America’s not painting a prettier picture either.

IMF’s outlook on Nigeria: Growth amidst inflation

Despite the economic headwinds, the IMF’s sticking to a 3.3% growth forecast for Nigeria’s economy in 2024, citing a resurgence in the oil and agriculture sectors. But let’s not ignore the elephant in the room — food prices are up 40% in March, and that’s got everyone worried.

American Express and O3 Capital: A credit lifeline

American Express and O3 Capital are rolling out Nigeria’s first business credit card. It’s got a $10,000 limit and a 45-day repayment period for international buys. This could be a game-changer for dollar access.

Microsoft’s Lagos exit

Microsoft’s pulling the plug on its Africa Development Centre in Lagos. Opened in 2022, it was all about pushing engineering and innovation. They’re not leaving Nigeria, though — just shifting focus.

Royal Wrap-Up: Harry and Meghan’s Nigerian tour

Prince Harry and Meghan Markle have concluded their three-day visit to Nigeria, reinforcing the country’s bid to host the 2029 Invictus Games. Their tour included engagements in Abuja, Kaduna, and Lagos, where they visited a secondary school and supported a charity that runs basketball camps for children across Africa. In a display of camaraderie, Prince Harry joined in a friendly game of basketball with the students, showcasing the royal couple’s engagement with youth sports and development

President Tinubu hits pause on Cybersecurity levy

President Bola Tinubu has told the Central Bank of Nigeria to hold off on that cybersecurity levy policy. It was supposed to kick in on May 20, 2024, but the House of Representatives isn’t having it.

Quote of the day “Success is not final; failure is not fatal: it is the courage to continue that counts.” — Winston Churchill

Photo of the day

Events to watch this week

• Green Startup Nigeria Expo (May 14): A gathering of eco-friendly entrepreneurs at Alliance Française, Lagos, to catalyze innovation and sustainability in Nigeria’s startup ecosystem.

• Water and Climate Summit Exhibition (May 16): Stakeholders engage at Shehu Musa Yar’Adua Centre, Abuja, to discuss sustainable solutions for climate and water resource challenges.

• Nasarawa Investment Summit 2024 (May 15-16): Nasarawa State’s “Industrial Renaissance” summit aims to unlock industrial, agricultural, and mining opportunities for wealth creation.

That’s it for this early Monday edition. We’re gearing up for a weekly Sunday release, so stay tuned for more timely updates. Until then, stay informed and stay ahead.