Nigeria’s economic pulse

Welcome to 234Digest, an independent, nonpartisan, reader focused newsletter on Nigeria’s economy and business environment. I’m Samuel Okocha, the multimedia journalist and editor steering this publication. After a strategic hiatus, we’ve sharpened our focus, transitioning from broad coverage to a specialized lens on economic and business news. As I bid farewell to fulfilling 15-year tenure with Nigeria’s external radio service, I’m thrilled to channel my expertise into this newsletter and my new role with an Africa-focused research and consultancy firm. Join me as we navigate the complexities of Africa’s largest economy amidst its current trials and transformations. In this comeback edition, we’re covering news about Nigeria’s naira, crypto and more.

Up first: Naira’s rally 

Nigeria’s naira has strengthened, thanks to a spike in foreign demand for bonds. The Central Bank of Nigeria’s (CBN) recent auction saw a 1.053 trillion naira ($682 million) in bills snapped up, with foreigners buying almost 80%.

This follows a hefty interest rate hike by the CBN to 22.75% on February 27, aimed at propping up the naira, which had lost about 70% of its value against the dollar since June.

The auction’s yields were eye-catching, with 12-month notes at 21.5% and three-month bills at 19%, reflecting a substantial rise from the previous 10%. CBN spokeswoman Hakama Sidi Ali noted the strong foreign demand as a sign of confidence in the bank’s policy actions.

The naira’s rally was evident in official trading, gaining 2.9% to 1,548 naira per dollar on March 4, while dollar liquidity jumped by over a third to $296 million, according to FMDQ data. This marks a positive shift for Nigeria’s economy, suggesting the central bank’s aggressive measures are paying off.

Catch up: No more crypto for you

Big news for crypto traders in Nigeria: Binance, the world’s leading cryptocurrency exchange, is saying goodbye to the naira. Starting March 8, you won’t be able to trade with Nigeria’s currency on the platform anymore. Why? Well, Nigeria’s cracking down on crypto exchanges, blaming them for fueling an underground market for foreign exchange.

The aftershocks of this policy are profound: Binance will halt naira withdrawals after Friday, and any lingering naira balances will be turned into Tether, a stablecoin anchored to the American dollar. This pivot to a digital dollar proxy underscores the turbulent relationship between cryptocurrencies and national currencies.

The crackdown has already seen its share of drama, with the detention of two Binance executives last week on undisclosed charges. Their continued custody, confirmed by their lawyers on Monday, paints a stark picture of the regulatory storm facing the industry.

This story is beyond a flex of regulatory muscle; it’s a reflection of the broader struggle to balance innovation with financial stability—a challenge that Nigeria, like many nations, continues to grapple with in the digital age.

No long talk

GDP surprises: Nigeria’s GDP? It’s growing faster than we thought, at 3.46% in Q4., Bloomberg reported. Major takeaway? The oil sector is back.

Energy hub ambitions: Nigeria is vying for a major win—hosting the Africa Energy Bank HQ. It’s competing against six others, and the stakes are high with $5 billion on the line to fuel Africa’s energy sector. If Nigeria gets it, it would be a game changer for its rep in the energy game.

Inflow woes: Capital inflows declined by 26% in 2023. FDI and portfolio investments are feeling the pinch.

Optimistic AFC: The CEO at the Africa Finance Corporation, Samaila Zubairu says no worries., it’s just a cycle. Nigeria’s economy will bounce back. He spoke to Bloomberg.

Quote of the day: ‘‘We are in challenging times, no doubt, but these times have also been marked by unprecedented opportunities, to reset course and to build a news and sustainable economy, away from the rent-seeking and the waste that was once the order of the day.”

—President Bola Ahmed Tinubu in a speech delivered on Tuesday at a leadership conference in Abuja, the Nigerian capital. He was represented by the Minister of Information and National Orientation, Mohammed Idris.

That’s it for today’s 234Digest. Stay tuned for another edition this week. Together, we explore the economic narratives shaping Nigeria.