When the global oil price crashed in 2014, Nigeria was one of the hardest-hit economies due to its over-dependence on oil as a revenue source. Nigeria’s economy was also affected by China’s economic slowdown, as well as the United States’ rate hike. In order to save the economy from a total collapse, the Central Bank of Nigeria (CBN) put stringent monetary policies in place, which saw investors pulling out of the country.
However, the economic condition of Nigeria has taken a new twist as the country has seen a tremendous growth in its economy. The country is out of recession, the inflation rate has dropped further and Investors confidence in the country has improved. This has led to an increase in the country’s forex reserve, which in turn has helped stabilize the Naira.
Below is the Ventures Africa Weekly Economic Index, for the week ending 5th of January 2018. This economic index gives you a glimpse into the recent activities in Nigeria’s economy as well as changes that could affect the economy:
How did the naira fare?
During the week under review, the Naira appreciated against the dollar as it was sold at N363/$ on Friday ending 5th of January 2018 from an average of N365/$ recorded in December 2017. The CBN has intervened aggressively to ensure that it kept the naira at about N363/$ Since February 2017 when the Naira exchanged at about N520/$.
However, there are concerns that the CBN and its stakeholders need to put stringent measures in place to ensure that the currency will not be hoarded. Electioneering is about to start and a lot of politicians hoard dollars that would be spent during the campaign.
What major decisions did the Central Bank make?
According to the Guardian, the Deposit Money Banks have begun the disbursement of the more than N26.4 billion enterprise development intervention fund under the Agriculture and Small and Medium Enterprises Investment Scheme (AGSMEIS) by the Bankers’ Committee.
At a yearly retreat of Bankers, which took place in Lagos, last December, Bankers agreed to put funds in the hands of Micro Small and Medium Enterprises’ across sectors starting January 1, 2018. They regretted that such a huge amount that they pooled together since last year had remained idle.
“We are going to be disbursing small loans like N100,000; N200,000; and N500,000 at not more than five percent,” the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, assured Nigerians.
How high is Nigeria’s foreign reserve?
Data from the website of the Central Bank of Nigeria reveals that as of 4th of January 2018, Nigeria’s external reserve increased by $309,007,951 to $ 39,074,969,396 from $ 38,765,961,445 recorded on 29th of December 2017. This is a positive beginning for the 2018 fiscal year and a great assurance for investor-community.
According to report, Nigeria may be sitting atop foreign exchange (forex) stockpile in excess of $42 billion from reserves’ accretion and the expected full inflow of the $3 billion Eurobond, which may have materialized.
How did the price of oil fare?
According to the OPEC weekly basket price, the price of crude oil increased from $64.47 per barrel to $65.86 per barrel between 29th of December 2017 and 5th of January 2018.
On Thursday, oil rose to its highest in 32months on concern about supply risks due to unrest in Iran and another decline in U.S. inventories as refining activity hit a 12-year high. U.S. oil stocks fell more than expected, continuing a steady drawdown of supplies in the world’s largest oil consumer, though stocks of distillates and gasoline rose on heavy refining activity driven in part by year-end adjustments. Cold weather across the majority of the US was expected to keep demand high, as heating oil prices were just off highs not seen since early 2015.
How did the Nigerian stock market perform?
According to the recent data released by the Nigerian Stock Exchange (NSE), as of 5th January 2018, the all share index decreased by 1.78 percent from the previous week ending 29th of December 2017. Market capitalization at the close of trading was N N13.851 trillion, which is a 1.78 percent increase from N13.609 trillion recorded the previous week. The All Share Index for the week under review closed at 38,923.26.
Top five price Gainers and Decliners in the week under review:
Top five price Gainers
- E.M Insurance Co (Nig) Plc.
- Neimeth International Pharmaceuticals Plc