Security challenges with electronic transfer

E kaaro o, Ututu Oma, Barka da Safiya - Good morning, and a warm welcome to ThinkBusiness Nigeria, your Monday – Friday dose of commentary, contexts, and insights on business and economic news that matter to you.

Welcome to a new week.

Nigeria’s ministers are expected to have their first cabinet meeting with the President later this morning. Before then, there have been changes again, both to plans mentioned in relation to naming of ministries, cancellation of ministries and personnel.

I will refrain from commenting further …. let them get to work – too many socio-economic problems confronting the nation.

Please have a great week.

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Markets

• On Friday, the benchmark NGX All-Share Index (ASI) climbed 295.00 (0.46%) points to close at 64,743.96, concluding a week loss of 0.89%, a 4-week loss of 0.4%, but an overall year-to-date gain of 26.33%. John Holt share price led the gainers, followed by Consolidated Hallmark Insurance (+8.24%), University Press (+6.67%) and Computer Warehouse Group (+5.56%).

• Oil prices rose about 1% on Friday despite signs of slowing US output and concerns about growth in global demand. West Texas Intermediate (WTI) crude futures gained 86 cents, or 1.1%, to settle at US $81.25 a barrel, and Brent crude futures rose 68 cents, or 0.8%, to settle at US $84.80 a barrel.

• Following measures that include supply to Bureau de Change by the Central Bank of Nigeria (CBN), Naira appreciated at both I&E window and on the streets. On the I&E window, it appreciated 0.16%, closing at N739.52 against the US dollar while it appreciated by 5.62% to reach N840.00 against the US dollar on the streets.

• U.S. natural gas futures fell to a more than two-week low on Friday. Gas futures for September delivery on the New York Mercantile Exchange were down 6.3 cents, or 2.4%, at US $2.55 per million British thermal units (mmBtu) . The contract was on track to post a weekly decline of about 8%.

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National Headlines

• It’s payback time – As it was well understood, virtually all the loans raised under the watch of the former President Muhammadu Buhari are due after he left office. One of such debt is the International Monetary Fund (IMF) US$3.4 billion collected in the thick of the Covid – 19 dynamics of 2020. According to IMF position on Nigeria, the country is expected to repay most of the capital and interest payments on SDR drawings between now and 2025 – SDR 373.81 (US $497.17 million) is due this year, SDR 1,322.01 (US $1.76 billion) is due next year, and SDR 650.58 (US $865.27 million) due in 2025, based on US $1.33 to 1 SDR. Calculated daily, the SDR is determined by summing up the value in US dollars based on market exchange rates of a basket of major currencies – US dollar, Euro, Japanese Yen, UK Sterling, and Chinese Renminbi.

• Security challenges with electronic transfer – The banking sector is experiencing increases in electronic fraud; it was reported weekend. In the first half of this year, the industry has lost N9.5 billion to fraud. In the whole of 2019, it was N3 billion. While electronic transfer has provided platforms for increasing payment efficiency, supporting trade, and improving growth, it has also provided fraudsters easily crafty ways to transfer monies from victims’ accounts. I think the most important thing about the report is that the Central Bank of Nigeria (CBN), Nigeria Inter Bank Settlement System (NIBSS) and the Nigeria Electronic Fraud Forum (NeFF) have identified the most important channels for electronic fraud in Nigeria – betting platforms, POS agents, and cryptocurrency accounts. While cryptocurrency may be a long shot, it is time for the CBN to work with betting platforms and POS agents to reduce frauds on their platforms.

Global Headlines

• The Russian / Ukraine war continues – The war in Ukraine is showing no signs at abating. The latest is that the Netherlands and Denmark plans to provide Kyiv with America produced F – 16s. Kyiv have always requested for these fighter jets because it would help provide superior air power over Russia, but European and US capitals have always been reluctant. The key element that will delay the transfer is the training of personnel. Other factors include logistics and the necessary authorization. In the absence of any agreement on ceasefire and victory on any side, the 20-month-old war is set for an endless conflict.

• BRICS summit holds this week in South Africa – South Africa will host the 15^th BROCS summit this week. BRICS, the emerging market group of Brazil, Russia, India, China, and South Africa will discuss two major issues. First, discussions around the weak global economy, rising geopolitical tension, and rising trade nationalism. The summit will also debate its expansion. Countries that have formally applied to join the group include Saudi Arabia, Iran, the UAE, Argentina, Indonesia, Egypt, and Ethiopia. Ahead of the summit, the Chinese president Xi Jinping will have a state visit to South Africa and hold a China – Africa leaders’ dialogue.

• China is struggling and the world economy is uncertain about it – The Chinese economy is not recovering as earlier expected, after its tight zero Covid- 19 policy. The latest is an avalanche of property market problems, with Evergrande filing for bankruptcy last week. Consumer spending is also weak and the economy on the brink of deflation. Exports as not as strong amidst uncertainty around geopolitical tensions with the US. Recall the over 100% duties applied to exports of steel by the US last week. Over the next 24 hours, the Peoples bank of China is expected to make cuts in its one year and five-year loan prime rates. It has also put together a package of measures on Friday at reviving a depressing stock market. In the meantime, as the second largest economy in the world struggles, it has implications for the global economy.

This Week

• Wednesday 23^rd August 2023, Nigeria Bureau of Statistics will release Nigerian Capital Importation for Q2 2023 report. Also, the NBS will release the Selected Banking Sector Data: Sectorial Breakdown of Credit, e-Payment Channels and Staff Strength (Q2 2023).

• Friday 25^th August 2023, the highly anticipated Nigerian Gross Domestic Product by Output Report (Q2 2023) will be released. The latest statistics shows that Nigeria's GDP grew by 2.31% y/y in real terms in Q1 2023, from 3.11% recorded Q1 2022, and 3.52% in Q4 of 2022.