ThinkBusiness Today - July 12th

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.

It’s mid-week, so hope you are making the best use of the positive developments in the Nigerian economy and mitigating the risk impact of the negative developments.

I wish you well.

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Markets

• The NGX ASI rose by 2.48% Tuesday, closing 65,669.29, representing a week gain of 8.16%, a 4-week gain of 17.36%, and an overall year-to-date gain of 28.13%. Key share price movement include Transcorp Hotels (10%) FTN Cocoa Processors (+10%), Chellarams (+10%) and Omatek Ventures (+10%).

• 7 companies suspended from the Exchange – Meanwhile, seven companies have been suspended from trading their shares on the exchange. These are Afromedia Plc, Pharmadeko Plc, Royal Exchange Plc, International Energy Insurance Plc, C & I Leasing Plc, Presco Plc, and Ardova Plc. They have been suspended for failing to file their audited financial statements for the year end 2022. The regulations required it is done withing 90 days or three months after the expiration of the period. Two months ago, the Exchange sanctioned 18 companies in related matters.

• Oil prices jumped about 2% to a 10-week high on Tuesday, boosted by relatively weak US dollar, hopes for higher demand in the developing world and supply cuts by the world's biggest oil exporters. Brent futures rose US $1.51, or 1.9%, to US $79.18 a barrel, U.S. West Texas Intermediate (WTI) crude rose $1.61, or 2.2%, to $74.60.

• Naira at the I & E window and the Street markets depreciated against the US dollar. In the I & E window, Naira lost 5.96%, closing at a rate of N788.42 against the US dollar, and by 1.74% on the street market, reaching N795.67 against the US dollar.

• US natural gas futures rose to above US $2.7/MMBtu due to expectations of higher cooling demand driven by hot weather. Meteorologists are predicting temperatures above normal until July 25, which will drive up the usage of natural gas for cooling purposes in homes and buildings.

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National Headlines

• Stop fees raise – It is the same story at every cycle. Why are we afraid to have conversations about how things should be done for the long term? The House of Representatives has asked federal universities not to increase tuition and accommodation fees because it may lead to dropouts in the universities. Great motivation, but the problem is that they will move on from here without any concrete solutions to the poor quality of education and conditions in our universities. It is a myth that you can have quality education without funding. Someone must fund quality education. If the government cannot do that, the beneficiaries will have to do it. But we cannot have quality education and poor funding. Unfortunately, the recent Student Loan Act. is shallow.

• Electricity Act in Action – Geregu Power is in conversations with the Lagos State government to develop a power transmission project, the Chairman Femi Otedola said yesterday. This is made possible by the Nigerian Electricity Act 2023, replacing the Electricity and Power Sector Reform Act 2005. Before the law, only the Transmission Company of Nigeria (TCN) could provide transmission in the country. Nigeria’s transmission capacity is currently between 7500MW and 8,000MW. Already, Lagos, Edo and Kaduna have electricity market laws.

• Digital tax implementation – Apple has announced it will be implementing price adjustments for in-app purchases on the App Store starting July 25. It says it will affect app developers and users in 4 select markets – Nigeria, Egypt, Tanzania, and Turkey. There are two applicable levels of digital related taxes in Nigeria. The first is the requirement that nonresident companies who offer digital services in the country are to remit 6% of their turnover to FIRS. This is on top the VAT in digital services introduced in January 2022.

Global Headlines

• Wait, not just yet – As expected, the North Atlantic Treaty Organisation (NATO) will not admit Ukraine into the alliance just yet. It did not also give a timetable for the admission. It merely said Ukraine will be admitted when it meets all requirements. Given all the support Ukraine has received from NATO in its fight against Russia, the President Volodymyr Zelensky described the decision as “absurd”. As I mentioned yesterday, NATO is a 31-member organization, set to admit Sweden as the 32^nd member.

• Microsoft + Activision – Following European court ruling in the last two months, a US court has also denied competition fears that the US $68 billion takeover of Activision, one of the world’s largest gaming companies by Microsoft will stifle competition. The biggest hurdle now remains UK authority. Also, the US authorities can still appeal the decision.

• Ai could take 25% of jobs – OECD says more than a quarter of jobs in the OECD rely on skills that could be easily automated in the coming Ai revolution. Expectedly, workers fear they could lose their jobs. Meanwhile, Bill Gates, Microsoft founder has written for a sensible balance in perspective regarding Ai. He wrote that there are extremes in the current debate and important to have a balanced perspective of what Ai will and can do.

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Platform Capital proudly presents Africa Walk 2023.

Join us in Dakar, Senegal (July 24-27) and Lagos, Nigeria (July 28-31), to explore the continent's investment landscape and witness the extraordinary talent within the African creative industry.

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The Week Ahead

• Today, Wednesday 12 July, the NBS will release the labour statistics report. The latest data shows that Nigeria unemployment rate stood at 33.33%.

• On Saturday July 15, the NBS will also release the inflation report for June 2023. It will give us indication of what has happened to prices since the removal of fuel subsidy.