ThinkBusiness Today - July 19th

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.

What can N8,000 (US $10) buy in today’s market? The answer to that question may have prompted the government to review the cash disbursement planned for the most vulnerable following the removal of fuel subsidies.

However, the problem is much bigger.

Does everyone that qualifies get it?

Is it transparent, verifiable, and largely incorruptible?

I shared my thoughts below.

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Markets

• NGX ASI rose by 1.31%, increasing by 823.37 points to close at 63,766.72, showing a week loss of 2.9%, a 4-week gain of 8.08%, and an overall year-to-date gain of 24.42%. NEM Insurance, Honeywell Four Mill, and NPF Microfinance Bank all gained 10%.

• Oil prices climbed more than 1% on Tuesday as a weaker US dollar and expected decline in US output outweighed softer-than-expected Chinese economic data. Brent futures up by US $1.21, or 1.4%, at US $79.71 a barrel, while U.S. West Texas Intermediate (WTI) crude rose US $1.22, or 1.7%, to US $75.37.

• At the I & E window, Naira gained slightly by 0.41% to close at N742.93, while it depreciated by 3% to reach N825, both against the US dollar.

• U.S. natural gas futures climbed about 4% on Tuesday on forecasts for the weather to remain hotter-than-normal through early August.

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National Headlines

• Fuel Prices reflects market realities – As mentioned here few weeks ago, fuel prices have started to show two important market changing features. First is that prices have gone up by about 15%, reflecting current US dollar rates against the Naira. Second, regional differences have started to emerge, with places in the Northern part of the country paying more for fuel compared to Lagos and places nearer to it, reflecting the cost of logistics and transportation from the ports in Lagos to the North. Consequently, fuel prices now range between N540 – N617 across the country. This is the new reality.

• Beyond the review of N8,000 – President Bola Tinubu ordered the review of the proposed N8,000 to be distributed to the most vulnerable following the removal of fuel subsidies. The release stressed the attitude of the President and that of his government to matters and issues of the welfare of Nigerians. Great. However, the greatest problem of the N8,000 is not whether it is sufficient or not, as even an N100,000 disbursement will not be enough, but that it is going to be discriminatory to the extent that not all the most vulnerable will receive it, and the process is corruptible to the extent that Nigeria does not have the right data and process to carry out such cash disbursements, and that it will not be transparent to the extent that it is not fully verifiable.

Global Headlines

• Shift in workers age in G7 economies – Bain & Co, of one the world’s largest consulting firms has released a report that concludes that the percentage of older workers in G7 economies – Canada, France, Germany, Italy, Japan, UK, and US, that is those over the age of 55, will exceed 25% by 2031, nearly 10 percentage points higher than 2021. The report acknowledges the factors driving these changes; fewer young people entering the workforce due to fertility rates and due to longer education. Retirement age have been revised in some of these countries. UK has increased its retirement age from 65 to 66 and may take it further. In France, the planned increase in retirement age from 62 to 64 led to protests and demonstrations. Aging population and workers have become a critical factor in migration, especially from Africa.

• Drop in Canada's inflation – Canada’s latest inflation report shows it dropped to 2.8%, a 27-month low in June, with contribution from lower energy prices. However, the report suggests underlying pressures remain because food and shelter costs increase remain sticky despite 10 rate hikes in 18 months.

• India now in top five iPhone Markets – This is perhaps another evidence of an increasingly number of its middle class and rising wealth in India. According to CNBC, India entered the top five markets for iPhone in Q2 2023, overtaking France and Germany, contributing near 4% of all iPhone sales in the quarter. However, the most dramatic number is that it increased by 50% in a single year. Earlier this year, Apple opened its first physical stores in the country in Delhi and Mumbai. There are Apple stores in about 26 countries, with US having the largest number at 272. There is no Apple store in Africa.

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