ThinkBusiness Today - July 24th

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Markets

• On Friday, NGX ASI was up by 1.68%, increasing by 1,072.67 points to close at 65,003.39, representing a week gain of 3.89%, 4-week gain of 9.57%, and an overall year-to-date gain of 26.83%.

• Oil prices rose nearly 2% on Friday to record a fourth consecutive weekly gain. Brent crude futures rose US $1.43, or 1.8%, to settle at US $81.07 a barrel, with a weekly gain of about 1.2%. U.S. West Texas Intermediate crude ended US $1.42, or 1.9%, higher at US $77.07 a barrel, its highest since April 25. WTI gained nearly 2% in the week.

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National Headlines

• No Ministers yet – 54 days after the swearing in of President Bola Tinubu, the Senate does not have his ministerial list yet. To forestall what happened during his own first term presidency, President Buhari signed a law that mandated the submission of Ministerial names to the Senate within 60 days after inauguration. According to that deadline, we expect the ministerial list this week. Ministers are critical to driving government reforms and for communicating progress. So far, that responsibility have fallen on President Tinubu advisers. There is suggestion that the delay is tied to the careful balancing act required on competence, regional considerations, and party loyalists.

• FG to streamline taxation from 52 to 10 – It emerged over the weekend that the Special adviser to the President on revenue, Zach Adedeji, made three critical policy statements on Nigeria’s fiscal arrangement. First, that the number of taxes will be streamlined from 52 to 10. Second, that the Federal Inland Revenue Service will be changed to Nigeria Revenue Service. Third, that regulatory agencies will focus on that core purposes and leave revenue generation to relevant agencies. It follows the establishment of the Presidential committee on fiscal policy and tax reforms chaired by Taiwo Oyedele, formerly of PwC. The question remains whether Zach Adedeji was authorized to speak on such heavy fiscal matters and whether the planned changes should have waited for the completion of the work of the committee.

• The CBN’s Monetary Policy Committee meets today – The Central Bank of Nigeria’s monetary policy committee meets today and tomorrow to decide on Nigeria’s Monetary Policy rate (MPR) and other monetary policy instruments. It will be the first meeting since the suspension and arrest of Godwin Emefiele and the first to be chaired by the Ag. Governor Folashodun Shonubi. At the last meeting in May, the committee raised the policy rate to 18.5%, from 18%, the 7^th time since March 2022, marking one of the strongest orthodoxy seasons of the Bank. Indeed, the rate was the highest since the adoption of MPR in 2006 when it replaces the Minimum Rediscount Rate (MRR). My expectation is that the Bank will leave rates unchanged given that the changes in prices / inflation today are largely structural.

• NOVA Merchant Bank to transition to retail – The Bank says it has received the nod from shareholders to transit to a commercial bank from the current merchant bank status. After transition, Nova will now be able to receive deposits from the public, a function it cannot perform as a merchant bank. There is no indication yet on how long it will take for the bank to complete the transition which may well largely depend on regulatory measures. When completed, Nova will join the fiercely tight and competitive commercial banking environment in Nigeria.

Global Headlines

• BRICS expansion – The group of Brazil, Russia, India, China, and South Africa is mulling an expansion, according to China Daily reports. This year’s BRICS summit will hold in South Africa 22 – 24 August. South Africa is the chair this year. The BRICS, originally formed in 2006 by the first four countries, was expanded in 2010 when South Africa joined. Since then, it has not accommodated new members. The report says more than 40 countries have expressed interest while 22 have formally applied to join.

• Twitter to X – Elon Musk, the owner of Twitter says the microblogging app will change its logo to X. This is the latest change to Twitter since Musk took over the platform since October 2022. The name of the business has changed to X Corp with plans to replicate the business and reach of China’s ‘We Chat’.

• US Fed Meeting this week – The markets highly anticipate this next meeting of the US federal open market committee (FOMC) tomorrow and Wednesday because of the mixed data since the last meeting. Inflation rate fell to 3% in June 2023, signaling the success of recent monetary policy measures in bringing inflation down. There have also been strong job reports. In the last meeting, interest rate was left unchanged, after 10 consecutive rate hikes. The markets expect there will be a hike of about 25 basis points, raising the range of interest rates to 5.25% - 5.5%. However, an index that tracks US business cycle fell for the 15^th straight month in June, suggesting a weakening economy and a likely recession. Growth in the US in first quarter was 2%. Meanwhile, Russia central bank raised rates for the first time in a year on Friday to 8.5%.

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Platform Capital - AFRICA WALK 2023

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.

For participation and registration

Strategy for Winning - Winning on Security in Nigeria and West Africa

‘Security is affecting every area of our lives’: The Media is critical to awareness and solutions

In the last 15 years, security in Nigeria and West Africa started to receive considerable attention, following Boko Haram’s escalating atrocities in the North Eastern part of the country. At a point, this crisis threatened Nigeria’s indivisible existence since 1914. However, in the last decade, other dimensions have emerged in Nigeria’s worsening security situation, ranging from banditry in the North West, to terrorism, farmer herder clashes and banditry in the North Central and North East, while communal conflict, kidnaping and cult activities appear prevalent in South West and South South, and the South East faces violent secessionist struggle.

It is this context and background that RDF strategies, with support from the Ford Foundation brought together top media personnel, business leaders, top security actors, civil society, and social media owners for a high-level workshop on insecurity in Nigeria and West Africa. As Dr. Catherine (Chichi) Aniagolu – Okoye, the regional director for Ford Foundation in West Africa summarised, “Ford Foundation is focused on challenging inequality in West Africa with a particular focus on natural resources and gender based violence, but we have increasingly realised how the issue of insecurity intersects with almost every aspect of life, from trade, free movement of people, gender equality, natural resources and climate change, education, to living standards and so on. Indeed, our most basic human rights are deeply impacted, and therefore the Foundation is also interested in intersectional solutions that help to improve collaboration between key actors in the ecosystem”.

Not surprising, the conversations showed that the impact of insecurity is extensive. Often, there is the human angle of deaths, displacements and dislocations, abductions, and wealth losses; the business angle because of costs escalation associated with doing business, either in the locality, region, or industry affected; and, the investment angle as the rising perception of insecurity only means declining investment attractiveness in the country.

Coincidentally in the last decade also, insecurity stories, just like all other stories, are no longer the exclusive production of traditional media as it was in the past. Today, citizens journalism has led where traditional media used to lead. Social media now plays a huge role in the dissemination of insecurity stories, but often, sensational, without context, and no reference to data. Consequently, it creates panic and gaps between reality and perception.

“The role of the media and the methodology has to be more thoughtful and considered”, says Dr. Nkiru Balonwu, the convener of the parley, stressing, “therefore this high-level meeting is important. With increased security we unlock potential for greater socio-economic growth, along with greater opportunities for domestic and international business. To realize this, collective action is necessary, and the media is one of the preeminent tools for inspiring buy-in and driving action. The media plays a critical role in connecting all stakeholders, amplifying the right messaging for peacebuilding, and countering violent extremism, and providing needed platforms for dialogue and improved understanding”.

A first of its kind, RDF is already planning a series of these meetings. Ahead of the meetings, trying to build an effective coordination of the dissemination of stories and reporting of insecurity issues, it was clear that the greatest danger is distrust. It became obvious that the matter of distrust must be effectively dealt with if security personnel are going to trust the media and vice versa. While everyone called for deeper collaboration between security agencies and the media, improvement in the knowledge and capacity of the media, constant communication between the media and security agencies, it was equally understood that the bigger opportunity was in tackling the underlying root causes of insecurity including poverty, food insecurity, unemployment and youth disenfranchisement amongst others, and the gap in political leadership that must be filled as well.