ThinkBusiness Today - July 3rd

E kaaro o, Ututu Oma, Barka da Safiya - Good morning, and welcome to the month of July. We wish you a productive beginning of the second half of 2023.

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As we build a community of business thinkers, I am delighted to make two announcements. First, ThinkBusiness will host Nigeria Invest Conference 2023, September 2023 at the Transcorp Hilton Hotel, Abuja (click to register). 

Second, also to build understanding of Nigeria’s business environment, we will be releasing our first ThinkBusiness Insights on Wednesday 5^th. It will focus on the Five fiscal policies required for macroeconomic stability in the medium term.

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Markets

• This is how the market opens after weekend. The benchmark NGX All-Share Index (ASI) increased by 859.41 (1.43%) points to close at 60,968.27, representing a 1-week gain of 2.77%, a 4-week gain of 9.38%, and an overall year-to-date gain of 18.96%. See H1 2023 analysis below.

• Oil prices settled higher on Friday but posted fourth straight quarterly loss. Benchmark Brent crude futures for August delivery which expires on Friday, settled 56 cents up, or 0.8%, at US $74.90. In the three months to the end of June, the contract finished down 6%. U.S. West Texas Intermediate crude (WTI) settled 78 cents up, or 1.1% at US $70.64 a barrel. It posted its second straight quarterly drop of 6.5%. EIA forecast global oil inventories to fall slightly in each of the next five quarters and expect upward pressure on crude oil prices, notably in late-2023 and early-2024. It expects Brent crude oil spot price will average US $79 per barrel in the second half of 2023 and US $84/b in 2024.

• On Friday, at the I & E window, Naira depreciated by 0.82% closed at N769.25 and appreciated by 0.02% to N773.33 at the street market.

• US natural gas futures have been fluctuating within a US $0.5 range, settling around US $2.8/MMBtu at the end of June. Prices rose nearly 15% for June, extending the second-quarter gain to almost 22% and are expected to continue to increase throughout the summer.

Equities Market increased by 19% in H1 2023 and crossed 60,000 point since a decade

The Nigerian stock market increased by 19% H1 2023, consolidating on gains made the previous year (2022: 19.98%). The All-Share Index began the year at 51,251.06 basis points and finished at 60,968.27 points on June 30, 2022, the highest point in nearly a decade (March 2008 at 66,381.20). Oil and gas category surged by 68%, followed by insurance 59%. The banking index increased by 55%, the consumer goods index jumped by 52%, and the industrial goods index increased by 4%. Most of the growth followed the policy reforms around exchange rate and the subsidy removal.

The NGX ASI H1 2023

Top 10 Gainers H1 2023

110 stocks recorded growth, led by FTNCOCOA (724%), followed by MRS (460%), and TRIPPLE G (375%).

Top 10 losers H1 2023

ROYALEX was the worst performing stock, shedding 42% of its value, followed by CHELLARAM (-41%) and AIRTELAFRI (-19%).

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National Headlines

• Inflation projected at 25% - The World Bank has projected that inflation may hit 25% in 2023, following the removal of fuel subsidy. It expects headline inflation to start to fall in Q1 2024. The impact of fuel subsidy removal is expected to work through the price system through direct impact increases in transport and logistics, and indirect impact increases on food, and wage increases.

• Nigeria’s intra Africa trade after AfCFTA – Trade between Nigeria and other Africa countries fell Q1 2023 by 12%, compared to Q1 2022. It is symptomatic of the international trade development amongst African economies since the establishment of the Africa Continental Free Trade Agreement (AfCFTA) three years ago. Though this does not include illegal and informal trade across about 1500 illegal border routes in the country, it shows the gaps in the extent of work required to grow intra African trade.

• NIN as Nigeria’s default identification? – One of the most intriguing parts of being a Nigerian is the amount of data collected by government, still, it appears we do not have adequate data for planning. The reason is simple, the data by the different government agencies are not managed in a coherent and dynamic manner. The National Identity Management Commission (NIMC) said at the weekend it has registered 101 million Nigerians. Great. I reckon the NIN is best placed to be the default identity that other forms of identity can now be built on. While some of the critical ones like international passports and drivers’ licence have done that, the most important other linkage is still missing – location / address data. As it is, the data is still largely static, but can be improved tracking migration and mobility.

Global Headlines

• Apple US $3 trillion value – Apple, the US technology giant, topped US $3 trillion market cap Friday. It is the first company in history to reach that milestone. To reach that, the share price has climbed 47% in 2023. Apple’s market cap is now roughly the size of Africa GDP, estimated at US $3.14 trillion (the continent’s total production in a single year). The only reason for putting this here is to show that the greatest gift of macroeconomic policy is to provide the best business environment for investment (innovation), growth and jobs by businesses. When national businesses prosper, nations prosper.

• AGOA and Africa Trade – In 2000, the US passed a legislation to support preferential trade, exports into the US by 35 Sub Saharan countries. 23 years after, South Africa may be graduated out of the scheme. While it is estimated that AGOA has helped create over 250,000 jobs in Africa’s textile industry, it is generally accepted that the results have been underwhelming. For Nigeria, the best estimate is that the scheme never took off, with concentration on the exports of crude oil rather than the enormous benefits in agriculture and light manufacturing. The current 10-year cycle ends in 2025, and it is not clear yet whether the scheme will be extended. The next forum will be held in South Africa but the country is currently suffering from its ambiguity in the support for Russia.

Nigeria Invest Conference 2023 - Sept. 21st

The Nigeria Invest Conference (NIC) 2023 is designed as a focal point for serious conversations with top government functionaries, business leaders, thought leaders, diplomatic partners, and non-governmental organizations (NGOs).

For sponsorship and enquiries:

Contact: [email protected]

The Week Ahead

• Korea inflation rate for June is expected to be released on Tuesday 4^th July, 2023 while Mexico inflation report for June to be released on Friday, 7^th July, 2023.

• The United State Unemployment rate is expected to be released on Friday 7^th July 2023.