ThinkBusiness Today - June 23rd

E kaaro o, Ututu Oma, Barka de Safe - 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.

TGIF.

Have you been moving around in Lagos in the last two weeks? What’s your observation compared to the period before then? Ok, my movements around Lekki, where I live, Ikoyi and Victoria, where I usually have meetings, and few movements across the third mainland bridge to Ikeja and Alausa in the last two weeks are enough evidence that traffic has reduced considerably, thanks to the removal of fuel subsidies.

Of course, economic activity is less, but people are also now making conscious economic choices of whether some journeys are necessary. Notwithstanding, as Lagosians, there will still be weddings to go to this weekend, so please enjoy.

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Markets

• The stock market fell for the first time this week, falling 0.19%. The benchmark NGX All-Share Index (ASI) fell 112.69 (-0.19%) points to close at 59,211.26, marking a 0.03% one-week gain, a 12.52% four-week gain, and a 15.53% year-to-date gain. This was triggered by Profit taken and sell off in on AIRTELAFRI (-1.72%) and decline in small cap stock such as Lasaco Assurance (-10%) Sovereign Trust Insurance (-9.84%), Unity Bank (-9.63%) and Secure Electronic Technology (-9.52%).

• Oil prices slumped by 4% on Thursday after Fed Chair Jerome Powell told Congress that further interest rate hikes are coming in the second half of the year after a pause last week. WTI Crude, traded at US $69.38, down by 4.35% on the day. The international benchmark, Brent Crude, was falling by 4.02% and traded at US $74.02.

• The Naira depreciated at both markets. At the I & E window, Naira was down 3.32% to N763.13, also, depreciated at the street market, down 0.88% to N766.67. This brings the difference between the two rates to 0.32%, or N3.

• US natural gas futures increased slightly by 0.23% to $2.60/MMBtu as investors continue to monitor the amount of gas flowing to US LNG export plants and weather forecasts.

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National Headlines

• Report card for living in Lagos – The Economist Intelligence Unit’s 2023 Global Livability report has ranked Lagos the fourth worst city to live in the world, ahead of Damascus (Syria), Tripoli (Libya) and Algiers (Algeria). Except Algiers, the cities behind Lagos – Damascus and Tripoli have been in war and conflict in the last decade. The metrics used are poignant for policy makers, both in Lagos and broader Nigeria. It is a survey of 173 cities, using 30 qualitative and quantitative factors across five broad categories: stability, healthcare, culture and environment, education, and infrastructure. As in everywhere else, the factors that make a place livable are largely the responsibility of the public sector. In Lagos, though there has been progress, public investment has not matched private investment in the last 25 years. Until those investments are made, Lagos will continue to be in this situation.

• Seme border open for vehicle importation again? – The federal government is mulling the reopening of the Seme border for the importation of goods, including vehicles. The Seme border is 30 minutes from Badagry and its Nigeria’s most popular link to Republic of Benin through the coastal of Lagos to Cotonou. Seme border was one of the land borders shut by President Muhammadu Buhari in 2019, reopened in 2022.

Global Headlines

• Turkey’s Interest Rate Doubled – Turkey’s central bank jacked up the country’s key interest rate Thursday, almost doubling it from 8.5% to 15%, the first hike since March 2021. Since then, Turkey has battled inflation and rising costs of living crisis, and reelected Recep Erdogan as President few weeks ago. With a new finance Minister and a return to monetary orthodoxy, the expectation is that the rate will reach 20% before the end of the year.

• Rate Raises “all over” – It was not only Turkey that was raising rates. The Bank of England raised interest rates by a bigger-than-expected half a percentage point on Thursday after it said there had been "significant" news suggesting inflation would take longer to fall. The BoE's Monetary Policy Committee (MPC) raised its main interest rate to 5% from 4.5%, its highest since 2008 and its largest rate increase since February. The Bank blame rise in wages for the inflation rate of 8%. Also, Norway’s central bank raised its key policy rate by 50 basis points to 3.75% on Thursday in a bid to curb inflation.

• Is the US labour Market Softening? – Report released Thursday by the US Bureau of Labour Statistics show 264,000 new claims in the week ended June 17^th . This is the first time it has held steady in 20 months, an early indication of a softening labor market in the face of the Federal Reserve's aggressive credit tightening.

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What I read this week

Title – Lagos: Supernatural City – Tales of Survival, Spirituality, and the Struggle for Power in Africa’s Biggest Metropolis

Author – Tim Cocks

This is my second time of living in Lagos. Lagos is the “place” in Nigeria, and I don’t know of any other book that captures that better than the book I read this week. A book like this is always a good read because it provides a perspective, often a dispassionate one, of an outsider looking inside. Most times, they are often able to describe a pattern that has eluded those that have been born and immersed in the system.

Lagos – supernatural city is a documentation of the “life” stories of seemingly unconnected individuals about lives in Lagos. Indeed, the book describes itself as “an intimate portrait of life in one of the most vibrant cities in Lagos”. The book is about the beliefs and “spirituality” of these Nigerians. That is, how they confronted the myriads of challenges in Lagos by calling on the different gods they knew.

I find two exceptional features in this book quite interesting. The characters are known, traceable, and recognized. They are not pseudo characters. Because I know of one, it was interesting reading what Cocks wrote about the person. The second is a validation of something I have always preached – we all have dreams, a burning desire to do well in life. However, in Lagos and broader Nigeria, doing well requires a combination of many things. It cannot be limited to hard work or diligence, family or friends, innovation, or knowledge. For every successful individual, there is that ‘extraordinary’ element and feature about their success. That is why this book is very fascinating, narrating that side of majority of Nigerians.

I have a remote personal connection to one of the stories. On page 189, Cocks wrote, “The Conflict for control of Ajah was long, sporadic and often futile”. That conflict led to my wife leaving her banking job in 2006. Based in Ajah at the time and working on the mainland after the banking consolidation exercise, she was always arriving home late. In those times, it was a daily struggle to arrive home safely because of the fight in Ajah. Unable to secure transfer at the bank, she reluctantly left the banking role. Just as policy have consequences, conflicts, no matter how small, have consequences, sometimes, they are tangential.

In Lagos today, as it is the case in the whole country, there is now a widely accepted notion that the next few years will require all the “skills” of survival one has ever learnt. The economy is tough, and it is no coincidence that many of those that can leave, are leaving in droves. For those of us left, I will leave you with one of Cocks final comments in the book, “The venues change (and I will add that the people also change), but the underlying anxiety was always the same. The wheel of fortune is spun by forces no. human has ever managed to control. Wouldn’t you want to appease them if you could?”