ThinkBusiness Today - May 8th

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Did you watch the coronation of their Majesties King Charles III and Queen Camilla on Saturday? Whether you like the British Monarchy or not, you will agree with me that what was on display was history and excellence. You get both by record keeping, and preparation, preparation, preparation…..

Contrast that with Nigeria’s gubernatorial elections that was postponed for another week, and the census that was planned for May 7 – 9 that has now been postponed indefinitely.

Markets

• The Nigerian stock market ended last week on a flat note. Benchmark NGX ASI climbed 174.56 (0.33%) points to close at 52,465.31, a 1-week gain of 0.44%, a 4-week loss of 3.26%, but an overall year-to-date gain of 2.37%. Key share price movement include Seplat (5.35%), Oando (1.82%), Access Corp (5.14%), GTCO (0.21%), FBNH (0.91%), Zenith (0.21%), and UBA (0.64%).

• Last week was on track to go down as one of the worst for oil prices in recent months, with both Brent and WTI shaving off some 10% week-on-week before a slight recovery on Friday as Brent Crude increased by 3.86%. Oil price movement has been driven by renewed fears of a US banking crisis contagion and lukewarm industrial figures from China. Hijacked tankers in the Strait of Hormuz, falling US inventories, and the lack of a deal to unlock Kurdish oil exports all failed to offset the macroeconomic doom and gloom.

• The Naira appreciated marginally by 0.08% at the I & E window as the rate closed N462.25/$ and at the parallel market closed at N732/$, indicating at 0.68% appreciation.

  Natural gas futures found their footing on Friday, ending a four-day losing streak that was fueled by a litany of bearish fundamentals. The Natural gas future increased by 1.71% and settled at US$2.14

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National Headlines

• Nigeria’s borrowing from the World Bank has reached $14.34bn as of March 31, 2023. This was an increase from the $13.93bn debt recorded by the Debt Management Office (DMO) as of December 31, 2022.

• The United Nations is to partner the federal and state governments, as well as multilateral and unilateral donors to mobilize $83.16m (N38.3bn, @ N461/$) for Nigeria’s agriculture sector development from 2023 to 2027. Already, the UN through its Food and Agriculture Organization, has sourced for about $16.36m (N7.54bn) for the initiative, according to the FAO Nigeria Country Programming Framework 2023 – 2027, obtained in Abuja on Friday from the Federal Ministry of Agriculture and Rural Development.

• DMO says Loan repayment of principal to service the loans N22.7trn from the Central Bank of Nigeria through the Ways and Means Advances will begin in 2026. This was according to a disclosure by the Debt Management Office on the Securitization of the N22.7tn Ways and Means Advances.

Global Headlines

• Saudi Arabia's economy grew by 3.9% y / y Q1 2023, according to initial government estimates published on Sunday. Non-oil activities grew by 5.8%, while oil activities grew by 1.3%. Government services activities grew by 4.9%.

• Deposits at U.S. commercial banks fell toward the end of April to the lowest in nearly two years, data released on Friday by the Federal Reserve showed, while overall credit provided by banks moved up, led by a record level of outstanding loans and leases.

• Job growth fared better than expected in April despite bank turmoil and a decelerating economy, the Labor Department reported Friday. The unemployment rate was 3.4% against an estimate for 3.6% and tied for the lowest level since 1969. A more encompassing number that includes discouraged workers and those holding part-time jobs for economic reasons edged lower to 6.6%.

News Analysis

If you have followed Nigeria’s economic dynamics for a long time, you would have realized how difficult it is to shake off the feeling of whether we want to operate a market economy or a social one.

In the last few days, reports in the Guardian show that the Transmission Company of Nigeria (TCN) has been cutting off electricity distribution companies from the grid due to non-payment of electricity supplied. On Friday, the Guardian reported that TCN says it will disconnect “electricity distribution companies that have failed in complying with payment schedules”. According to the same report, TCN had given a 14 businessday notice on the 21^st of March and a suspension order issued on 19^th April 2023.

In the same report, the Guardian quoted Kingsley Achife, the MD /CEO of Ibadan electricity, “As a revenue collection arm of the electricity value chain, IBEDC sells and distributes electricity generated by the generation companies. However, the company is unable to meet its financial obligation to the electricity value chain due to poor payment and huge outstanding bills by customers”.

There is no doubt that the chain is broken. We are stuck on the same electricity provision for many years given poor and weak investment. Why are Discos not efficient in collecting payments? What investments are required to do so? Why are the investments not made? What is the missing link in the market design? Are the recent reforms sufficient?

Ultimately, the challenge remains how to make the appropriate market design that ensures that more investments are made and pricing is fair, not necessarily cheap, for a sustaining ecosystem.

The Week Ahead

• The Central Bank Nigeria (CBN) will issue a total of N143.98 billion treasury bills on Thursday 11^th May 2023 as the same amount will be maturing the same day. Africa's largest economy's big bank disclosed this on Nigeria's treasury bills programme released on its website on Wednesday. The bills are divided into 91-days, 182-days, and 364-days raising N4.5 billion, N5.4 billion and N134 billion respectively. The bills are also a roll-over of maturing bills for the corresponding period.

• UK Q1’23 GDP growth is expected to be released on Wednesday 12^th May 2023 and also the inflation figure for the United State is expected to be released on Wednesday 10^th May, 2023.

Winning

As promised on Friday, Napoli, the Italian football Club base in Naples, provides the context for this edition’s winning.

Napoli drew with Udinese Thursday evening to reach an unassailable lead and therefore winners of the 2022 / 23 Serie A season, known as the Scudetto. This is the third time in their history, winning with five games of the season still to play. The two previous occasions were in 1987 and 1990 when the Argentine and global football star Diego Maradona played for the club.

At the start of the season, fans grumbled as key players left the club, including – Lorenzo Insigne, Dries Mertens (Napoli’s all time goal scorer), Arkaddiusz Milik, and Fabian. Indeed, just before the season started, both Inter Milan and Juventus were neck and neck as favorites for the Scudetto, according to the bookies.

Napoli have overcome many hurdles before the reaching the summit of Italian football this season. After the highs of the late 80s and second title in 1990, they were relegated to Serie B in 1998, further relegated to Serie C following bankruptcy in 2004, but back in the topflight in 2000 / 01 season.

As Napoli fans took to the streets to celebrate their team’s historic victory with song, flares, fireworks, horns, and firecrackers as it became a long street party in Naples last Thursday, and continued in the home game on Sunday, there are many winning lessons. Let me just mention two.

First, the most obvious.

Let me provide two quotes: The first by Rajat Chhajta of Khelnow, describing the Napoli team season: “solid all-round squad guided by a shrewd manager”. The second by Teddy Mitrosilis, “in kitchens, sports, and business, the team comes first”. Building a team is critical to business success. How they are recruited, the process of finding the right fit, and how they are “coordinated" to deliver the group’s goal are what eventually delivers the ultimate success.

I think the second lesson that many may overlook is that Napoli have been knocking on the door of the title for a while. Osimhen scored 22 goals by the time Napoli clinched the Scudetto. He joined from Lille, France for an African record fee of Euro 70 million. Before his arrival at the club in 2020, Napoli had come close to winning the Serie A title on several occasions with more established and experienced players.

While doing that, they kept constantly changing the team by iteration (review).

Increasingly, many businesses are realising the power of iteration that allows for constant review of what works and what does not until excellence is achieved. Napoli did this perfectly to reach the summit of Italian football with less budget compared to some other teams.

Congratulations to Victor Osimhen, coach and team members.