Following the price of oil crash in 2014, China’s economic slowdown and the US rate hikes, Nigeria has been grappling to save its economy. Unfortunately, last week happened to be the worst week for Nigeria since the fall in oil price. The country formally entered a recession; the rate of unemployment increased and inflation rate soared to the highest in about 11 years.
Investors have become skeptical about coming into the country, and businesses are shutting down. This is because business owners, especially importers are finding it difficult to get foreign exchange to bring goods into the country. All these are happening at the same time due to the lack of a blueprint by the current administration.
The government has been asked by several stakeholders to cease being erratic, and only implement well thought out policies as the constant flip-flopping is costing the country dearly.
Below is Ventures Africa’s Weekly Economic Index, which gives you a glimpse into the recent activities in Nigeria’s economy between Monday 29th August and Friday 2nd September, as well as changes that could affect the economy:
How high is the level of Unemployment in Nigeria?
On Wednesday, August 31, 2016, the Nigerian Bureau of Statistics (NBS) released the unemployment rate for the second quarter of the year. It revealed that unemployment rate has risen from 12.1 percent in the first quarter to 13.3 percent at the end of the second quarter. In Q2 2016, the population of the labour force increased to 79.9 million from 78.5 million in Q1 2016.
Is Nigeria really in a recession?
The NBS also released its 2016 Q2 GDP report which revealed that the growth rate for the quarter contracted by negative 2.06 percent compared to 2016 first quarter GDP contraction of -0.36 percent. The contraction of negative 2.06 percent confirms that Nigeria is officially in recession. Nigeria also recorded negative GDP growth rates in both the oil and non-oil sectors of the economy.
The real growth in the oil sector was negative 17.48 percent (year-on-year) in Q2 2016, which is a 10.68 percent decline in the growth of Q1. The non-oil sector declined by 0.38 percent in real terms in Q2 2016. This growth rate was 0.20 percent points lower than Q1 2016 (-0.18 percent),
The growth in the non-oil sector was largely driven by the activities of seven subsectors including Agriculture, Information and Communication, and Arts and Entertainment. The seven sub-sectors grew positively while the remaining 19 major sectors, many of which are substantially indirectly dependent on the oil sector recorded negative growth.
Is the naira exchange rate getting any better?
The currency hit its record low hours after it was revealed that Nigeria’s economy was officially in recession. The Naira has continued to weaken in the parallel market as Bureau de change operators find it difficult to access their Forex account and get dollar supply after the central bank suspended nine commercial lenders from the market two weeks ago. As of Friday 2nd September the Naira exchanges against the dollar for N422 in the parallel market.
Did the Nigerian Stock Market perform better this week?
Nigerian stocks closed trading on a negative note as the All Share Index dropped -2.33 percent. At the close of trading on Friday, 2nd September 2016. Market capitalization was N9.53 trillion compared to N9.76 trillion recorded on Thursday. The volume of shares traded as of Friday was 309 million units. The three top gainers are WEMA Bank, FCMB and SEPLAT and top losers are DANGCEM, AFRIPRUD and CAVERTON.
What is the latest in the Nigerian Banking Sector?
Two weeks ago, the CBN banned 9 banks from the Forex market for refusing to remit $2.12 billion NNPC/NLNG funds in their possession into the TSA. Less than 24 hours later, UBA was readmitted after it paid $530 million it owed.
However, after a week of suspending eight banks from the foreign exchange market, the CBN announced last week that these banks have been reinstated. The reinstatement occurred after the banks agreed to a repayment plan for the NNPC/NLNG deposits in their possession that they had failed to deposit into the TSA.
CBN also announced the issuance of licenses to 11 new Money Transfer Operators (MTO). It would be recalled that a few weeks ago, the CBN issued a press release ‘warning’ un-licensed operators from executing international monetary services in Nigeria without its approval. This announcement caused outrage from some existing MTO’s who believed the CBN’s decision was unfair.
