Photograph — Afolabi Sotunde for Reuters

Welcome to the start of another week and the first Weekly Economic Index for February. As usual, here’s a quick roundup of our top three events of last week and why they matter. 

The naira is the new oil

Cash is the new oil in Nigeria. Not literally, of course. But there is a cash crisis going on. Banknotes are becoming so scarce that Nigerians now buy them at a premium. This crisis is happening because of the central bank of Nigeria’s new naira rollout. It was supposed to be a hard reset for Nigeria’s fiscal system that would ultimately reduce inflation and drive a cashless economy. But the move has only left people scrambling to get old and new notes. 

Bank ATMs are either not functioning or serving an overwhelming queue. Meanwhile, bank agents — who essentially act as human ATMs across the country — have increased their commissions on cash withdrawals to 10% or 20% due to the struggle to get cash from lenders. Nigeria’s informal sector, which represents about 58% of the economy, is heavily cash-dependent. Hence, they bear the heavier brunt of this crisis.

Starlink’s almost triumphant entry into Nigeria

Last week, Nigeria became the first African country where Elon Musk’s SpaceX internet service, Starlink, became active. SpaceX’s announcement came seven months after receiving the approval to launch in Nigeria and Mozambique. And now that Starlink’s much-anticipated arrival is here, social media is buzzing with positive reviews.

Internet coverage and speed have been among the most mulish challenges facing Nigeria’s digital economy. And Starlink’s main offer is to solve both problems. According to the website, Starlink offers speeds of 50–200Mbps in most areas in Nigeria—an upgrade considering 5G speeds in Nigeria struggle at 130Mbps.

However, Starlink has another giant to conquer: getting paid. Firstly, many Nigerians complained that its prices were too high. So it recently reduced its hardware and subscription costs from $600 (N438,000) and $43 (N31,000), respectively, to N274,098 and N19,260. But that’s not enough. Because of Nigeria’s restriction on international transactions, Nigerians will still have to pay more. Even though Starlink prices its offerings in naira, Nigerians cannot pay in their local currency. Except for those with domiciliary cards, users may pay up to ₦440,000 —$956 via CBN’s official rate of ₦460 to $1 —while using virtual dollar cards, which offer unofficial rates as high as ₦743 to $1.

The end of a (Tech) Nation

Tech Nation, a well-known supporter of tech startups in Europe, has closed after over a decade. The organisation, funded mainly by the UK government, lost its support to a program run by Barclays Bank Eagle Labs.

Tech workers from within and outside Europe received the news with sadness. A simple look at how Nigerians reacted shows how vital the programme has been to many. Tech Nation has pioneered several initiatives that have impacted lives across several continents, especially its visa programs. Over the last decade, Tech Nation has endorsed over 3,000 individuals from 94 countries. Nigeria, India and Russia have the highest representation among its alumni. But if Tech Nation does not find backers by March 31st, it will have to shut its doors permanently.

ICYMI: Market roundup

  • The Nigerian Exchange had a positive week, with the All-Share Index gaining 2.95% to close at 54,213.09 points.
    • Top gainers were International Energy Insurance Plc (57.14%), N Nig. Flour Mills(44.44%), Geregu Power (36.88%), Mrs Oil (20.94%) and John Holt (20.91%). 
    • The top decliners were Chams Holding Company (-16.67%), Guinness (-10%), Ikeja Hotel (-10%), Ncr (-10%) and Academy Press (-9.85%).
  • The crypto market ended the week with a 2.09% decline to a market cap of $1.07 trillion.
    • Bitcoin lost 3.47% to close at $22,975
    • Ethereum shrank by 0.80% to close the week at $1,632.
    • BNB gained 2.84% to close the week at $327.77
  • Brent crude fell 8.6% to close the week at $79.86/barrel, while WTI oil fell 8.6% to $73.46/barrel.
  • The naira closed the week at N462/$ at the Investors’ and Exporters’ window, while it traded at N748/$ at the parallel market.

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