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Damilare AsimiyuJunior Economist & Research Analyst, GTI Group
Nigeria Economic Outlook for 2020
Providing Basis for Effective Strategizing
GTI RESEARCH
GTI
Capital
GTI
Securities
GTI
Asset Mgt.
& Trust
GTI
MicrofinanceGTI
Trading Floor
24-Dec-19 2
1. Review of Global Economy in 2019
Contents
Nigeria Economic Outlook for 2020
2. Review of Global Oil Market in 2019
3. Review of Domestic Macroeconomy in 2019
4. Global Economic Outlook for 2020
5. Domestic Economic Outlook for 2020
24-Dec-193
Nigeria Economic Outlook for 2020
5.4%
4.3%
3.5% 3.5% 3.6% 3.5% 3.4%3.8% 3.6%
3.0%3.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E2020F
REAL GDP GROWTH (Annual Percentage Growth)
GLOBAL GROWTH TREND
World Advanced Economy EMDEs
2.30% 1.60%
4.60%3.00% 2.60% 3.00%
-0.32%
8.15%
23.07%
-8.20%
15.50%17%
2015 2016 2017 2018 2019E 2020F
GLOBAL MERCHANDISE TRADE & LIQUIDITY LEVEL
Merchandize Trade MSCI World Equity Index
HIGHLIGHTS
Global growth is expected to weaken to 3.00% by the end of
2019, driven by economic slowdown in both Advanced and
Emerging Economies – IMF WEO, Oct. 2019
In advanced economies, growth in 2019 is expected to settle at
1.7% as against 2.3% in 2018, while in Emerging Markets and
Developing Economies (EMDEs), growth is expected to print at
3.9% as against 4.5% in 2018.
Growth of merchandize trade is expected to ease to 2.60% in
2019 (from 3.00% in 2018), while global liquidity level is
expected to rise to 15.50% from a contraction point of 8.20%
in 2018.
DRIVERS
Spillover effect of the U.S. – China trade dispute
Increased protectionism agenda
Brexit negotiation uncertainty
Weak growth in Euro-Area
Pockets of Geo-political tensions (e.g. U.S. & Iran, U.S. &
Venezuela)
Prolonged civil unrest (e.g. protest in France, Hong-Kong)
Global Economy in 2019
Sources: IMF, WTO, MSCI
24-Dec-19 Nigeria Economic Outlook for 20204
Global Economy in 2019… cont’d
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
USA China Euro-Area India Japan Russia
Growth Trend in Major Economies
2017 2018 2019E 2020F
• Divergent growth trend to characterize major economies in
2019 and 2020
In the U.S. and China, growth is expected to ease in
both 2019 and 2020
In Euro-Area and Russia, growth is expected to slide
in 2019 before seeing modest recovery in 2020
However, India is expected to see further expansion
in its economic growth, albeit at a slow pace
• Quantitative easing of varying magnitude prevailed
across major economies in 2019 due to global growth
concern resulting mainly from the negative spillover effect
of the protracted trade dispute between the U.S. and
China.
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 2020F
Interest Rate Environment in Major Markets
U.S ECB India China Japan
Sources: IMF, ECB, U.S. Fed, BOJ, BoI
24-Dec-19 Nigeria Economic Outlook for 20205
28 June ‘16
While Campaigning for
the White House,
Donald Trump promised
to counter unfair trade
practices from China. Trump and Chinese
president, Xi
Jinping, agreed to
a 100-days plan
for trade talk.
President Trump
orders probe into
alleged Chinese
intellectual property
theft.
The two sides
failed to agree on
a new step to
reduce U.S. trade
deficit with China
after the 100
days talk.
Trump orders 25% tariffs
on Steel and 10% on
Aluminium from all suppliers
including China. China
responded with a 25%
tariffs on 128 U.S. products.
After two days of
trade talk with little
progress, president
Trump announced a
new 10% tariffs on
$300bn Chinese
imports (effective,
Sep. 1 2019), but
insist trade talk will
continue despite the
new tariffs.
The U.S. and China agreed
on a 90-days halt to new
tariffs. The deadline for the
cease fire was extended on
February 25, 2019.
At G20 meeting in Osaka,
Trump and Xi agreed to
restart the trade talk.
The U.S. released list of
$16bn Chinese goods to
be subject to 25%
tariffs. China retaliated
with a 25% duties on
$16bn U.S. goods.
Trump imposes
tariffs on all
imported washing
machines and solar
panels from China
and others.
Timeline of the U.S. – China Trade War
7 April ‘17
31 March ‘17
Trump (now president)
signed two executive orders
to tightened tariff
enforcement in anti-subsidy
and anti-dumping trade
cases, and to review and
address causes of trade
deficit.
19 July ‘17
14 Aug. ‘17
22 Jan ‘18
8 Mar. – 2 Apr. ‘18
7 Aug. ‘18
The U.S. implements an
additional 10% tariffs on
$200bn of Chinese imports.
China answered with duties
of $60bn on U.S. goods.
24 Sept.’18
Feb 25 – 29 Jun ‘19
1 Aug. ‘19
1 Sep. ‘19
U.S. imposed 15% new
tariffs on $300bn
goods; China
retaliated with 5%
and 10% tariffs on
1,717 items.
12 Dec ‘19
Trump signed-off on an
initial trade agreement
with China to halt new
tariffs imposition while
negotiation continues into
2020. China replicate
same gesture by
suspending new tariffs on
U.S. goods
Global Economy in 2019… cont’d
What will end the
trade war? U.S.
Election or
Trump’s
Impeachment?
• Global daily average crude oil demand increased by a
marginal 1% in 2019 to 99.8mb/d. Same growth rate is
expected in 2020 due to projected weak growth of global
demand
• Despite efforts by OPEC and its ally, Russia, to stabilize oil
prices through series of output cuts, oil price outlook still
remains on the downside due to the rapid and sustained
increase in U.S. shale crude oil production (also known as
WTI) amid weak rise in global demand.
24-Dec-19 Nigeria Economic Outlook for 20206
Global Oil Market in 2019
0
20
40
60
80
100
120
2016 2017 2018 2019E 2020F
Global Oil Market Performance
World Oil Demand World Oil Supply Share of Non-OPEC Supply
Share of OPEC Supply Shortage
0
20
40
60
80
100
120
2014 2015 2016 2017 2018 2019E 2020F
Oil Prices
Brent Crude Oil OPEC Crude Oil WTI Crude Oil
Sources: OPEC MOMR, Oil Price.com
24-Dec-19 Nigeria Economic Outlook for 20207
Africa Biggest Economies in 2019
• Among Africa’s three biggest economies, only Egypt will
end 2019 with a GDP growth that doubled that of its
population growth rate
• Nigeria’s par-capita GDP is twice as low as that of Egypt,
and almost four times lower than that of South Africa. This
by implication means more Nigerians are poorer than
citizens of the other two biggest economies
• Nigeria is the only country among the three biggest
economies in Africa with both Inflation and Benchmark
Interest rate (i.e. MPR) in double digits
• Nigeria and South Africa have their unemployment rate
above 20%, while Egypt’s unemployment rate is below
10%
• Among the three biggest stock markets in Africa, only the
Nigeria Stock Exchange will end 2019 on a negative YTD
return.
AFRICA'S BIGGEST ECONOMIES: KEY PERFORMANCE INDICATORS FOR 2019
Country
Name
GDP
size
($bn)
Population
Size (mn)
Per
Capita
GDP ($)
GDP
Growth
(Q3’19)
Populatio
n Growth
rate
Benchm
ark
Interest
Rate
Inflation
Rate
Unemploy
ment Rate
Equity
Market
(YTD)
Nigeria 376.28 200.96 1,881.4 2.28% 2.70% 13.50% 11.86% 23.10% (17.0%)
South Africa 349.29 56.7 6,237.3 -0.6% 1.20% 6.75% 3.60% 27.60% 9.2%
Egypt 237.04 100.39 2,370.4 5.60% 1.90% 12.75% 3.60% 8.10% 6.5%
Sources: CBN, NPC, NSE, Investing.com
24-Dec-19 Nigeria Economic Outlook for 20208
Timeline of Key Events in 2019
JanFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
• CBN lowered MPR for the
first time in over 2-years
to 13.5% while retaining
CRR, LR and Asymmetric
Window at 22.5%, 30%,
and +200/-500bps
around MPR respectively
• CBN cashless policy on
lodgment and withdrawal by
Individual and corporate
accounts kick started
• Nigeria GDP grew by 2.12%
in Q2
• CBN added milk importation
to the list of commodities
excluded from accessing FX
at official rate
• President Buhari dissolved
EMT led by the VP,
inaugurate 8-man EAC
• Legal battle begins between
Nigeria and P&ID over a
failed gas processing
investment for which a UK
court granted P&ID prayers
to seize Nigeria’s assets
worth $9.6bn
• President Muhammadu
Buhari signed the African
Free Trade Agreement
(AfCFTA)
• CBN adjust LDR to 60%
from 48%
• Airtel Africa Plc listed
3.76bn shares on NSE and
LSE
• CBN excluded individual
and local corporates from
investing in OMO auctions
• President Muhammadu
Buhari presented ₦10.33
trn expenditure for 2020 to
the National Assembly
• CBN announced LDR by
65% in December 2019
• EODB 2020 report: Nigeria
moved up 15 places to
131st position
• Nigeria GDP grew by
2.28% in Q3
• World Bank review down
Nigeria’s growth projection
for 2019 to 2.0%
• Dongote flour mills delisted
from the NSE
• CBN ordered commercial
banks to stop selling T-bills
to individuals and small
businesses
• National Assembly passed
Finance Bill 2019; a key
component of which is VAT
increase to 7.5%
• The National Assembly
passed 2020 budget of
₦10.59 trn
• FG re-present $29bn
foreign loan request to the
National Assembly
• CBN review guide to
charges by Banks, Other
financial and Non-bank
financial Institutions –
Reduced fee on
withdrawal from other
ATM to ₦35 (effective
Jan. 1, 2020)
• President Muhammadu Buhari
signed 2019 budget into law
• Nigeria GDP grew by 2.10%
in Q1’19
• MTN Nigeria listed 20.35bn
shares on NSE
• President Buhari re-appoints
Mr. Godwin Emefiele as
governor of CBN for second
term
• Access bank merger with
Diamond bank formally
consummated
• Federal government
signed new minimum wage
bill into law. The lowest
paid worker now to be
receiving ₦30,000 (as
against the previous
minimum wage of
₦18,000)
• World Bank projected
a 2.2% growth for
Nigeria
• President Muhammadu
Buhari ordered the closure
of all Nigeria land
borders with neighboring
countries due to smuggling
of commodities and arms
• 2019 general elections
took place
• APC won the presidential
election and most of the
gubernatorial and national
assembly seats
• CBN released five year
policy thrust with focus on
5-key areas of Preserving
macroeconomics & financial
stability; Developing robust
payment system
infrastructure; Improving
access to credit by farmers,
MSMEs and consumers;
Growing external reserves;
and Supporting
diversification efforts
• Customs duty exchange
rate increases to ₦326/$1
from ₦306/$1
• Since exiting the 2016 economic recession,Nigeria’s GDP has continued to grow, albeit ata very slow pace
• The Oil GDP component performance hascontinued to be shaped by the global priceand output volatility
• The Non-oil GDP component, though has beengrowing recently but still below the pre-recession average of 3.5% annual growth.
24-Dec-19 Nigeria Economic Outlook for 20209
Breaking Down the GDP Performance in 2019
7.84
4.894.28
5.39
6.31
2.65
-1.58
0.83
1.91 2.17
-4
-2
0
2
4
6
8
10
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019(AVG)
Annual GDP Growth Rate (%)
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
2015 2016 2017 2018 2019(AVG)
Performance of the GDP Components
Non-Oil Growth Rate Oil Growth Rate
Source: NBS
• Just like in 2018, growth of the three non-
oil sectors is on the verge of converging
around 2%, which is still very low to
generate the kind of “big push” needed by
the economy to fully rebound
• Only 5 out of the 46 sectors that make up
the Nigeria economy grew by more than a
quarter of a trillion (i.e. above ₦250bn) in
the last 12-months
24-Dec-19 Nigeria Economic Outlook for 202010
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
2015 2016 2017 2018 2019(AVG)
Sectors of the Non-Oil
AGRICULTURE INDUSTRIES SERVICES
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
Tele
com
mun
ication
s…
C
rop P
rodu
ctio
n
Cru
de P
etr
ole
um
…
Road T
ransp
ort
Food
, Bev
era
ge…
Const
ruct
ion
Cem
ent
Oth
er
Serv
ices
Ed
uca
tion
Acc
om
moda
tion
and
…
Air
Tra
nsp
ort
Insu
rance
Fin
anci
al In
stitution
s
Bro
adca
stin
g
Pu
blic
Adm
inis
tration
Woo
d a
nd
Woo
d…
Motion
Pic
ture
s,…
F
ore
stry
F
ishin
g
Hum
an H
ealth &
…
Art
s, E
nte
rta
inm
ent…
Oth
er…
P
last
ic a
nd R
ubber…
Non
-Meta
llic
…
Tra
nsp
ort
Serv
ices
P
ulp
, P
aper
and
…
Coa
l M
inin
g
Publish
ing,
Adm
inis
trative &
…
L
ivest
ock
C
hem
ica
l a
nd
…
Wa
ter
Tra
nsp
ort
E
lect
rica
l a
nd…
R
ail T
ransp
ort
&…
Po
st a
nd C
ouri
er…
M
oto
r v
ehic
les
&…
Meta
l O
res
Wa
ter
Supp
ly,…
Basi
c m
eta
l , Ir
on
…
Q
ua
rryin
g a
nd…
T
extile
, A
ppa
rel…
Ele
ctri
city
, G
as,
Ste
m…
Oil R
efi
nin
g
Pro
fess
ion
al,…
Real Est
ate
Tra
de
y/y Absolute change (₦trn)
Breaking Down the GDP Performance in 2019… Cont’d
Source: NBS
• The national budget has continue to
underperform due largely to revenue shortfalls
• Both the Oil and Non-oil revenue has continue to
print below the budget targets
• Due to the revenue shortfalls, the capital
expenditure component of the budget has
suffered the most from the revenue shortfalls
• Federal government has increased VAT to 7.5%
(effective, Jan. 2020) from 5%, but this will not
significantly solve the revenue shortfall problem
as it (the VAT increase) will add less than
₦100bn to the revenue
24-Dec-19 Nigeria Economic Outlook for 202011
Fiscal Policy in 2019
EXPENDITURE
2018 Budget Performance 2019 Budget Performance
Approved
Actual (Jan-
Dec) Variance
% of
Variance Approved
Pro-
Rata(Jan-
Jun)
Actual (Jan-
Jun) Variance
% of
Variance
Total Expenditure (₦trn) 9.12 7.45 -2.18 -23.9% 8.92 4.46 3.39 -1.07 -24.0%
Recurrent Expenditure
(₦trn) 5.7 5.25 -0.46 -8.1% 6.32 3.16 3.16 -0.02 -0.6%
Capital Expenditure
(₦trn) 2.87 1.74 -1.64 -57.1% 2.09 1.05 0.294 -0.76 -72.0%
Statutory Transfers
(₦trn) 0.53 0.46 -0.07 -13.2% 0.5 0.25 0.23 -0.02 -8.0%
Debt Servicing (₦trn) 2.2 2.15 -0.05 -2.3% 2.25 1.13 1.11 -0.02 -1.8%
REVENUE SIDE
2018 Budget Performance 2019 Budget Performance
Approved
Actual (Jan-
Dec) Variance
% of
Variance Approved
Pro-
Rata(Jan-
Jun)
Actual (Jan-
Jun) Variance
% of
variance
FGN Total Revenue
(₦trn) 7.16 3.96 -3.2 -44.7% 6.99 3.5 2.04 -1.45 -41.4%
Oil Revenue (₦trn) 2.99 2.32 -0.68 -22.7% 3.68 1.84 0.9 -0.94 -51.1%
Non-Oil (₦trn) 1.47 1.21 -0.35 -23.8% 1.41 0.7 0.61 -0.09 -12.9%
Others(₦trn) 2.70 0.43 -2.17 -80.4% 1.9 0.96 0.53 -0.42 -43.8%
Source: Budget Office
• Value Added Tax (VAT) increased to 7.5% from 5% effective January2020. Only seven items comprising –
Exported Services
Medical & Pharmaceutical products
Basic food items
Baby products
Medical services
Play & performances conducted by educational institutions as part oflearning, and
Materials and equipment imported for use in downstream gas activities areExempted
• Petroleum Profit Tax – Introduced Withholding tax of 10% on dividendspaid out of profits of companies engaged in petroleum operations
• Capital Gain Tax – Companies to now pay capital gain tax whentransferring assets between two entities; anyone with compensation inexcess of ₦10mn after loss of employment to also pay
• Stamp Duties – ₦50 on banks transfer from ₦10,000 andabove
• Customs & Excise Tariffs – Goods imported into Nigeria mustnow pay excise duty
• Personal Income Tax – TIN now mandatory to operate bankaccount
• Company Income Tax – Corporates must have TIN to operatecorporate account; Foreign companies engaged in digitalbusiness with or without physical presence to pay tax
24-Dec-19 Nigeria Economic Outlook for 202012
Fiscal Policy in 2019… Cont’d
C&ET
CGT
PPT
Stamp
Duties
PIT
CIT
VAT
7-Highlights
of the New
Finance Bill
2019
• National Assembly approved 2020 budget in record
time, return Nigeria to January – December budget
cycle
• On the low side, despite revenue constraints, FG and
the National Assembly increased 2020 budget by
18.7% when compared to 2019 size.
24-Dec-19Nigeria Economic Outlook for 2020
13
Approved Budget for 2020
Appropriation Bill 2020
Total Expenditure (₦'Trn) 10.59
Recurrent Expenditure (Non-Debt) (₦'Trn) 4.84
Capital Expenditure (₦'Trn) 2.47
Debt Service (₦'Trn) 2.73
Sinking Fund (₦'Bn) 296
Statutory Transfer (₦'Bn) 560.47
Total Revenue (₦'Trn) 8.15
Oil Revenue (₦'Trn) 2.64
Non-oil Revenue (₦’Trn) 1.81
Other Revenue (₦’Trn) 3.7
Source: Budget Office
24-Dec-19 Nigeria Economic Outlook for 2020 14
Approved Budget for 2020: Expected Revenue Sources
S/N Description 2019 Budget 2020 Budget Variance % of Varaince
a Share of Oil Revenue 3,688,282,600,552.00 2,637,609,314,988.00 (1,050,673,285,564.00) -28%
b Share of Dividend (NLNG) 39,889,887,640.00 124,269,200,000.00 84,379,312,360.00 212%
c Share of Minerals & Mining 1,288,084,234.00 1,895,673,251.00 607,589,017.00 47%
d Share of Non-Oil 1,409,186,629,523.00 1,805,115,823,875.00 395,929,194,352.00 28%
Share of CIT 813,365,752,583.00 839,306,973,052.00 25,941,220,469.00 3%
Share of VAT 229,339,263,648.00 292,573,424,131.00 63,234,160,483.00 28%
Share of Customs 310,866,122,279.00 618,647,203,735.00 307,781,081,456.00 99%
Share of Federation Acct. Levies 55,615,491,012.00 54,588,222,958.00 (1,027,268,054.00) -2%
e
Revenue from GOEs (Top 10 GOEs excluding
NNPC) 955,361,046,920.00 990,113,888,722.00 34,752,841,802.00 4%
Top 10 GOEs Operating Surplus (80% of which
is captured in Independent Revenue) (359,831,060,380.00) (436,938,846,257.00) (77,107,785,877.00) 21%
f Independent Revenue 631,079,910,674.00 849,968,442,768.00 218,888,532,094.00 35%
g FGN's Balances in Special Levies Accounts 12,910,083,472.00 300,000,000,000.00 287,089,916,528.00 2224%
h FGN's Share of Actual Bal. in Special Accts 8,327,994,472.00 345,000,000,000.00 336,672,005,528.00 4043%
i Signature Bonus / Renewals / Early Renewals 84,228,494,867.00 939,300,022,585.00 855,071,527,718.00 1015%
j Domestic Recoveries + Assets + Fines 203,379,583,341.00 237,012,653,161.00 33,633,069,820.00 17%
k
Earmarked Funds (Proceeds of Oil Assets
Ownership Restructuring) 710,000,000,000.00 (710,000,000,000.00) -100%
l Stamp Duty 200,000,000,000.00 200,000,000,000.00
m Exchange Rate Differentials (Non-FAAC) 125,479,949,022.00 125,479,949,022.00
n Grants and Donor Funding 209,915,780,857.00 36,392,600,000.00 (173,523,180,857.00) -83%
AMOUNT AVAILABLE FOR FGN BUDGET
(including GOEs) 7,594,019,036,171.00 8,155,218,722,115.00 561,199,685,944.00 7%
• Government to leverage more
on TAX and the technology of
TSA to boost non-oil revenue
• Revenue expectation from oil
is modest, and can suffice for
a “Base Case” scenario – that
is, current aggregate crude oil
output is 2.04mb/d and oil
price of $55/bl
Source: Budget Office
• CBN cut MPR by 0.5% to 13.5%, the first time since June 2016
• CBN raised LDR of commercial banks to 60% in July, then to 65% in October
• CBN bars individual and local corporates from investing in OMO auctions
• CBN stops Treasury-bills sales to individuals and small firms
• CBN directed commercial banks to begin charging of processing fee on
individual/corporate deposits and withdrawal
OBJECTIVES OF THE POLICIES
To reduce cost of fund, especially to those in employment generating real sector
To reduce high preference of domestic retail investors in risk-free government
securities (as they mostly prefer short term) and give more room for “the money
bags” that will take position on the long end of the curve
To reflate interest in equity based investment, real estate, agriculture, and boost
aggregate consumption
To drive the cashless policy agenda of the Apex bank
REALITIES
Despite the high interest rate environment in Nigeria, portfolio investors (who are
the major target of the CBN to bring in more FX) are currently being cautious of
investing in Nigeria’s risky assets over concerns of possible devaluation of the Naira,
multiple exchange rate regime, and fiscal tightening
Also, the high inflation rate in the country will continue to negate the objectives of
the CBN policies
24-Dec-19 Nigeria Economic Outlook for 2020 15
Monetary Policy in 2019
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%20.0%
Jan
Mar
May
Jul
Sep
No
v
Jan
Mar
May
Jul
Sep
No
v
Jan
Mar
May
Jul
Sep
No
v
Jan
Mar
May
Jul
Sep
No
v
2016 2017 2018 2019
Trend of MPR and Inflation Rate
MPR Inflation Rate
0
100
200
300
400
500
600
Jan
Ma
r
Ma
y
Jul
Sep
Nov
Jan
Ma
r
Ma
y
Jul
Sep
Nov
Jan
Ma
r
Ma
y
Jul
Sep
Nov
Jan
Ma
r
Ma
y
Jul
Sep
Nov
Jan
Ma
r
Ma
y
Jul
Sep
Nov
Jan
Ma
r
Ma
y
Jul
Sep
2014 2015 2016 2017 2018 2019
Naira/USD Exchange Rate Movement
Naira/USD (Official Rate) Naira/USD (Parallel Market)
Source: CBN
• Foreign reserves which accrued by more than $6bn in the firsthalf of the year has continued to compress (since beginning ofH2) due to the twin-effect of oil price & output volatility, andfall in capital importation
• The most affected component of the Capital Importation isFPI (also known as Hot Money), suggesting foreign investorslack of confidence in Nigeria policy environment andexchange rate stability
24-Dec-19 Nigeria Economic Outlook for 202016
Foreign Reserves Position in 2019
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Foreign Reserves Movement
0.00
1000.00
2000.00
3000.00
4000.00
5000.00
6000.00
7000.00
8000.00
9000.00
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
Capital Importation
FDI ($'Mn) FPI ($'Mn) Other Investment ($'Mn) Total ($'Mn)
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
1.6
1.65
1.7
1.75
1.8
1.85
1.9
Nigeria's Crude Oil Production & Prices
Crude Oil Production (mb/d) Price of Bonny Light (pbl)
Saudi Oil
Vessel
attacked by
Iran
OPEC
agreed to
further
tighten
output
Nigeria
bargain for
high output
Sources: CBN, NBS, OPEC MOMR
• Despite the listing of two big telecoms firms – MTNN and Airtel Africa, onthe Nigeria Stock Exchange, the NSE All Index has fallen by more than 4,800index points YTD, to signify the huge sell-off in the market
• With the exception of Access, MTNN, and Dangsugar, other large capitalizedstocks will close 2019 with a negative YTD return. This is driven by absenceof market stimulating policy and weak performance of many listedcompanies
• In the fixed income market, yields was relatively stable in the first nine monthsof the year before the CBN different policy drives towards advancing morecapital flows to the private sector weighed on yield levels
24-Dec-19 Nigeria Economic Outlook for 202017
Capital Market in 2019
0.00%
5.00%
10.00%
15.00%
20.00%
Jan-1
8
Feb
-18
Mar-
18
Apr-
18
Ma
y-1
8
Jun
-18
Jul-
18
Aug-1
8
Sep-1
8
Oct
-18
Nov-1
8
Dec-
18
Jan-1
9
Feb
-19
Mar-
19
Apr-
19
Ma
y-1
9
Jun
-19
Jul-
19
Aug-1
9
Sep-1
9
Oct
-19
Nov-1
9
Trends in the Fixed Income Market
T.BILLS 3-Months True Yield T.BILLS 6-Months True Yield
T.BILLS 12-Months True Yield BOND 5yrs Marginal Rate
BOND 10yrs Marginal Rate
25,000.00
26,000.00
27,000.00
28,000.00
29,000.00
30,000.00
31,000.00
32,000.00
33,000.00
NSE All Share Index
0
200
400
600
800
1000
1200
1400
Sectoral Performance of the Equity Market
Banking Industrial Consumer Goods Oil/Gas Insurance
MTNN listing
boost
performance
CBN stopped sale of
OMO & T-Bills to
individuals and small
businesses
CPI rose for the first
time in 20-months
• U.S. – China trade spat may not last beyond H1’2020
• U.S. Fed may consider new interest rate cut in early 2020 if GDP growth disappoint in Q4’19
• Republican dominated senate will likely not vote to impeach President Trump as done in the
House of Rep. However, Trump’s popularity will continue to wane, and will likely loose the
November 2020 presidential election
• PM Boris Johnson may likely deliver on Brexit promise before 31st March, 2020 “Good” or
“Bad”
• Global liquidity level will remain high due to quantitative easing in many advanced and EMDEs.
However, only EMDEs with clear growth strategies and stable exchange rate outlook will benefit
from global liquidity wash in search of better yields
• Global merchandise trade volume is expected to remain subdued due to increasing
protectionism and weak global growth
• ECOWAS adoption of a single currency “ECO” may not come to fruition
• Crude oil price may fall below $55 if the U.S. and China trade dispute re-escalate. Beside,
crude oil demand is not likely to rise significantly in 2020 irrespective of the outcome of U.S. –
China trade dispute
24-Dec-19 Nigeria Economic Outlook for 202018
Global Economic Outlook for 2020
• Returning to January – December budget cycle to boost business planning and investment
intents
• Equity market to witness modest recovery; driven by low yields in the fixed income market (vs.
high inflation rate), dissipation of political risk, and expectation of improved budget
implementation
• Bond yield might gain traction (modest) by early Q2’ 2020 as FG will need to repay
c.₦500bn on maturing bond instruments
• Power tariffs may likely be reviewed upward to reflect current-cost realities
• Mass industrial action likely to go down in many states (in H1’2020) over inability to pay the
new minimum wage
• Insurance sector & Microfinance banks recapitalization directives will reduce number of
players due to need for mergers & acquisition. Nonetheless, the surviving ones will be stronger
and more liquid
• CBN may push for banks recapitalization over Moody’s recent report which downgrades
Nigeria banking sector long-term rating to “Negative” from “Stable”
• Naira value may depreciate if oil price slide by more than 10% below $55/bl
24-Dec-19 Nigeria Economic Outlook for 202019
Domestic Economic Outlook for 2020
• More commodity likely to come under CBN forex restriction if external reserves
continued to be pressured
• Nigeria may re-open land borders before end of Q1’2020 to avoid losing out on
AfCFTA opportunities
• Inflation may like surge to 12% if border closure extends beyond January 2020.
This may also force CBN to return MPR to 14%
• National Assembly expected to approve FG’s $29.9bn foreign loan request
• Nigeria to breakthrough on P&ID legal battle but will part with some fortunes
• More government agencies to be captured in the IPPS and TSA for fiscal
prudency
• GDP growth to remain weak due to unaligned fiscal and monetary policy focus,
and over-dependent on crude oil as the main source of FX. Hence, we expect
GDP growth to settle between 2.10% - 2.40%
24-Dec-19 Nigeria Economic Outlook for 202020
Domestic Economic Outlook for 2020
24-Dec-19 21Nigeria Economic Outlook for 2020
24-Dec-19 Nigeria Economic Outlook for 202022
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