Reforms in the offing?
After at least four years of sitting on its hands, the government might be set to take bold necessary steps to reform the economy as some of the factors that led to the 2016 recession begin to crystalize.
Oil prices are falling as demand slows on the back of the coronavirus outbreak, the closure of the land borders have fuelled inflation, while growth will test the economy’s unorthodox path.
“The economy is in worse shape than even the data show and the government is set to do something about it,” a government official said without giving a timeline.
Given that investors are beginning to court the country’s power sector on new reforms embarked on by the FG and recent moves to improve the business environment (e.g. the new visa policy), it is very likely to see new policies rolled out in the mid-term.
FG taps into 71% of country’s pension fund as assets hit N10.22trn
From the total fund under management by the Pension Fund Administrators (PFAs) as at the end of 2019, the amount borrowed by the government stood at N7.34 trn, 71.87 percent of the country’s N10.22trn pension fund.
The borrowing is held through different kinds of bonds and treasury bills, data from the latest monthly report of the National Pension Commission (PenCom) shows.
Year-on-year there was an 18.28 percent increase of pension fund assets from N8.64trn in 2018 to N10.22trn as at 31 Dec 2019.
Stock investors lost N239bn as market dipped 2.69% last week
Investors lost N239bn last week after the shed 2.69 percent and market capitalization depreciated by 1.61 percent.
All trading sessions, except Thursday’s, closed in the red as bears continue to dominate on the bourse.
All other indices finished lower with the exception of the insurance index which saw an uptick of 0.23 percent while the NSE ASeM closed flat.
Currency in circulation declines 7.9% in January
CBN’s move to increase the amount banks are required to keep with it has reduced the total currency in circulation by 200 million or 7.9 percent month-on-month in January.
The total currency in circulation in January stood at N2.2bn according to CBN data, down from N2.4bn in December.
The apex bank’s Monetary Policy Committee (MPC) had in January raised CRR by 500 basis points (5 percent points) to 27.5 percent as a way of reducing the volume of money in the economy because it feared inflation would keep rising.
A policy last year for banks to lend as much as 65 percent of their total deposit (initially raised to 60%) increased credit to the private sector and pushed market rates downwards.
At the same time, the closure of Nigeria’s land borders helped boost inflation now at 11.58 percent (December) compared to CBN’s preferred maximum of 9 percent.
2019 was worst year for global air freight demand in 10yrs
The International Air Transport Association (IATA) released full-year 2019 data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), fell by 3.3 percent compared to 2018 while capacity (AFTK) rose by 2.1 percent. This was the first year of declining freight volumes since 2012, and the weakest performance since the global financial crisis in 2009 (when air freight markets contracted by 9.7 percent).
In the month of December, cargo volumes contracted 2.7 percent year-on-year while capacity rose 2.8 percent.
Air cargo’s performance in 2019 was dampened by weak growth in global trade of just 0.9 percent. The sector’s underperformance was also due in particular to slowing GDP growth in manufacturing-intensive economies. Softer business and consumer confidence, along with falling export orders, also contributed to air freight struggles.
There are signs that confidence and orders could pick up in 2020. It is too early to say what long-term effects will be seen from the impact of restrictions associated with combatting the coronavirus outbreak.
All markets except Africa suffered volume declines in 2019. Asia-Pacific retained the largest share of FTKs, at 34.6 percent. The share of freight traffic increased modestly for both North America and Europe, to 24.2 percent and 23.7 percent, respectively. Middle East carriers’ traffic share held steady at 13 percent. Africa and Latin America saw their shares lift marginally, to 1.8 percent and 2.8 percent.
African carriers’ saw freight demand increase by 10.3 percent in December 2019, compared to the same month in 2018. This was reflected in the strong 2019 full-year performance, which saw Africa freight volumes expand 7.4 percent. Capacity in December grew by 10 percent and for 2019 in total, increased by 13.3 percent. Over the year, air cargo volumes have been supported by strong capacity growth and investment linkages with Asia.
