Welcome to the October edition of the Duplo Economic Digest!
We bring you the most critical issues and trends impacting African markets in the months ahead. Let’s dive in!
Nigerian Macroeconomic Recap
Crypto Cleared, Pricey pumps, Cabinet Shuffled
Petrol subsidy is gone…for real this time.
Petrol prices surged on October 9 to ₦1,030 ($0.63) per litre at NNPC Ltd outlets in Abuja and NGN 998 (USD 0.61) in Lagos following NNPC’s termination of its exclusive purchase agreement with Dangote Refinery. Broader market prices have stabilised, averaging NGN 1,100 (USD 0.68) per litre nationwide. Allegations of monopolist practices by lawmakers and industry stakeholders spurred the break with Dangote. The move opens the sector to other fuel marketers, enabling them to negotiate prices directly with the refinery and allowing other players to supply Nigeria with petroleum products.
In September, NNPC reportedly purchased petrol from Dangote at NGN 898.78 (USD 0.56) per litre and sold it to marketers at NGN 765.99 (USD 0.47). The loss incurred forced NNCP to reiterate the unsustainability of the subsidy regime, pushing the government to deregulate the downstream sector fully. However, the move comes at a cost to ordinary Nigerians, who have been exposed to a 362% rise in fuel prices (in naira terms) since May 2023. The Nigeria Labour Congress (NLC) immediately criticised the increase, accusing the government of repeatedly raising petrol prices without offering sufficient relief or addressing public hardship. Similarly, the Centre for the Promotion of Private Enterprise (CPPE) deemed the hike “ill-timed,” with CPPE Director Muda Yusuf arguing that Nigeria is unprepared for total deregulation. The Tinubu administration is not the first Nigerian government to attempt to break the social contract by cutting fuel subsidies, but others have always backtracked. If the regime can hold its nerve amid popular resistance, it would be the first to deregulate the downstream sector successfully.
EFCC finally lets go:
In a significant development, the Nigerian Economic and Financial Crimes Commission (EFCC) has dropped money laundering charges against Binance executive Tigran Gambaryan, who had been detained in Nigeria since February 2024. The charges were withdrawn on October 23 at the Federal High Court in Abuja. The primary reason was to allow Gambaryan to seek medical treatment outside Nigeria. During his detention at Kuje Correctional Centre, Gambaryan’s health had reportedly deteriorated significantly. In addition, diplomatic efforts had contributed to his release. EFCC lawyer Ekele Ihenacho mentioned that “diplomatic arrangements had also helped secure Gambaryan’s release”. It’s worth noting that while the charges against Gambaryan have been dropped, the EFCC will continue its money laundering case against Binance as a company.
Following Gambaryan’s release, US President Joe Biden personally thanked Nigerian President Bola Tinubu in a 30-minute phone conversation on October 29. President Biden expressed his appreciation for Tinubu’s leadership in securing Gambaryan’s release on humanitarian grounds. During the call, both leaders also discussed Collaboration between the two countries, especially in law enforcement through the newly established Bilateral Liaison Group on Illicit Finance and Cryptocurrencies and Nigeria’s aspiration for a permanent seat on the United Nations Security Council.
Dangote and Tinubu meet.
President Bola Tinubu convened a crucial meeting on October 29, to discuss the implementation of the naira-for-crude policy and address pressing issues within Nigeria’s oil sector, with key stakeholders including Aliko Dangote. During the meeting, President Tinubu reiterated the government’s unwavering commitment to the naira-based crude oil and refined petroleum products sales. He emphasised that this policy was strategically designed to eliminate exchange rate barriers and foster stability within the downstream sector.
Aliko Dangote provided an update on the capabilities of his refinery. He disclosed that the refinery currently has over 500 million litres of petrol in stock, can produce more than 30 million litres daily, and is well-equipped to meet Nigeria’s estimated daily consumption of 32 million litres. President Tinubu urged all stakeholders to prioritise local production and consumption in light of these developments. He specifically encouraged NNPC Ltd and private marketers to cease petrol imports and instead source their supply from domestic refineries. Dangote echoed this sentiment, questioning the rationale behind continued imports when his refinery had ample stock to meet the nation’s needs.
Another one bites the dust
South African retailer Pick n Pay is exiting Nigeria, selling its 51% stake in a joint venture as part of a larger restructuring strategy. The retailer, which entered Nigeria four years ago through a partnership with A.G. Leventis, joins several multinational companies, including Shoprite and Jumia, that have scaled back or left due to Nigeria’s challenging economic environment. High inflation, significant naira depreciation, and rising operational costs have eroded consumer purchasing power and made profitability difficult. Other major firms like Diageo, GSK, and Kimberly-Clark have also exited, citing similar issues, as inflation recently peaked at 34.19%, and the naira lost over 100% of its value last year.
Cabinet shake-up.
In a hotly anticipated cabinet reshuffle, President Bola Ahmed Tinubu made changes to the executive on 23 October in a bid to enhance government efficiency. Tinubu reassigned ten ministers to new portfolios, discharged five others from their roles, and nominated seven newcomers to ministerial positions, with their names forwarded to the Senate for confirmation. Newly appointed ministers include Dr Tunji Alausa, who was promoted from Minister of State for Health to Minister of Education. Dr Jumoke Oduwole, formerly the Executive Secretary for the Presidential Enabling Business Environment Council, was named as Minister of Industry and Trade. Imman Suleiman Ibrahim, previously the Minister of State for Police Affairs, was appointed as Minister of Women Affairs. Additional appointments include Dr Nentawe Yilwatda as Minister of Humanitarian Affairs, Muhammadu Dingyadi as Minister of Labour and Employment, and Idi Mukhtar Maiha as the inaugural Minister of Livestock Development.
NBS to rebase GDP and inflation.
The National Bureau of Statistics (NBS) will rebase its calculations for GDP and inflation in November 2024, updating the data investors rely on for economic insights. Rebasing adjusts these figures to better reflect the economy’s evolving structure, as new industries and products emerge while others become less relevant. This update helps ensure GDP and inflation metrics accurately represent current economic realities.When the GDP was last rebased in 2010, Nigeria’s economy grew by over 60% in naira terms, and surpassed South Africa as the largest economy in Africa. Now that Nigeria is the fourth largest on the continent, how much change do you think the rebasing will make to the size of the economy?
IMF on Nigeria. In its latest World Economic Outlook report, released in October 2024, the International Monetary Fund (IMF) revised Nigeria’s economic forecast, downgrading projected growth to 2.9% for 2024—a decrease of 0.2% from July’s forecast and 0.4% from April. The IMF attributes this adjustment to “slower growth in Nigeria” due to weaker-than-expected economic activity in the year’s first half. For 2025, the IMF is slightly more optimistic, projecting a growth rate of 3.2%, which is 0.2% higher than its previous forecast for that year. Inflation remains a pressing issue, with the IMF forecasting an average inflation rate of 32.55% in 2024, expected to decline to 25% by 2025. In response to high inflation, the IMF advises Nigeria to pursue tighter monetary policies and a balance between fiscal and monetary strategies to address inflation and manage debt. The IMF’s cautious outlook contrasts with the World Bank’s projections, which estimate Nigeria’s GDP growth at 3.3% in 2024 and 3.6% from 2025 to 2026. This adjustment reflects the IMF’s guarded perspective on Nigeria’s economic recovery trajectory amid broader challenges facing emerging markets.
Finance Flashback
Naira notes are here to stay. Following the call from the members of the House of Representatives to the CBN to accelerate the distribution of newly printed N200, N500, and N1,000 banknotes while gradually withdrawing the old notes before the December 31, 2024, deadline, the Central Bank of Nigeria (CBN) has refuted claims that the old banknotes will cease to be legal tender on December 31. Citing a Supreme Court order from November 29, 2023, which allows the indefinite use of these notes, the CBN confirms that old and redesigned banknotes remain valid for transactions. The public is encouraged to continue accepting all Naira notes and consider electronic payment options to reduce reliance on physical cash.
Access Bank goes after the big bucks. Access Bank Plc plans to issue dollar-denominated securities in Nigeria’s domestic market to support its growth and meet central bank capital requirements. CEO Roosevelt Ogbonna announced two tranches of the issuance: one focused on financial institution development, expected by mid-2025, and another for the open market, modelled after Nigeria’s successful domestic dollar bond sale that raised $900 million. Access Bank also aims to expand internationally, with plans to enter the U.S. by 2025 and establish a Hong Kong office through its UK subsidiary. This follows recent acquisitions, including a planned purchase of the National Bank of Kenya and a provisional license to open a subsidiary in Namibia, reinforcing its pan-African growth strategy.
NGX Performance
NGX stands strong. The Nigerian stock market demonstrated resilience and growth in October 2024. Despite some fluctuations, including three days of decline in the second week, the overall trend was positive. The market benefited from strong performances in key sectors such as consumer goods and oil & gas. The significant gain in the NGX Growth Index (12.66%) suggests increased investor confidence in smaller, high-growth potential companies. The steady performance of blue-chip stocks, reflected in the modest growth of the NGX 30 index, provided stability to the market. The release of Q3 financial statements likely contributed to increased trading activity and price movements as investors reacted to company performances. The market also showed its ability to absorb new listings, as evidenced by the Aradel Holdings Plc listing.
Zrosk takes a piece of the pie On October 2, 2024, Zrosk Investment Management Ltd acquired a 10% stake in Mecure Industries PLC (NGSE). Conducted off-market and approved by the Nigerian Exchange Group (NGX), this strategic investment represents a milestone for Mecure, strengthening its capital base and accelerating its growth plans. The partnership brings both financial backing and a shared commitment to expanding Mecure’s reach in the pharmaceutical and healthcare sectors, aligning with Zrosk’s mission to support growth in underserved African markets. Both companies have expressed optimism about the collaboration and its potential impact on Nigeria’s healthcare sector, with the acquisition reflecting Zrosk’s broader strategy of investing in high-growth African businesses, particularly in healthcare and pharmaceuticals.
FX Performance
Cardoso’s pot of gold. According to CBN Governor Olayemi Cardoso, Nigeria’s foreign exchange reserves experienced substantial growth in 2024, reaching a two-year high of $39.12 billion as of October 11. This marks a 12.74% increase from $34.70 billion at the end of June and the highest level since October 7, 2022, when the reserves were $38.06 billion. Between April 8 and October 3, the reserves grew by $5.57 billion, fueled by improved oil prices and increased crude oil production and export volumes. Enhanced remittance inflows now account for 9.4% of total external reserves, while foreign investments surged, with capital importation rising by 65.56% to $6.49 billion between January and July. The current reserves can finance over 12 months of imports, surpassing the international benchmark of 30 months. This growth reflects Nigeria’s enhanced capacity to manage external obligations and bolster investor confidence. The CBN has also implemented reforms, including exchange rate unification and resumed FX sales across various market segments, increasing transparency and reducing arbitrage.
Naira continues to struggle. The Nigerian Naira reached N1,631.17/dollar at the official market, reflecting the ongoing pressure on Nigeria’s foreign exchange, driven by high money supply, which grew 62.8% annually to N109 trillion in September 2024. In response, the Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC) signed an agreement to mitigate foreign exchange risks and increase local currency loans for Nigerian businesses. The IFC plans to invest over $1 billion in Nigeria, focusing on SMEs, infrastructure, agriculture, and other key sectors.
October Petrol Price watch
Company Focus – MONIEPOINT – Nigeria’s latest unicorn
Moniepoint, previously known as TeamApt, is a Nigerian fintech company that has recently achieved unicorn status with a valuation surpassing $1 billion following a successful $110 million Series C funding round. Founded in 2015 by Tosin Eniolorunda and Felix Ike, Moniepoint has steadily evolved over the past decade from an infrastructure and payment solutions provider for banks to a full-fledged business banking entity serving small and medium-sized businesses (SMBs) across Nigeria. In August 2023, the company further diversified by launching Moniepoint Microfinance Bank, entering the personal banking market.
Moniepoint’s services span digital payments, comprehensive banking services, foreign exchange, credit facilities, and business management tools, including expense management, accounting, bookkeeping solutions, and insurance options. The company processes over 800 million transactions monthly, totalling more than $17 billion in transaction value, and was recognised by the Financial Times as one of Africa’s Fastest-Growing Financial Institutions for two consecutive years. Between 2019 and 2022, Moniepoint achieved an absolute growth rate of 7,979% and a compound annual growth rate (CAGR) of 332%, culminating in $182 billion in processed transactions for customers in 2023.
The recent funding round, led by Development Partners International’s African Development Partners III fund with contributions from Google’s Africa Investment Fund, Verod Capital, and Lightrock, will support Moniepoint’s expansion across Africa, where Nigeria currently accounts for 90% of its business. During Nigeria’s 2023 cash crunch crisis, Moniepoint’s agent banking solutions experienced a surge in popularity, underscoring its role as a market leader. As Africa’s latest unicorn, Moniepoint now looks to strengthen its regional presence, starting with acquiring KopoKopo in Kenya cementing its influence in financial inclusion and digital transformation across the continent.
Africa Focus
Gachagua out. Kenyan lawmakers have voted to impeach Deputy President Rigathi Gachagua, marking a historic first for the country. The Senate approved five of eleven charges against Gachagua, resulting in his immediate removal from office. He faced accusations of gross misconduct, irregular wealth acquisition, undermining the president, and fostering ethnic division. The impeachment proceeded despite Gachagua’s hospitalisation with severe chest pains, as his lawyers’ request to delay the vote was denied. With his removal, Gachagua loses his position, eligibility for future public office, and retirement benefits. President William Ruto now has 14 days to nominate a successor, who will require National Assembly approval within 60 days. This significant political shift underscores the fragility of high-level alliances in Kenya and highlights the complex power dynamics within the government.
Zambia is one step closer to debt restructuring. Zambia has made considerable progress in restructuring its debt, with significant agreements across multiple fronts. In June 2024, the IMF completed the third review of Zambia’s 38-month Extended Credit Facility (ECF), increasing the program’s value to approximately $1.7 billion with an additional $385.7 million in funding. This step reflects Zambia’s commitment to meeting IMF standards and securing international support. In March, Zambia reached a restructuring deal with Eurobond holders, aligned with IMF parameters, which was finalised in June. Further progress came in September when Zambia reached a $1.5 billion debt restructuring agreement with two major Chinese state-owned lenders, the China Development Bank and the Industrial and Commercial Bank of China.
Meanwhile, negotiations with private commercial creditors are ongoing to reach an agreement by the end of 2024. Since 2021, the World Bank has committed over $2.1 billion to Zambia, providing all new funding as grants starting in mid-2023 to support Zambia through its debt distress. Despite these advances, Zambia faces challenges. A severe drought has led to a downward revision of its 2024 growth forecast from 4.7% to 2.3%. To complete the debt restructuring process, Zambia will need commercial creditors to agree to terms comparable to those offered by bondholders and official bilateral creditors.
Losing confidence in Senegal. Moody’s has downgraded Senegal’s credit rating from Ba3 to B1, pushing it further into junk status. This decision follows a government audit ordered by Prime Minister Ousmane Sonko, which revealed significant financial discrepancies. The audit found that Senegal’s budget deficit had surged to 10% of GDP, nearly double the previously reported figure of 5.5%. Additionally, the country’s debt burden was estimated at 83.7% of GDP in 2023, approximately 10% higher than earlier estimates. The market reacted negatively to these revelations, with Senegalese Eurobonds experiencing sustained losses since the audit’s release. Dollar bonds maturing in 2033 fell for four consecutive days, reaching a low of 84.97 cents, while 2048 notes dropped to 72.77 cents on the dollar.
The Finance Minister, Cheikh Diba, confirmed that Senegal’s $1.8 billion IMF program has been temporarily frozen due to these financial imbalances. Looking ahead, Moody’s projects that the budget deficit could reach 7.5% of GDP in 2024, while the government aims to bring public debt below 70% of GDP. The rating remains “under review” for potential further downgrade, reflecting ongoing concerns about Senegal’s fiscal health.In response to the audit findings, the Finance Minister announced plans for structural reforms starting in 2025 to address these issues and restore investor confidence. Senegal is also discussing with the IMF to stabilize its economy amid rising uncertainty surrounding upcoming legislative elections.
Upcoming events in November
- African Economic Conference
23-25 November 2024
Gaborone, Botswana - Africa Tech Festival,
12-14 November 2024
Cape Town International Convention Centre (CTICC), Convention Square, 1 Lower Long Street, Cape Town, South Africa - Blockchain Africa Conference
20 November 2024
CSIR International Convention Centre
Tshwane, South Africa - Africa Digital Finance Summit 2024
20-22 November 2024
Johannesburg, South Africa - FinTech Festival
21-22 November 2024
Julius Nyerere International Convention Center (JNICC)
Dar es Salaam, Tanzania - Lagos International Finance Expo 2024
30 November 2024
Landmark Centre
Water Corporation Drive #Plot 2 & 3 Annex, Nigeria
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We hope you found this month’s newsletter exciting. See you next month!
