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Nigeria’s Net Domestic Credit Hits Record of N61.1 Trillion in August 2022

The total net domestic credit of Nigeria’s economy rose to N61.1 trillion in August, the highest the economy has ever recorded

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Naira Exchange Rates - Investors King

The total net domestic credit of Nigeria’s economy rose to N61.1 trillion in August, the highest the economy has ever recorded, according to the data retrieved from the Central Bank of Nigeria (CBN) on the money supply in the country.

Net domestic credit signifies the local loans given to both the public and private sectors in the country over a certain period. 

In December 2021, Nigeria recorded a net domestic credit of N48.7 trillion. However, by August 2022 total domestic credit had risen to N61.1 trillion, representing an increase of N12.4 trillion or 26% when compared to N48.7 trillion achieved in December 2021.

Further analysis of the data by Investors King shows that the private sector has the highest domestic credit rate of N40.1 trillion, 66% of the total credit to the economy. While the public sector has a domestic credit of N21 trillion.

However, a more critical analysis of the available data revealed that the N12.4 trillion increase recorded between December 2021 to August 2022 was majorly from the public sector domestic credit.

The public sector domestic credit includes borrowings from the state and Federal Government which totaled to a sum of N7.1 trillion this year alone.

Nigeria has been struggling with limited fiscal space following the decline in its crude oil production due to oil theft and a series of other factors. Foreign revenue generation dropped across the board as the nation dropped to fourth on Africa’s largest producers‘ list in September 2022.

Therefore, the country’s inability to up crude oil production despite the global oil rally has affected the economy more than the obvious.

Again, the Nigerian Naira, a key indicator of the healthiness of the economy, depreciated further against the United States Dollar on Wednesday, trading at N741 to a U.S. Dollar at the parallel market.

Meanwhile, the Central Bank of Nigeria (CBN) continued to struggle with escalating inflation rate of 20.52%. The apex bank-led monetary policy committee had raised the interest rate by 15.5% in an effort to curb inflationary pressure and rein in prices.

The CBN Governor, Godwin Emefiele stated that the interest rate will continue to rise in an attempt to reduce the high the money in circulation and lure investors into the economy.

However, in hopes of reviving the dying economy, the Nigerian National Petroleum Cooperation disclosed that Nigeria is soon expected to increase its daily production of crude oil by 500,000 barrels per day. 

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Finance

Remittance to Nigeria, Other African Countries Hits $53bn in 2022

Remittance to Sub-Sahara Africa rose to $53 billion in this year

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Naira Exchange Rates - Investors King

The World Bank report has indicated that remittance to Nigeria and other countries in Sub-Sahara Africa has reached $53 billion in 2022. This represents an increase of 5.2 percent when compared with 2021.

Investors King understands that remittances into Nigeria and Kenya constitute a significant percentage of all the remittances into the African Sub-Sahara region. 

“Remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 percent to $53 billion in 2022, compared with 16.4 percent last year (due mainly to strong flows to Nigeria and Kenya),” the report stated.

According to the World Bank report on Migration and Development, prepared by the bank’s Migration and Remittances Unit and Development Economy, remittance has constituted an important part of the Gross Domestic Product (GDP) for a number of African countries. 

For example, Remittances as a share of GDP in the Gambia is 28 percent while it stood at 21 percent in Lesotho, the report noted. 

The report added that remittances are an important source of household income for most Low and Middle-Income Countries (LMICs). Through remittances, most of the households in the LMICSs have been able to survive harsh economic conditions such as the Covid-19 pandemic. 

“Remittances are a vital source of household income for LMICs. They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households”. 

The World Bank noted that although the rising price of goods has adversely affected migrant incomes, the reopening of the economy and international borders has led to the increase of remittance inflow into Sub Sahara Africa.

Meanwhile, the global bank acknowledges that countries that witnessed scarcity of foreign exchange rates or multiple exchange rates officially recorded a decline in remittances inflow as migrants shift to alternative channels which promise better rates. 

The report noted that sending funds back home from some countries in Europe and America could attract a transaction fee that is as high as 7.8 percent on average. 

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Banking Sector

Insider Dealing: Hafiz Mohammed Bashir Acquires 37 Million Shares in Unity Bank

Alhaji Bashir carried out the acquisition in 32 different transactions at an average price of N0.51 a unit between November 8th and 11th 2022

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Unity bank - Investors King

The management of Unity Bank Plc has announced that a non-Executive Director, Hafiz Mohammed Bashir scooped 37,681,947 shares of the bank.

The transaction was disclosed in a statement signed by the bank’s secretary, Alaba Williams.

Alhaji Bashir carried out the acquisition in 32 different transactions at an average price of N0.51 a unit between November 8th and 11th 2022, according to the disclosure available on the Nigerian Exchange Limited (NGX).

Insider dealing is the buying or selling of a company’s shares by someone with a piece of insider information not available to the public. Insider dealing is illegal in the U.S. but not in Nigeria as long as it’s disclosed.

The Nigerian Security and Exchange Commission (SEC) mandated all listed companies to disclose insider trading to enforce transparency across the nation’s Exchange market.

Also, insider dealings can help stakeholders and retail investors assess the confidence of top company executives in a listed company. While Alhaji Bashir’s acquisition could demonstrate his trust in the future of the company, it could also mean positioning ahead of a major company’s event given his position.

Hafiz Mohammed Bashir Profile

In 2017, Hafiz Mohammed Bashir was appointed as a Non-executive Director following the Central Bank of Nigeria’s approval.

Hafiz Mohammed Bashir is an accomplished professional with vast experience in the public and private sectors. He retired at the apex of Local Government Administration in Katsina State in 1992 and has chaired the Board of many companies – including Fiztom International Ltd, HafadGlobal Resources limited and Fiziks Nigeria limited.

Alh. Hafiz who is currently in private business holds a Post Graduate Diploma in Management from Abubakar Tafawa BalewaUniversity, Bauchi, and an Advance Diploma in Public Administration from the University of Jos, a higher Diploma in Local Government Administration- AhmaduBello University. Zaria and Diploma in Insurance from ABU, Zaria He is also currently undergoing a Master’s programme in Business   Administration at the Business School of the Netherlands.

See the details of the transactions below.

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Loans

Lagos Chamber of Commerce Advised FG on Borrowing, Proffer Solutions to Foreign Exchange Crises

LCCI lamented that additional borrowings will further increase Nigeria’s debt-servicing bill

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The Lagos Chamber of Commerce and Industry ( LCCI) has advised the Federal Government to explore alternative ways to finance the deficit in the 2023 budget proposal. LCCI lamented that additional borrowings will further increase Nigeria’s debt-servicing bill.

Investors King understands that the 2023 budget proposal as submitted to the National Assembly by the president has a deficit of N10.78 trillion.

Speaking at the organisation’s 134th Annual General Meeting (AGM) held in Lagos, LCCI President, Dr Olawale Cole, stated that although the chamber does not totally frown at the budget deficits, the chamber, however, is not disposed to issuing new commercial loans as well as bilateral and multilateral loans to finance the deficit. 

Dr. Olawale added that while President Buhari alongside other African presidents is seeking debt cancelation from international creditors, the presidents across the African continent keep piling up debts. 

“The world is a bit confused at our president’s well-publicized call for debt cancellation at the last United Nations General Assembly,” he noted.

Speaking further on the danger of the country’s incessant borrowing, Olawale said “the borrowings are significantly increasing, and Nigeria is struggling to service these debts due to revenue mobilisation challenges and an increased fuel subsidy burden”.

“The International Monetary Fund (IMF) has warned that debt servicing may gulp 100 percent of the federal government’s revenue by 2026 if the government fails to implement adequate measures to improve revenue generation,” he lamented. 

Similarly, the LCCI president also spoke on the foreign exchange challenges in Nigeria. He noted that the major cause of the fall in naira is a result of the drop in oil output and weak production amid increased demand for foreign currency. 

“The real solution to our forex scarcity crises is to boost production and expand exports. We must also resolve the crises around oil production, as 80 percent of forex earnings come from oil and gas exports,” he said. 

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