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Crystal-Gazing the Nigerian Stock Market in 2022

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By Uche Uwaleke


Going by the relatively low year-to-date return of circa 6 percent in 2021, the performance of the Nigerian stock market, represented by the equities segment of the Nigerian Exchange, appears a far cry compared to mouth-watering market return of 2020.

One continues to recall with nostalgia that despite the ravaging impact of COVID-19 on the Nigerian economy, the stock market surprised on the upside, outperforming global stock markets in 2020, according to Bloomberg, and posting over 50 percent year-to-date return.

Has the low outturn in 2021 come as a surprise? Not exactly. In my article ahead of 2021 titled ‘Crystal-gazing the Nigerian Stock Market in 2021’, I had made the following prediction: ‘’the stock market will most likely pull back by the second half of 2021 having attained an unprecedented peak in 2020.

The low yield environment in 2020 acted like a tide that lifted all boats and under such circumstances, there is the tendency that a number of stocks may have been mispriced or priced above their intrinsic values.

If history is any guide, market correction is bound to happen especially in the last two quarters of 2021 regardless of any positive growth rate in GDP attained in 2021’’.

With the benefit of hindsight, this prediction actually hit the bull’s eye in view of the fact that the highest stock return in 2021 was in the month of January at 5.3% and that returns for the last quarter printed at 4.52% (October), 2.88% (November) and -1.12% (November) compared to 13.79%, 14.72% and 15% respectively during corresponding periods in 2020. It goes without saying that the performance of the Nigerian stock market in 2021 cannot be divorced from the fragile economic performance.

The country recorded some improvements in real GDP growth compared to the economic downturn of the previous year which was largely on account of COVID’19 pandemic. For example, GDP growth rate in the second and third quarters came in at 5.01% and 4.03% respectively powered mostly by the non-oil sector.

Also worthy of mention is the fact that headline inflation began a downward trajectory in April 2021. Regrettably, these positive macroeconomic developments did not make any significant impact on the stock market not least because the quarterly GDP growth rates had a lot to do with what is statistically known as the base effect in the computation of GDP given the deep economic recession experienced during the corresponding periods.

Furthermore, although disinflation was sustained for 8 consecutive months in 2021, the double-digit inflation rate remained high to support any meaningful growth in the stock market. As a matter of fact, the 6.07% return in 2021 translates to negative real return when adjusted for inflation which came in at 15.40% in November 2021. 

Other factors which presented challenges to real traction of the stock market in 2021 include the high exchange rates as well as rising yields in the fixed income market due in part to increase in government’s borrowing.

It will be recalled that the remarkable performance of the stock market in 2020, despite the pandemic, was largely on account of the low yield environment made possible by the accommodative monetary policy stance of the Central Bank of Nigeria.As the 2021 curtain falls, what looks clear from my crystal ball is that the performance of the market in 2022 will be shaped by the following factors: CBNs Monetary Policy.

In order to support economic recovery, the CBN has maintained what can be described as accommodative monetary policy stance since September 2020 when the MPR was reduced by 100 basis points to 11.5%.

This stance will likely change in 2022 as policy becomes more hawkish induced by both endogenous and exogenous factors (i will come to these later).

Tightening monetary policy through, for example, raising the MPR could lead to rising yields in the fixed income market and portfolio rebalancing away from equities to fixed income securities. For many businesses including listed companies, access to credit will continue to pose a challenge in a rising interest rate environment. 

Persistent Forex challengeFor many businesses that depend on imported raw materials, difficulty in accessing forex is most likely to linger in view of the arrears of unmet forex demand which the CBN still grapples with. Against this backdrop, capacity utilization will likely be negatively impacted which in turn affects bottom lines and ability of listed companies to pay dividends. 


Implementation of the FGs 2022 BudgetOne of the endogenous factors I referred to earlier has to do with the growing fiscal imbalance. I can bet that the over N6 trillion deficit in the 2022 budget (which now has an aggregate expenditure of over N17 trillion) and government borrowing plans to finance the deficit will impact the stock market in a number of ways.

It stands to reason that the more the government borrows to finance budget deficit; the more interest rates are driven up and as yields in the fixed income space go up, investors will naturally migrate from equities to government securities. More so, when government securities have the additional advantage of being risk-free.

I foresee the yield environment in 2022 returning to the pre-COVID level and having a huge toll on the equities market. As a corollary, the implementation of certain aspects of the 2021 Finance Act could impact liquidity of companies such as the reduction in the period for the payment of the Tertiary Education Tax from 60 days to 30 days.

Faced with liquidity constraint, many public companies may not be in a position to maintain dividend payments at current levels or even pay at all. 


Removal of fuel SubsidyAnother endogenous factor I could pick from my crystal ball is the planned removal of fuel subsidy following implementation of the PIA by mid-2022.

The inevitable consequence will be higher headline inflation in the near term lingering till end of 2022. The tight monetary policy that will follow to rein in inflation will result in higher fixed income yields and make equities investment less attractive.

There’s equally the risk of rising cost of production arising from removal of fuel subsidy and increase in electricity tariffs. The situation will be made worse if fuel subsidy removal triggers social unrest which is inimical to both foreign and domestic investments. Already, if recent reports are anything to go by, organized Labour has announced a Nation-wide protest on January 27 against the plan.


Heightened Political ActivitiesFor some reasons, penultimate election years in Nigeria are characterized by feverish preparations for general elections which tend to relegate the economy to the back seat.

This will have adverse consequences for the economy and the stock market from the uncertainties and tensions often generated by activities of some desperate Politicians. Inflationary pressure and exchange rate challenge will likely manifest more in the 2nd half of 2022 as politics takes centre stage.Intensity and Spread of Omicron Virus.

On the global scene, the intensity/spread of the omicron COVID’19 variant represents an exogenous factor. So, how the federal government of Nigeria responds to it will equally influence stock market performance in 2022. Resort to Lockdowns and movement restrictions will prove counterproductive.Interest Rate Normalization in Developed economies.

The planned interest rate normalization in developed economies is another exogenous variable likely to impact the Nigerian economy including the stock market in 2022. First, bond yields will rise leading to capital flow reversals in frontier and emerging markets. So, Nigeria should expect further capital outflows as a consequence which will hurt the stock market.

Also, it goes without saying that exit of foreign investors usually puts pressure on the forex market.

Therefore, another likely implication is depletion of foreign reserves and a higher exchange rate of the naira providing further justification for the CBN to tighten monetary policy. As earlier noted, doing so will increase cost of borrowing and reduce access to credit by businesses. When this happens, banks are likely to reprise their assets which may worsen Non performing loans position in the Banking sector.

At another level, the rise in US interest rates and bond yields will make it more expensive for the government to service the huge public debt now in excess of N38 trillion especially the foreign debt with significant Eurobonds component.

This development will worsen the fiscal imbalance, jeopardize the 2022 budget as well as crowd out development funds.Having gone through this experience before, both the fiscal and monetary authorities should anticipate the fallout of interest rate normalization in developed economies and put in place measures to cushion the adverse impact on the Nigerian economy.International crude oil priceOn the flip side, International crude oil price is likely to stay above the 2022 budget reference price of $62 per barrel on the average.

Crude oil output is also likely to shore up following implementation of the Petroleum Industry Act. The combined effect of these is that the oil sector performance is likely to improve in 2022 which should rub-off positively on oil companies listed on the Nigerian Exchange.

Overall, the seemingly intractable challenge of insecurity will continue to dampen sentiments in the nation’s stock market in the new year. In order to mitigate the risks in the horizon, as well as ensure effective response to these possible threats to the nation’s economy, there should be proper coordination between fiscal and monetary authorities.

The government should begin in earnest to discuss compensation measures with organized Labour aimed at ameliorating the impact of fuel subsidy removal. 


All said, to overcome the headwinds, investors in the Nigerian stock market will be well advised to follow the time-honoured cautious investment path of asset allocation, risk management and portfolio diversification.
Happy New Year!
*Uche Uwaleke is Professor of Capital Market at the Nasarawa State University and President of the Association of Capital Market Academics of Nigeria

Business Analysis

Nigeria Customs Generates over N1.75trn Revenue in 2025

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By Joel Oladele, Abuja

The Nigeria Customs Service (NSC) has generated an impressive N1,751,502,252,298.05 in revenue during the first quarter of 2025.

The Comptroller-General (CG) of the Service, Bashir Adeniyi, disclosed this yesterday, during a press briefing in Abuja.

According to Adeniyi, the achievement not only surpasses the quarterly target but also marks a substantial increase compared to the same period last year, reflecting the effectiveness of recent reforms and the dedication of customs officers across the nation.

“This first quarter of 2025 has seen our officers working tirelessly at borders and ports across the nation.

I’m proud to report we’ve made real progress on multiple fronts—from increasing revenue collections to intercepting dangerous shipments,” Adeniyi stated.

He attributed this success to the reforms initiated under President Bola Tinubu’s administration and the guidance of the Honourable Minister of Finance and Coordinating Minister of the Economy, Olawale Edun.

The CG noted that the revenue collection for Q1 2025 exceeded the quarterly benchmark of N1,645,000,000,000.00 by N106.5 billion, achieving 106.47% of the target. This performance represents a remarkable 29.96% increase compared to the N1,347,705,251,658.31 collected in Q1 2024.

Adeniyi highlighted the month-by-month growth, noting that January’s collection of N647,880,245,243.67 surpassed its target by 18.12%, while February and March also showed positive trends.

 “I’m pleased to report the Service’s revenue collection for Q1 2025 totaled N1,751,502,252,298.05.

“Against our annual target of N6,580,000,000,000.00, the first quarter’s proportional benchmark stood at N1,645,000,000,000.00. I’m proud to announce we’ve exceeded this target by N106.5 billion, achieving 106.47% of our quarterly projection. This outstanding performance represents a substantial 29.96% increase  compared  to  the  same  period  in  2024,  where  we  collected N1,347,705,251,658.31.

“Our month-by-month analysis reveals even more encouraging details of this growth trajectory,” Adeniyi said.

In addition to revenue collection, Adeniyi said the NCS maintained robust anti-smuggling operations, recording 298 seizures with a total Duty Paid Value (DPV) of ₦7,698,557,347.67.

He stated that rice was the most seized commodity, with 135,474 bags intercepted, followed by petroleum products and narcotics.

“From rice to wildlife, these seizures show our targeted approach,” Adeniyi remarked, noting the NCS’s commitment to combating smuggling and protecting national revenue.

Adeniyi also highlighted key initiatives, including the expansion of the B’Odogwu customs clearance platform and the launch of the Authorized Economic Operators Programme, which aims to streamline processes for compliant businesses. The NCS’s Corporate Social Responsibility Programme, “Customs Cares,” was also launched, focusing on education, health, and environmental sustainability.

Despite these achievements, the CG noted that the NCS faced challenges, including exchange rate volatility and non-compliance issues. Adeniyi acknowledged the need for ongoing adaptation and collaboration with stakeholders to address these challenges effectively.

Looking ahead, the NCS aims to continue its modernization efforts and enhance service delivery, ensuring that it remains a critical institution in Nigeria’s economic and security landscape.

“Results speak louder than plans; faster clearances through B’Odogwu, trusted traders in the AEO program, and measurable food price relief from our exemptions. We’ll keep scaling what works,” he concluded.

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BUSINESS

NSIA Net Assets Hit N4.35trn in 2024

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By Tony Obiechina Abuja

The Nigeria Sovereign Investment Authority (NSIA) yesterday disclosed that its net assets grew from N156bn in 2013 to N4.35 trillion in 2024.

Similarly, the Authority has remained profitable for 12 consecutive years, leading to cumulative retained earnings of N3.

74 trillion in 2024.

Managing Director and Chief Executive Officer of NSIA, Aminu Umar- Sadiq made these disclosures at a media engagement in Abuja, highlighting its audited financial results for the 2024 fiscal year.

According to him, the results underscored the resilience of the authority’s investment strategy and the strength of its earnings, driven by a well-diversified revenue base and robust risk management practices, despite a challenging global macroeconomic and geopolitical environment.

Total operating profits, excluding share of profits from associates and Joint Venture (JV) entities, increased from N1.17 trillion in 2023 to N1.86 trillion in 2024, driven by the strong performance of

NSIA’s diversified investment portfolio, infrastructure assets, gains from foreign exchange movements, and derivative valuations.

In addition, Total Comprehensive Income (TCI), inclusive of share of profits from associates and JV entities, reached N1.89 trillion in 2024, reflecting a 59 per cent increase from N1.18 trillion in 2023.

Core TCI (excluding foreign exchange and derivative valuation gains) rose by 148 per cent to N407.9 billion in 2024 compared to N164.7 billion in 2023, supported by robust returns on financial assets measured at fair value through profit and loss, including collateralised securities, private equity, hedge funds, and Exchange-Traded Funds (ETFs).

Umar-Sadiq said the authority’s outstanding financial performance in 2024 reflected the “strength of our strategic vision, disciplined execution and unwavering commitment to sustainable socio-economic advancement.”

He said, “By leveraging innovation, strategic partnerships and sound risk management, we have not only delivered strong returns but also created value for our stakeholders

“As we move forward, we remain focused on driving economic transformation, expanding opportunities, scaling transformative impact and ensuring long-term prosperity for current and future generations of Nigerians.”

The CEO reaffirmed the authority’s commitment to managing the country’s SWF, and delivering the mandates enshrined in the NSIA Act.

He said NSIA remained poised to continually create long-term value for its stakeholders by delivering excellent risk-adjusted financial results, developing a healthy and well-diversified portfolio of assets and large-scale infrastructure projects, and enhancing the desired social outcomes.

He noted that NSIA was committed to its mandate of prudent management and investment of Nigeria’s sovereign wealth.

“In adherence to its Establishment Act, NSIA prioritises transparency, disclosure, and effective communication with all stakeholders and counterparties,” he said.

He pointed out that in the year under review, a new board, led by Olusegun Ogunsanya as Chairman, was appointed by President Bola Tinubu, in accordance with the provisions of the NSIA Act.

The new board will provide strategic direction and oversight, in addition to playing a pivotal role in critical decision making.

He remarked that under the guidance of the Board, the Authority will retain focus on its primary mandate of creating shared value for all stakeholders based on its continued adoption of corporate governance practices.

“NSIA prides itself an investment institution of the federation established to manage funds in excess of budgeted oil revenues and its mission is to play a pivotal role in driving sustained economic development for the benefit of all Nigerians through building a savings base for the Nigerian people, enhancing the development of the county’s infrastructure, and providing stabilisation support in times of economic misadventure,” he added.

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Business Analysis

A Peep Into Dangote’s Refinery, The World’s Engineering Wonder

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By Cletus Akwaya

Call it Dangote Republic and you would not be wrong, for that is what it means in real sense.

The ultra-modern Dangote Refinery and Petrochemical complex located at the Lekki Free Trade Zone in Lagos is the World’s Engineering wonder.

A guided tour for top Media executives in the country  by the President,  Dangote Industries Group himself, Alhaji Aliko Dangote on July 14, provided a rare privilege and opportunity to appreciate the project that has emerged as the World’s largest  single train petroleum refinery.

Dangote, the Kano-born business mogul and Africa’s richest man, whose vision for the industrial transformation of Nigeria led to the initiation of this project is certainly a fulfilled person, having accomplished such a gargantuan task in the spelt of just about 10 years.

The refinery, which is  built and equipped with the latest technology in the industry. It is a behemoth sitting on a huge land space of 2, 735 hectares, approximately seven times, the size of Victoria Island, the octane section of Lagos, which has become the abode for the very rich in the nation’s commercial nerve – centre over the decades.

The land was provided by the Lagos state government after the payment of $100million dollars by the Dangote Group as cost of the land.

The edifice didn’t come easy as the engineers had to reclaim 65million cubic metres of sand  through dredging of the Atlantic coastline to pave way for the construction of the refinery and its accompanying facilities especially the Jetty.

The Dangote refinery is not a stand-alone project as it has a coterie of associated industries and infrastructure making it a self-reliant complex.

For instance, the company has a fully developed port (jetty)for maritime operations for both in-take of crude and discharge of refined products. This perfectly compliments the huge pipeline network that lands into the Atlantic for intake of crude and loading of refined products to ships.  Its Jetty, which stretches 9KM into the international waters in the Atlantic Ocean and 12.5 KM from the refinery is perhaps one of the most modern in the world built with sand piles that shield the final landing points from the violent oceanic waves, thus providing for safety and stability of ships, barges and oil tankers.

The complex is accessed by 200KM network of concrete under-lay and well asphalted road network to ease vehicular traffic. The refinery has its dedicated steam and power generation system with standby units to adequately support operations of the various plants in the complex.

 It has successfully completed a 435 MW power generating plant for its operations. The power generated from this plant surpasses the entire distribution capacity of Ibadan Electricity Distribution company, which supplies electricity to five states of the Federation including Oyo, Osun, Ondo, Ekiti and Kwara.

The Dangote refinery with a capacity of 650,000 bpd of crude oil is designed to handle the crude from many of the African countries, the Middle East and the US light crude. Its petrochemical plant is designed to produce 77 different high-performance grades of polypropylene, which is the major raw material for numerous industries and other refineries. With a huge refining capacity, Alhaji Dangote said the products from the refinery company would easily meet 100 per cent the needs of  Nigeria’s demand for gasoline, diesel, Petrol and Aviation Jet with 56 per cent surplus for export, from which the company projects to earn a princely $25billion  per annum from 2025.

The company has facility to load 2,900 trucks with its various products in a day by land and millions of litres of products through the waters depending on where the orders come from. The $25million projected revenue in 2025 could translate to a huge relieve for the nation in dire need of foreign earnings to shore-up the value of the nation’s currency.

The associated industry, the Dangote Fertilizers Limited also situated in the complex utilises the raw materials from petrochemicals to produce different varieties of fertilzers especially Urea, NPK and Amonia grades of fertilizers. Apart from the local market, Dangote is already exporting its fertilizers to other countries including Mexico, a testament to its high quality that meets world standards.

This feta,  the President of Dangote industries explained was possible because of the high quality, the company has opted to pursue. In between the refinery and the fertilizers complex lies a 50,000 housing estate, which provided accommodation for the construction workers at the time of construction especially during the COVID-19 lockdowns of 2020, when workers remained encamped on the project site to continue with the work.

What stands out the Dangote Refinery is perhaps not in its sheer size and capacity but in the fact that  it is  perhaps the only of such projects whose Engineering, Procurement and construction(EPC) was done directly by the company without engaging the world renowned refinery constriction companies  like Technip Bechtel (USA)Technip (France)Aker Solutions (Norway)Chiyoda Corporation (Japan)SNC-Lavalin Group (Canada)J. Ray McDermott (USA)JGC Corporation (Japan)Hyundai Heavy Industries (South Korea)Foster Wheeler (USA) and Daelim Industrial Company (South Korea)

“The design of the refinery was handled by dozens of Engineers and technical experts assembled in India and Houston, Texas, USA to execute engineering designs of the refinery,” said Edwin Kumar, the Executive vice President, Oil and Gas for the Dangote Group who midwifed  the birth of the refinery complex.

“We didn’t give out contracts to anybody, we bought every single bolt and equipment ourselves and had it shipped into the country,” Dangote explained to his guests.

Part of the equipment imported into the country was the procurement of over 3,000 cranes to handle the evacuation of huge consignments of machinery from the wharf and for subsequent installation at the construction site. The cranes have become an unusual assemblage of such equipment to be found in one place on the African continent.

If there was any doubt that Alhaji Aliko Dangote is Africa’s richest man, the successful completion of the refinery and petrochemical complex at the cost of about $20billion has further confirmed his status as Africa’s leading businessman and entrepreneur.

However, Dangote does not really accept that he is the richest man on the continent,
“When you are rich, you accumulate cash, but when you  wealthy, you create wealth” he told the top Media executives on tour of the huge project, explaining that he would rather  prefer to be referred to as a “Wealthy man.”

And consistent with his business philosophy, Dangote hinted of plans to list the refinery on the Nation’s stock exchange by the first quarter of 2025. His vision is to avail the public of 20 per cent of the shares so as to ensure participation by Nigerians and even international portfolio investors.

The refinery company and the entire of Dangote Group at the moment provides direct employment to about 20,000 Nigerians and much indirect jobs to Nigerians, making it the highest employer of labour outside the government.

Most interestingly, the highly technical operations of Dangote refinery is operated by over 70 per cent of local manpower who work in the refinery control, centre, the numerous production and quality control laboratories among others. Some of the staff who explained their tasks to the visiting media executives said they were graduates of Engineering and allied disciplines recruited mostly from Nigerian universities and trained in various institutions abroad for periods ranging from sixth months – one year to master refinery operations. Through this strategy, Dangote has ensured transfer of technology to thousands of Nigerian youths.

“We don’t  know where they come from as long as they are Nigerians and if they decide to leave and join international oil companies for better job opportunities, we have no problem with that,” Dangote responded to a question on the strategy to retain the technical manpower for stability of the refinery’s operations.

The Dangote Refinery is a Republic of some kind,  at least an economic or industrial Republic.

But the man who presides over this ‘industrial empire’, Alhaji Dangote says his only ambition is to boot the nation’s economy and ensure netter life for Nigerians.

“When you import any product into Nigeria, you are importing poverty and exporting our jobs to those countries from where you are importing” Dangote said  adding “this is why I want economic nationalism in Nigeria.”

Dangote’s vision even goes beyond Nigeria as he has cement factories and other business concerns in about 13 African countries including Ghana, Ethiopia, Tanzania, Uganda, etc. This signifies his continent-wide  dream to transform Africa’s economies.

There has been attempts by some international oil companies to frustrate the successful take-off of the refinery, through over pricing and in some instances outright  denial of crude supplies for processing. This made Dangote to commence importation of crude from the US. However, the cheering news that the Nigerian National Petroleum Company Limited (NNPC) has finally approved a supply arrangement has raised hopes that full operations will commence and that the long-awaited Dangote oil products will reach consumers around the country from August.

At last, the Dangote Group may have achieved its objective to serve as the elixir to Nigeria’s industrialisation effort. This is perhaps the greatest legacy of Africa’s richest man to his country of birth.

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