Weekly Economic Update (June 24th – 28th)

Key Economic Events

  • Total public debt climbs as the naira weakens

Nigeria's total public debt surged 30.4% to N121.67 trillion ($91.46 billion) in Q1 2024 from N97.34 trillion in Q4 2023 ($108.23 billion). This is largely because of the 11.05% increase in domestic debt stock to N65.65 trillion from N59.12 trillion, being new borrowings for part funding of the 2024 budget and securitization of the ways and means advances, coupled with the depreciation of the Naira. Since the forex market reform in June 2023, the Naira has recorded significant depreciation, with the official exchange rate weakening to N1,330.26/$ in Q1 2024 from N899.39/$ in Q4 2023. Notably, external debt stock is relatively flat at $42.12 billion in Q1 2024 compared to $42.5 billion in Q4 2023.


There is a growing concern about Nigeria’s capacity to effectively manage and service its soaring debt. Currently, the country’s public debt is over 50% of GDP, increasing the risk of debt distress. Moody’s has also noted that Nigeria could spend as much as 36% of its federal government revenue on debt interest payments in 2024. What is more troubling is that Nigeria's substantial and rising debt level is yet to unlock tangible economic growth and development. Without effective strategies to boost revenue, reduce borrowing costs, and improve debt management in the short term, Nigeria risks prolonged economic stagnation and heightened fiscal vulnerability.

Market Update
  • Oil market - Bullish sentiment on expectations of an easing cycle commencing soon

Brent crude prices were largely bullish during the review period, trading within a range of $85.01 - $86.41 per barrel. On average, oil prices increased by 0.81% to $85.81 per barrel from $85.12 per barrel in the preceding week. The rally was driven by growing anticipation that the U.S. Federal Reserve might soon begin cutting interest rates, coupled with concerns over potential supply disruptions from geopolitical conflicts in Russia and the Middle East.

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Oil prices are likely to remain elevated due to increased summer demand, a growing geopolitical risk premium driven by conflict in the Middle East, and expectations that the Fed Reserve will commence its easing cycle soon.

  • Forex market - Naira depreciation across all segments

In the parallel market, the Naira traded above N1,500/$ all through the review period, depreciating to a 4-week low of N1,520/$ on June 27 before appreciating slightly to close the week at N1,515/$. Similarly, the currency traded above N1,500/$ in four of the five trading days at the official window. It started the week at N1,490.28/$ before depreciating to close the week at N1,505/$. This was despite the boost in dollar supply at the official window. Average daily turnover increased by 24.71% to $ 188.03 million from $150.77 million in the preceding week. Meanwhile, the gross external reserves continued its steady accretion, gaining 1.28% to close at $34.14 billion on June 27 from $33.71 billion at the end of the previous week.

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With the onset of the summer season, we expect dollar demand to increase. Failure of the dollar supply to meet this growing demand will lead to further currency weakness in the short run.

  • Money market - improved liquidity position

Liquidity within the banking system improved significantly during the review period as banks' opening positions were positive all through the period despite outflows for the FGN bond auction settlement and the NTB primary market auction settlement. On average, banks’ opening position was N698.1 billion long compared to N316.15 billion long in the preceding week. The improvement in liquidity position led to a drop in average short-term interest rates (OPR/ON) to 23.98% from 25.51% in the previous week.

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We expect interest rates to remain at current levels pending any major injection/withdrawal from the system.

  • Fixed Income Market

At the start of the week, there was a primary market FGN bond auction where the CBN offered N150 billion each for three tenors (FGN-19.30%-2029, FGN-2031, and FGN-19.89%-2033 bonds). Total subscriptions reached N305.25 billion, resulting in a subscription rate of 67.83%, with notably lower subscriptions observed for the 2029 and 2031 maturities. Ultimately, the Debt Management Office (DMO) allotted N297.01 billion. Stop rates increased by 0.35%, 0.45%, and 1.61% for the respective tenors, closing at 19.64%, 20.19%, and 21.50% compared to the previous auction. Bearish sentiment prevailed in the secondary market following this auction, leading the average benchmark yield across the FGN bond curve to end the week at 18.68%, slightly down from 18.69% the previous week, as investors focused on higher yields across different maturities. Trading concentrated on the shorter and intermediate segments of the bond curve, with profit-taking observed on 2025 and 2026 maturities. During the review period, there was also a primary NTB auction where the CBN offered to roll over N228.72 billion across the 91-day, 182-day, and 364-day tenors. Total subscriptions amounted to N773.98 billion, indicating a high subscription rate of 338%. The CBN eventually allotted N284.26 billion. Stop rates remained unchanged at 16.30% and 17.44% for the 91-day and 182-day tenors respectively, compared to the previous auction. However, the stop rate for the 364-day maturity increased by 0.18% to close at 20.68%. In the secondary market for Treasury bills, trading showed a bearish trend, with the average benchmark yield rising by 0.08% to close the week at 21.86%.


Looking ahead, we anticipate a quiet trading session with bond yields expected to remain stable around current levels, barring any significant market-moving events.

  • Stock market - mixed market sentiment

The Nigerian equities market performance was mixed as the market gained in three days and lost in two days. Compared to the preceding week, the NGX ASI gained 0.32% to close at 100,057.49 points on June 28 from 99,743.05 points on June 21. Similarly, market capitalization gained 0.32% to close the week at N56.60 trillion from N56.42 trillion the preceding week. Screenshot 2024-07-02 at 12.22.11.png The average traded volume declined by 51.81% to 530.13 million units from 1.1 billion, while the average traded value fell by 43.57% to N10.00 billion from N17.72 billion.

Market breadth for the week was positive as 48 stocks gained, 32 lost, and 59 remained unchanged. CWG topped the gainers' list with a 44.55% increase, closing at N7.95 per share. FTNCOCOA followed with a gain of 22.39% to close at N1.64 per share, while UCAP rose by 21.84% to close at N26.50 per share. Screenshot 2024-07-02 at 12.22.39.png The laggards were led by JAIZBANK (-11.36%), DAARCOMM (-10.53%), CHAMPION (-10.49%), UPL (-9.09%) and BETAGLAS (-8.62%).

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We anticipate cautious optimism in the equities market with heightened activity as investors adjust their portfolios for the second half of the year. Profit-taking on high-performing stocks and selective buying in underperforming stocks are also expected.


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