Global Economy

• According to Goldman Sachs the US economy faces 35% risk of recession in 2023 due to higher oil prices and the possibility of a prolonged Russian invasion of Ukraine. The analysts at the bank peg a recession risk in the US at 35% – up from a 10% risk last year. The analysts however expect further service sector reopening and spending in 2022 from excess savings which will keep real GDP growth positive in the coming quarters. Meanwhile, US unemployment is expected to remain relatively low at 3.5% and that the economy would continue to see job gains in 2022 despite fairly weak GDP growth due to strong labor demand.
• Goldman analysts downgraded their forecast for US GDP growth. Instead of a 1% growth in GDP during the first quarter of fiscal year 2022, they now expect 0.5% growth. Earlier estimates predicted 2.5% growth in the second and third quarters, though now that has been downgraded to 1.5% and 2.5%, respectively. One small sign of optimism is predictions for the fourth quarter. Previous estimates expected 2% growth in GDP, though the revised outlook calls for 2.5%. Overall, however, GDP growth this fiscal year is expected to reach 1.75% – down from the previous estimate of 2%.
• The International Monetary Fund has said Nigeria and other African countries are vulnerable to higher food and fuel prices, low tourism revenues, and difficulty accessing the international capital market as a result of the war going on in Ukraine. The Managing Director, IMF, Ms Kristalina Georgieva, disclosed this after meeting with African Ministers of Finance, African central bank governors, and representatives from the United Nations Economic Commission for Africa to discuss the impact of the crisis in Ukraine. According to her, the crisis threatens to undo some of that recovery the African economies recorded last year.

Nigeria Economy

• During a virtual meeting of African finance ministers and the International Monetary Fund (IMF), Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed stated that the government is gradually phasing out subsidies.  According to her, the failure to remove fuel subsidy, July this year as earlier planned was due to the public’s aversion. The Minister however hinted that just as subsidy removal in the electricity sector was achieved in phases the same would be done with fuel subsidy.
• The Federal Government, on Thursday, extended the licences of operators in the free trade zones across the country by five years. The move is meant to address the challenges faced by operators in the zone. Speaking at a stakeholders’ forum organised by the Nigeria Export Processing Zones Authority (NEPZA the Minister noted that Free trade zones are very critical to revenue generation for the Nigerian economy and can also help to improve Nigeria’s fiscal position especially under the African Continental Free Trade Agreement (AfCFTA).
• Despite the perceived benefits of the Finance Act 2021, the Nigeria Economic Summit Group (NESG) has said that the Act may be burdensome for individuals and businesses in the country. NESG board member, Nnanna Ude, noted that although the 2021 Finance Act is targeted at accelerating non-oil revenue generation in Nigeria, tax revenue increase may have a deleterious impact on households and stifle investment and economic growth.
• Coronation Merchant Bank has projected that the Monetary Policy Committee (MPC) will raise the benchmark lending rate by at least 50 basis points this year. The bank expects a conservative approach to interest rate fixing as the MPC seeks a balance between price stability and economic growth. It, however, argues that a single 50 basis points hike to bring the monetary policy rate (MPR) to 12 % is likely. The rate-fixing MPC, in the height of COVID-19 threat in 2020, reduced the MPR by 100 basis points in September 2020, to 11.5 %.
• Farmers under the aegis the All Farmers Association of Nigeria have called for a full review of the Anchor Borrowers’ Programme of the Central Bank of Nigeria. According to the body, its faulty as only small fraction of farmers have been beneficiaries of the initiative. According to the National President of AFAN, Kabir Ibrahim only two million out of a total 14.5 million farmers have access to the ABP facilities. He called on the authorities to make the process more transparent.
• The Nigeria Economy Summit Group (NESG) has called for sectoral reforms in manufacturing, trade, education, health, and ICT to champion industrialisation, strengthen the value chain and promote inclusive growth in Nigeria. NESG Chief Executive Officer, Laoye Jaiyeola, stated this in Abuja, at a workshop organized by the African Economic Research Consortium (AERC) and the NESG themed “Sectoral Development: Assessing the conditions that drive youth unemployment in key sectors of the Nigerian economy.

Review and Outlook

Economic forecasts made at the beginning of the year did not anticipate the current Russian war in Ukraine, as such growth and inflation permutations have been thoroughly defied with energy prices rocketing and consumer and business confidence plummeting the optics are grim. Global trade is invariably being severely affected by sanctions as well as the possibility that supply chains could buckle just as they are beginning to recover from the Covid-19 pandemic. Analysts believe that Nigerian inflation figures for February would reflect the rise in prices occasioned by the scarcity and consequent hike in fuel prices.

The week ahead will see a flurry of Monetary Policy Committee meetings across the US, UK, Japan, Indonesia and Taiwan. The UK would release employment data for February while Japan and the Eurozone would announce CPI data for last month.

Oil and Gas 

Domestic

• World Bank Country Director, Shubham Chaudhuri, has said the 18-month extension to the full deregulation of the downstream oil industry in Nigeria would cost the country over N4tn in subsidy payments for 2022. Meanwhile, the Executive Secretary of Major Oil Marketers Association of Nigeria, Clement Isong, argued that the subsidy payment might hit N6tn if the current geopolitical crisis in eastern Europe persists.
• The Nigerian Content Development and Monitoring Board (NCDMB) has disclosed its partnership with some firms to produce 10% of the current Liquefied Petroleum Gas (cooking gas) demand in the country. Analysts have questioned the statutory right of the Board to engage in such deals.
• The rising prices of crude oil have pushed up the prices of refined petroleum products in the country including diesel selling for as high as N650 per litre and aviation fuel at N600 per litre.
• The Nigerian National Petroleum Corporation (NNPC) Limited has written to the management of ExxonMobil Corporation affirming its right to exercise pre-emptive power in the ExxonMobil-Seplat deal.
• The Minister of State Petroleum Resources, Timipre Sylva, has said the nation’s inability to meet the OPEC oil production quota was due to the lack of investments in the sector, exits of IOCs from the sector, and the insecurity challenges.
• Oil production data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reveals that the country’s crude oil production dropped to 1.25 mb/d in Feb from 1.39 mb/d in Jan 2022.
• The Director of Huawei Nigeria Enterprise Business, Li Wei, said the company has developed ICT solutions to address Nigeria’s existential upstream production and pipeline challenges. 

Foreign

• Oil prices soared more than 9% on Monday, touching their highest since 2008, as the United States and European allies mull a Russian oil import ban and delays in the potential return of Iranian crude to global markets fuelled tight supply fears.
• On Tuesday, President Joe Biden announced a U.S. ban on Russian energy imports while Britain said it would phase Russian energy out by the end of the year.
• The Vienna talk to revive the 2015 nuclear deal was stalled by uncertainty after Iran suggested there were new obstacles and Russia demanded a guarantee that the White House sanctions it faces over the Ukraine invasion would not hurt its trade with Iran. The White House insisted that the sanctions on Russia have nothing to do with a potential nuclear deal with Iran.
• Oil and gas industry leaders at the CERAWeek energy conference advocated for a combination of fossil fuel production and renewable energy to reduce the global reliance on certain countries like Russia.
• The European Commission’s climate policy chief has stated that the European Union plans to wean itself off Russian gas within a few years by diversifying its fossil fuel supplies away from Russia and shifting fast to renewable energy.
• Russian Deputy Prime Minister, Alexander Novak, has warned that the sanctions imposed on its energy sector would have catastrophic consequences for the global market as oil prices could jump to $300 per barrel.
• According to sources from Bloomberg, the Chinese government is in talks with its four state-owned oil companies to acquire stakes in Russian oil and metal companies following the divestment of Western oil majors from Russia.
• Oil prices stabilized on Friday and were on track for their biggest weekly drops since November after see-sawing on fears of escalating bans on Russian oil versus efforts to bring more supply to market from other major producers.
• Brent had a weekly decline of -1.62% (see Table 1).

Metals

Gold grew by +0.95% while Silver also grew by +1.75% W-o-W (see Table 1).

Agriculture

• Cocoa prices dipped by +0.88% W-o-W.
• Corn prices appreciated by +1.52% W-o-W while Sugar depreciated by -1.19% (see Table 1).

Table 1: Weekly Change in Commodity Prices

Commodity	11-Mar-22	04-Mar-22	31-Dec-21	Weekly Chg	YTD Chg
Brent	112.04	113.89	78.54	-1.62%	42.65%
Gold	1985.6	1967	1827.1	0.95%	8.67%
Silver	26.165	25.715	23.27	1.75%	12.44%
Cocoa	2633	2610	2546	0.88%	3.42%
Corn	750.25	739	595.5	1.52%	25.99%
Sugar	19.08	19.31	18.83	-1.19%	1.33%
Source: CNBC,

*Data for 11^th March 2022 is as of 05:11pm (Nigerian Time)

Outlook

• In the coming week, oil prices are expected to rise with Western sanctions on Russia affecting supply of Russian oil to the market.
• Gold price is expected to drop in the coming week as expectations of positive outcome on Russia-Ukraine talks could weigh on the price.
• Cocoa prices are expected to grow in the coming week as trees yield less due to higher temperature, forcing lower supply.
• Sugar prices are expected to stabilize in the coming week as increased export could cover demand.
• Corn prices are expected to continue its price rise as Russia-Ukraine crises forces a reduced supply in the market.

Fixed Income and Money Market 

Currency Market

This week, the Naira was relatively stable at the I & E FX window, as it was flat for most trading sessions.

On Thursday, the Naira closed at the N416.50/USD, which indicates on a week-on-week (W-on-W) basis, the Naira remained unchanged, at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it depreciated, depreciating by -0.20%.

Average Benchmark Yields
	3-March-22	10-March-22	% Change
I & E FX Window	416.50	416.50	0.00
NAFEX ($/N)	415.74	416.56	-0.20%

Source: FMDQ

Money Market

System liquidity was impacted this week by both outflows and inflow, the market saw a PMA settlement and OMO repayment.

At the close of the trading on Thursday, open repo (OPR) and overnight rates (O/N) settled at 4.83% and 4.50% respectively indicating a W-o-W rise of +141.50% and +63.64%.

Money Market Rate
	3-March-22	10-March-22	% Change
OPR (%)	2.00	4.83	+141.50%
O/N (%)	2.75	4.50	+63.64%

Source: FMDQ

We expect rates to hover around current levels barring any significant outflows from the Apex bank.

Treasury Bills Market

Average benchmark yields in the Treasury Bills market were mostly unchanged this week.

At the close of trading on Thursday, the market was bearish with selling interest seen at the NT Bills. Average benchmark yields for T. Bills rose by +2.33%, yields on OMO bills remained flat on a W-on-W basis.

Average Benchmark Yields
	3-March-22	10-March-22	% Change
T. Bills (%)	3.44	3.52	+2.33%
OMO Bills (%)	3.92	3.92	0.00

Source: FMDQ

We expect activity next week to be weak depending on the market liquidity situation. 

FGN Bond Market 

The DMO sold N236.53 billion worth of notes against N94.00 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 1.75%, 3.28%, and 4.10%, respectively. Compared to the previous auction, rates on the 91-day, 182-day, and 364-day notes fell by 49bps, and 25bps respectively.

FGN Bond Market

The local bond market swayed sideways this week, with interest seen at the short end of the curve.

At the close of trading on Thursday, the overall average benchmark yields closed at 10.48%, benchmark yield falling by -0.76%.

Average Benchmark Yields
	4-March-22	10-March-22	% Change
Short Tenor	7.44	7.50	+0.81%
Mid Tenor	10.03	10.02	-0.10%
Long Tenor	11.78	11.63	-1.27%

Source: FMDQ

FGN Eurobond Market

The Eurobond market was bullish for the most part this week, with buying seen across the board. The average benchmark yield closed at 7.66%.

Nigerian Capital Market

• The Nigerian bourse started the week on a positive note while market sentiment bullish, albeit with occasional bargain hunting.  The NGXASI closed the week on a negative note with a rise of +0.36%. The Nigeria Exchange gain N91.02bn. However, year-to-date return was positive at +11.05%, while the market capitalization settled atN25.57trillion.
• Sectoral performance across sectors tracked was mixed, at the close of trading on Friday, NGX-Insurance was the highest gainer for the week with +2.65% while NGX- Oil and Gas recorded the highest decline with -2.22%. NGX-AFBRVI, NGX-MERIGRW closed the week with +1.98%, +1.54%, respectively.
• Market breadth for the week closed flat with 13 gainers led by NIGERINS  as against 18 losers led by ROYALEX

Chart1: Movement of NSEASI Index Points 4 MAR 2022-11 MAR. 2022

NASD OTC 

The NASDOTC Security Index (NSI) and Market Capitalization closed the trading week positive Market capitalization and NSI settled  The NSI and Market capitalization closed the week at +0.49% respectively.

Dangote and Elumelu Index

Dangote Index closed the week positive with 142.61 basis points from 142.48 basis points recorded the previous week, representing a rise of +0.09%

DANGSUGAR recorded a rise of +1.91%, NASCON +2.27% Respectively DANGCEM recorded flat.

Table 2: Dangote Index W-o-W Change

Company	4-Mar-22	11-Mar-22	WoW Chg
DANGCEM	273.5	273.5	0.00%
DANGSUGAR	15.7	16	1.91%
NASCON	13.2	13.5	2.27%

Source: NGX

Furthermore, the Elumelu Index closed positive with 119.35 basis points from 118.75 basis points recorded the previous week, a W-o-W rise by +0.51% TRANSCORP, UBA, closed the week positive with +1.85%, +3.64 UBCAP and AFRIPRUD-9.71%, -4.41%. Respectively while TRANSCOHOT closed flat W-o-W.

Table 3: Elumelu Index W-o-W Change

Company	4-Mar-22	11-Mar-22	WoW Chg
AFRIPRUD	6.8	6.5	-4.41%
TRANSCOHOT	5.38	5.38	0.00%
TRANSCORP	1.08	1.1	1.85%
UBA	8.25	8.55	3.64%
UBCAP	13.9	12.55	-9.71%

 Source: NGX,