CAPITALDIGEST DAILY NEWS, 02/06/2025

S’AFRICA OVERTAKES NIGERIA AS AFRICA’S TOP FUEL IMPORTER

Nigeria has relinquished its long-held position as Africa’s largest importer of refined petroleum products following the ramp-up of operations at the Dangote Petrochemical Refinery, a new report has stated. South Africa has now overtaken Nigeria as the continent’s largest fuel importer, according to new data from energy consultancy CITAC, signaling a seismic shift in Africa’s downstream oil market. The refinery, which began large-scale production in early 2024, is already disrupting established trade flows across sub-Saharan Africa and reshaping the continent’s energy dynamics. With a refining capacity of 650,000 barrels per day, the largest single-train refinery in the world, its rising output is sharply reducing Nigeria’s dependence on petrol imports. The latest figures released by an energy consultancy, CITAC, on Wednesday, showed that Nigeria imported 3.1 million metric tonnes of refined petroleum products in the first quarter of 2025. In contrast, South Africa brought in 4.2 million tonnes over the same period, cementing its status as the continent’s biggest fuel importer. “Nigerian imports are dropping as a result of the continued operation of Dangote,” said Elitsa Georgieva, Executive Director at CITAC.

NGX GAINS N187BN AS BULLS SUSTAIN MOMENTUM

The Nigerian Exchange extended its bullish run on Wednesday, gaining N187bn in market capitalisation, driven by increased trading activity and positive investor sentiment. At the close of trading, the All-Share Index rose by 296.39 points, or 0.27 per cent, to close at 111,902.61 points. This reflects a one-week gain of 2.08 per cent, a four-week gain of 5.64 per cent, and a year-to-date gain of 8.72 per cent. Similarly, the market capitalisation rose to N70.6 tn from N70.4 tn in the previous session, indicating a gain of N187 bn. Market activity also witnessed significant improvements. A total of 512.17 million shares valued at N17.12bn were exchanged in 16,711 deals. This represents a 25 per cent increase in volume, a 73 per cent rise in turnover, and a 4 per cent improvement in the number of deals when compared to Tuesday’s session. The market breadth was positive as 128 equities participated in trading, ending with 39 gainers and 28 losers. University Press led the gainers’ chart with a 10 per cent increase to close at N5.61 per share. Learn Africa also gained 10 per cent to close at N4.51, followed by Northern Nigeria Flour Mills, which rose by 9.98 per cent to N130.55, and Honeywell Flour, which appreciated by 9.95 per cent to N21. On the other hand, Academy Press led the losers with a 10 per cent decline to close at N4.05. Abbey Mortgage Bank dropped by 9.96 per cent to N6.87, while Skyway Aviation Handling lost 9.94 per cent to close at N59.80. Nigerian enamelware also fell by 9.88 per cent to N22.80.

FOREX MARKET LIBERALISATION BOOSTS PUSH FOR INVESTORS’ CONFIDENCE

Investors strongly abhor uncertainty because it complicates planning. This was the scenario when the country’s foreign exchange market experienced volatility due to a severe dollar shortage. This shortage was a result of a significant decline in both crude oil production and prices. The situation resulted in the Central Bank of Nigeria’s inability to meet foreign exchange obligations, leading to a backlog exceeding $7bn. Manufacturers struggled to fund their letters of credit, causing many to shut down due to a lack of raw materials. Additionally, numerous foreign companies operating in the country were unable to repatriate their profits, which led some of them to exit Nigeria.Despite ongoing global and domestic challenges, the liberalisation of Nigeria’s forex market has significantly reduced the volatility that plagued it before the reforms implemented in June 2023. Investors can now easily access forex due to a willing buyer, willing seller regime. The apex bank has successfully cleared over $7 bn in backlog and manufacturers are funding their letters of credit without much hassle.The local currency, which depreciated to N1,609/$ on May 9, strengthened to N1590.75/$ on Wednesday, May 28, indicating a positive outlook and stability in recent months. In addition to the stability that the reform has provided to the forex market, it has also contributed to reducing the disparity between the exchange rates in the official and alternative markets, enhancing transparency and tackling the issue of roundtripping in the market.

BROAD MONEY SUPPLY ROSE TO N119TN IN APRIL – CBN

Nigeria’s broad money supply rose to a record N119.11tn in April 2025, reflecting one of the sharpest monthly expansions in recent quarters, according to data from the Central Bank of Nigeria. The figure represents a 22.9 per cent increase from N96.97tn recorded in April 2024 and a 4.3 per cent rise from N114.22tn in March 2025. The rise in money supply comes amid the CBN’s decision to maintain a tight monetary policy stance, with the Monetary Policy Committee leaving the Monetary Policy Rate unchanged at 27.5 per cent in its May 2025 meeting, pausing a string of rate hikes for the second time this year. Although headline inflation eased marginally to 23.71 per cent in April from 24.23 per cent in March, the continued rise in liquidity could undermine recent gains in price moderation if not closely managed. The MPC warned that inflation remains high and maintained a hawkish tone, even as it chose to monitor the effects of earlier tightening measures. The expansion in the money supply was driven by growth in both net foreign assets and net domestic assets. Net foreign assets rose significantly to N47.76tn in April, representing a 66.3 per cent increase from N28.73tn in April 2024 and a 5.7 per cent rise from N45.17tn in March. The CBN attributed the increase to stronger foreign exchange inflows, which may have been supported by crude oil receipts, remittances, and multilateral funding. The bank’s ongoing reforms in the foreign exchange market and improved dollar liquidity also appear to have contributed to the rise in external reserves.

DOMESTIC INVESTORS MAINTAIN NGX DOMINANCE

Domestic investors continued to dominate trading activities on the Nigerian Exchange Limited in April, accounting for 87 per cent of total transactions, according to the latest Domestic & Foreign Portfolio Investment report released by the NGX. The report showed that out of a total transaction value of N482.86bn for the month, domestic investors accounted for N419.57bn, while foreign investors contributed N63.29bn, representing just 13 per cent of the total market turnover. A closer look at the domestic market revealed that institutional investors traded N267.63bn, surpassing retail investors who recorded N151.94bn in trades. On the foreign side, the report showed that inflows amounted to N26.58bn, while outflows were slightly higher at N36.71bn, indicating a negative net foreign position for the period. Foreign portfolio transactions dropped significantly by 91.41 per cent from N737.40bn in March to N63.29bn in April. This sharp decline was largely attributed to the absence of significant block trades that had boosted figures in the previous month. Overall, total transaction value on the NGX declined by 56.73 per cent from N1.11 tn recorded in March 2025, reflecting reduced trading appetite amid lingering currency volatility and global investment uncertainty. Year-to-date, total transactions on the Exchange stood at N2.74tn as of April 30, with domestic investors accounting for N1.84tn and foreign investors contributing N899.44bn.