The naira saw a slight appreciation against the dollar, but analysts warn that external risks, including declining crude oil prices, could affect its stability

At the close of trading on Wednesday, the naira appreciated by 0.16% to 1530.52/$ from 1532.93/$ in the previous trading session, according to data from the Central Bank of Nigeria (CBN).

Also read: Financial services sector on Nigerian exchange hits N9.49tn market capitalisation

Despite this slight appreciation, analysts noted that the naira’s stability remains fragile, with external factors, including declining crude oil prices, posing potential risks.

The naira traded as high as 1545/$ and as low as 1500/$, marking a fluctuation within a narrower range than seen on Tuesday. In the parallel market, however, the exchange rate remained unchanged at 1,585.00/$, which has widened the spread for speculative traders.

The gap between the official and parallel market rates has now narrowed to about 3.07% from 3.40% earlier in the week.

While analysts point out the slight depreciation, they also suggest that the market is stabilising due to structural reforms and increased forex inflows into the country.

Tilewa Adebajo, CEO of CFG Advisory, explained that the exchange system has evolved, with more people using digital platforms to send money to Nigeria, which is contributing to the naira’s relative stability.

“The reason we are seeing some stability is because there is a new system where everyone uses one portal to buy and sell their dollars or whatever currency,” Adebajo said.

She also noted that many foreign inflows are coming through these digital platforms, which provide the official exchange rate, thus reducing reliance on the parallel market.

Comercio Partners, in an investor note, praised the recent stability of the naira, noting that the currency has remained within the N1,450-1,550 range against the dollar, helping to curb rising import costs.

The investment house credited the naira’s relative stability to improved forex inflows, a positive current account position, and the CBN’s efforts.

However, they cautioned that this stability could be threatened by external factors, especially a decline in global crude oil prices. So far, Brent crude prices have fallen by 5.5% year-to-date, driven by expectations of rising global oil supply, policy shifts, and weaker demand. With the U.S.

planning to increase oil production and OPEC+ beginning to unwind voluntary production cuts in April 2025, oil prices could face additional downward pressure.

Experts at CardinalStone also echoed these concerns, highlighting that while the naira’s stability is supported by structural reforms and positive inflows, the outlook remains uncertain due to external risks like oil price volatility.

“Nigeria’s long-term stability hinges entirely on sustained forex inflows, competitive market dynamics, and the Central Bank keeping its eye on the ball,” their report stated. “One policy misstep and we’re right back to square one.”

The Nigerian Exchange’s financial services sector reached N9.49tn, driven by banking stocks like Guaranty Trust Holding, Zenith, and Access Holdings

The financial services sector on the Nigerian Exchange (NGX) has closed with a significant market capitalisation of N9.49 trillion, underpinned by strong performances from key banking stocks.

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Guaranty Trust Holding Company Plc (GTCO), Zenith Bank Plc, and Access Holdings Plc emerged as major drivers of this growth, marking another milestone for the Nigerian stock market.

Guaranty Trust Holding Company Plc led the charge, maintaining its position as the most valuable financial institution in Nigeria, with a market capitalisation of N2.07 trillion.

GTCO’s stock closed at N60.50 per share, reaffirming investor confidence in the company. Zenith Bank Plc followed closely behind, recording a market capitalisation of N1.96 trillion. Zenith’s share price increased by 0.42% to N47.75, demonstrating a solid performance amidst challenging market conditions.

Access Holdings Plc also maintained a strong market position with a capitalisation of N1.24 trillion. Despite a slight decline of 0.64% in its share price to N23.20, Access Holdings continues to be a key player in the financial services sector.

United Bank for Africa Plc (UBA) recorded a market capitalisation of N1.21 trillion, with its stock trading at N35.50. This reflected a decline of 2.61% in its share price, yet UBA continues to maintain a robust presence in the market.

First Bank Holdings Plc, one of Nigeria’s oldest financial institutions, had a market capitalisation of N1 trillion. The bank’s share price closed at N27.90, representing a 2.28% drop, reflecting some market challenges.

In contrast, Fidelity Bank Plc proved resilient, with a market capitalisation of N843.57 billion. Fidelity’s share price appreciated by 1.19%, closing at N16.80, signalling investor confidence despite the overall market trend.

Ecobank Transnational Incorporated saw its market capitalisation rise to N532.14 billion, with its stock trading at N29.00 per share. Sterling Financial Holdings Company Plc, however, had a slight dip of 0.19% in its share price, closing at N5.31, resulting in a market capitalisation of N241.38 billion.

Jaiz Bank Plc, a non-interest banking institution, continued to show potential for growth, recording a market capitalisation of N150.71 billion. The bank’s share price rose by 3.05% to N3.38, reinforcing its growing market presence.

Wema Bank Plc, despite showing a 4.19% decline in its share price to N10.30, maintained a market capitalisation of N220.73 billion. Unity Bank Plc saw no trading activity, but its market capitalisation remained at N17.65 billion.

FBN Holdings Plc stood out as the top tier-one banking stock on the Nigerian Exchange, with its shares appreciating by 17.65% year-to-date at the close of trading on Friday. This growth reinforces the positive outlook for the financial sector, which continues to attract investors despite market fluctuations.

The performance of the financial services sector, driven by banking stocks, is expected to contribute further to the overall growth of the Nigerian Exchange in the coming months.

Nigeria’s fuel subsidy debt to the NNPCL reached N7.74tn by September 2024, with measures in place for settlement within 210 days

The Federal Government’s indebtedness to the Nigerian National Petroleum Company Limited (NNPCL) has escalated to a staggering N7.74 trillion as of September 2024.

Also read: Dangote Refinery, others supplied only 50% of Nigeria’s fuel needs in February

This debt is the result of the government’s effort to maintain affordable fuel prices amid rising import costs, following the full implementation of the deregulation of the downstream oil sector.

The subsidy debt, covering the period from June 2023 to September 2024, reflects the government’s commitment to covering the cost differential between the higher rates at which petrol is imported and the retail prices in the domestic market.

This was disclosed in a presentation made by the NNPCL to the Federation Account Allocation Committee (FAAC) during its February meeting in Abuja. A copy of the document was obtained by our correspondent on Monday.

According to the FAAC document, the Nigerian government is exploring various measures to settle this N7.74 trillion fuel subsidy debt within a period of 210 days.

This effort comes after the NNPCL made a previous demand in August 2024, seeking a refund of N4.71 trillion from the government to cover outstanding debts for the importation of petrol.

These debts, categorized as “exchange rate differential on PMS and other joint venture taxes,” were incurred between August 2023 and June 2024.

The exchange rate differential, which plays a significant role in the subsidy scheme, refers to the difference in value between the foreign exchange rates at the time of importation and those used by the government to cover the costs.

Essentially, this is the financial gap that emerges when the NNPCL imports petroleum products at a higher rate than the government sells them to consumers.

For example, if the exchange rate for the US dollar fluctuates from N1,600 to N1,500 over time, the NNPCL must absorb the difference, leading to significant financial claims against the government. This under-recovery of costs is expected to be recouped through future payments from the government.

A detailed breakdown of the NNPCL’s claim shows that while the total sum of the exchange rate differential stood at N10.499 trillion, N2.756 trillion had already been recovered between November 2023 and September 2024, reducing the outstanding debt to N7.74 trillion.

The payment of this debt is ongoing, with the government planning to clear the balance within the 210-day period.

The NNPCL’s outstanding debt has been steadily increasing since June 2023, reaching N7.74 trillion by September 2024, a 14.07% of Nigeria’s 2025 national budget of N54.99 trillion.

Over the past year, monthly claims have risen from N1.29 trillion in June 2023 to N7.74 trillion by September 2024. This steady increase has highlighted concerns about the sustainability of the subsidy scheme, particularly as global oil prices remain volatile and exchange rates continue to fluctuate.

The deregulation of the fuel sector, which President Bola Tinubu officially declared in May 2023, was expected to end the subsidy regime. However, despite this declaration, international institutions such as the International Monetary Fund (IMF) and World Bank have noted that the government has effectively continued subsidising fuel imports.

In response, experts, including energy analyst Wumi Iledare, have questioned the rationale behind the government’s ongoing subsidies, given the NNPCL’s role in selling oil on behalf of the government.

The FAAC committee has raised concerns about inconsistencies in the financial reports from the NNPCL. Ogun State’s Accountant-General, Tunde Aregbesola, highlighted discrepancies between the reported revenue in November and the subsequent months, leading to questions about the accuracy of the financial figures.

Reports suggest that NNPCL may still be in the process of reconciling its figures, with receivables from the company amounting to around N10.8 trillion.

This has created further uncertainty about the actual financial obligations of the government and the national oil company. In response, the FAAC Chairman, Oluwatoyin Madein, stated that the matter was under review by the Alignment Committee and that the reconciliation process was expected to be concluded soon, covering up to December 2024.

As the reconciliation continues and efforts to resolve the outstanding subsidy debt unfold, the long-term implications for Nigeria’s economic stability remain uncertain.