Year 2023 seems to be rosy for capital market investors as well as the insurance industry with equity investors gaining N11.7 trillion and insurers mobilising N1 trillion premium income in the outgoing year, LEADERSHIP Sunday can exclusively report.

This is despite the harsh economic scenario that has led to the death of many Small and Medium Enterprises (SMEs) as well as the exit of multinationals from the country.

The Nigerian equities market gained N11.734 trillion so far in the year as of December 14, 2023, as investors’ positive sentiment towards the market was sustained.

Since the beginning of the year, the equities market has witnessed an unprecedented rally and buying interest across sectors, especially in the financial services, consumer and industrial goods sub sectors which has continued to trigger massive bargain hunting in large company shares, pushing the key performance indices and stimulating activities in the market.

The market capitalisation gained N11.734 trillion from N27.915 trillion at the beginning of the year to close at N39.649 trillion as at December 14, 2023.

Similarly, the Nigerian Exchange (NGX) Limited All-Share Index (ASI) rose by 41.37 per cent from 51,251.06 points on December 30, 2022 to 72,455.83 points on December 14, 2023.

During this period, the NGX recorded N112.02 billion new issues listings across its equities market with the new listing of VFD Group by introduction of 190.027 million ordinary shares valued at N46.534 billion.

The chief executive officer of Crane Securities Limited, Mike Ezeh, said the emergence of President Bola Tinubu further energised the market since market participants have hope in his ability to rejig the economy and implement economy-friendly policies.

“The elections came and were hitch-free against all unification of the multiple exchange rate, review of monetary and fiscal policies, shake up major changes carried out at the apex bank and its overflow down to the deposit money banks across the country brought stability to the market.

“The commissioning of the first indigenous private refinery which has cyclical effect on both upstream and downstream operation of petroleum companies quoted in the market propelled the interplay in the market by some high-net-worth investors on many quoted companies resulting in high turnover in trading volumes of those companies leading to the significant increase in market capitalisation within the period,” he said.

Similarly, at the end of the third quarter of the year, the insurance industry had recorded N729.1billion gross premium income, with projection that it would hit N1trillion premium income by the time the last quarter results come out. If this happens, this will be the first time the industry will be recording this feat, eight years after it was expected to have hit the one trillion mark.

Hence, Nigerians have continued to take refuge in life insurance as a means of wealth security for their families, as they spent N265.39 billion in nine months amid tough economic realities.

According to the National Insurance Commission (NAICOM) in a document entitled: ‘Nigerian Insurance Market at a Glance – Q3, 2023’, individual life insurance class was the major driver of the insurance industry, contributing N265.39 billion, which is 36.4 per cent of the recorded N729.1 billion gross premium written.

NAICOM noted that group life was second with 34.5 per cent; oil and gas, 28.9 per cent, fire, 23.6 per cent and motor 18.1 per cent.

Moreover, the industry’s total size was N2.8 trillion, with total assets for non-life insurance amounting to N1.74 trillion and total assets for life was N1.07 trillion.

It said the industry’s total paid up capital was N422.3 billion; total capital, N848.9 billion and total statutory deposit N26.7 billion. The ratio of total claims to total premium, NAICOM said, was 50.1 per cent; ratio of claims paid to reported 70.9 per cent; ratio of claims paid to reported, non-life, 55.0 per cent and ratio of claims paid to reported, life, 94.9 per cent.

Meanwhile, the year 2023 for the Nigerian banking industry was as challenging as other years, albeit with more drama and impact as the country was almost ground to a halt in the early part of the year due the scarcity of cash.

Although, the financial industry and the country at large had witnessed many landmarks including a general election, the cash crunch which affected every life in the country still overshadowed all events, with its marks still felt by many.

A fallout of the naira redesign policy of the Central Bank of Nigeria (CBN) initiated in late 2022, the scarcity of cash began in the first month of the year and by March, banks had to close branches as they ran out of cash to give to customers.

Protests broke out in many parts of the country as customers could not access their funds and people ran out of food and funds. The cash scarcity saga had revealed the inadequacies of the banking industry in meeting the needs of a fast growing technological world and many banking applications also failed customers and transactions were almost impossible.

Aside the cash crunch, the value of the naira had plummeted to never seen before levels, affecting every facet of life and bringing inflation figures in the country to decades high. Inflation which now stands at 27.33 per cent had been impacted by not only the spike in the price of petroleum products but also in the value of the naira which had depreciated in value significantly.

From N450 to the dollar at the official end and N750 to the dollar at the parallel market it is currently selling at N1,200 on the streets and hovers between N950 and N1,000 at the official end of the market.

The controversy in the change in leadership at the apex bank is another major event that the aftermath still lingers with the former governor of the CBN still behind bars. The year 2023 stands as the year when the CBN had three governors in the space of six months.

The former governor, Godwin Emefiele, had been ousted by the new administration led by President Bola Ahmed Tinubu on charges of fraud and had been replaced by an acting Governor, Adebisi Shonubi, in June. However, Shonubi’s stay was short lived as he was replaced by the Dr Olayemi Cardoso late September.

Aside these, the financial industry also witnessed events such as the limiting of the tenure of executive directors, non-executive directors and deputy managing directors which saw many executives of banks and financial institutions leaving their jobs.

Whilst only four monetary policy committee meetings were held this year, benchmark interest rate had risen from 16.5 per cent in January to 18.75 as at July this year when the last meeting was held. The industry also witnessed forward facing strides with the CBN releasing guidelines on contactless payments in the country as well as operational guidelines for open banking in the country outlining the procedures that govern how banks and other financial institutions are permitted to access and manage customer data.

Year 2023 closes on high apprehension as the industry awaits the announcement by the Central Bank Governor, Dr Olayemi Cardoso, on the new capital base for banks in the country. Cardoso had a the Bankers’ Dinner in November announced that for the industry to be able to operate in the $1 trillion economy as projected by the president, there would be need to raise the capital base of banks.

The CBN had also announced an end to all its intervention programmes and plans to begin to recall the facilities given out from the yew year.

In the maritime industry, by January 2023, former president Muhammadu Buhari commissioned the $1.5bn Lekki Deep Seaport In Lagos.

The Lekki Deep Seaport is a joint venture between the federal government through the Nigerian Ports Authority (NPA), Lagos State government, Tolarams Group and China Harbour Engineering Company. The approach channel of the seaport measures about 11km long and 16.5m deep. LPLEL was created to develop, build and operate a standard user multipurpose port that sub-concessioned the container terminal operations to Lekki Freeport Terminal, a subsidiary of CMA-CGM.

On August 21, 2023, President Bola Tinubu swore in his 45-member cabinet with a few new ministries, including the Ministry of Marine and Blue Economy. Marine and Blue Economy is the sustainable use of ocean resources for economic growth to improve livelihoods and create jobs while preserving the health of marine and coastal ecosystems. The new ministry has the capacity to generate more than $1.5 trillion per year globally and will provide over 30 million jobs and supply a vital source of protein to over three billion people.

In November, 2023, the United Nations Assistant Secretary-General for Africa in the Departments of Political and Peacebuilding Affairs and Peace Operations, Martha Ama Akyaa Pobee, while presenting the Secretary-General’s report (document S/2022/818) on the situation of piracy and armed robbery at sea in the Gulf of Guinea, said such incidents had continued to decrease during the reporting period.

The steady decline resulted from concerted efforts by national authorities, with the support of regional and international partners; regular deployment of naval assets by international partners and piracy convictions in Nigeria and Togo in 2021, among others.

It would equally be recalled that to address long-standing macroeconomic imbalances and change the economic trajectory, the new government led by President Bola Tinubu introduced several reform policies, including fuel subsidy removal and foreign exchange unification. Furthermore, several palliative measures have been introduced to ease the effect on businesses, low-income people and the most vulnerable.

President Bola Tinubu had, in his inaugural address on May 29, 2023, announced the removal of the subsidy to lift a major financial burden off the back of the government. The Nigerian government had for decades subsidised and fixed retail prices of petroleum products.

However, a significant shift to a less restrictive forex policy came into force on June 14, 2023 as the Central Bank of Nigeria (CBN), under the recent administration granted banks the autonomy to determine their foreign exchange trading rates.

The director/CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, stated that the liberalisation of the foreign exchange market would unlock the huge potential for investment, jobs and capital flows, saying investors’ confidence would be positively impacted.

According to Yusuf, it is important to reiterate that this is not a devaluation policy, it is a normalization of the foreign exchange policy regime and an adjustment of rate to reflect the fundamentals of demand and supply. It would be dynamic; and the naira will appreciate or depreciate depending on the fundamentals.

The CBN on October 11 issued a communique restating its commitment to enhance foreign exchange (FX) liquidity, addressing the recent FX challenges, and shared its six-point plan, one of which involves lifting the FX ban placed on 43 items.

The Organised Private Sector (OPS) expressed optimism that the lifting of foreign exchange restrictions hitherto placed on importing 43 items is a market-friendly step towards unifying the exchange rates and is expected to curtail inflationary pressures in the short term.

President / chairman of Council, Lagos Chamber of Commerce and Industry (LCCI), Dr. Michael Olawale-Cole stated; “LCCI wishes to commend the Central Bank of Nigeria (CBN) on the removal of the restrictions on 43 items previously banned and the decision to raise dollar supply to meet the demand pressure.

“It is also noteworthy the commitment of CBN to offset the FX backlog as part of the measures to address the current FX challenge plaguing the market.”

Though, Nigeria’s ICT sector contributes one of the greatest percentages to GDP, stakeholders claimed that given its many potentials, the sector should have achieved more in 2023.

They contend that the ICT sector has the capacity to completely transform the economy, but that its potential has not yet been fully realized due to a number of issues, including poor Quality of Service (QoS), limited forex supply, multiple taxation, naira devaluation, and broadband penetration.

Following the devaluation of the naira in June 2023, telecom operators made losses, according to their financial reports. For instance, MTN Nigeria Communications Plc and Airtel Africa Plc disclosed N479.11 billion in foreign exchange losses. From 461/$1 in December 2022 to 777/$1 in September 2023, MTN reported a forex loss of N232.8 billion on its net foreign currency liabilities in its nine-month financial report for the year.

The telecom company averred that it had to heavily rely on letters of credit to meet its capital expenditure requirements because there was not enough foreign exchange available in the market.

For Airtel, it stated, “Loss after tax was $13m driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in June 2023. This impact has been classified as an exceptional item.

“The exceptional item of $471m is on account of derivative and foreign exchange losses following the Nigerian naira devaluation in June 2023 (from 465 NGN/USD in May 2023 to 752 NGN/USD in Jun 2023). This has resulted in an exceptional tax gain of $154m. Tax exceptional items in the previous period benefited from the initial recognition of a deferred tax credit of $42m in Kenya.”

President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Tony Emoekpere, averred that though, the ICT sector is expanding quickly and is estimated to have contributed over 16 per cent of the country’s GDP in Q2, 2023, the industry could perform substantially better if some of the problems experienced by operators were resolved.

Emoekpere listed one of such challenges as multiple taxation, of which he tasked the Commission and other stakeholders to look at ways to addressing it, along with other challenges.

In the same vein, the chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engr. Gbenga Adebayo, averred that telecom operators have continue to bear the brunt of multiple taxation and coerced compliance with tax and levy demands that have no legal basis by sub-nationals for years, adding that, this threatens investment, sustainability and industry growth.

The year 2023 saw an increase in agitation by telecom operators to increase call and data tariff. Citing increasing cost of business operations and the harsh economy, the telecom operators proposed an upward review of the mobile termination rate for voice services and the institution of an interim adjustment of the telecom industry’s floor price for voice and data services.

Head, Enterprise Sales, FiberOne Broadband Limited, Mr. Kenny Joda, also talked about the challenges faced by Internet Service Providers (ISPs). According to Joda, about 90 per cent out of the 568 indigenous ISPs in Nigeria are struggling due to multiple taxation, infrastructure, high cost of doing business and forex, among others.

[Leadership]