The latest Purchasing Managers’ Index (PMI) for the manufacturing sector has continued to reflect the sector’s weaknesses as regards production, new orders, and employment levels. According to the latest data released by the CBN, manufacturing in the month of June stood at 41.1 points, a decline compared to 42.4 and 51.1 index points recorded in May and March 2020 respectively. The contraction was due to a decline in new orders index to 36.4 in June (from 42.8 in May 2020), which resulted in lower production – the production index decreased further to 36.6 (from 44.5). Producers were hit with higher costs of production (input price index rose to 67.2 from 61.4), but were unable to pass on costs to customers (output price index remained flat at 53.2) due to the drop in new orders. The Manufacturers Association of Nigeria said that the lockdown in some states and curfew imposed by the FG had a huge impact on production as it caused a slow down in the supply of raw materials, while access to foreign exchange for critical raw materials remains challenging.
Moody’s Investors Service has predicted Nigerian banks’ foreign currency funding gap to rise to $5 billion over the current low oil prices, volatile foreign inflows and lower remittances amid the coronavirus pandemic. The challenges are threatening to renew the foreign currency liquidity pressures that blighted Nigerian banks during a previous oil crisis in 2016-2017, Moody’s, said in its July 2020 report, titled ‘Renewed foreign-currency shortages highlight vulnerability for banks’. Moody’s projected dollar shortages to intensify over the next 12-18 months if low oil prices persist, rekindling the foreign-currency liquidity crisis that led to severe dollar rationing during the last oil price crash in 2015-2017. However, it added that unlike three years ago, rated banks are in better shape as they had bolstered their dollar deposit bases and liquid assets. Peter Mushangwe an analyst at Moody’s said that lower dollar inflows at a time when foreign currency borrowing will likely be more expensive for Nigerian banks will strain their foreign currency funding, and that the ratings agency’s moderate scenario where foreign-currency deposits decline by 20 percent, while loans remain constant, would increase rated banks’ funding gap to ₦1.5 trillion or $3.8 trillion, and to ₦1.9 trillion or $5.0 billion under the firm’s severe-case scenario of 35 percent foreign-currency deposit contraction. This would create an acute funding challenge.
OPay has announced plans to shut down some of its business units including its ride-hailing; ORide, OCar, and logistics, OExpress services, to focus more on financial and technology services in Nigeria. According to the firm Thursday, the decision is as a result of harsh business conditions caused by the COVID-19 pandemic, the lockdown, and the Lagos state ban on motorcycles. The Lagos state government had in February this year imposed a ban on motorcycle and tricycle operations, though the ban did not include delivery services in key commercial and residential areas within the state. The firm said the ride-hailing units are not a major part of its business units adding that it has been “investing more and seeing accelerated growth in its commitment to Nigeria’s financial and technology inclusion”. The firm said during the pandemic it recorded a huge demand for its offline mobile money agency, and online digital payment, which remains the core of its business. From January to April 2020 for example, it witnessed a 44 percent growth of offline and online transaction value even in the midst of pandemic and lockdown. OPay expressed hopes that the fintech part of its business coupled with the goods’ platform will form the future of Nigeria’s technology development.
The funeral of an Ethiopian singer and activist, Hachalu Hundessa, which was held in his hometown of Ambo in the Oromia region has sparked days of protests in which at least 81 people have been killed, including three Oromia special police force members, according to a police chief on Wednesday. The event, under heavy security with the sparse crowd, joined the final rites for the artist whose killing on Monday night sparked spontaneous protests in parts of the country. Hundessa’s political songs gave voice to the Oromo’s longstanding sense of marginalisation, the country’s largest ethnic group, and his murder led to angry protests in Addis Ababa and the region of Oromia which surrounds it. The slain singer’s wife Santu Demisew Diro, who gave a short speech after mourners laid wreaths, requested for “a monument erected in his memory in Addis where his blood was spilt.”