- After Sallah holidays, Nigerian bourse shrinks by 0.08% as sentiment wanes
The Federal Government has requested an 18-month extension on the closing date of the World Bank’s $800 million palliative loan in a strategic move to bolster its social safety net programmes amidst rising inflation and economic challenges.
According to a restructuring paper document on the project from the World Bank, the Nigerian government has requested to extend the closing date of the project from June 30, 2024, to December 31, 2025.
The extension seeks to realign project timelines and enhance the efficacy of the National Social Safety Net Program-Scale Up (NASSP-SU).
The document read, “This paper seeks approval from the Country Director for a Level II restructuring of the National Social Safety Net Program Scale-Up project (NASSP-SU, P176935, Credit No. 7019-NG), an $800 million Investment Project Financing.
The restructuring will extend the project closing date by 18 months from June 30, 2024 to December 31, 2025. The benefit size and duration of the cash transfers under component 1 will also be changed.
“Finally, the chairmanship of the project’s national steering committee will be changed from the Minister of Humanitarian Affairs and Poverty Alleviation to the Minister of Finance. This is the first restructuring and extension of the project’s closing date.”
The extension request stems from Nigeria’s ongoing battle with high inflation, which peaked at 33.2 percent in early 2024, exacerbated by the removal of fuel subsidies and exchange rate depreciation.
These economic pressures have pushed millions into poverty, necessitating expanded and sustained support for the vulnerable populations.
In a letter dated March 4, 2024, the Federal Ministry of Finance formally requested the extension to ensure comprehensive implementation of project activities.
The government’s ambitious reforms, including the removal of gasoline subsidies and a unified foreign exchange policy, while beneficial in the long run, have heightened short-term economic hardships.
The requested extension aims to provide additional time for rolling out and managing cash transfers, as well as strengthening the social safety net delivery systems.
The NASSP-SU project, initiated to provide shock-responsive safety net support to Nigeria’s poor and vulnerable, was approved on December 16, 2021, and became effective on January 30, 2023.
Despite the delayed start due to legislative hurdles, the project has made significant strides.
As of May 2024, the project has covered approximately 30 million beneficiaries, with around three million poor and vulnerable households receiving cash transfers.
The project’s implementation, however, faced a temporary halt from January to March 2024 due to a governmental review.
Following recommendations from a multi-ministerial panel, the project resumed with an emphasis on biometric verification of beneficiaries.
The project is now poised to extend its reach, leveraging the integration of the National Social Register with the National Identification Number system to enhance targeting accuracy.
So far, only 39.38 percent of the entire loan has been released to Nigeria, as there is a pending balance of about $485 million.
To mitigate the adverse effects of inflation and economic reforms, the Nigerian government plans to reach 15 million households with N75, 000 in temporary cash transfers, distributed in three monthly payments.
This initiative is expected to be financed through the NASSP-SU project, which will also support reforms to strengthen the social registry.
The project restructuring will align with the government’s program, adjusting benefit sizes and durations of support, and enhancing collaboration between the Federal Ministry of Humanitarian Affairs and Poverty Alleviation and the National Identity Management Commission for beneficiary verification.
The restructuring also includes changes in institutional oversight, with the National Steering Committee now chaired by the Minister of Finance.
After Sallah holidays, Nigerian bourse shrinks by 0.08% as sentiment wanes
On Wednesday, cash trading on the local bourse decreased by 8 basis points, closing at 99,840.95 points.
Similarly, the market capitalization of listed equities fell by 8 basis points to N56.48 trillion, despite active trading on the Exchange.
The market exhibited strong breadth with 40 gainers against 15 decliners, despite the benchmark index’s negative performance. Leading the advancers were UPL, GUINNESS, CHAMPION, HONEY FLOUR, and VERITASKAP, with share price increases of 10.00 percent, 9.96%, 9.83 percent, 9.52 percent, and 9.46 percent, respectively.
On the other hand, CAVERTON, ABCTRANS, NB, WAPIC, and MANSARD topped the list of decliners, with share price decreases of 9.62 percent, 9.52 percent, 8.37 percent, 5.71 percent, and 4.37 percent, respectively.
Trading activity on the NGX showed a significant uptick, with total deals, volume, and value rising by 35.57 percent, 334.92 percent, and 233.02 percent, respectively, amounting to 9,899 trades, 1.38 billion units, and N16.48 billion. Sector performance was relatively positive; the Banking, Oil/Gas, and Industrial Goods indices recorded gains of 0.51 percent, 0.08 percent, and 0.001 percent, respectively, while the Insurance and Consumer Goods indices posted losses of 0.14 percent and 0.09 percent, respectively. At the end of the trading session, FIDELITYBANK was the most traded security in terms of both volume and value, with 1.05 billion units valued at N11.32 billion exchanged in 466 trades.
In the money market, the Overnight NIBOR fell by 149 basis points to 25.68 percent, reflecting an improvement in liquidity.
However, key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate (OVN) rose by 0.73 percent and 0.89 percent, closing at 26.36 percent and 27.14 percent, respectively.
Meanwhile, NITTY rose across the board for most tracked tenor buckets, despite the average secondary market yield on T-bills decreasing by 0.05 percent to 19.81 percent.
In the bond market, the FGN bond market, average secondary yield stayed muted at 18.76 percent, despite yield expansions of 0.11 percent and 0.05 percent in the MAR-25 and JAN-26 FGN papers.
The sovereign Eurobonds market was predominantly bearish across maturities, thus pushing the average yield higher by 18bps to 10.19 percent.
In the foreign exchange market, the Naira depreciated against the dollar by 0.02% in the official NAFEM market, closing at ₦1,483.02 per dollar. At the parallel market, the Naira closed at N1, 465 per dollar.