Nigerian Capital Market Update
Macroeconomic Overview (3/3)
In June 2023, the announcement of the unification of exchange rates as well as the removal of fuel subsidy caused a huge spike
in exchange rates and fuel prices
Exchange rates Year-to-date
Average fuel pump price Year-to-date
1000
800
Before unification
600
400
200
After unification
0
3-Jan-23
3-Feb-23 3-Mar-23
3-Jun-23
3-Apr-23 3-May-23
3-Jul-23
3-Aug-23
Average price per litre
700
617
590
600
538
500
400
306
300
245
213
208
214
200
100
0
ill
January February
March
April
May
June
July
August
Source: Central Bank of Nigeria
Opportunities Amidst Disruptions
PwC
Amidst the economic disruptions arising from sudden macro-economic reforms
in the short run, it is expected that these reforms would yield positive benefits
for the economy and the capital market in the long run
■ The liberalisation of the foreign exchange market could potentially attract
foreign investments and positive capital flows
☐
In addition, the removal of fuel subsidy will provide more fiscal space for the
Federal Government and allow for channeling of the funds saved from
payment of subsidy into more developmental projects such as infrastructure
development. However, policy implementation and accountability in fiscal
offices is key to reap the benefits of the subsidy removal
The Nigerian Capital Market Update
Source: National Bureau of Statistics, Trading Economics, PwC research
■ Other macro-economic initiatives of the Federal Government aimed to improve its
fiscal position and increase revenue including setting up the Presidential
Committee on Fiscal Policy and Tax Reforms to enhance revenue collection
efficiency, ensure transparent reporting, and promote the effective utilisation of tax
etc. and the planned sale of about 20 state-run companies to raise funds and
improve governance in these entities also presents opportunities for the capital
market. The Sale of the state-owned entities through the capital market would
deepen and grow the market. Furthermore, tax incentives to attract more
companies to utilise the capital markets as well as investors to participate in
investing in the capital markets could be introduced through the tax reform process
August 2023
6View entire presentation