1 May 2023
E kaaro o, Ututu Oma, Barka da Safiya – Good morning, happy workers day, and welcome to ThinkBusiness Nigeria.
ThinkBusiness Nigeria newsletter provides essential strategic information on markets, macro, and political economy issues and dimensions that drives business and markets. It provides the highly mobile professional, investor, businessperson with the essential information and intelligence he or she needs to know.
It summarises the markets, but providing insights on key shifts and changes and what they mean for your investments. It scans the entire Nigeria and foreign news landscape and distills what really matters from many noises around, and share them with you. In addition, ThinkBusiness Nigeria ensures you understand the factors driving those developments by providing required background and contexts.
Strategy and personal development are important, so ThinkBusiness Nigeria also incorporates strategy for winning in business and life, drawing experiences from businesses, sports, history, life etc to give simple but powerful analogies about life and success and their underlying patterns.
Markets
| % Change | YTD (%) | ||
| NGX ASI | 52,403.51 | 0.32% | 2.25% |
| Brent Crude Oil | 79.54 | 1.17% | -7.93% |
| I & E FX Window | 462 | 0.12% | -3.11% |
| FX Parallel Market | 739 | 0.27% | 0.14% |
| Gold | 1992.64 | 0.19% | 9.84% |
| Cocoa | 3,156.00 | -0.47% | 21.11% |
- The gains seen at the Nigerian Exchange (NGX) lately was maintained on Friday as the benchmark NGX All-Share Index (ASI) climbed 167.63 (0.32%) points to close at 52,403.51, representing a 1-week gain of 2.33%, a 4-week loss of 2.51%, but an overall year-to-date gain of 2.25%. It was supported by impressive Q1’23 results released by companies and this informed the sustained buying pressure across the major sectors, consumer goods sector appreciated by 0.61 per cent, and the insurance space improved by 0.93 per cent and the banking index which marginally rise by 0.94%
- Brent crude futures rebounded with 0.73% rise to $79.54. The small uptick in prices reflects continued market jitters over the U.S. economy, with new data released on Thursday showing that U.S. GDP grew by 1.1% for the three months ending in March.
- The Naira gained at I&E Window and the parallel market. Naira closed at N462/$ at I&E window, up 0.12%, and gained 0.27% in the black market to close at N739.
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National Headlines
- Are you surprised by the spate of U turns by the federal government? The latest is that the census planned for 3 – 7 May will no longer go ahead on those dates. Prior to that, the government said it merely expanded the committee charged with defining the process and modalities for removing fuel subsidies to include members of incoming administration. The census was planned for 3 – 7 May, 17 years after the last effort, while the subsidy removal was expected to take effect June. But no one really believed those two major activities will go ahead as planned. If you do, you must have an overstated view of institutional capacity in Nigeria. The dates were put close to the resumption date of a new administration, so it will be used as an excuse, and so it turned out.
- Did you try to export or waited in vain for an import in the last week? The strike by the Association of Nigerian licenced custom agents (ANCLA) entered its fifth day at the weekend, according to reports by BusinessDay. ANCLA is protesting the 100% increase in handling prices by the two major aviation handling companies – NAHCO Aviance and SAHCO.
- What happened to Naira circulation after the Central Bank of Nigeria (CBN) released the old Naira notes after the gubernatorial elections of March 18th? Data released last week shows currency outside banks rose 66% to N1.4 trillion in March 2023, from N843 billion in February. It fell by 70% in January after the original deadline was set for 31 January and later 10th February 2023. Though the process was flawed, the question remains whether the progress made on digital payments during the period can be sustained.
Global Headlines
- Into the last weekend, the shares of First Republic, the US latest embattled mid-sized bank dropped by 40%. By weekend, according to CNBC, the US regulator has intensified the midwifing of a buyer for the bank. The contenders are JP Morgan Chase, PNC, and Bank of America, repeating the same pattern with Signature Bank. For us in emerging markets, the crisis becomes our problem when it becomes a systemic risk in the US. There is no concrete evidence of that yet.
- Oil poised for weekly dip as recession fears, rates cloud outlook
- UK inflation stays at 10% as bread rises at record clip
News Analysis – 2023 Workers’ Day: Not a smiling day for Nigerian Workers
As we celebrate another Workers’ Day on May 1, 2023, with more or less zero improvement from the last celebration of Workers’ Day, one must wonder what exactly the point of the celebration is for the average Nigerian worker as working conditions for workers in Nigeria are far from ideal. Workers are faced with low wages and they are in a state of not having enough at almost all times.
The minimum wage was raised by the federal government to N30,000 in 2018. This equates to N1,500 per day (20 working days in a month) and N187 per hour (for a regular 8-hour workday). It is significant to observe that the cost of living in all of these has climbed in recent years rather than decreased. For instance in 2018, the average inflation stood at 12.09%, a 50kg-bag of locally produced rice stood at N18,000. While the minimum wage has not changed in the last 5 years, inflation has risen to 22.04% as of March 2023, and a BusinessDay survey of some markets in Lagos found that a 50kg bag of locally parboiled rice now sells for N43,000, this is about 140% increase compared to 2018. The cost of living for average Nigeria worker is also exacerbated by the rise in rent, transportation, medical expenses and electricity, among others, and for most workers, the cost of living is about 5.3 times more than the average salary.
Even as it may, many private organizations and government agencies, including 15 state governments, have yet to implement the N30,000 minimum wage. Abia, Bayelsa, Delta, Enugu, Nasarawa, Adamawa, Gombe, Niger, Borno, Sokoto, Anambra, Imo, Benue, Taraba, and Zamfara are among the states that have failed to implement the minimum wage. In the private sector for instance, OK foods industry worker took to the street to protest in 2021 about the unfair payment by the company. The mixing boys worked for 12 hours with a daily wage of N1,500, which amounted to N125 per hour which is far lower than the minimum wage per hour.
The little that is been paid, though some below the minimum wage, workers still struggle to receive it as and when due. For instance in Abia state, health workers and teachers are currently owed between 10 months and 27 months’ salaries. Also, April 13, 2023, Ad hoc workers of the Plateau State College of Health Technology, protested over 45 months of unpaid salaries. ASUU in Taraba state earlier in April declared total and indefinite strike action hinged on government’s failure to pay earned academic allowances, promotion arrears, fractional payment of salaries to staff as well as unsettled staff pension and gratuity scheme.
Due to the poor working condition and also inability of the workers take-home to actually take them home, many workers has sought to find a greener pasture elsewhere and Nigeria has lost more workers to other nation in recent years. Nigerian nationals emerged the second highest recipients of United Kingdom’s Worker Visas between in one year. The UK report on migration disclosed that the UK Government Worker Visa approvals for Nigerians in 2022 increased to 38,007 from 12,405 in 2021, a 206% increase in one year. Many of these migrant cited poor working condition and underpayment as the major reason.
To make average worker in Nigeria happy, the Nigeria government must shift from the mentality of not prioritizing workers welfare to making it the first among most important policies. Investing in workers welfare by paying a living wage and provision of social security is a path that will lead to better days in every facet of Nigeria’s economy and development. Also, government should ensure that labour law implementation cut across the private and public and that worker across board are fairly rewarded.
The Week Ahead
- The NBS is expected to release the State Disaggregated Mining and Quarrying Data (2022) on Friday
Winning! My weekly thoughts on how you can “win” this week.
The inspiration to “winning” this week comes from an interesting article and interview in the May – June 2023 edition of the Harvard Business Review (HBR) – pg 56 – 59. HBR spoke with Tim Simmons, the chief product officer of Sam’s Club, a membership only retailer with 600 stores in the US and Puerto Rico.
According to interview, Sam’s Club has recorded a 43% increase in net sales after making six operational changes in their business.
The company made six structural changes / elements to how it operates and serve its customers. Four of those changes were related to how they improved the conditions in which their workers now serve their customers, including changing workers specialty roles by broadening job roles, streamlined shifts and made them predictable and supporting workers lifestyle, used technology to support workers productivity and increased average pay by 31%.
What is the take? Out of six elements and changes made to get result, four of those changes were related to the conditions that supports improving workers productivity. Indeed, Tim Simmons said in the interview, “you’ve got to set your people up to succeed”
I could not agree more. Let winning this Week start by thinking of how you can support your staff and colleagues to win – How can I improve productivity in my business by innovating and supporting how those that work in the business serve customers and clients?
