Nigerian Economy: Insights Into 2017

NIGERIAN
ECONOMY
INSIGHTS INTO 2017
PRESENTATION BY
YUSUF AYOKUNLE
GTBANK PLC
T O
MICA
NOVEMBER 2016
Outline
• Review of the State of the Economy
• Buhari/APC Scorecard
• Governance learning points in 2016
• Nigeria in Recession: Survival

Strategies
• Outlook for 2017
2
Review of the state of the Economy
3
Main Economic Indicators
Economic Performance (Real GDP growth)
Real growth by Sector Q1-2016 Q2-2016 Q3-2016
3.96%
Agriculture 3.09% 4.53% 4.54%

2.84%
2.35% Industries (Manufacturing) -5.49% -9.53% -12.21%
2.11%
services 0.80% -1.25% -1.17%
Contribution by Sector Q1-2016 Q2-2016 Q3-2016
Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016
Agriculture 20.48% 22.55% 28.65%

-0.36%
-2.06% Industries (Manufacturing) 24.33% 22.65% 21.11%
-2.24% services 55.20% 54.80% 50.24%
GDP--- 2015:$478bn -- 2016E: $317bn $489bn 4

Sources: Nigerian Bureau of Statistics (NBS)
Construction: -6.1% Trade: -1.4%
GDP Q3-2016: Declining sectors
Crude Oil & Gas: -22.0% Textiles & Footwear: -0.9%
-6.28% -0.03%
Real Estate: -7.4% Motion Pictures & Sound -3.7%
-17.41% -1.71%
Air Transport: -3.1% Food & Beverages: -5.8%

-5.72%
Hospitality: -4.9%
-5.53%
-2.56%
-6.01%
-6.39% 5
GDP Q3-2016: Growing sectors
Crop Production: +4.9% Road Transport: +1.3% Telecoms: +0.9%
+4.72% -3.71% +1.49%
Livestock: +0.8% Financial Institutions: +2.8% Broadcasting: +6.3%
+6.32% -13.24% +6.05%
6
Inflation: Nigerians are getting poorer
+42%
Devaluation Headline Inflation sub-components
+68% 18.3%
Fuel 17.9%
17.6%
17.1%
16.5%
15.6%
+45% Non-
Food
Electricity Food
Inflation
13.7% Inflation Oct-2016: Oct-2016:
12.8% 18.1% 17.09%
11.4% Dec-2015: Dec-2015:

8.73% 10.59%
9.6% 9.6%
9.3% 9.4%
Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16
7
Sources: Nigerian Bureau of Statistics (NBS), FMDQOTC, April: FX-Fuel-Dev-Har-Bok
Inflation: Key policy pronouncements that drove inflation
₦13.5/kwH ₦86.5/L ₦197/$
45% 68%
42% Naira
increase in increase in
devaluation
electricity fuel price -
- June
tariff - Feb May
₦19.6/kwH ₦145/L ₦283/$
8
Inflation: Naira is losing value
Bag of Rice (50kg) Chicken (1kg) Crate of Egg
2015:₦10,000 –– 2016:₦19,500 2015:₦750 –– 2016:₦900 2015:₦600 –– 2016:₦900
+95% +20% +50%
Palm Oil (5 litres) Bread (Grand Square) Vegetable Oil (5 litres)

2015:₦1,400 –– 2016:₦3,200 2015:₦300 –– 2016:₦450 2015:₦1,000 –– 2016:₦3,000
+129%
+50% +200%
9
Sources: Local markets survey
Cornflakes Spaghetti (1 carton) Milo (450g)
2015:₦480 –– 2016:₦800 2015:₦2,000 –– 2016:₦3,800 2015:₦800 –– 2016:₦1,000
+78% +90% +25%
Croaker Fish (Carton) Garri (paint bucket) Gala Sausage

2015:₦18,000 –– 2016:₦22,000 2015:₦550 –– 2016:₦800 2015:₦50 –– 2016:₦70
+22% +45% +40%
10
2015:₦50 –– 2016:₦70 Price of Gala, Nigeria’s favourite

sausage jumps by 40%
Is this the final straw?
54-years old
11
Air Conditioner – 1.5HP Gas Cylinder refill Refrigerator
2015:₦65,000 –– 2016:₦127,000 2015:₦3,500 –– 2016:₦3,800 2015:₦90,000 –– 2016:₦109,000
+95% +9% +21%
Toyota Corolla (1.6L) Mobile Phone (Samsung JS) Flight Ticket (Lagos to PH)
2015:₦5.9mn –– 2016:₦14.7mn 2015:₦55,000 –– 2016:₦72,000 2015:₦15,000 –– 2016:₦24,000
+148% +60%
+31%
12
Exchange Rate (FX Markets)
CBN/Official Interbank BDC Parallel/Street
2014: ₦168/$ 2014: ₦186/$ 2014: ₦190/$ 2014: ₦199/$
-17% -7% -7% -33%
2015: ₦197/$ 2015: ₦199/$ 2015: ₦203/$ 2015: ₦264/$
-55% -58% -90% -76%
2016: ₦305/$ 2016: ₦315/$ 2016: ₦385/$ 2016: ₦465/$
Sources: CBN, NIFEX, ABOKIFX, STREET

13
Exchange Rate (FX Markets)
PARALLEL/
CBN/OFFICIAL INTERBANK BDC
STREET
₦305 ₦315 ₦385 ₦465
₦377 ₦389 ₦565 ₦566
₦323 ₦330 ₦493 ₦495
Sources: CBN, NIFEX, ABOKIFX, STREET

14
Exchange Rate (FX Market)
EFCC and DSS raid BDCs
Buy: ₦381/$
Spread: ₦4 Max
Sell: ₦385/$ New NIFEX Act to make people who have foreign
currencies in their possession for more than 30 days go
to jail for up to two years or pay a fine of 20 per cent of
the amount
15
Oil Price, Crude Output and Foreign Reserves
2016 2015 Change Oil Price $pbl
$’bn $’bn $’bn Budget benchmark price 38.0

Average oil price- 2016 42.5
External Reserves 24.5 29.1 -16% Variance 4.5
Excess Crude Account 2.5 2.1 17% 2016 -High 51.93

2016 -Average 42.51
Sovereign Wealth Fund 2.0 1.9 5%
2016 -Low 26.05
Total 28.9 33.1 -13% Current – Nov 22,2016 48.87
16
Sources: NBS, Min of Finance
Oil Price, Crude Output and Foreign Reserves
Return of the Militants: Niger Delta Avengers
Mbpd
Budgeted Crude Oil output 2.20
Average oil output 1.81
Variance -0.39
17
Sources: NBS, Min of Finance
No of NDA attacks in H1-2016 16
Timeline of NDA attacks on oil installations
Oil Price, Crude Output and Foreign Reserves 8

5
3
0 0 0
Financial Impact of the Militancy in the Niger-Delta Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
Daily loss in output: 400,000barrel
Average Crude Oil Price: $42.5pbl
Revenue loss in dollars: $17.4mn/day – $6.2bn/annum
Exchange Rate: ₦305/$

www.nigerdeltaavengers.org
Revenue loss in Naira: ₦5.2bn/day -- ₦1.89tn/annum

@Agbinibond
What is the trade-off? 18

Stock Market (Equities)
All-Share Index (bps) Market Capitalization (₦’tn)
December 2015 28,642 ₦9.85tn
2016 YTD loss: -11% -11%
November 2016 25,461 ₦8.76tn
19
Sources: NSE
41%
Unemployment
Nigeria’s Population: 170mn Labour Force: 79.9mn Fully employed: 53.8mn
Underemployed: 15.4mn Unemployed: 10.6mn Unemployment Rate: Q2-2016
13.3%
Q2-2015: 8.2%
20
Sources: NBS
Trade and Capital Flow Statistics
Foreign Trade and Capital Importation
Foreign Trade Q2-2016 Q1-2016 Grwth/(Dec) Grwth/(Dec) Capital Importation Q3-2016 Q2-2016 Change Change
₦'tn ₦'tn ₦'tn %
$mn $mn $mn %
Total Exports 1.87 1.15 0.73 63.30%
Total Imports 2.07 1.5 0.57 38.10% Foreign direct investment 340 184 156 85%
Trade (Deficit)/Surplus -0.2 -0.35 0.15 -44.10%

Foreign portfolio
investment 920 337 583 173%
Breakdown of exports:
Crude oil exports 1.49 0.82 0.67 81.70% Other investments 561 521 41 8%
Non-oil exports 0.38 0.33 0.05 16.70%
Total exports 1.87 1.15 0.73 63.30% Total 1,822 1,042 780 75%
The only positive development this year

21
Sources: NBS
Policy Developments: Monetary & Fiscal
Monetary Policy & Money Market
Monetary T-Bills Primary Auction – NOV 11,2016

Policy Tools Nov-16 Dec-2015
Inflation Real
CRR 22.5% 20%
Maturity Yield Rate Return
NOP 0.5% 0.5% 91 Days 14.50% 18.33% -3.83%

Liquidity
ratio 30% 30% 182 Days 19.05% 18.33% 0.72%
MPR 14% 11%

364 Days 22.99% 18.33% 4.66%
22
Sources: CBN, FMDQOTC
Fiscal Crisis at State level Only 3 states are can pay salaries
Timeline of FG’s Intervention to states between Jun-15 to Jun-16
₦414bn • Jul-2015
• NLNG Dividend proceeds
₦338bn • Sep-2015
• CBN Salary bail-out loans
• Sep-2015
₦567bn • Debt restructuring (Loan

for FGN Bond asset-swap
by DMO)
• Jun-2016
₦90bn • Conditional Budget
Support Facility (MoF)
 For how long will state governments be
bottle-fed by Abuja?
₦1.41tn  Do we really need 36 states?
23
Sources: Min of Finance
Fiscal Policy:
18 Months After
Vice President Yemi Osinbajo

Economic
Blueprint?
Head, Economic Management
Team
Kemi Adeosun Udo Udoma

Minister of Finance Minister of Budget & National Planning 24
Fiscal Policy:
14.3%
Breakdown of proposed $30bn borrowing program

Proposed projects and programmes loan 11.3
Special National Infrastructure projects 10.7
Euro bond 4.5
Federal Government budget support 3.5
Total 30.0
25
Sources: DMO
Buhari/APC Scorecard: 18 Months After
26
May 31, 2015 – November 30, 2016
Weight Actual Score
Security 20% 2.4%
2.1%
Economy 65%
Anti-corruption 15% 1.5%

Score: 6%
100% 6.0%
27
May 31, 2015 – November 30, 2016
 22 girls rescued out of 219
Weight Actual Score
 Boko Haram pushed back but Borno bombings
20% Security: Rescue Chibok Girls 4% 0.4% continue
 IPOB
Eradicate insurgency- Boko Haram 13% 2.0%  Rise of IPOB/BIAFRA
 Resurge of militancy - Niger Delta Avengers
Institutionalize insurgency deterrence system 3% 0.0%  Senseless killing of Shia Muslims (over 350)
65% Economy: Create Jobs - (Unemployment) 10% 0.0%  Unemployment at 13.3% (8.2%: Q2-2015)
Inclusive prosperity - (Economic growth) 25% 0.0%  Economy in recession at -2.24% (+2.35%:Q2-
2015)
Cost of living - (Inflation) 5% 0.0%
Development of public infrastructure 25% 2.1%  Inflation at 18.3% (Q2-2015: 9.0%)
15%Anti-corruption: Recovery of looted funds 4% 1.0%  Cash and non-cash recoveries: ₦2.12tn
Secure conviction of looters 5% 0.0%

Effective national re-orientation 3% 0.5%
Institutionalize anti-corruption crusade 3% 0.0%
100% 6.0% 28
Governance learning points in 2016
29
You are the CEO, make the final hiring decision
Attributes Grid: A B C D E
Integrity
90% 80% 60% 40% 20%
Capacity 20% 40% 60% 80% 90%
30
Learning Points
Integrity is not enough Profile
Capacity is equally as important, if

Integrity: 90%
not more important
You can’t give what you don’t have Capacity: 20%
31
Lifeline?
30
Months left
Presidency: Nigeria Economic Recovery and Growth Plan (NERGP) 2017 -2020 to be ready soon 32
Nigeria in Recession: Survival Strategies
Business Owner/Entrepreneur Salary Earner Unemployed

33
Strategies Entrepreneur Salary Earner Unemployed

1 Cut costs x x x
2 Eliminated luxuries x x x
3 Diversify income stream x x x
4 Increase savings x x
5 Pay-off debt x x
6 Relocation x x x
7 Multiple/part-time jobs x x 18% -22%
8 Return to school x x
9 Stay close to recuriting agencies x
10 Operate efficient inventory system x
11 Innovative thinking x x x
12 Look out for Government jobs x
13 Go digital – Fintech (Disrupt) x x x
Turn your
hobby into
business 34
Period of belt-tightening
Expense Item Couple & 2 kids Couple & 2 kids
Lagos Mainland Lagos Island
Family of Four: Estimated Annual Living Expenses ₦ ₦
House Rent 800,000 1,200,000
Feeding ₦1,500/Day – Island 20% extra 2,190,000 2,628,000
School fees - ₦150,000/Term –Island N50k extra 900,000 1,200,000
Clothing - ₦10,000/Month – Island 20% extra 480,000 576,000
Transport - ₦400/Day – Island 20% extra 584,000 700,800
Communication - ₦5000/Month 120,000 120,000
Domestic consumables – Island 20% extra 600,000 720,000
Total Annual Expenditure 5,674,000 7,144,800
Minimum Expected Monthly Salary:

Hubby's monthly salary 236,417 297,700
Wife's monthly salary 236,417 297,700
Couple's monthly salary 472,833 595,400
35
101 Best Side Business Ideas to Start While Working Full-Time

https://www.ryrob.com/best-businesses-start-while-working-full-time-job/
50 Small Businesses You Can Start on Your Own

http://www.thesimpledollar.com/50-side-businesses-you-can-start-on-your-own/
36
Return of Wonderbanks Please flee Moku! Mogbe!! Moda’ran!!!
360%
Nospecto
135% return p.a. Boom & Recession 37
Outlook for
2017
Any reasons to be optimistic?

38
Outlook for 2017
Projections for Main Economic Indicators
2016 2017
13.3%  May worsen if urgent steps are not taken by the FG to arrest
closure of manufacturing plants and address FX challenges
18.3%  Will fluctuate within the 20% - 30% band
-2.24%  Recession may linger if the FG maintains current approach

to the economy IMF: 0.6%, Fitch: 2.6%
₦305/$  Probable devaluation in the offing – oil price rebound and

stable crude oil output (2.2mbp) will help
14%  Will remain flat at the current level

39
Outlook for 2017
Probable developments next year: Watch out!
2016 Signs
₦19.6/kwH  Debts of DISCOS in excess of ₦400bn
₦145/L  NNPC hints that current price is unsustainable
₦305/$  Unorthodox approach adopted in combating currency

speculation
40
Outlook for 2017
2017 Budget Highlights
Variables 2017 2016 Change
Crude oil production (mbpd) 2.2 2.2 0.0%

Benchmark Price ($) 42.5 38 -10.6%
Exchange Rate (₦/$) 290 197 -32.1%
FGN Expenditure (₦'tn) 6.87 6.06 -11.7%

FGN Revenue (₦'tn) 4.17 3.86 -7.5%
Deficit (₦'tn) 2.70 2.20 -18.2%
GDP (₦'tn) 108.73 102.92 -5.3%
Deficit/GDP 2.5% 2.1%
2017 2016
Capital Mix 28.2% 30.2%
Recurrent Mix 71.8% 69.8% 1.63mbpd - $48.8pbl 41
Sources: 2017 -2019 MTEF & FSP
Outlook for 2017
Hope 2017: Anchoring our optimism
Critical Action Plan Required from the Federal Government
• Further monetary
• Loss of momentum in
tightening (CRR hike)
anti-corruption
will curtail credit
crusade could
Achieve political or economic settlement of the militancy in the
creation by DMBs and
weaken prospects of
Niger Delta effectively starve the
Iran Nuclear deal • Lingering restrictive
recovery of•looted
funds neededapproval
to and economy of breath 2.2mbpd @
FX $48pbl
policy could
augment budget probable ramp up in undermine
oil production
funding shortfalls for may economic growth
• Increase in yield on
development of worsen outlook by starving
investment securities
(30million barrels
critical infrastructure manufacturers of
by CBN to
resting in inventory)
Obtain 10-year target infrastructure and import substitution inputs and trigger
compensate for the
mass retrenchment.
loss of purchasing
loans from multilateral and bilateral agencies $30bn borrowing plan
power could stifle
credit growth to the
economy as banks
shift to the safer and
high-yielding
government securities
Allow a free-float of the Naira and pass the Petroleum Industry Bill
(PIB)
42
Outlook for 2017
Hope 2017: Anchoring our optimism
Critical Action Plan Required from the Federal Government
• Further monetary
• Loss of momentum in
Ensure a more harmonioustightening
anti-corruption
working(CRR relationship
hike) between the Executive and
Legislature will curtail credit
crusade could
creation by DMBs and
weaken prospects of
effectively starve the
Iran Nuclear deal
recovery of•looted
funds neededapproval
to and economy of breath
augment budget probable ramp up in
Privatization of state-owned commercial enterprises* to
oil production
funding shortfalls for may
• Increase in yield on
worsen outlook
stimulate immediate FDI flows
development of investment securities
(30million barrels
critical infrastructure by CBN to
resting in inventory)
compensate for the
loss of purchasing
CBN should accelerate disbursement of target intervention
power could stifle
credit growth to the
funds to critical sectors of the economy
economy as banks
shift to the safer and
high-yielding
government securities
Effectively promote and ensure use of Made-in-Nigeria goods

43
**NNPC, Transmission company of Nigeria (TCN), refineries, tourist parks. airports, seaports, railways, waterways etc
Outlook for 2017
Opportunities in the Nigerian Economy  Textile and Apparel Value chain
 Agriculture:
 Livestock production Step-1 Cotton Fiber
 Crop production
 Agro-processing (cocoa to paste) Ginning
Carding
 Agro export (cocoa, cashew, Gum Arabic, Sesame Seed)
Combing
Step-2 Fiber Yarn Spinning
 N500bn FG social intervention programme: Dyeing
 ₦5,000 Conditional Cash Transfer
 Home Grown School Feeding Programme
Weaving
 Micro Credit Loans (SMEs, Market Women etc)
 Post-NYSC Entrepreneurial Development Programme Step-3 Yarn Fabric Knitting
Bleaching
(N-Power) – batches 2 & 3 Dyeing
Finishing
 Treasury bills Investment
 91-days: 14% return p.a. Cutting
Step-4 Fabric Design
 182-days: 19% return p.a. Sewing
Ironing
 364-days: 22% return p.a. Buttonholing
 Textile and Apparel Step-5 Wholesaler Retailer

 Mass production – Army, school uniforms, sportswear
 Made-in-Nigeria footwear
 Production of embroidery
 Increase share of value-chain Step-6 Retailer Final user 44
Outlook for 2017
Opportunities in the Nigerian Economy
 Tourism
 Erin-Ijesha Waterfalls, Idanre Hills, Badagry
 Ikogosi warm springs, Olumo Rock
 Yankari Game Reserve, Mambilla Plateau
 Okomu National Park, Obudu Cattle Ranch
 Food & Drinks:

 Establish full-fledged restaurant in neighbourhood
 Catering to corporates (Lunch, AGM, Seminars)
 Production of bottled drinks and wines
 Light manufacturing:
 Paper & stationeries production
 Furniture & fittings
 Nylons and plastics
 Soaps and cosmetics
 41 categories of items banned from the FX market
 Services
 Dry-cleaning
 Event Centre and Event Planning
 Facilities Management and landscaping
 Graphic design and web design
 Lecturing/home teaching service/blogging 45
Outlook for 2017
Opportunities in the Nigerian Economy
Tourism Industry in Tanzania: Can we replicate same in Nigeria?

Ruaha National Park Tarangire National Park Zanzibar Beaches Serengeti National Park
Selous Game Reserve Mafia Island Mount Kilimanjaro
 More $1bn in earnings

 Over 750,000 visitors per annum
Pemba Island Lake Manyara Ngorongoro Conservation Area
Multiplier Effect:
Visa fees
Hotel & Catering Fees
Local transport
Clothing industry
Domestic consumables 46
Outlook for 2017
Opportunities for Investors: Goods and Services with Domestic Substitutes
Item Foreign goods Nigerian substitutes

Clothes TM Lewin, H&C, Thomas Pink Ankara, Kampala
Cornflakes Kellogs, Cheerios, Haldiram’s Nasco, Tropic, Good Morning
Oats Quaker, Oats & Whey, Umpqua, Modern Pap
Soap Dove, Kiss my Face, Cetaphil Dudu Osun, Lux, Teema
Creams Aveeno, Nivea, Vanicream Pears
Eggs Haribo, Goose, VeganEgg Zartech, Tuns, Obasanjo Farms
Toothpick Roland, Hotlix, Cinna-Pix --opportunity to be tapped--
Chicken Campbell’s, Hormel, Tyson, Kirkland Zartech, Tuns, Obasanjo Farms
Rice Mama Gold, Basmati, Blue Ribbon Olam, Stallion, Dangote, Coscharis
Tin Tomato Hunts, Contadina, Cento Ric-Giko Erisco, Dangote
Wine Champagne, Moet, Chardonnay Veleta
Juice Mott’s Verjus, V-8 Dansa, Chivita
Soft Drinks Calpico, San Pellgrino, Solo Pepsi, Coke, Fanta
Yoghourt Euro Cuisine, Premium, Gerber L&Z, Hollandia,
Chocolate NV Liberty, Mercer Estate, Cameron Hughes Eclairs,
Vegetable Oil Crisco, Zoye, Wesson Palma Presco
Palm Oil Nutiva, Omni, Deganim Banga Okomu,
Education Harvard, Cambridge, UCL Babcock, Unilag, OAU, UI, Crescent Univ
Medical Services Royal London Hospital, Lenox Hill Hospital Reddington, St Nicholas, LASUTH, Vedic
International Flights BA, Lufthansa, Emirates Arik
Obudu Cattle Ranch, Yankari Game Reserve,
Vacation/Holiday/Retreat Dubai, Disney World, Sentosa Ikogosi Warm spring, Olumo Rock, Epe Resort 47
Outlook for 2017
Opportunities: Age of Innovation – Fintechs (Disruptors)
The Co-Creation Hub, Yaba
Funds transfer & payments platform Auto parts sales
Paternity Support Driving energy efficiency
Agro-products sales Learning and knowledge platform
Source: http://cchubnigeria.com/
48
Outlook for 2017
Opportunities: Age of Innovation – Fintechs (Disruptors)
Transparency and accountability in Mobile App promoting African
public governance Culture
On-line booking of outdoor ads
Value creation from recycling Health & fitness
Source: http://cchubnigeria.com/
49
Outlook for 2017
Financing Options for Entrepreneurs and Businesses
Conventional Maximum
Prime lending
commercial rate: 17%
lending rate:
bank loans 27%
Intervention Single digit: 9%

funds
S/n CBN On-lending Programs ₦'bn
1 Commercial Agriculture Credit Scheme (CACS) 200
2 SME Credit Guarantee 200 ₦1.2tn intervention fund at
3 Power and Airline Intervention Fund (PAIF) 300 max of 9% interest rate p.a.
4 Real Sector Support Facility (RSSF) 300
5 Micro, Small and Medium Enterprises Development Fund 220
6 Rice Anchor Borrowers Program 40
CBN program target: 1 million
young graduates (entrepreneurs) 50
Sources: CBN
Outlook for 2017
Politics 2019 in view: The likely contenders
Ibrahim Muhammadu Atiku Nasir Aminu Senator Rabiu

Dankwambo Buhari Abubakar El-Rufai Tambuwal Kwankwaso
Governor, President, Former Vice Governor, Governor, Former
Gombe State Nigeria President, Kaduna State Sokoto State Governor,
Nigeria Kano State
 What is Tinubu/South-West APC Coalition’s gameplay? 2017 Anambra Gubernatorial

 Who will Tinubu back for 2019? Election 51
Outlook for 2017
Politics 2019 in view: The likely contenders
BEFORE EVERYTHING FALLS APART

Published Saturday, November 26, 2016
PEDULUM By Dele Momodu, Email:

dele.momodu@thisdaylive.com
52
THANK YOU
Disclaimer: The views expressed in this presentation are personal to the speaker. 53

Nigerian Economy: Insights Into 2017

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NIGERIAN

• Review of the State of the Economy

• Governance learning points in 2016

• Nigeria in Recession: Survival

• Outlook for 2017

Agriculture 3.09% 4.53% 4.54%

Contribution by Sector Q1-2016 Q2-2016 Q3-2016

Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016

Agriculture 20.48% 22.55% 28.65%

-2.24% services 55.20% 54.80% 50.24%

GDP--- 2015:$478bn -- 2016E: $317bn $489bn 4

Crude Oil & Gas: -22.0% Textiles & Footwear: -0.9%

Real Estate: -7.4% Motion Pictures & Sound -3.7%

Air Transport: -3.1% Food & Beverages: -5.8%

Crop Production: +4.9% Road Transport: +1.3% Telecoms: +0.9%

+4.72% -3.71% +1.49%

Livestock: +0.8% Financial Institutions: +2.8% Broadcasting: +6.3%

+6.32% -13.24% +6.05%

11.4% Dec-2015: Dec-2015:

Inflation: Key policy pronouncements that drove inflation

₦13.5/kwH ₦86.5/L ₦197/$

₦19.6/kwH ₦145/L ₦283/$

+95% +20% +50%

Palm Oil (5 litres) Bread (Grand Square) Vegetable Oil (5 litres)

+78% +90% +25%

Croaker Fish (Carton) Garri (paint bucket) Gala Sausage

+22% +45% +40%

2015:₦50 –– 2016:₦70 Price of Gala, Nigeria’s favourite

Is this the final straw?

+95% +9% +21%

Exchange Rate (FX Markets)

CBN/Official Interbank BDC Parallel/Street

2014: ₦168/$ 2014: ₦186/$ 2014: ₦190/$ 2014: ₦199/$

-17% -7% -7% -33%

2015: ₦197/$ 2015: ₦199/$ 2015: ₦203/$ 2015: ₦264/$

-55% -58% -90% -76%

2016: ₦305/$ 2016: ₦315/$ 2016: ₦385/$ 2016: ₦465/$

Sources: CBN, NIFEX, ABOKIFX, STREET

Exchange Rate (FX Markets)

₦305 ₦315 ₦385 ₦465

₦377 ₦389 ₦565 ₦566

₦323 ₦330 ₦493 ₦495

Sources: CBN, NIFEX, ABOKIFX, STREET

Exchange Rate (FX Market)

EFCC and DSS raid BDCs

Oil Price, Crude Output and Foreign Reserves

2016 2015 Change Oil Price $pbl

$’bn $’bn $’bn Budget benchmark price 38.0

Excess Crude Account 2.5 2.1 17% 2016 -High 51.93

Oil Price, Crude Output and Foreign Reserves

Return of the Militants: Niger Delta Avengers

Budgeted Crude Oil output 2.20

Average oil output 1.81

Oil Price, Crude Output and Foreign Reserves 8

Daily loss in output: 400,000barrel

Average Crude Oil Price: $42.5pbl

Revenue loss in dollars: $17.4mn/day – $6.2bn/annum

Exchange Rate: ₦305/$

Revenue loss in Naira: ₦5.2bn/day -- ₦1.89tn/annum

What is the trade-off? 18

Stock Market (Equities)

All-Share Index (bps) Market Capitalization (₦’tn)

December 2015 28,642 ₦9.85tn