Nigerian Inflation: Approaching an Inflection point

Nigerian Inflation: Approaching an Inflection point

Executive Summary 

In our H1 18 strategy report, we projected a drop-in headline inflation, anchored on the blend of soft domestic food prices and base-effects (H1 17) with the scale of moderation trimmed by higher transport inflation – hinged on rising crude oil prices. Indeed, our view of a downturn in consumer prices panned out with headline inflation declining by 285bps over H1 18 to average 13.02% year-on-year (YoY).

However, the scale of moderation was steeper than what we had envisaged, as NNPC stepped up its fuel imports over the period to support market supply and price – at N145/litre. Consequently, core inflation dipped 101bps to average 11.17% YoY over H2 17 while food inflation declined markedly by 451bps over the review period to 15.63% YoY with the sharp decrease resulting from the impact of favorable base effect and increased market supplies.

In terms of our outlook over the second half of the year, we considered currency and liquidity concerns over the rest of the year. On the currency front, we believe increased interventions from the CBN will keep the Naira stable in H2 18. With regard to liquidity, particularly from the implementation of the approved 2018 budget (N9.12 trillion) and, most importantly, spending against the 2019 elections, we do not envisage any price pressure, taking a cue from precedents which shows muted pressures over H2 18 as well as in the months leading up to elections.

Overall, our analysis suggests that while base effects although minimal would drive lower CPI, structural bottlenecks from elevated transportation costs should limit scale of moderation in inflation. Summing up developments across both core and food inflation sub-components, we project mean headline inflation to hover around 12.04% YoY over 2018 (2017: 16.55%).

Headline inflation nose-dives over H1 2018, hits 28-month low

In our H1 18 strategy report, we projected a drop-in headline inflation with downside curtailed by elevated transport inflation. Precisely, our expectation of softer inflation was anchored on the blend of soft domestic food prices and base-effects (H1 17) with the scale of moderation trimmed by higher transport inflation, hinged on higher crude oil prices.

Indeed, our view of a downturn in consumer prices panned out with headline inflation declining by 285bps over H1 18 to average 13.02% year-on-year (YoY). However, the scale of moderation was steeper than what we had envisaged. To be precise, due to rising crude oil prices, we had expected independent marketers’ inability to import fuel to give rise to episodes of fuel scarcity which would pressure PMS price.

However, in a bid to boost supply, NNPC stepped up its fuel imports over the period thus supporting price at regulated level of N145/litre. Consequently, core inflation dipped 101bps to average 11.17% YoY over H2 17 with the decline stemming from the HWEGF1, education and clothing divisions. In the review period, food inflation declined markedly by 451bps to 15.63% YoY with the sharp decrease resulting from the impact of favorable base effect and increased market supplies.

 

VIEW FULL REPORT HERE

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Source: Articles

ECONOMIC UPDATE: Currency – The Battle for Naira Stability

ECONOMIC UPDATE: Currency – The Battle for Naira Stability

In our H1 18 Nigeria Strategy Report, we projected a blow in FX outflows that will impulse the CBN to step up its intervention across FX markets. Our projection was based on the confluence of policy normalization in developed markets, flight to safety across EMs, lower domestic interest rate environment, and political risk in the domestic clime. True to our prognosis, average monthly FX outflows rose 15.4% over H1 2018 to $3.6 billion (forecast; $3.3 billion), which prompted an accelerated pace of intervention by the CBN.

For context, CBN sales expanded at the IEW1 and interbank markets over H1 18 – IEW (+122% to $1.96 billion), BDC (+83% to $2.89 billion) and Interbank sales (+56% to $11.4 billion) to drive overall intervention to $16.3 billion (+66.5%). Consequently, the NAFEX2 and BDC rates remained relatively stable over H1 18, closing the period at N360.5/$1 and N362.3/$1 accordingly.

Coalescing our adjusted CBN outflows and inflows, we estimate monthly average reserve drawdown of $310 million (average accretion of $1.3 billion in H1 18) which summed up to $1.9 billion over H2 18 (vs. $8.0 billion accretion in H1 18) – notwithstanding Eurobond issuance – which should dwarf any significant accretion in the foreign reserve to $45.7 billion. Consequently, we expect the apex bank to put its full ammunition to use to keep the Naira at current bands, which would maintain stability in the short term to keep the interbank at N361/$ for the rest of 2018.

Further down, the distortion of the free interplay of demand and supply at the IEW with the lag expected from CBN intervention – amidst pressure at other windows as in May 18 – would drive short-term volatility in rates and an eventual adjustment to our fundamental driven purchasing power parity estimate of between N391.17/$ to N402.48/$ (7-10% down-leg from current NAFEX rate of N361.00/$ at the end of June 2018).

CBN fires up as Hot Money lose steam 

In our H1 18 Nigeria Strategy Report, we projected a blow in FX outflows that will impulse the CBN to step up its intervention across FX markets. Our projection was based on the confluence of policy normalisation in developed markets, flight to safety across EMs, lower domestic interest rate environment, and political risk in the domestic clime. True to our prognosis, average monthly FX outflows rose 15.4% over H1 2018 to $3.6 billion (forecast; $3.3 billion), which prompted an accelerated pace of intervention by the CBN.

For context, CBN sales expanded at the IEW3 and interbank markets over H1 18 – IEW (+122% to $1.96 billion), BDC (+83% to $2.89 billion) and Interbank sales (+56% to $11.4 billion) to drive overall intervention to $16.3 billion (+66.5%). That said, while we had expected the accelerated sales to drive a drawdown in external reserve, the combination of strong foreign flows in the first quarter, which provided room for the CBN to shore up its reserve4, combined with Eurobond issuance earlier in February, and improved oil inflows (+20.6% to $9.0 billion) triggered robust net flows with $7.4 billion accretion striding the FX reserve to $47.8 billion at the end of H1 18. Consequently, the NAFEX5 and BDC rates remained relatively stable over H1 18, closing the period at N360.5/$1 and N362.3/$1 accordingly.

 

VIEW FULL REPORT HERE

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Source: Articles

4 Money lessons this holiday

4 Money lessons this holiday

It’s the long holiday. Your children will be away from school and with you at home for at least eight weeks. Looking forward to building memories together? We bet you are. This holiday is, however, a perfect time to ingrain lifelong money lessons in your children. You can teach them to value money. Let them understand that mum and dad work for money and that most of the things they enjoy were bought with money and should be handled with care.

The practical steps below will help you inculcate these lessons.

 

  1. Kickstart a savings culture

Children get loads of gifts, many times monetary, from their parents and other family members. Teach your children to always save a part of any amount they are given. If they are at the age where they get stipends, teach them to save a fraction of their allowance. You can begin with a visible piggy bank where they physically drop the money and progress to a young savers account or Money Market Fund as they get older. Share their account balances with them periodically so that they see their money growing.

  1. Let them set savings goals

Saving is significantly easier when you are saving towards a goal. Teach them the value of financial goals. Let them identify something they really want. Calculate the cost and how long it will take to save for it if they save an amount from their daily allowance. Keep a record of the savings and track. Remind them periodically- e.g. five weeks to your new Play Station game. When the time is done, and the money accumulated, open the safe and buy them the game. They will feel very fulfilled and value the game.

  1. Allow them to earn money

As they mature, it’s important to teach them the importance of labour and its connection with resources and fine living. You could give them specialized tasks that are not typically among their chores and pay them for it. If there are old enough to work during the holidays, encourage them to get safe holiday jobs.

  1. Celebrate their milestones

Nothing propels progress like encouragement and reward. Celebrate their saving milestones with lavish praise and treats. If your child saves consistently for a whole school term, for instance, you could take that child to the movies as a reward for consistency. The child who saves for a PS game can also get ice-cream in addition. These rewards communicate that doing the right thing is always beneficial eventually.

 

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The stage is set for ARM ENGAGE (III)

The stage is set for ARM ENGAGE (III)

The date is fixed, and stage set for the third instalment of the ARM ENGAGE event hosted by ARM Pension. On the 26th of July 2018, the brand will open the doors of Terra Kulture to NYSC and fresh graduates for an educative and fun session themed “The Millennial Professional”.

This event aims to inspire and prepare the younger generation for the professional life after university and youth service. To achieve this, personalities like Zainab Balogun, Emma Oh My God and Iyinoluwa Aboyeji have been invited to speak on topics that touch every stage of the target audiences’ professional life and growth.

The most recent instalment of the event which held in November 2017 with the theme “The 21st-century entrepreneur” had speakers like Bolanle Austin-Peters, Adebola Williams, Bosun Tijani and Cobhams Asuquo. Each of these speakers held the crowd spell-bound with topics that ranged from Embracing the Glass ceiling, to Find your rhythm.

With over 500 persons in attendance, the event achieved its aim of bringing a crop of young individuals under one roof to prepare them to excel at being 21st-century entrepreneurs.

The Managing Director of ARM Pension Mr Wale Odutola while appreciating the reach and impact of the previous ARM ENGAGE events, is optimistic that this edition slated for July 2018 will be a big boost to the preparatory efforts of the next generation of industry leaders.

 

Register here to attend ARM ENGAGE (III)

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Maximizing funds this holiday

Maximizing funds this holiday

Holiday means the children will be home with you. But it also means another session is approaching and school fees are around the corner. With holiday treats and expenses piling up, there is a need to conserve resources as much as possible. Is there a way to moderate holiday expenses and still give your children a good time? Consider the following tips.

 

Buy in bulk: you know the biscuits and drinks your children enjoy, make the difficult choice of buying a carton. It will eventually make more financial sense.

 

Cut down on the variety: Resist the temptation to buy the food variant each child prefers. Rather buy the one all your children enjoy.

 

Choose summer school carefully: Look for an option that delivers value without blowing your budget. Finding a school close to your house or office could also help you save on transportation expenses.

 

Invite trusted family members: If you have retired parents or available siblings you trust, invite them to stay with you over the holidays. Keep communication lines open and teach them how to care for your children.  It will help you save on nannies.

 

Schedule your leave to match their holiday: scheduling your time-off-work to fall during your children’s holiday will ensure you are there to take care of them yourself. Apart from cutting out nanny costs, this will also enable you to manage your resources to last all through the holidays.

Help your children understand that the good things in life come at a cost and waste must be avoided. Teach them the art of saving this holiday.

 

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What to do if your child performs poorly at school

What to do if your child performs poorly at school

Every parent expects their child to come home with a good result after a school term. A good result assures them that their enormous investment in the child’s education is valued and likely to birth returns. However, this is not always the case. Parents sometimes must deal with their children’s unsatisfactory results. What is the best way to handle such occurrences? The tips below should help;

  1. Approach the situation with calm

Naturally, your first reaction would be to express your disappointment in the child. This might however not be the most productive thing to do. It may help not to respond immediately but give yourself time to relax and approach the situation from a place of calm. It will help you think things through.

  1. Focus on the positives

It is unlikely that the child would have failed at all his/her subjects. Consider the subjects with more encouraging grades and the comments from the teachers. It could be an indication of the child’s strengths and interests.

  1. Find out what went wrong

Not every bad result is a consequence of poor preparation, the child could have had challenges understanding the teacher, be finding it difficult to adapt to a new school or struggling with peer pressure. At other times, laziness and poor preparation are the culprits. Whichever way, identifying the problem area will help you find a fitting solution.

  1. Develop a practical plan

There is no doubt that the child needs help. Together, work out a practical plan that would help the child do better next term. Could be earlier nights to ensure alertness in class, a reading plan through the school term, a tutor for extra classes, a change of academic direction or even a change of school or living environment.

  1. Keep the communication line open

Do not wait till the next result season to discuss the child’s progress. Periodically check in with the child and tutors to ensure your plan is working. Follow up on their continous assesment tests and assure of your willingness to listen to their challenges and help them overcome it.

 

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30 and ready to Will it

30 and ready to Will it

I didn’t think I would come this far so soon. 10 years ago, I was just a starry-eyed girl, fresh from university looking for her place in the world. What is now my chain of stores began like child’s play. My first job was as a front desk executive at a consulting firm. Many of the well paid big girls in the office could not resist complementing my dress sense. They found it amazing that I could pull of magazine cover type of looks on my entry level salary. I knew all the hot spots for good clothes, the will to go the distance, good negotiation skills and an eye for combinations that work well. I soon became a personal shopper for most of the ladies in the office.

When I could no longer cope with the demand, I resigned and faced the business head long. Consulting for corporate fashion became my thing and I was soon a popular name at many organisations. Along the line, I picked up the habit of attaching little favours for my clients, alongside their purchases. It made a massive difference, the referrals poured in and soon, I was ordering fabric from Bangladesh and India, sending original designs to China and shipping in clothes in my label. The first store was a huge success, two stores quickly followed and now I have over 30 stores stocked with unique designs for the corporate woman, bearing my seal.

Of course, making and selling clothes is not all I have done in the past 10 years. I found love along the way and started a family not long after. Seemingly, the only thing not working in life is my relationship with my in-laws. They just cannot stand the sight of me. Traditional in their outlook and set in their ways, they cannot understand a wife that jets all over the world opening stores and gracing runways. They think their banker son deserves to come home to sumptuous food made by his wife every day. They think I am not prioritizing our two kids and that my wanderlust is the reason we do not yet have a son.

If only they knew that the glory days of bankers are over. That their son is not yet highly placed enough to earn the kind of money that can fund our current lifestyle. That the houses and cars are products of my country hopping. That the fat allowance they get every month often comes from me. Already I can hear the whispers, the prodding, he needs to get a younger wife that will stay at home to take care of him and bare him sons. At first, I was certain he would not budge, but his recent incessant complaints about my schedule is betraying the fact that he is beginning to succumb to their prodding. I would not be shocked if I return home one day to meet a yellow sisi in my kitchen, wearing the madam glow and feasting on my hard work. That’s why I could not wait, I had to take steps to secure my children and my assets.

First, I put my children’s education in a Trust, that way they will still get to attend the best schools, regardless of what happens. I am also considering estate planning. It’s time to put my house in order. Not many people think about getting a Will in their 30s but I have to. Given my situation, I can’t take chances, it’s time to Will it. I hope I live a long happy life, but if I don’t or if something happens to my marriage, I want it to be clear who owns what and who gets what. I also want my daughters to know they mean the world to me and they are the reason I work so hard.

I am not leaving this to chance, it’s time to be 100% sure.

Securing your assets for the ones you love is now really easy, sign up on our Easy Will portal to get a secure and valid Will online.

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World cup ready? Let’s confirm

World cup ready? Let’s confirm

So, it’s 8 days to the world cup, how ready are you?

We compiled a list of the five most essential things you need to have a fabulous time this world cup season. Check them out!

  • Evenings free; This is not the time to work long hours or have weekend duty. What to do? Report for work earlier than usual and maximize your mornings. No faffing or dulling, get to work in good time, do your work well so that you can leave on the dot of the closing time. If your boss is also interested in football, it should be an easy ride. If not, well, all you can do is try.

 

  • Data & Tv subscription; Don’t be that guy that waits till the morning after to glean match gist from his colleagues. Renew your cable subscription and keep your phone data-full. If you live really far from work, you might not need to subscribe for cable TV, what you can do is locate a decent& safe viewing center around your office.

 

  • Sure guys; There is nothing as disappointing as watching a great match all by yourself with no one to analyze the moves or celebrate the moments with. This is the time to connect with two or three of your favourite football buddies. Be open to making new buddies too, nothing unites like good football.

 

  • Settle Bae; Bae can stress you this season with constant complaints of how you are colonizing the TV remote and no longer have time for her. Perhaps you should buy her the hot new Nigeria jersey, and explain the match schedule to her- more like take a leave of absence. You can also buy her that book she’s been talking about or help her subscribe to a movie streaming application. P.S Think dialogue and compromise.

 

  • Money sense; If you look closely, you’ll observe that all the things listed above are going to cost you money. Yes, the world cup is likely to increase your expenditure. That’s why you need to wise up. Ensure you invest right before the spending spree starts. All you need to do is download the PayDay Investor app, follow the few and easy steps to complete your registration and start investing. That way you will have money kept aside, safe from the pressures of world cup spending and won’ t have a reason to sing ‘had I known’ later.

Finding it difficult to complete your registration? Please email [email protected] for prompt assistance.

We wish you a season of fantastic football.

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My dream wedding

My dream wedding

Typically, when do people start dreaming about the wedding of their dreams?

That moment when your heart stops as it realizes it has found permanent connection with this person and forever is a huge possibility? Perhaps the day after he pops the question, or she screams yes? Maybe much longer, before you even catch the glimpse of the one.

Your wedding is arguably the most capital-intensive party you will ever throw, the expenses are endless. Many have found themselves in an endless pit of unpayable debt all in a bid to get married in style. Others have emptied their accounts and started their new homes on shaky financial ground. Does it have to be that way though?

The average lady has a picture of her dream wedding way before wedding bells ring. The average man might not particularly have a clear picture, but he looks forward to this all-important event and hopes to be able to splurge to his heart’s content. Truth be told, there is no problem with dreaming. As a matter of fact, everyone deserves the wedding of their dreams and everyone can have the wedding of their dreams, if they plan for it.

So, when is the ideal time to start planning? Hmmm, what about right now?

Yes, you are still in school and your wedding is the least of your concerns. Now is the best time to start. You can invest as little as one thousand Naira weekly. Set a goal on your PayDay Investor app, and just forget about it. Imagine how much you would have seven years later when you are finally ready to marry, accrued interest & all? That would be the most pressure-free wedding ever.

Maybe you are many steps ahead, serving your fatherland or at your first job. Bae is still in hiding and you have more pressing needs. But you know what they say, love happens when you have other plans. You should consider the ARM Life savings plan. Just set a direct debit order to save five thousand Naira monthly and take your mind off it. With the sum assured and interest accrued, you will be more than prepared for your big day by the time your investment matures.

It could also be that you are way past the stages described and bae has not only put a ring on it, you already have a date, few months away. It’s not too late. The ARM Money Market Fund is perfect for short and medium-term goals. You could open one and start investing towards your Honey Moon and take that off your worry list.

And if your wedding already happened and you are recovering from the staggering expenses. Take a cue from experience and start preparing for expenses ahead. Babies are expensive, and the interesting part is, their expense is recurring, best to be prepared. Our Education Plan is definitely a step in the right direction if you are looking forward to blissful parenting.

Key takeout, whatever stage you are in life, plan well and the next stage would be significantly easier.

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Paying rent and housing inconveniences

Paying rent and housing inconveniences

The events from last week Saturday reminded me of why I want to get my own house.

“Ferix! Ferix!” The baritone voice of my annoying neighbour Okwudili boomed. I rubbed the sleep from my eyes, yawned and got up from the bed grudgingly. Nene, my wife opened her eyes in time to silently urge me out quickly before the man’s incessant shout wakes our 3-month-old daughter.

When I got to the door, I angrily drank in Okwudili’s stout frame clad in loose camouflage shorts and white vest struggling to break free of his protruding stomach. “Ferix, I’ve been calling you since. Abeg come and move ya car, I want to drive out” he said without a single care in the world.

“But I asked you to park inside yesterday evening and you said there was no need because you were not going anywhere today” I responded, now obviously livid.

“So, somebody cannot change his mind again? Please come and remove ya car let me go out” he spat out then turned and walked away.

“You need to stop this nonsense o Okwudili… and by the way, my name is Felix, not Ferix” I called out after him. He marched on like I hadn’t even spoken.

I was angry. No, scratch that. I was infuriated.

If it wasn’t somebody waking us up at unexpected hours, it was another playing loud music and disturbing the baby, not to mention those who leave the pumping machine on till the water runs over and floods the entire outdoor space. Just last month, my car had borne the brunt of Okwudili’s fight with Baba Feyi. After so much begging, I let the huge dent they left on my car slide.

Now, I’m fed up. Nene is as well, and she didn’t mince words when she made it known.

“Felix, you and I need a quick solution to this issue. It’s either we use the money we’ve been accumulating in our savings plan to get an apartment with just two tenants or we start building on that our land around Amuwo Odofin. If you’re not tired of this madness, my dear I am” she said. My wife Nene doesn’t talk much, so this long sentence drove home her point.

My dream

I have always wanted something small and fancy – just appropriate for my small family. I had dreamed of a bungalow in a serene vicinity with 4 rooms and enough outdoor space to accommodate our love for fitness.

Our kids loved to play as well, a spacious compound would be just ideal for them. This dream has, however, remained a dream for too long.

It was time to put actions behind the dream. I had started a savings plan for this purpose five years ago and it has reached maturity.

I picked up the phone and called my architect friend Dipo. The plan for the bungalow must start coming alive now because, by the end of next year (all things being equal), we need to be in our own home. It may be more responsibility, but I think I’m done paying rent and housing inconveniences.

 

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