Being an Analyst Note issued by Proshare Research on October 17th, 2022

Discovery of More Illegal Pipelines Validates Proshare's Oil Theft Report 

Barely a week into discovering a 4km illegal pipeline attached to the Trans-Forcados Export Trunk Line, Tantita Security Services Nigeria Limited (TSSNL) has found yet another illegal pipeline attached to the Shell-operated Trans-Forcados pipeline connecting directly to the sea in Delta state. TSSNL reported that the oil thefts connect their pipeline to the trunk line through a pipeline abandoned by Nigerian Agip Oil Company (NAOC) which links to an offshore facility where crude is loaded into vessels and exported illegally. Proshare's report, #TheAnatomyofCrudeOilTheft, had highlighted many illegal tapping points along the country's major pipelines. 

Analysts advocated the need to cut off these points and increase real-time surveillance. Howbeit, with the new discovery and the associated details, The report writers noted that the pipeline operators and security officials should be held accountable for illegal tapping activities, and sanctions should be swift, precise, and public.

Lagos State's newly established Wealth Fund would enhance State's Growth Potential

At the official launch of Lagos state's 30-year development plan, Lagos state governor Babajide Sanwo-Olu disclosed that he had signed the Lagos State Wealth Fund (LSWF) Bill. The Governor noted that by its recent action, the state intends to toe the path of fiscally autonomous States and Provinces in countries such as Singapore and Canada. Analysts note that the LSWF would prove critical to the state's future development as it would help wean Lagos State off federal allocations and smoothen its infrastructural spending. Analysts argue that the LSWF would enhance the long-term growth potentials of the state.

Meanwhile, the launch of the state's development plan coincided with the release of the 2021 Internally Generated Revenue (IGR) data for sub nationals by the National Bureau of Statistics (NBS). According to the data, Lagos state expectedly outperformed all other states in generating revenue internally in the 2021 fiscal year. Available data shows that Lagos state generated a total of N753bn in 2021, while in a distant second place was the FCT with an IGR of N131bn (see table 1 below).

Table 1: Top Ten States in terms of IGR (2021)

Problems of the Egg Industry Pose Threat to Mental Health and Productivity of Nigerians

World egg day is usually celebrated on the second Friday of every October. In Nigeria, the cost of producing eggs has forced many farmers out of production. Maize and Soya prices have increased especially in the past 2 years, increasing feed costs. The higher exchange rate has also made accessing micro ingredients used to formulate feeds challenging, posing the threat that Nigerians might have to pay more to buy eggs. While Nigeria is the highest producer of eggs in Africa, its production has not met demand. 

Lower purchasing power has served as a factor affecting demand as egg producers claim that despite the growth in the sector, they've also witnessed reduced demand as people turn to cheaper foods. It was recently noted that feed quality for chicken has fallen while prices have increased. With the reduced quality of eggs and the pivot from eggs to other meals by consumers, mental health problems come to the fore since studies have shown that eggs provide nutrients that affect moods and prevent depression. 

Equity Market turns Bullish as NGX Records Week-on-Week (W-o-W) Gain

The Equity Market recorded a N118.52bn gain Week-on-Week (WoW), closing the week with a +0.46% gain as against a 3.41% loss recorded the previous week. Despite rising inflation, political tension, and foreign exchange challenges, the Nigerian stock market closed positive with major buy interest registered across sectors, twelve (12) sectors closed the week positive, three (3) sectors closed negative, and two (2) sectors closed flat. Although the stock market opened for four trading days last week as the Federal Government declared Monday a public holiday to commemorate 2022 Eid-el-Maulud celebration, trading activities were mixed, as trading volume declined by 16.2% WoW while value traded increased by 34.9% wow, however, it was enough for the NGX's stock market to end its five (5) week bearish trend. Analysts expect mixed investor reaction as profit-taking continues in the market (see table 2 below).

Table 2: NGX Top Gainers Week-on-Week

ITU Sets Agenda for Rural Connectivity in Nigeria 

The International Telecommunications Union (ITU), an agency of the United Nations (U.N.) for information and communication technology (ICT) sector, responsible for global telecoms regulation, has said its working with the Nigeria Ministry of Communications and Digital Economy to ensure that every rural area in Nigeria has internet access, especially for rural women that are producing most of the food consumed. Doreen Bogdan-Martin, the secretary general of ITU disclosed that only 50% of the rural communities in Africa have internet access. There are discoveries that rural women produce 70% of African foods but only 34% of them use the internet. Analysts believe that modern agriculture technology would boost agricultural productivity (monitoring crops, weather forecasting, etc.) and increase employment opportunities.

FGN Mulls Special FX Window for Manufacturers

At the Manufacturers Association of Nigeria Export Promotion Group's Annual General Conference last Thursday, the Minister of Trade and Investment, Mr. Niyi Adebayo, hinted that the Federal Government (FGN) would begin steps towards creating a separate and special foreign exchange window for export manufacturers. The Minister responded to the manufacturer's plea for access to forex through a special window instead of operators visiting the parallel market to source FX. The manufacturers lamented that the acute FX scarcity had made the cost of production more costly as they source forex from the parallel market which is currently trading above N700/USD. However, a separate exchange window for manufacturers should not be the solution, as the I&E FX window already exists. The country currently has four exchange windows, with arbitrators taking advantage of the disparity. Analysts believe the Federal Government should be working towards a single exchange rate to encourage capital inflows as the World Bank and IMF advised. 

The US takes Drastic Actions against China as Trade Battles Escalate

The Biden administration unveiled a comprehensive strategy last week to move the USA forward and match China in producing advanced semiconductors, virtually eliminating China's semi-conductor industry overnight, escalating the high-tech battle with Beijing. USA citizens working in Chinese firms were put in a position of choosing between their citizenship as USA citizens or their job. Analysts believe that this step by the U.S. will have a devastating effect on the Chinese Tech Industry due to the outflow of human capital and could lead to a reduction in Chinese tech products in global markets. 

The Lazarus Group Steps Up its Game in Japan

Following a report released by the Japanese authorities, the notorious North Korean Lazarus group has begun to attack cryptocurrency exchange platforms in the region. Several crypto employees in the country have noted the national police agency about phishing emails from the Lazarus group, luring them to install malware that would allow the criminal actor to breach their computers and steal crypto assets. Like other countries seeking to establish control over the crypto marketplace, the Japanese federation is also in the lane of regulation as it considers requiring crypto exchanges to give information about their activities and freezing assets of sanctioned firms.

Over the past trading sessions, the cryptocurrency market has traded in a narrow band, with cryptocoins facing selling pressure mostly in the future markets. Bitcoin has steadily approached the US$18,000 support level. Due to the recent downsides, investors are largely confused about the direction of bitcoin, with the market sentiment reflecting an extreme fear over the past day and last month. However, Bitcoin increased slightly by +0.50% from US$19,118.19 to US$19,271.61. Recent data shows that 16,428 traders have been liquidated, with the largest single liquidation order occurring on Bybit-BTC-USDT valued at US$812.62k (see chart 1 below).

Chart 1: Crypto Fear and Greed Index