Last week, NBS reported a soft GDP growth print of 1.5% y/y weaker than most analysts myself included expected. Main drag stemmed from oil which contracted and agriculture which grew at its slowest pace since 1987 and trade which remained in recession. Telecomms rose 11.5%
Telecomms GDP growth is strongly correlated with growth in subscriber numbers (~90%) and the key driver there was a jump in MTN subscribers (+25% y/y). If one holds the MTN number flat from June 2017, Telecomms GDP would likely have grown by 4.4% which puts Q2 2018 GDP at 0.8%
So when the CBN and the AGF start making unreasonable demands for immediate payment of $10bn from a key growth contributing non-oil company in Nigeria you wonder what is driving this kamikaze regulatory brinkmanship? CBN posture is quite irritating when you consider that in 2018
CBN incurred interest expense of N1.3tr ($3.7bn) on account of paying 19% on OMO issuances of N10-11trn. All in a bid to attract portfolio investors of $3.7b in fixed income and $3.6b in equities. If you think of it they bribed half of the FPI inflows to come into Nigeria in 2017
by offering insane interest rates. For comparison FDI flows into Nigeria stood at $982million. So CBN would rather pay the worst form of foreign capital high interest rates and proceed to treat sticky FDI capital with criminal suspicion over historical transactions.
High maintenance FPI we pay tribute to but treat the poster boy of Nigerian FDI success like he is a criminal over procedural issues from a decade ago. What message do we think we are sending to other FDI? Seems to be clear you are not wanted here only better buy our debt
The saga reminds me of a quote I heard this year: the Buhari govt is more interested in re-litigating the role of private enterprise/markets in the economy. It views profits as immoral and not the reward the risk. We will see the impact on the economy in the coming quarters.
