#Nigeria FX reserves have been falling off since July. As foreign capital has flowed out over August the CBN has had to actively intervene to keep the NGN in line. We already had a 'queue' issue' which CBN penned as an administrative issue. Is this a convenient coincidence? Fundamentally despite a pickup in oil at year start, Nigeria swung into a CA deficit of over $1bn. Although some is shifting parts but our services deficit has surged again as the $ illusion is back and we are seeing ourselves as Americans again.

Access and Diamond held a call today to discuss their combination and let's just say there are several angry minorities in both camps though one senses more on the Diamond side. Diamond dropped the bomb that they will be taking additional loan write-downs of btw 150-180b What was strange was the excuse Uzoma put up. He says Diamond began IFRS 9 implementation and found the extra bad eggs just barely a month after filing their 9M 2018 results. If that is indeed the case the 0.3x book Access got could be more expensive once we adjust for the NPL

According to Nigeria's infrastructure masterplan we need to raise infrastructure stock to GDP from 25% of GDP to around 70%. Big EMs like India, China and gulf petro states were doing anywhere between 5-10% of GDP per annum. Last year helped by record borrowings we did 1.3% I admire BRF and he is clearly in campaign mode but NO the FG cannot fund infrastructure in Nigeria. Last year's 1.3% came after pushing debt/GDP by 200bps to 16% at a high cost. nearly 70% debt service to revenue. The FG balance sheet simply cannot take us from 1-5% of GDP

#Nigeria the Budget Office put out 2017 fiscal accounts which showed that FY deficit came in at NGN3.8tr (3.3% of nom GDP) and above the 3% fiscal responsibility act. As usual revenues missed thanks to usual over-optimistic non-oil rev assumptions and higher JV payments But interestingly, capex spending came in a record NGN1.44tr (1.3% of GDP and around 66% of target) with overall budget execution at 87% suggesting some credibility in implementation despite the costs driven by higher drawdowns by Works, Power and Housing

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%

CBN seems to have boxed itself into a corner. Inflation at 11.4% is below long run level of 12%. FX: you have the reserves to deal with anything even better you've converged most segments (NIFEX closed today at N349/$) GDP Growth is weak, credit growth even weaker what to do? Cut MPR? Na we need to impress some people who interpret our policy position via MPR when in actual fact we have cut real policy rate (OMO) down to 12.15% from 18-22% in 2017. But banks are not lending? Try interventions? Banks are bogged down with IFRS 9, low CAR and NPL issues