President Buhari gives go-ahead on flexible Naira

Faced with an economy nearing recession and inflation at the highest in almost six years, Nigerian President Muhammadu Buhari has backed down on his refusal to allow the naira to weaken.

Buhari has given the central bank the go-ahead to introduce a more flexible exchange-rate system even as he remains opposed to devaluation of the naira, said Garba Shehu, his spokesman.

“The president is opposed to devaluing the naira, he has said so repeatedly,” Shebu said in an interview on state-controlled NTA Television on Monday. “He has given them leeway to introduce what he has called ‘flexibility in managing’” the currency’s value, he said, referring to the central bank.

Buhari said at the weekend he supported a stable currency, though he would keep “a close look at how recent measures affect the naira and the economy.” The comments, made four days after the Central Bank of Nigeria said it planned to introduce a more flexible exchange-rate regime, left traders guessing whether he supported those measures.

“We see this as a welcome development as it will help reduce the uncertainties regarding the expected policy framework on foreign-exchange flexibility announced by the CBN governor last week,” analysts at Lagos-based Investment One said in an e-mailed note Tuesday. “We see the move towards a market-determined exchange rate from both fiscal and monetary authorities as a catalyst for increased economic activities.”

Nigeria has held the naira at 197-199 per dollar since March 2015, even as other oil exporters from Russia to Colombia and Malaysia let their currencies drop amid the slump in crude prices since mid-2014. Foreign reserves dwindled as the central bank of Africa’s largest oil producer defended the peg, while foreign investors, fearing a devaluation, sold Nigerian stocks and bonds.

Three-month non-deliverable naira forwards have weakened 35 naira to 285 per dollar since the central bank announced its change of direction, suggesting traders anticipate the currency may trade near that level in the event of a devaluation.

Central bank Governor Godwin Emefiele said on May 24 policy makers were considering a two-tier currency system, with the naira trading nearer a market-related level in the interbank market while the central bank would continue to allocate dollars to strategic industries at a fixed rate. He said the new system would be implemented “in the coming days.”

Bloomberg

Mobile data prices finally coming down in Nigeria

Africa’s mobile internet market has grown steadily over the last decade and new forecasts show mobile data revenue, will double over the five years to 2019—topping $22 billion. On the other hand, mobile voice revenue, though still significantly higher ($50 billion in 2014), will only grow by 10% in the same period. It means the continent’s telecoms operators will likely intensify efforts to grab more mobile data market share in coming months.

In Nigeria, the continent’s biggest mobile market, the race for more mobile internet users has already kicked off with a shift in telco marketing strategies away from voice minutes to data package offers. And with this has come a sharp drop in mobile data prices.

Nigeria’s internet usage numbers has grown rapidly in the last few years and is now pegged at 92 million, down by a few million owing to a recent sim card registration exercise that cut off unregistered users due to security concerns.

Over the course of the last month, the country’s leading mobile operators have announced cuts in mobile data prices. The price cuts were primarily made possible by the deregulation of the data prices by the Nigerian Communications Commission last October when the regulator announced a removal of a data floor price, leaving telcos to set prices as low as possible.

Once the regulators removed the artificial floor the Nigerian market was always likely to follow a similar trend seen in the United States and Europe with data eventually becoming a far valuable proposition for mobile operators than voice. But cheaper mobile data is likely to have a far more significant impact in a country with very low fixed line broadband internet penetration.

Once the regulators removed the artificial floor the Nigerian market was always likely to follow a similar trend seen in the United States and Europe with data eventually becoming a far valuable proposition for mobile operators than voice. But cheaper mobile data is likely to have a far more significant impact in a country with very low fixed line broadband internet penetration.

Nigeria is Facebook’s biggest African market and only Egypt registered more tweets than Nigeria in 2015. As a result of the popularity of these apps which offer both messaging and voice services, telcos have created specific plans for various OTT services “as a means to lure customers in and then up-sell them to full plans once they get hooked,” says Sanusi. Some have even offered special packages for Netflix users.

Amid falling prices, the strategy will not be any different. By making mobile data cheaper than it’s ever been, telcos are hoping to gain more users who might later upgrade to more expensive plans.

The hope is that the trend catches on in other African countries as a PwC report shows mobile data prices need to drop significantly as only 43% of the world can afford 500 megabytes per month.

In fact prices in Nigeria need to drop by 97% to become affordable for the majority of the country’s 180 million people. With the price for 500 MB of data in Nigeria falling 50% in the last month alone, it appears Africa’s biggest mobile market could be on its way to meeting that target.

Quartz

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Earlier this week, Nigeria's Central Bank said it would set up a more "flexible" exchange rate policy, but so far the details of how it will be implemented, are not clear. On Thursday, the Central Bank told currency traders to submit bids for dollars at the current, fixed rate of 197 Naira to the Dollar.