IMF: Nigeria Is on the Right Track But There’s Still Work to Do
Investment Research Weekly Market Commentary | Jul 7, 2025
Welcome to this week’s edition of our stock market newsletter!
Green White Green Recap
Macro Update
IMF: Nigeria Is on the Right Track But There’s Still Work to Do
The International Monetary Fund (IMF) now expects Nigeria’s economy to grow by 3.4% in 2025, slightly above its earlier estimate of 3.0%. This optimism is driven by higher oil production, domestic refining of petroleum products and the resilient performance of the services sector.
To control inflation, the IMF backed the CBN’s tight monetary policy and noted that it must offer savers a return higher than the inflation rate (positive real interest rates). The 364-day Treasury bill now yields 25.23%, nearly matching the inflation rate.
On public finances, the IMF called for a neutral fiscal stance urging the government to spend only what it earns. With oil prices still below budget assumptions and debt service costs rising, fiscal discipline is now more important than ever.
Finally, the IMF noted that Nigeria needs more growth to impact lives, and must protect vulnerable households through better-targeted social spending.
Key Takeaway:
The IMF says that the CBN is on the right track in fighting inflation, the FG needs more fiscal discipline and the economy must grow faster to improve the well-being of Nigerians
FX Update
Naira Gains Ground, But the Pressure Isn’t Over
This week, the naira appreciated 1.2% to ₦1,525/$ from ₦1,544/$, reaching its strongest level since early February. In the parallel market, the naira gained 1.0% to ₦1,565/$ from ₦1,580/$. So far in 2025, the naira and reserves have been under pressure and Q1 2025 external sector (trade with other countries) data from the CBN shows why. For context, Nigeria’s external reserves fell from $40.92 billion in January to $37.4 billion at the end of June, a drop of $3.5 billion in six months. The decline in the reserves can be attributed to foreign investors exiting Nigeria due to rising global risks and the repayment of loan obligations. In Q1 alone, over $9.35 billion left the country through portfolio investment withdrawals ($5.03bn) and other investment outflows ($4.32bn).
Key Takeaway:
The naira is stronger this week, but sustained capital flight and weak reserves show the battle isn’t over. Gains will only hold if backed by stronger exports and FX inflows.
Remember to save dollar-based goals in dollars, which can be done with apps like Ladda.
Equities Update
Market Wrap: Insurance and Consumer Goods Lead Weekly Gains
The NGX All‑Share Index climbed by 0.83% last week, closing at 120,989.66. This movement was powered largely by investor interest in the Insurance and Consumer Goods sectors. Market momentum strengthened overall, with weekly trading volume increasing to 4.8 billion shares, up from 3.7 billion the week before.
Sector Performance (Weekly):
Insurance: +5.86%
The best-performing sector of the week. Big gains from International Energy Insurance and Mutual Benefits Assurance drove the rally.Consumer Goods: +4.08%
Strong buying interest in Champion Breweries, Cadbury, Unilever, and others boosted the sector.Oil & Gas: +0.77%
Modest gains. Still trading cautiously amid oil market volatility.Banking: +0.12%
Little movement. Investors appear to be waiting on earnings season and regulatory clarity.Industrial Goods: –2.11%
The only sector to decline, pressured by losses in Dangote Cement and Lafarge Africa.
Key Takeaways:
Insurance is leading the market, posting the strongest weekly performance.
Consumer Goods stocks remain resilient, attracting consistent interest despite broader market caution.
Trading activity is picking up, suggesting broader investor engagement.
Banking paused, likely due to investor wait-and-see stance.
Industrial Goods dipped, creating potential bargain opportunities for long-term investors.
Fixed Income Update
Yields Fall as Demand for Government Securities Grows
Yields across Nigeria’s fixed-income market dropped this week as more investors moved into treasury bills and bonds. This rising demand should allow the government to borrow at lower rates.
Treasury Bills:
Yields declined across all tenors this week, indicating renewed demand for short-term government securities:
90-day T-Bill: increased from 18.35% to 18.60%
180-day T-Bill: Dropped from 20.59% to 20.36%
364-day T-Bill: increased from 21.93% to 25.23%
FGN Bonds:
The benchmark 10‑year FGN bond yield declined from 18.23% last week to 17.20% this week, reflecting heightened demand for long-term sovereign debt.
Key Takeaway:
Yields are falling across the board as investors continue to show strong interest in fixed-income assets.
You can invest in treasury bills to save for your short-term goal on rent, schools, fees, etc. through Ladda—a fintech app that helps you save at high returns.
For long-term goals, naira-denominated fixed income instruments are not suitable due to inflation and currency risks .
Star-Spangled Banner Recap
Trump’s New Law Reshapes US Fiscal Policy and Market Sentiment
President Trump has signed a major law combining tax cuts, increased spending, and new trade powers. Called the “One Big Beautiful Bill,” it makes the 2017 tax cuts permanent for companies and high earners.
The law boosts spending on the military, border control, and police but cuts healthcare programmes like Medicaid. It also gives the president more power to impose tariffs, raising concerns over future trade disruptions.
While businesses welcomed the tax clarity, investors worry about how much the US will need to borrow to fund it all. These concerns led to rising interest rates as the 30-year treasury yield hit 5.15%, the highest in over a decade.
On a positive note, theUS economy remains strong as it added. 147,000 jobs, unemployment dropped to 4.1% and wages rose by 3.7% from last year. However, much of the hiring came from the public sector, not private businesses.
Markets responded positively to the strong job numbers and tax clarity.
Major Stock Market Performance:
The S&P 500 gained +1.69% this week, closing at a record high of 6,279.35, with a year-to-date return of +7.50%, including dividends.
Nasdaq (US): Rose +1.6%, helped by tech stocks; year-to-date +17.3%
Dow Jones (US): Up +2.3%, boosted by banks and industrials; year-to-date +7.9%
FTSE 100 (UK): Gained +0.4%, a quiet but positive week; year-to-date +6.7%
Nikkei 225 (Japan): Fell –0.6%, still struggling with weak demand; year-to-date –7.5%
MSCI World Index: Rose +1.3%, bringing total return this year to +4.6%
Key Takeaways:
Trump’s new law gave markets some confidence with tax clarity, but raised fresh worries about US debt and inflation.
However, the US economy remains strong as unemployment fell in June, thus supporting the performance in stocks
Investors remain optimistic about the US economy but worry about the poor health of US government finances.
Remember to always save for your dollar goals in dollars. You can do this with us on Ladda—a fintech app that helps you save at high returns.
We hope you find this edition insightful, and as always, stay focused on your financial goals!
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