West Africa in Focus /

IMF’s optimism for Nigeria amid global economic strain

  • IMF's revised economic outlook and a recent article IV show optimism for Nigeria and Cote d'Ivoire

  • Despite low investor interest, the Nigerian exchange launches West Africa's first exchange-traded derivatives market

  • Just like Nigeria, Ghana is dealing with power outages... and authorities think that it could get worse

IMF’s optimism for Nigeria amid global economic strain
Janet Ogabi
Janet Ogabi

Senior Research Analyst

Tellimer Research
21 April 2022
Published byTellimer Research

The IMF's latest World Economic Outlook downgrades global growth but raises the forecasts for some Sub-Saharan Africa countries – including Nigeria. Similarly, a recently published Article IV by IMF staff to Cote d'Ivoire highlights the upside potential that higher oil prices offer the West African economy.

Ghana has joined Nigeria in facing power problems. Although not yet severe, authorities warn that it could worsen. We also discuss Nigerian banks' struggles to hold onto tech talent and the region's first exchange-traded derivatives market.

NGX launches West Africa's first exchange-traded derivatives market

Nigeria's stock exchange (NGX) launched the first exchange-traded derivatives (ETDs) market in West Africa on 14 April. This aims to improve liquidity and increase the exchange's market capitalisation, and is also in line with the objectives in the 10-year Nigerian Capital Market Masterplan (updated plan expected in 2022). The ETDs market launch kicks off with the approval of seven derivative contracts, two of which have debuted on the NGX – NGX Pension Index Futures and NGX 30 Index Futures. The five others are single stock futures.

The Nigeria exchange remains unattractive to foreign investors due to persisting FX issues. However, in the long term, the launch of the ETDs market should improve the depth and competitiveness of the capital market.

ETDs could improve depth and competitiveness of Nigeria's capital market

Why Nigerian banks are struggling with tech talent

Bank executives in Nigeria are complaining to the media about a mass exodus of their top tech talents. In the past few years, the rate at which young Nigerians are leaving the country seems to be on the rise, driven by the gloomy domestic economic conditions and facilitated by slightly more accommodating immigration policies in countries such as Canada, the UK and UAE.  

Traditional banks are further challenged by fintechs, which can offer higher compensation (from increased investment inflows) and typically promise a better work culture. This is particularly worrisome considering the increasing focus on digitisation and E-banking by banks to expand profit margins.

Exposure of Nigerian banks to E-banking

Cote d’Ivoire: The resilient one

The IMF recently completed its 2022 Article IV Mission to Cote d’Ivoire. The conclusion of the mission is in line with our observation in November 2021 that Cote d'Ivoire is weathering the pandemic well with solid fundamentals. However, the IMF notes that downside risks are high and mainly external – Russia's war in Ukraine, tighter monetary policy in developed markets and instability in some west African states. On the flip side, recent oil and gas discovery and implementation of the 2021-25 National Development plan offer upside potential.

Want to learn more about the IMF's views on emerging markets? Our annual IMF spring meetings are currently ongoing. Click here to request a meeting (Please note that attendance is dependent on your Tellimer subscription).

Power outages in Ghana could get worse

Nigeria is not alone in facing power problems. In recent weeks Ghana has also been suffering power outages. According to the authorities, the outages have been due to rainstorms and ongoing technical work by Ghana Grid Company (GRIDCO). However, there have been counter-claims that the real reason is due to power rationing (known locally as 'Dumsor'). As Ghana enters its rainy season, authorities warn of a possible increase in outages. Ironically, Nigeria's outages have been partly due to the low rainfall during the dry season.

The IMF is more optimistic about Nigeria's growth

In the IMF's World Economic Outlook report published this week, the Fund actually raised some 2022 GDP growth estimates for African countries – including Nigeria. The surprising upward revision for Nigeria from 2.7% to 3.4% is based on perceived improved prospects due to higher oil prices.

But we think that a higher oil price is a mixture of good and bad for Nigeria. Increased subsidy spending and higher energy costs are likely to impede overall productivity, although higher foreign exchange earnings are a positive.

Nigeria's real GDP growth (%yoy)

 Our latest West Africa research

  • The Central Bank of Nigeria has granted the largest telco in the country, MTN Nigeria, final approval to operate a Payment Service Bank (PSB), five months after approval-in-principle was granted to the company along with Airtel Nigeria. We examine MTNN’s competitive advantage and the possible impact on valuation.

  • IMF's global GDP growth forecast for 2022 cut by 80bp to 3.6%, versus Jan 2022, due to fallout from Russia-Ukraine War. We chart the biggest changes in growth, inflation, fiscal and current account deficits in emerging markets.

Upcoming events

Tellimer annual IMF Spring meetings (Cameroon and Cote d'Ivoire) – 25-26 April

We are hosting a series of bilateral calls with IMF teams and governments in our traditional markets. Some of the West African markets include Cameroon and Cote d'Ivoire. You can see a complete list of available meetings here – though we may expand this list subject to demand and availability. Please note that attendance will be dependent on your Tellimer subscription.

Also, watch out for our team's post-meeting review and comments.

African Private Equity and Venture Capital Association (AVCA) conference – 25 April

Venture capital is becoming an increasingly important investment class in Africa, as local and international capital pours into the emerging digital economy. The African Private Equity and Venture Capital Association will be having its annual conference to discuss the investment landscape in Africa.

Tellimer's West Africa Equities Coverage


Nigeria’s stock market delivered another week of gains as the all-share index recorded a 1.6% uptick (vs 1.3% the previous week). This streak of positive performance can be attributed to the reinvestment of dividend payments. Elsewhere, speculators are also taking positions as the market awaits Q1 financial results.

The outlook for Nigerian equities is unchanged: FX restrictions will keep Nigeria off-limits to fresh capital from foreign investors, while locals will dominate. In addition, several factors point to increased domestic yields as we move towards H2, which might put a dampener on local participation in equities. However, there are opportunities as highlighted in our stock recommendations above.

Market indicators

Nigeria's yield curve (%)

Ghana's yield curve (%)