Macro Analysis /

Nigeria: Key sector trends for 2022

  • In this 21-page slidepack, we summarise our views on trends in Nigeria's key sectors for 2022

  • The elephant in the room remains FX – key factor for the country's economic growth and development

  • Our top stock picks for 2022 are Zenith (high dividend yield), MTNN (market leadership) and Seplat (ANOH project)

Nigeria: Key sector trends for 2022
Janet Ogunkoya
Janet Ogunkoya

Senior Research Analyst

Ayobami Omole
Busola Jeje
Tellimer Research
11 November 2021
Published by

In this 21-page slidepack, available to Tellimer Insights Pro clients, we summarise our views on the most important trends in the Nigerian economy for 2022, by sector. The elephant in the room remains the FX situation – key for the country's economic growth and development. Click on the "Download full report" button below to access the slidepack.

Our top stock picks

Our top stock picks for 2022 are Zenith (for its high dividend yield), MTNN (market leadership and population coverage) and Seplat (ANOH project). 

Banking sector: Neither the best nor the worst of times

Key trends to watch in 2022:

  • NIMs will remain under pressure: Although banks are currently repricing their loan rates upwards, special bills will continue to drag on asset yields.

  • Moderate improvement in profitability: This will be driven by increased loan growth, e-banking fees and lower costs as inflation decelerates.  

  • Retail banking drive: Nigerian banks will continue to pursue retail and digital banking through investment in technology and growing agency networks.

  • Alternative sources of growth: Nigeria banks are looking towards the rest of Africa for growth and are embracing holding company structures to tap into non-banking businesses.

  • Basel III: The new regulation comes with more stringent capital, leverage and liquidity requirements. FBNH and tier 2 lenders (ex. Stanbic) are more exposed.

Telecoms sector: An evolving landscape

Key trends to watch in 2022:

  • MTN’s stake sale: The stake sale should provide much needed liquidity for MTN Nigeria on the Nigeria stock exchange, driving fair value realisation.

  • PSB licences: The CBN has granted approval in principle for payment service bank licences for MTNN and Airtel Africa. The licenses will allow the telcos to operate PSBs across the country. Our blue-sky valuation show upside potential for MTNN.

  • 5G licence auction: The NCC is preparing to auction 5G spectrum (3.5Ghz) to the MNOs at $197.4mn.

Cement sector: A tale of resilience

Key trends to watch in 2022:

  • Growing volumes: Volume growth across the board to meet rising domestic and export market demand.

  • Increasing exports: Dangote is taking the lead on exports with an aggressive strategy to neighbouring countries. As Nigeria's cement players increase capacity (especially Dangote and BUA), we expect a full resumption of exports.

  • Cement players cave in to cost pressures: Cement firms finally caved into cost pressures with a c20% increase in July. As supply increases, it remains to be seen what could pan out in 2022.

  • Sustainable production: There is more talk around curbing CO2 emissions. Lafarge has been more aggressive with capex in this regard, increasing AF use in kilns.

Dangote Refinery: A game-changer in 2022

  • Nigeria has 0% operating refinery capacity: Nigeria has four oil refineries with a total capacity of 420,000 barrels/day. None of these have been operational since 2019, despite billions of US$ being approved for revamping them.

  • Dangote Refinery is a more likely game-changer: The 650kbpd Dangote facility will save Nigeria FX and could reduce subsidy costs; the benefits outweigh the risks.

  • Ease external balance pressure: As Dangote Refinery comes on board in 2022 (although it will not be surprising to see another postponement of the project), it paves way for the removal of subsidies and eases external balance pressures.

Download the report for the 21-page slidepack.