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Nigeria shuts down Lagos, FCT and Ogun for 14 days to curb Covid-19 spread

  • 111 total confirmed cases of coronavirus in Nigeria; 68 in Lagos, 23 in Federal Capital Territory (FCT) and 1 in Ogun

  • Essential services and food manufacturing exempt from lockdown - positive for consumers

  • Lockdown expected to increase use of digital payment channels – positive for banks

Nigeria shuts down Lagos, FCT and Ogun for 14 days to curb Covid-19 spread
Nkemdilim Nwadialor
Nkemdilim Nwadialor

Equity Research Analyst, Financials

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Tellimer Research
30 March 2020
Published byTellimer Research

President Muhammadu Buhari declared a shutdown of business, economic and social activities in Lagos, the Federal Capital Territory (FCT) and Ogun during his national broadcast on Sunday. The restriction aimed at curbing the spread of the coronavirus in these states, which account for 83% of all 111 confirmed cases in the country (according to the NCDC), is expected to last 14 days and will take effect from today at 11 pm.

Essential services like hospitals (including clinics and pharmacies), and healthcare-related manufacturing and distribution are exempt from this shutdown. Other commercial establishments that are exempted (albeit with restrictions on activities and movement) include:

  1. Food processing, distribution and retail companies
  2. Petroleum distribution and retail entities 
  3. Power generation, transmission and distribution companies 
  4. Private security companies 

Interestingly, although telecommunication companies and the media are not exempt, they were issued a caveat that allows for staff movement where they can prove that they are unable to work from home.

Implications on banks

Banking is not considered as essential services and will be closed during the lockdown (some bank branches have already been closed after customers tested positive for Covid-19). However, Buhari's address did not mention any changes to banking fees and charges, which we think is due to the adjusted banking fees already made in December 2019 that saw lower transfer charges grouped into different slabs (Table 1 below). 


During this lockdown, we expect to see a significant uptick in the use of digital and other alternative payment channels, which would be positive for banks, especially those banks whose fee and commission in FY 19 accounted for c20% of non-interest income. This includes most of the banks we cover like Access, UBA, GTB, Fidelity, Stanbic and Zenith. As another example, local fintech leader Paga has already adjusted its fees via payment and transfer waivers, aimed at reducing cash usage in Nigeria. See also our latest report on The future of payments: Could Covid-19 end cash’s reign?


Nigerian banks non-interest income split

Source: Company accounts, Tellimer Research. Sample based on Access, UBA, GTB, Fidelity, Stanbic, Zenith

Meanwhile, we expect all consumer companies (except liquor companies like Nigerian breweries and International Breweries), to be allowed to operate during this period, as they all have food manufacturing or processing functions. This could also prove to be positive for consumer companies like Nestle, Unilever and Flour mills as we see households stock up on food and other consumer staples in preparation for the lockdown.