Q4 2020 Economic Outlook: Out of Reverse and into Second Gear

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Economic Outlook – Out of reverse and into second gear

Off the floor but no dramatic GDP rebound

The economy, while still contracting, picked itself up off the floor in Q3’20 due to the end of the domestic and external lockdowns, which have given a boost to the crude price. The benefits from the discovery of vaccines for Covid-19 will be felt with a lag in Nigeria.

The GDP contraction this year and the recovery next year will be subdued, as we have consistently warned, because of Nigeria’s limited global integration and the slow pace of policy reform.

Oil as ever the determinant of a modest recovery

This latest recession, like the last and its predecessors, can be traced to oil price softness (as well as the pandemic). For a successful exit, we must look for an oil price recovery because project diversification of the economy remains just that (a project). The FGN needs the tax revenue from oil to make the changes.

OPEC+’s relative discipline, the hit taken by the shale industry in the US and the positive news on vaccines all point to such a recovery. This will give authorities headroom within the 2020 budget as global demand for crude, led by Asia, gathers momentum, and will compensate for faltering collection of non-oil taxes.

Just enough to get by on FX

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Repetitive we regret but our view on FX policy and direction has not moved. The CBN’s plan is to make small FX rate adjustments once it has exhausted all administrative measures. This time around, foreign portfolio investors (FPIs) will not underpin the rate and shore up reserves. The rescue will come in the form of an oil price recovery and, the FGN trusts, the release of multilateral loans. The authorities should therefore be able to adhere to their plan.

Read Also:  Emerging Markets 2018 Economic Outlook

Bond yields to settle after declining

The doubling of the DMO’s domestic funding target to NGN1.6trn this year has not created a spike in yields. Rather, the CBN’s management of liquidity and use of its regulatory powers, as well as the shortage of investment alternatives for domestic institutions, have caused yields to tank: almost nothing now for NTBs and the yield for the FGN bond maturing in ’50 at half the rate of inflation.

At these levels of return and allowing for global macro and FX considerations, the FPIs have dropped the Nigeria credit story. They have decamped to Egypt and elsewhere. We see FGN bond yields in the mid-curve in a range of 4.0% to 5.0% over the next quarter.

Central economic indicators Year-end December
  2018a 2019a 2020f 2021f
Real growth (in per cent) 1.9 2.3 -2.5 1.8
CPI (in per cent; y/y Dec) 11.4 12.0 14.8 14.1
Monetary policy rate (%; year-end) 14.0 13.5 11.5 11.0
Current account/GDP (in per cent) 1.1 -4.3 -1.0 -1.1
Bonny Light (end-period spot; USD/b) 62 67 49 53
Bonny Light (average spot; USD/b) 73 65 42 51
Official FX reserves (in USD bn) 43 39 35 36
NGN/USD (NAFEX; end-period) 364 365 395 420
NGN/USD (NAFEX; average) 362 362 382 415

 

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DOWNLOAD THE FBNQUEST ECONOMIC OUTLOOK Q4 2020 HERE

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Q4 2020 Economic Outlook: Out of Reverse and into Second Gear - Brand SpurQ4 2020 Economic Outlook: Out of Reverse and into Second Gear - Brand Spur

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Q4 2020 Economic Outlook: Out of Reverse and into Second Gear - Brand SpurQ4 2020 Economic Outlook: Out of Reverse and into Second Gear - Brand Spur

Latest News

Securing Payments in Asia: Omise Integrates the EMV 3DS 2.2 Protocol Using Netcetera’s 3DS Server

Securing payments in Asia with latest 3-D Secure technology - Omise integrates the EMV(R) 3DS 2.2 protocol using Netcetera's 3DS Server

 

ZURICH, SWITZERLAND and SINGAPORE - EQS Newswire - 27 January 2021 - 

Securing payments in Asia with latest 3-D Secure technology
Omise integrates the EMV 3DS 2.2 protocol using Netcetera's 3DS Server


The Payment Service Provider Omise has implemented the Netcetera 3-D Secure Server to secure online payment transactions in the APAC region. Netcetera, a market leader for digital payment solutions, offers certified products for 3DS payment processing, and promotes secure and frictionless consumer authentication. With the go-live beginning of January 2021, Omise is among the first PSP customers to implement the latest EMV(R) 3DS 2.2 protocol, enabling them to increase the approval rates and reduce fraud.

PSPs, merchants and acquirers need to reduce the risk for non-authenticated transactions, associated refunds and lost revenue, while at the same time establishing a frictionless flow and improving the cardholder experience during online shopping. Finding the right balance of serving both security and convenience is a challenge.

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To successfully address this challenge, Omise decided to implement the network-certified and PCI-ready Netcetera 3-D Secure Server on premise solution. They are among the first PSPs to implement the 3DS server with the latest protocol EMV 3DS 2.2. Jatuporn Pinnuvat, Head of Product Innovation at Omise, says: "After a thorough evaluation and investigation of different suppliers and products, we decided on Netcetera with their flexible, agile and independent payment offering. We consider their 3DS server as the most reliable and viable product to support secure and convenient transactions. The implementation was smooth and efficient, and we were able to save a lot of time and effort thanks to the comprehensive technical documentation, educational webinars and Netcetera's professional support."


With their strong presence, providing service to thousands of merchants in the APAC region, Omise is a major player in the payment industry, and drives security and convenience of online payments together with Netcetera. Kiril Milev, Managing Director of Netcetera's location in Singapore, says: "We are convinced that we can bring value to the payment industry with our certified and state-of-the-art products, driving e-commerce payment forward. With this implementation at Omise, we are able to strengthen our presence in the APAC region". Ivan Ong, responsible for sales and business development in the area for Netcetera, adds: "We are committed to adapt our products to new regulations and protocols and are always among the first to be compliant. We are happy to count Omise among our customers, and as one of the first to implement our server with the latest 3DS 2.2 protocol."


Note:
EMV(R) is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.

About Netcetera

Netcetera is a global software company with cutting-edge IT products and individual digital solutions in the areas of secure digital payment, financial technologies, media, transport, healthcare and insurance. More than 2,000 banks and issuers, and 150,000 merchants rely on the digital payment solutions and globally certified 3-D Secure products of the market leader for payment security. The owner-managed company covers the entire IT lifecycle, from ideation and strategy to implementation and operation. The balanced combination of the latest technologies and proven standards ensures investment security, from large-scale projects to innovative start-ups. Founded in 1996, Netcetera is a holding company with 700 employees and is headquartered in Zurich, Switzerland, with additional locations across Europe, Asia and the Middle East.


Further information: netcetera.com

About Omise

Established in 2013, Omise is a payments platform which provides businesses with a modern end-to-end infrastructure to accept, process and disburse payments online. Working with Omise, merchants have access to powerful payment tools, comprehensive risk management solutions, as well as connection to card networks and consumers' preferred payment methods. Omise enables revenue growth and seamless payment experiences across online, in-store and in-app.


Omise is present in Thailand, Japan and Singapore. The company is the payments platform of choice for thousands of brands today.

Further information: omise.co

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