Here are three big stories from Africa’s business and policy landscape you (probably) didn’t miss but should keep in mind this week:
Nigeria Enacts 0.5% Cybersecurity Levy
Last week, the Central Bank of Nigeria (CBN) announced a new cybersecurity levy, impacting all electronic transactions. The levy applies broadly, to all commercial, merchant, non-interest, and payment service banks, among other financial institutions operating within Nigeria. These institutions are tasked with collecting the 0.5% levy directly at the point where electronic transfers are initiated. Transparency is ensured as the deducted amount will be clearly labeled “Cybersecurity Levy” in the customer’s account statement.
The legal foundation for this levy lies in the recently enacted Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024. Specifically, Section 44 (2)(a) of the Act mandates that businesses listed in the Second Schedule contribute 0.5% (0.005) of the value of all electronic transactions to the National Cybersecurity Fund (NCF). Financial institutions must begin deducting the levy within two weeks of the announcement. Following this initial period, these institutions are obligated to send the accumulated levies in bulk to a dedicated National Cybersecurity Fund account maintained at the CBN by the 5th business day of every subsequent month.
Naira becomes worst performing currency
Once again, Nigeria’s naira is experiencing a dramatic decline. A new Bloomberg report revealed that the Naira ranked as the world’s worst-performing currency over the past month. The naira’s value has dipped to its weakest point since March 2024, reaching 1,466.31 against the US dollar. The naira’s decline transcends the official market. The unofficial market also witnessed a decline, with the naira falling 0.9% to 1,468 against the dollar on Friday. Last week, the official market closed the week to trade at ₦1,400.40 per dollar, reflecting a 0.83% decrease compared to the previous close of N1,390.96 in April.
Just a month ago, CBN Governor Yemi Cardoso was praising the Naira as the world’s best performer, attributing its success to a series of foreign exchange reforms and positive investor sentiment. The Naira’s appreciated against the dollar on the parallel market to trade at N1000/$, for the first time since September 26, 2023. However, the recent depreciation is attributed to a significant shortage of US currency in the local market. On Thursday, the 9th of May, dollar supply dropped to only $84 million, half of the previous day’s level. Data from FMDQ revealed a fluctuating market, with the intraday high hitting ₦1,465, a stark contrast to Wednesday’s N1,440. Similarly, the intraday low saw a marginal depreciation of ₦1,351, down from ₦1,335.
According to Standard Chartered’s Chief Economist for Africa and the Middle East, Razia Khan suggests that the upcoming maturity of $1.3 billion in naira futures contracts at the end of the month might further dampen market confidence. This could lead to increased demand for dollars as investors seek to close out their positions. Meanwhile, Nigeria is not alone in its currency struggles. Two other African nations, Zambia and Ghana, are also experiencing significant currency depreciation. Both countries are currently grappling with debt restructuring processes, further complicating their economic situations.
Egypt’s debt has increased by $3.5 billion in three months
A report by the Central Bank of Egypt has revealed a concerning trend in Eygpt’s external debt. In the three months leading to December 2023, Egypt’s foreign debt surged by $3.5 billion, reaching a total of $168 billion. This represents a significant increase from $164.5 billion at the end of September and $162.9 billion at the end of December 2022. Approximately 82.5% is classified as long-term debt, providing some stability. However, the total debt now represents a substantial 43% of Egypt’s Gross Domestic Product (GDP), raising concerns about the country’s ability to manage its financial obligations.
Since 2015, the country has quadrupled its external debt, relying on these funds to finance ambitious projects like a new capital city, infrastructure development, military acquisitions, and currency support. For example, due to the Ukraine crisis, there was a shortage of foreign currency in Egypt and an exodus of foreign investors. In response to the crisis, Egypt allowed its currency to depreciate by over 35%. This devaluation was aimed at making Egyptian exports more competitive and potentially paving the way for further IMF loans. Last year, the IMF approved a significant increase in its loan program for Egypt. The initial $3 billion Extended Fund Facility arrangement, established in December 2022, received a $5 billion augmentation, bringing the total support to $8 billion.
ICYMI: Market roundup
- Nigeria’s equities market went downwards over a 5-day trading week, with the NGX All-Share Index depreciating by 1.36% to close at 98,233.76 points. The top gainers were TantalizersTantalizer Plc. (27.78%), FTN Cocoa Processors Plc. (20.00%), Presco Plc (15.31%), May and Baker Nigeria Plc (15.00%), and The Initiates Plc (15.00%). The top decliners were P Z Cussons Nigeria plc (-26.97%), Mcnichols plc (-20.18%), Secure Eletronic Technology Plc (-16.95%), International Brewries plc, (-15.27%), and Axamansard Insurance Plc. (-12.90%).
- The naira closed the week at ₦1466.31/$1 on Friday at the investor’s and Exporters’ window.
- Brent crude closed the week at $82.79 while US West Texas Intermediate (WTI) crude closed at $78.17.
- The global cryptocurrency market cap stood at $ 2.23 trillion, as of 7 am Monday, the 13th of May. Bitcoin stood at $60,924.16, a 5.05%, decrease over the week, Ethereum decreased by 8.99% to trade at $2,882.48 and Binance coin also decreased by 0.99% over the week, to trade at $588.27
- Last week, Nigerian startup SEAMFIX, a global digital identity solutions provider, secured $4.5 million from Alitheia IDF in a private equity funding round.
- Egypt-based fintech Swypex announced its launch following a $4 million seed investment round, led by the renowned venture capital fund Accel, with participation from Foundation Ventures, The Raba Partnership, and angel investors.
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