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Nigerian banks make a mint from a crisis

Oil prices and currency controls created opportunities for some banks, which reported bumper gains from FX and fixed income last year, but no one is expecting a repeat of that. Can lending keep them sweet?

By Rachel Savage


Nigeria’s economy is hooked on the oil that oozes from beneath the soil and creeks of its southern Delta region.

The oil and gas sector accounts for more than 90% of exports and, until 2014, contributed around 80% of government revenues. So it was to be expected that west Africa’s most populous nation would struggle when the oil price fell from above $110 a barrel in 2014 to as low as $29 at the start of 2016.

The crisis was made worse by the Central Bank of Nigeria’s (CBN) currency controls; in early 2017, these resulted in naira being traded on the black market for dollars at a rate that was 70% weaker than the official one.

The economy shrank for five consecutive quarters from the beginning of 2016, marking Nigeria’s first recession in 25 years. And the recovery – with growth of less than 1% in 2017 – has been almost as painful.

It was expected too that any fall in oil prices would hit Nigeria’s banks. After all, 45% of their lending is to the oil and gas sector, according to an IMF report released in March.