Weekly Economic Index: Nigeria’s inflated outlook, Uganda’s penny-wise strategy and the end of Twitter

Kwame Malik
Kwame Malik

Global Courant

Here are three big stories from Africa and the global business landscape that you (probably) didn’t miss, but should keep in mind this week:

Nigeria is gearing up for more inflation.

Nigerian inflation hit a new seven-year high of 22.79% in June, according to the National Bureau of Statistics (NBS). This spike occurred after President Bola Tinubu scrapped fuel subsidies and allowed the currency to weaken before declaring a state of emergency to contain the cost of basic food.

Headline inflation in Nigeria has risen every month in a row this year. And the uptrend is not likely to end anytime soon. Gasoline prices hit a new high last week N617/litre, fueling concerns that inflation would rise again. Also, the naira weakened against the dollar to N850 in the parallel market while demand for the dollar rose.

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In its Executive Board Work Program (BWP) for the year 2024, released over the weekend, the International Monetary Fund (IMF) also forecast weak growth and higher inflation rates for several low-income countries, including Nigeria. One of the reasons is the high debt burden these countries have to overcome.

Uganda uses a ‘penny-wise’ strategy.

Uganda wants to replace low-denomination banknotes with coins, and a cost-benefit analysis will support the decision. Adam Mugume, Executive Director of Research at the Bank of Uganda, said so in a letter published in the International Monetary Fund’s (IMF) Fourth Review for Uganda in June. The exercise is designed to reduce printing costs.

“Given the high cost of printing currency, we conducted a market study to compare printing costs, and a cost-benefit analysis of replacing low-denomination banknotes with coins,” the letter reads. The Bank would begin phasing out the 1,000 shilling paper note before looking at others. According to them, the 1000 shilling notes are more heavily used by the residents, which shortens their lifespan.

In its 2021/22 annual report, Uganda’s central bank indicated that the cost of issuing currency, including printing and circulation, had increased by Shs 24.4 billion (16.5 percent) over the period.

The Bank of Uganda has not disclosed a specific timetable for this action. But this won’t be the first time banknotes have been phased out. Other minor currency denominations ranging from 1-500 shillings are now coins.

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Twitter is shedding its feathers.

Elon Musk replaces Twitter’s iconic bird logo with an ‘X’. He says the move is part of a rebranding of the social platform to X, the one-letter name he has repeatedly used in company and product names.

Musk announced the revamp on Sunday, saying on the social media app that “we will be saying goodbye to the Twitter brand soon and gradually all the birds.”

The Starlink founder has already made significant changes to Twitter since buying the company last year, including changing the name to X Corp in depots as part of his plans to create an “everything app” under the “X” brand. The company plans to move from a text-centric platform to integrating more audio, video, and payment features and is looking to bring in advertisers and partner with broadcasters or payment groups.

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ICYMI: Market overview

Nigeria’s stock market had a positive week, with the All-Share Index gaining 3.89% to close at 65,003.39. The biggest risers in the Nigerian stock market were John Holt Plc (58.01%), Chellarams Plc (32.39%), Sterling Financial Holdings Company Plc (27.33%), Ecobank Transnational Incorporated (27.17%) and CWG Plc (26.38%). The biggest fallers were FTN Cocoa Processors Plc (-29.08%), Courteville Business Solutions Plc (-28.09%), Abbey Mortgage Bank Plc (-26.32%), Linkage Assurance Plc (-20.00%) and Japaul Gold & Ventures Plc (-15.15%). The naira closed out the trading week on N777.82 against the dollar at the Investors’ and Exporters’ Window. Brent crude closed tradeg at ​​$80.79 a barrel, up from last week’s $78.53. West Texas Intermediate closed at $76.41, up from last week’s $74.10. The valuation of the crypto market dropped from $1.21 trillion to $1.19 trillion. Bitcoin fell 1.65% to $29,788, Ethereum fell 3.18% to 1870, and XRP fell 2.57% to $0.73.
Kasjaa Rwandan e-commerce platform, has raised a $21 million Series B round to expand its business into West Africa.
MyCover.aia Nigerian insurtech platform, has raised $1.25 million in pre-seed funding from Ventures Platform and Founders Factory Africa.
kako, a Tunisian mobility start-up, has won a secret fundraising round to complete construction of a manufacturing facility, aiming to produce 1,000 scooters per year. PharmaRun, a Nigerian health tech platform with Buy Now Pay Later options, won the 2023 Pitch2Win startup competition. The startup won $10,000 in cash with no equity.

Weekly Economic Index: Nigeria’s inflated outlook, Uganda’s penny-wise strategy and the end of Twitter

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