Standard Bank has issued a report indicating expectations of a substantial capital inflow during the latter half of 2024, projecting around $5.1 billion entering Nigeria’s economy. The anticipated funds include foreign inflows of $5.05 billion from a Eurobond sale and an NNPC crude payment facility administered by AfreximBank.
The bank’s forecast suggests that Nigeria might issue between $3 billion and $5 billion through a dollar-denominated local bond, building upon previous Eurobond issuances. Additionally, a significant portion of the projected inflows, amounting to $1.05 billion, stems from the Nigerian National Petroleum Company’s (NNPC) crude pre-payment facility of $3.30 billion in May, a segment of which AfreximBank has verified.
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In the international finance domain, the report notes that the World Bank’s Board is scheduled to convene on June 13 to finalize approval for Nigeria’s $2.25 billion financing package request. This package comprises $1.50 billion in Development Policy Financing and $750 million in Programme-for-Results financing, with disbursements contingent on implemented reforms and macroeconomic policy frameworks.
The report also delves into factors impacting currency volatility, attributing recent fluctuations to geopolitical tensions. It mentions Central Bank of Nigeria (CBN) Governor Olayemi Cardoso’s statements on FX market intervention and discusses the exchange rate dynamics, noting improvements in the Forex market’s performance post-COVID. However, it highlights a recent decline in foreign inflows after reaching a peak in March, citing potential risks ahead, including inflationary pressures and geopolitical uncertainties affecting foreign portfolio investment (FPI) inflows.
Furthermore, Standard Bank anticipates potential policy shifts by the Monetary Policy Committee (MPC) to address rising inflation, along with potential risks to the currency forecast related to fiscal policy decisions, oil production levels, and inflationary pressures. The report underscores the importance of maintaining transparency and effective communication from the CBN to manage market expectations and mitigate risks in the evolving economic landscape.
