In normal and volatile times, it is always important to maintain an investment portfolio that is diversified across currencies. We normally recommend that at least 20% of an investor’s portfolio should be in foreign currency. An investor’s objective could be to hedge against a potential devaluation of the Naira or earn real returns on investments, given limited high yielding local currency investment options. The Legacy USD Bond Fund (LBF) can assist investors to achieve both goals. The LUBF is a mutual fund, registered with the Securities and Exchange Commission, Nigeria. The Fund’s primary objective is to generate stable income over the long-term. With a minimum of US$1,805.85, investors will gain exposure to Sovereign and Corporate US Dollar Eurobonds issued by the Nigerian government and Nigerian corporates. Also, once an investment has been made, the investor can monitor the value of the investment by clicking here. Please see Product Focus below for further details.

Sustained growth in digital payment industry

Recent data from the Nigeria Inter-Bank Settlement System (NIBSS) showed solid growth across the various e-payments channels for the 11 months of 2021. NIBSS Instant Payment (NIP) transactions recorded a 75.3% y/y and 74.2% y/y growth in transaction value and volume to N241.7tn and 3.1bn, respectively. For POS transactions, total transaction value and volume also rose 38.1% y/y and 52.9% y/y to N5.7tn and 883.3m, respectively. The Mobile Inter-scheme transfers category saw the most impressive growth where transaction value was more than twice as tall, beating that of 2020 by 165.1% y/y to N6.9tn. Similarly, transaction volume grew 114.6% y/y to 249.0m.

The continued growth in e-payments transaction volume and value in Nigeria reflects an enduring shift away from cash. This has also been driven by the increasing internet & mobile penetration as well as investment by banks and other payment-based fintech companies in payment technology infrastructure. Beyond that, the pandemic which allowed the populace to spring quickly to the use of banking apps and USSD transfer channels to transfer funds have proved supportive in the remarkable rise in Mobile inter-scheme transfers. Furthermore, the growth in POS transactions shows the increase in agency banking services. We believe the newly launched e-Naira if fully integrated into e-payment channels, will also spur growth.

Nigeria’s significantly under-tapped digital payments industry is poised for significant growth, which lends credence to the increasing foreign capital flow to the sector. A myriad of factors across industry fundamentals, positive country demographics, and regulatory support have formed the base for expected accelerated growth for the Fintech industry in Nigeria. This expectation has received much attention from investors, which has led to significant investments as existing players look to position for future growth. The Fintech industry in the country has seen funding rounds from various global investors since 2014, either through equity or grants.

• FX: Last week, the Naira traded at ₦414.32/US$ from ₦414.24/US$, in the interbank market.
• Bonds:In the secondary market for Federal Government of Nigeria (FGN) bonds, yields increased across most maturities. However, the yields on the 3-yr FGN bond and 30-yr FGN bond decreased by 1 basis point, (to 9.31%), and 20bps (to 13.17%), respectively. Indicative yields on US Dollar Eurobonds issued by Nigerian entities were between 1.98% and 9.37%, depending on maturity.
• Oil:The price of Brent increased by 7.54%, from the previous week’s closing price of US$69.88bbl to US$75.15bbl.
• Equities:Last week, the NSE All-Share index declined by 0.68%. The December 2021 Year-to-date return was 4.00%. The Consumer Goods sector lost 1.70%, on average. Honeywell increased by 2.85%, while UACN decreased by 8.00%. For the Brewers, Nigerian Breweries and Guinness rose by 0.11% and 7.44%, respectively. The Industrial Goods sector declined by 3.06%, on average. Dangote Cement lost 10.00%, while Lafarge Africa gained 0.81%. The NSE Banking sector gained 3.47%, on average. GTCO advanced by 9.96%, while Stanbic declined by 1.35%. In the Agriculture sector, Presco and Okomu remained unchanged.