Weekly Economic Index: The future of the naira, South Africa’s momentum, and a new fintech player

Unifying the Naira exchange rate.

Last week, Nigerians were thrown into a frenzy after reports emerged that the Central Bank of Nigeria (CBN) sold foreign currency to banks at a rate of N631 to a dollar during the weekly bidding. This was seen as a devaluation since just 24 hours earlier, the dollar had been sold at N461.6 at the Importers and Exporters (I&E) window. However, the CBN denied this and stated that the dollar was still trading at N465/$1 at the Investors’ & Exporters’ (I&E) window.

The recent concerns about the devaluation of the naira and the discussion around a unified exchange rate system have raised questions about the future of the currency. While the CBN has denied the devaluation reports, Nigerians are particularly worried about unifying the exchange rate system and how it will impact the value of the naira in the long term. On one hand, a unified exchange rate would eliminate multiple exchange rates and create a more transparent and efficient currency market. This could boost investor confidence and attract foreign investments. However, Nigeria’s naira performance will still depend on various factors such as economic policies, market conditions, and the CBN’s interventions.

South Africa’s Rand gains momentum

The South African rand regains momentum. The rand closed the week trading at 19.500 against the dollar, which is 0.65% stronger than its previous close. In the last few months, the South African rand has faced challenges due to the anticipation of rising interest rates, which equally raised conversations about capital outflows from emerging markets like South Africa. Last month, the rand lost more than 7% against the dollar. Just last week, it struck a record low of 19.9075 per dollar. Interestingly, its recent recovery is attributed to expectations that the Federal Reserve in the United States will pause its interest rate hikes. 

Entertainment meets fintech

MultiChoice Group, is the latest player to enter the African fintech market. The South African company, which is known for its media and entertainment services, has partnered with Rapyd and General Catalyst to launch Moment, an all-in-one payment platform for Africa. The plan is to simplify digital payments, boost global trade, and give businesses and customers more control. The group plans to streamline payment infrastructure, enabling convenient and cost-effective transactions with customers and suppliers. It also offers customers greater control over their spending and savings. The platform intends to operate in over 40 countries, support hundreds of payment methods, and facilitate global-African trade by offering virtual accounts in various currencies and enabling local payments in over 130 countries. 

Note that Multichoice already processes payments from 22 million households across 50 countries every month as a media company. Moment fulfils their strategy to expand by investing in adjacent businesses that provide scalable services, underpinned by technology. According to the company’s CEO, Calvo Mawela, the joint venture will “address the need for an accessible and reliable payment platform for many small businesses and millions of consumers in Africa” in an already competitive payments space.

ICYMI: Market roundup

The market opened for four trading days last week as the federal government of Nigeria declared Monday, 1st of May as a public holiday to mark the Workers’ Day celebration. 

• The NGX All-Share Index appreciated by 5.37% from last week to close at 55,820.50 points. The top gainers were Conoil plc (45.78%), Eterna Press plc (32.14%), Jaiz Bank plc (30.00%), MRS Oil plc (20.83%), and Neimeth International Pharmaceuticals plc (20.14%). The top decliners were Tantalizers plc (-16.00%), Consolidated Hallmark Insurance plc (-11.48%), Prestige Assurance (-8.89%), NPF Microfinance Bank plc (-8.85%), Champion Brew Plc (-7.42%).
• The naira closed the week at N464.67/$ on Friday at the investor’s and Exporters’ window.
• Brent crude is down from last week’s $77.49 per barrel to close the week at $76.13, while US West Texas Intermediate (WTI) crude closed at $71.74.
• The global cryptocurrency market cap stood at $ 1.15 trillion, as of 9 pm Sunday, the 5th of June. Bitcoin stood at $27,262.99, a -1.17% decrease over the week, while Ethereum gained a little momentum over the week by 2.75% to trade at $1,905.93 and Binance coin dropped -0.86%, to trade at $306.51.
• Last week, Morocco-based health-tech startup  DataPathology raised $1 million from Azur Innovation Fund to broaden its network of laboratories in Morocco and Africa.
• Zofi Cash, a Ugandan salary advance financial platform developed to address employees’ challenges of financial emergencies, raised a $1 M pre-seed round from Nigeria-based investors Advancly.