Business
Currency crisis looms as fiscal buffers dwindle
LAGOS – The continued dwindling of the fiscal buffers- foreign reserves, excess crude account, (ECA) against the backdrop of rising and stable oil prices at the international market is responsible for the strengthening expectation that the nation’s currency, the naira, will dramatically lose value, Business Day investigations have shown.
Also, the current gap of over N13 between the official and parallel market rate which is creating arbitrage opportunity for forex dealers and lose fiscal stance of the federal government among others, is increasing dealers appetite for hedging through the growing desire to switch from Naira to foreign currency denominated deposits. The implication, they argue, is that naira will witness more depreciation.
Razia Khan, analyst with the standard chartered bank, London said, “It is correct that fiscal policy plays a key role in shaping expectations. Monetary policy has done pretty much what it can to restore FX stability. But expectations regarding the sustainability of a stable FX rate are heavily influenced by fiscal policy.
By running down its external and fiscal buffers, the ECA, Nigeria proves itself to be especially susceptible to oil price volatility. In the event of an oil price (or oil output) shock, the perception is that Nigeria will not be able to defend its FX rate. Markets are forward looking, hence the pressure on the currency now. Monetary policy will continue to try to restore stability – but it can only do so much.”
Analysts and monetary policy committee members are of the opinion that this portends danger for the economy as the Central Bank of Nigeria is getting closer to the limit of its monetary policy, stressing that the projected 6-9 percentage inflation rate can only be achieved with stable currency.
A currency crisis is a sudden devaluation of a currency which often ends in a speculative attack in the foreign exchange market. A currency crisis may result from chronic balance-of-payments deficits or from market speculation about the ability of a government to back its currency.
Although most of the analysts who spoke with BusinessDay did not see devaluation as the viable option in view of the import dependent nature of our economy, they wonder why Nigeria with a $30bn current account surplus and with oil prices at $100 per barrel is not seeing an accretion in its foreign reserves.
Besides, they say that considering the rate at which ECA is being depleted, we may wake up next year to discover that nothing is left in the account.
Another concern is the fact that no one seems to be in charge or accountable for management of oil income and questioned the relevance of the economic management team.
“That is why you have all the noise of accusation and denial with regards to what has accrued to the NNPC that is not remitted to the nation’s coffers,” says one close currency watcher
“Somehow, somebody will have to make sense of the oil production and revenue numbers. We are all going to pay a huge price for negligence as CBN can not continue to defend the naira as its balance sheet has very little wiggle room, he told BusinessDay.
Bismark Rewane in recent LBS breakfast meeting for February said that weaker naira will impair earnings of banks and also increases risk of default on dollar-denominated loans.”
Doyin Salami, in his contributions at the last MPC meeting said “From the perspective of economics theory, a persistent surplus on our current account, resulting from high oil price, should see the Naira strengthen. However, the failure to build reserves has resulted in strengthening expectation of that the Naira will lose value. This expectation has been manifested in a continuing switch from Naira to foreign currency denominated deposits –a trend I had previously described as “retail hedging.”
Unless the Fiscal side shows significant improvement imminently, the options for monetary policy may become glaringly inconsistent with the objectives and policy direction for the economy in Nigeria. For monetary policy, the challenge of managing the internal and external value of the Naira is a core element of its mandate. Achieving inflation rate of 6 ‐9 per cent in 2014 requires a stable currency.”
Salami further observed that the model articulated, in various documents, for the growth and development of the larger economy in Nigeria is predicated on Import substitution and for CBN to achieve price stability, “import substitution requires a stable, even strong currency.”
He said that given the data and information laid before the committee members “the immediate and emerging build up of banking system liquidity, it is clear that there is a need to respond to the pressure on the currency and forestall the build-up of further pressure. However, it is increasingly clear that we are approaching the limits for using the cost of credit as a management tool without inflicting damage on the growth and development aspirations of the economy.”
Sarah Alade, deputy governor and member of the MPC said, “Already, available data suggest that Gross Foreign Direct Investment (FDI) and portfolio inflows decreased significantly in the last quarter of 2013. Given that monetary policy is approaching its limit, there is need to allow for more flexibility in the exchange rate”
Suleiman Barau, another member of MPC said that the current crisis was “aggravated by activities of politicians who may have been forced to recourse to the use of foreign currencies to avoid charges associated with Naira cash withdrawals. The aggravated demand for foreign exchange (for transfers/Letter of Credit valid) that we have seen in 2013 is largely in the area of invisibles which has increased by 23.8% from 24% ($13.3b) to 48.2% ($26.1b) during corresponding period in 2012.”
Kingsley Moghalu, deputy governor and also a member of the committee said, “The role of fiscal factors in the current difficulties, marked by a severe decline in the Excess Crude Account over the past year, thus leaving the country dangerously vulnerable to external shocks as a result of the lack of fiscal savings. There is no indication that this situation will change in the near to medium term.”
– BUSINESS DAY
Improved operating performances have seen Eterna Plc report higher revenue and profitability for the second quarter and half-year ended June 30, 2026.
The company’s unaudited consolidated financial results showed that revenue rose by 38 per cent to N217.31bn from N157.65bn in the corresponding period of 2025.
The results show that gross profit more than doubled to N15.99bn, while operating profit increased to N8.78bn from N2.34bn. Profit before tax rose by 389 per cent to N7.67bn from N1.57bn recorded in the corresponding period of 2025.
Profit after tax (PAT) increased to N5.88bn from N573.81m, while earnings per share (EPS) improved to N2.69 from N0.44.
The company also reported an improved financial position, with total assets standing at N82.75bn as of June 30, 2026.
Cash and bank balances increased to N20.36bn from N4.79bn as of December 31, 2025, while total liabilities declined to N51.22bn from N84.43bn. Total equity rose to N31.53bn from N7.77bn, reflecting stronger liquidity and capitalisation.
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On the results, the Managing Director/Chief Executive Officer, Dr. Jude Nwaulune, said, “These results demonstrate the strength of our business and the impact of disciplined execution across our operations. The significant improvement in profitability and financial position provides a solid foundation to advance our growth priorities.
“The successful Rights Issue has further strengthened our balance sheet, resulting in a healthy leverage position, stronger equity and improved net assets. We remain focused on expanding our retail, aviation, lubricants and gas businesses, improving operational efficiency and customer experience, and delivering sustainable value to shareholders and other stakeholders.”
The company said its full unaudited consolidated financial statements for the half-year ended June 30, 2026, are available on its website.
AVA Capital Plc has been admitted to the Main Board of Nigerian Exchange Limited (NGX) following the listing by introduction of its 5 billion ordinary shares at ₦7.50 per share, with a market capitalisation of ₦37.5 billion.
The listing marks a significant milestone in the Company’s growth journey, reinforcing its commitment to sustainable growth, strong corporate governance and long-term value creation, while enhancing its visibility within Nigeria’s capital market.
Speaking at the listing ceremony, the Chief Executive Officer of AVA Capital Plc, Kayode Fadahunsi, described the admission as a defining moment in the Company’s evolution. “Our admission to the Main Board of Nigerian Exchange is more than a listing; it is a public affirmation of the business we have built and the future we are committed to creating. We have established a resilient institution with a clear growth strategy, strong governance culture and an unwavering focus on creating sustainable value for our shareholders. Becoming a listed company deepens our accountability, broadens our visibility and positions us to seize new opportunities as we continue our growth journey.”
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Commenting on the listing, the Chief Executive Officer of Nigerian Exchange Limited, Jude Chiemeka, said the admission reflects the continued confidence of businesses in Nigeria’s capital market as a platform for sustainable growth. “Today’s listing reflects the confidence that forward-looking companies continue to place in the Nigerian capital market. By joining the Main Board of Nigerian Exchange, AVA Capital Plc is embracing the transparency, governance standards and market discipline that define public companies, while positioning itself to access a broader investor base and unlock long-term value. We are delighted to welcome AVA Capital Plc to the NGX family and look forward to supporting its continued growth.”
The admission of AVA Capital Plc expands the range of investment opportunities available to investors while reinforcing NGX’s commitment to connecting businesses with long-term capital and supporting their growth through enhanced visibility, strong governance and deeper investor engagement.
June 2026 results of the Nigerian National Petroleum Company Limited (NNPC Ltd) shows a Profit After Tax (PAT) of N535 billion, despite recording a marginal decline in crude oil and condensate production during the month.
The figure represents a 15.8 percent increase over the preceding month, according to the latest Monthly Financial and Operations Report of the state oil major, which indicates that the PAT rose by N73bn from the N462bn recorded in May, while revenue increased to N4.389tn.
According to the report, the company remitted cumulative statutory payments of N6.286tn to the Federation in H1, 2026.
It read, “NNPC Limited recorded N535bn profit after tax for the month of June, representing a 15.8 per cent increase from the N462bn recorded in May. Total revenue for the month stood at N4.389tn, while cumulative statutory payments to the Federation for the period January to June 2026 increased to N6.286tn, underscoring NNPC Limited’s sustained contribution to national revenue generation.”
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Average crude oil and condensate production declined marginally to 1.72 million barrels per day in June from 1.73 million barrels per day in May, representing a 0.58 percent decrease. However, output was 1.18 percent higher than the 1.70 million barrels per day recorded in June 2025.
According to the report, production was affected by operational disruptions, facility integrity issues and subsurface challenges across several assets.
It stated, “June production performance was impacted by operational disruptions, facility integrity issues, and subsurface challenges across several assets. However, performance was partially mitigated by production ramp-up following the completion of the Assa-Rumuekpe and 28-inch TNP Turnaround Maintenance.”
Despite the slight production decline, crude oil and condensate sales surged to 28.23 million barrels in June from 18.95 million barrels in May, representing a 48.97 percent month-on-month increase. The June sales volume was also 6.77 percent higher than the 26.44 million barrels sold in June 2025.
Gas production also improved, rising to 7,841 million standard cubic feet per day from 7,774 million standard cubic feet per day in May, while gas sales recovered to 4,970 million standard cubic feet per day from 4,921 million standard cubic feet per day.
The report highlighted progress on two major gas infrastructure projects. The Obiafu-Obrikom-Oben Gas Pipeline reached 98 percent completion, with final tie-in works ongoing.
It stated, “The Obiafu-Obrikom-Oben (OB3) Gas Pipeline progressed to 98% completion, with final tie-in works ongoing towards achieving First Gas in August 2026.”
Construction on the Ajaokuta-Kaduna-Kano Gas Pipeline also advanced to 94 percent completion. According to the company, “Construction and installation activities on the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline advanced to 94 per cent completion, supporting the target of early gas delivery to Abuja in 2026.”
The NNPC Ltd declared that it would continue implementing measures to sustain production growth despite operational challenges.
It stated, “Focus remains on delivering incremental production across the asset portfolio by improving facility reliability and availability, minimizing Unscheduled Downtime, optimising crude export operations, and accelerating the maturation of production opportunities to sustain Upstream production growth.”
The report also showed that upstream pipeline availability remained at 100 percent during the month, while petrol availability across the NNPC Retail Limited stations stood at 53 percent. It added that all production, sales and financial figures remained provisional and were subject to reconciliation with relevant stakeholders.
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