Dear Subscriber,

One day, or day one

In June 2024, the rating agency, Moody’s, reaffirmed Nigeria’s positive outlook status. This comes prior to the downgrade of one of Africa’s largest economies, Kenya. The agency’s negative outlook for Kenya was driven by its escalating debt levels and high cost of living, which spurred protests across the country. Despite the renewed economic optimism, Nigeria faces challenges in achieving a modest standard of living for its citizens. Consumers are still reeling from the negative effects of the twin policies of currency devaluation and fuel subsidy removal. This is further compounded by the ongoing petrol scarcity, which has led to a rise in transport costs across the country. The risk of protests has increased as consumers retaliate to the heightened costs.

Nigeria is home to over 37 million small businesses. A positive credit rating will attract foreign investors to the country and stabilize the naira in the near term. This in turn will ease the cost of doing business and lessen price pressures on consumers as the cost of goods and services begin to decline.

He that goes a‐borrowing, goes a‐sorrowing

Nigeria’s headline Inflation has climbed to a record high of 33.95% in May, fuelled by heightened food inflation (40.66% in May). This has placed a strain on consumers’ disposable income. In a bid to curb inflationary pressures, the MPC has hiked rates by 750bps to 26.25%p.a in 2024. This has significantly raised the cost of borrowing, leading to adverse effects on borrowers and businesses. On the other hand, higher interest rates have elevated the marginal propensity to save. Consumers have become more willing to save on expectations of higher returns.

While borrowing is not discouraged, it is important to be cautious. As former US Secretary of Commerce Wilbur Ross once said, “You cannot just keep borrowing more and more and keep spending more and more without eventually having a day of reckoning.” The lifestyle section of this Unity Bank digest lists four tips to help you manage your personal loans.

This edition of the Unity Bank Digest provides a comprehensive analysis of these economic trends and engaging lifestyle and entertainment stories for your reading pleasure.

Enjoy your read!