Nigeria’s House of Representatives has passed four tax reform bills proposed by President Bola Tinubu, marking a significant step toward overhauling the country’s tax system. However, lawmakers made key adjustments to the original proposals before approval. One major change was the decision to retain the Value-Added Tax (VAT) rate at 7.5%, rejecting the proposal to increase it to 12.5% by 2026. Lawmakers cited concerns about the economic impact of a higher VAT on businesses and consumers. Revenue allocation was also revised. The initial plan to allocate 60% of VAT revenue to high-revenue states faced opposition due to regional equity concerns. Instead, lawmakers capped this at 30%, while the remaining 70% will be distributed equally among all states (50%) and based on population (20%). To ease the tax burden on low-income earners, the reforms exempt minimum wage earners from income tax. Additionally, the minimum tax threshold for domestic businesses has been raised to ₦50 billion ($32.66 million), ensuring that only larger companies bear the tax burden. In the oil sector, the existing 85% petroleum profit tax has been replaced with a 30% corporate tax rate on gains from oil operations, aligning it with standard corporate taxation. Meanwhile, a global minimum tax has been introduced for multinational companies with annual turnovers of at least $970.8 million to curb tax avoidance. The bills are now awaiting Senate approval and President Tinubu’s assent. These reforms are part of broader efforts to boost Nigeria’s tax-to-GDP ratio, which remains low at 10.8%, and reduce dependence on borrowing to fund government spending.
Money Market
System liquidity opened the session at ₦956.15 billion short, following OMO auction settlement outflow. The Open Buy Back (OBB) and the Overnight (OVN) closed the day at 32.40% and 32.80%, respectively.
FGN Treasury Bills Market
The FGN Treasury Bills Market started off the week on a bearish note with improved offers seen across the curve. We saw trades consummated on the 22 Jan NTB as high as 18.50% and 19.40% on long end OMO bills. The 5 Mar NTB was seen bid at 18.05% while offers stood at 17.85%. At the PMA this week, the DMO floated N550bn across the standard maturities. At the auction, the DMO sold 678.75bn out of a 1.27 trillion subscription. Stop rate on the 91-day bill remained unchanged while the 182-day and 364-day bill rose by 4bps and 57bps to 17.79% and 18.39%, respectively. The newly issued 364 day bill was seen at 18.30/18.20. Furthermore, the DMO revised the Q1 issuance calendar, featuring another auction 19 March with N800bn on offer. Week-on-week, the average benchmark yield declined by 4bps to close at 18.89%.
We expect cautious sentiment.
FGN Bond Market
The FGN Bonds Market traded in tandem with the bills market. Quotes were seen on the 31s at 19.40/19.20 and the 29s at 19.35/19.00. On the long end of the curve, the 2050 maturity was seen bid at 17.00% and offered at 16.50%. The 2035 bond was also offered at 18.60% with few bids to match. Following the release of the calendar, bearish sentiments intensified with trades consummated on the 2031 maturity as high as 19.55%. Week-on-week, the average benchmark yield increased by 3bps to close at 18.42%.
We expect a similar market trend.
FGN Eurobond Market
The FGN Eurobonds Market sustained the bearish momentum this week as Trump tariffs, global uncertainty and U.S economic slowdown fears dominated sentiments. It was a data filled week. The JOLTS Job Openings data printed at 7.74M vs 7.56M forecast and 7.60M previous. The U.S CPI declined to 2.8% against 2.9% forecast and 3.0% previous while the U.S PPI m/m printed at 0.0% vs 0.3% forecast and 0.4% previous. Week-on-Week, the average benchmark yield increased by 13bps to 9.16%.
We expect the outcome of the FOMC meeting to dictate market direction.
Currency Market
The value of the Naira to the dollar declined by 5bps to close at ₦1517.93/$ at the Nigerian Foreign Exchange Market Window (NFEM).
Equities Market
The local bourse ended the week with the benchmark NGX All-Share Index (ASI) declining by 21bps to close at 105,955.13. Market capitalization also decreased, closing at ₦66.36 trillion. Market breadth was negative at 0.88x, with 21 advancers and 24 decliners. This performance was driven by gains in ROYALEX (+10.00%), LINKASSURE (+9.57%) and GUINEAINS (+9.52%), and losses in TANTALIZER (-9.85%), JAIZBANK (-9.72%), and NEIMETH (-9.45%).
Trading activity was mixed on the day, with the volume of shares traded increasing by 119.65% to 749.63 million units, while the total value of shares traded decreased by 33.71% to ₦11.04 billion. The most actively traded stocks by volume were CHAMPION with 350.37 million units, TANTALIZER with 53.07 million units, and CUSTODIAN with 51.11 million units. In terms of value, ARADEL led with ₦1.82 billion, followed by CHAMPION at ₦1.40 billion, and MTNN at ₦1.27 billion.
Reflecting the day’s performance, the NGX All-Share Index reflected a 1-week loss of -0.51% with an overall year-to-date gain of 2.98%. Other notable indices are the NGX Top 30 Index (-0.18%; -0.39% 1WK; 3.06% YTD), NGX Banking Index (0.19%; -0.45% 1WK; 3.93% YTD), NGX Oil & Gas Index (-0.18%; -1.15% 1WK; -6.81% YTD), and NGX Insurance Index (0.50%; 0.89% 1WK; -1.95% YTD).
