How Nigeria’s telecoms industry is responding to COVID-19

The Nigerian stock market has experienced a significant downturn, with the NSC banking index plummeting over 30% year to date. This decline has raised concerns among investors, especially in the banking sector, which is known for its liquidity and stability. David Adu, Senior Analyst at Meristem Securities, shed light on the factors contributing to this weakness and the implications for the banking industry. According to Adu, the sell-offs in the banking sector are a reflection of the broader market turmoil caused by the COVID-19 pandemic. The market volatility has made investors apprehensive about the economic outlook, prompting them to offload banking stocks. Despite a slight moderation in non-performing loans (NPLs) reported by the Central Bank of Nigeria, the earnings outlook for banks remains uncertain. The rise in NPLs from 6.11% in December to 6.54% in February indicates ongoing challenges in the banking sector, exacerbated by the COVID-19 crisis and the oil price environment. The Central Bank’s cautious approach to monetary policy further adds to the pressure on banks. While there are expectations for the central bank to provide liquidity support for banks, the uncertainty surrounding policy decisions leaves the sector in a wait-and-see mode. Shifting focus to the telecom industry, Adu highlighted the role of telecom companies in the fight against COVID-19. Across Africa, telecom firms have implemented measures to support communities during the pandemic, such as reducing data prices and increasing connectivity. In Nigeria, telecom operators are expected to ramp up corporate social responsibility initiatives to mitigate the economic impact of the crisis. The surge in data usage during the pandemic has also prompted discussions on potential measures to ease the financial burden on consumers. As the telecom sector navigates the challenges posed by COVID-19, stakeholders are monitoring how companies adapt to the evolving landscape and contribute to the national response. In conclusion, the dual impact of COVID-19 on Nigeria’s banking and telecom sectors underscores the need for strategic resilience and innovation in the face of unprecedented disruptions. Both industries are crucial pillars of the economy, and their responses to the crisis will shape the broader recovery efforts and future development trajectory of the country.