Pre-MPC Note: Policy Rates to Remain Stable as the CBN Takes the Unconventional Route

In the upcoming meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) between July 22nd and 23rd 2019, we expect rates to be kept at current levels but the tone of members to support monetary easing. Since the last meeting in May 2019, the global and domestic economic environments have become more supportive of the shift towards looser monetary policy. On the domestic scene, the CBN has issued new guidelines to compel commercial banks to expand credit. The most drastic was the minimum floor of 60.0% established for loan to deposit ratio.

Next Wave of Inertia? ...Better Safe than Sorry

In our Economic and Financial Market Outlook 2019 titled “On the Precipice”, we noted that Nigeria desperately needs structural and market-driven reforms, human capital and infrastructure investments to put Nigeria on the path of sustained growth and prosperity. We reiterated our resolve that the performance of the economy over the medium-term would depend on the policies of the winner of the presidential elections. Fast forward to June 2019, President Buhari was re-elected for a second term with 56.0% of the 26.5 million votes cast.

May 2019 CPI Report: Slight Moderation Expected in Headline Inflation

Ahead of the release of May 2019 inflation data next week, we present our expectations. We project a slight moderation in headline inflation to 11.3% Y-o-Y in May from 11.4% due mainly to a high base effect. This is despite an expected uptick in M-o-M inflation to 1.0% in May from 0.94% in the previous month. Our forecast is mainly driven by sustained food price pressures which would drive M-o-M food inflation higher to 1.3% from 1.1% in the previous month. This would leave food inflation marginally lower but broadly unchanged at 13.7% Y-o-Y.

In Nigeria, empowering women means exposing them to violence –Report

Helping women find jobs or raise their incomes in Nigeria can put them at heightened risk of violent abuse by boyfriends, husbands and the public, a World Bank study has found.

The study aimed to assess the risks of the Nigeria For Women project, a $100 million programme to improve women’s livelihoods by providing grants, skills training and business advice.

Q1:2019 GDP: A Broad-based Economic Slowdown Pulls Growth Lower at 2.0%

Based on the recently released Q1:2019 GDP report, the Nigerian economy expanded at a slower pace of 2.0% Y-o-Y (vs 2.4% in Q4:2018), below both our expectation and analysts’ consensus forecast of 2.5% aggregated by Bloomberg. The moderation in growth was due to a broad-based slowdown across the oil and non-oil sectors. The oil sector contracted for the fourth consecutive quarter at -2.4% Y-o-Y in Q1:2019, deeper than the contraction of -1.6% in the previous quarter.

FGN 2019 Budget: Another Budget of Wishful Spending

Few weeks ago, the National Assembly passed the 2019 appropriation bill of the Federal Government into law. This was concluded in record time, considering that May 6 was the earliest time the budget had been passed under the President Buhari administration prior to 2019. Budget deliberations were also less contentious than in the past three years when the executive and legislature had a fractious relationship.

2019 Budget: Economist says ₦2tr capital expenditure shows pressure on economy

An Economist, Prof. Segun Ajibola, says the allocation of N2 trillion for capital expenditure in the 2019 budget was too low to drive growth and development in the country.

Ajibola said this in an interview with the News Agency of Nigeria yesterday in Abuja, while reacting to the passage of the 2019 Appropriation Bill of N8.92 trillion by the National Assembly.

The budget was increased by the legislature by N90 billion from the N8.83 trillion presented by President Muhammadu Buhari on Dec. 18, 2018.

FY 2018 Debt Report: High Debt Servicing Cost Underpins Debt Sustainability Risks

Since the sharp contraction in government revenues due to the oil price crash of mid-2014, Nigeria’s rising debt profile has raised sustainability concerns. Although government’s revenues have recently been supported by increasing oil prices, stable oil production and improving tax collection, Nigeria’s revenue to GDP still lags pre-oil price crash levels. Based on annualised Q3:2018 revenue data, we estimate that gross revenues was N7.0tn in 2018. While this is the highest revenue collection on record, it is weak relative to GDP at 5.5% compared with 7.8% in 2013.

IMF/World Bank Spring Meetings: Global Growth Prospects Lacklustre

Global and country-level macroeconomic updates by multilateral institutions continued this week during the spring meetings of the World Bank and the International Monetary Fund (IMF). We had analysed the IMF’s report on the Nigerian economy last week, highlighting economic projections and critical reform areas. This week we review global growth prospects and the World Bank’s Bi-Annual Update on the Nigerian economy.

Global Growth Forecast Revised Downwards to 3.3% in 2019