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

Sub-Saharan economic growth recovery to take longer -World Bank

The World Bank has cut its growth forecast for Sub-Saharan Africa this year to 2.8 percent from an initial 3.3 percent, it said on Monday.

The commodity price slump of 2015 cut short a decade of rapid growth for the region, and the bank said growth would take longer to recover as a decline in industrial production and a trade dispute between China and the United States take their toll.

Post-MPC Reaction: Monetary Policy Rate Cut -Moving Back to Convention?

At the end of the second meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria, which was concluded today, 26th March 2019, the Committee decided, in perhaps the last MPC communique of Governor Godwin Emefiele, on a vote of 6 to 5 to reduce policy rate by 50bps (13.5%) after having held the rate at 14.0% since July 2016. The Committee in an unexpected twist, cited the need to shift policy focus to supporting growth amongst other considerations.

Pre-MPC Note: Moderating Risks Create Room for Accommodative Policy Stance

The second meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria will hold between 25th and 26th March 2019. Since the last meeting, global and domestic economic conditions have remained favourable. On the global scene, monetary policy is now accommodative, supporting the return of investors into Emerging and Frontier markets. On the domestic scene, growth has improved, inflation is moderating, and external reserves have strengthened due to a surge in capital inflows post-elections.

February 2019 Inflation: Sustained Moderation in Price Pressures

This week, the National Bureau of Statistics (NBS) published the Consumer Price Index (CPI) for February 2019. The report shows a surprising slowdown in inflation for the second consecutive month to 11.3% Y-o-Y in February 2019 (January: 11.4%). This is significantly below the analysts’ average estimate of 11.5% reported by Bloomberg. We observe that headline inflation was slower than expected due to lower M-o-M inflation at 0.73% in February (January: 0.74%), the lowest since December 2017.

New tenure will be tough, Buhari warns

President Muhammadu Buhari has held a special meeting with members of his cabinet where he told them that the new four-year mandate given to his administration would be tough.

He told them that he would pursue his campaign promises of securing the country, transforming the economy and the fight against corruption.

The cabinet ministers were in the State House, Abuja, on Friday to congratulate him on his electoral victory.

AfCFTA: Boosting Industrial Revolution through Intra-Africa Trade

The shelves of many supermarkets in Nigeria boast of a large amount imported products, including toothpicks from China, toilet paper and milk from Holland, sugar from France, chocolates from Switzerland and matchboxes from Sweden.

Yet many of these products can be produced in Nigeria or found in much closer African countries with industrial bases, the News Agency of Nigeria reports.

Buhari Urged to Beam Searchlight on BPP Activities

The Registrar, Chartered Institute of Purchasing and Supply Management of Nigeria (CIPSMN), Mohammed Aliyu, has called on President Muhammadu Buhari to closely monitor the activities of the Bureau of Public Procurement (BPP) to avoid economic waste.

Aliyu who made the call in Abuja at the Annual General Meeting (AGM) of the Institute, noted that government can effectively supervise activities of BPP when the National Council on Public Procurement had been inaugurated.

MPC: Policy Parameters Unchanged as Fears of More Hawkish Stance Soften

As we expected in our Pre-MPC note, the Monetary Policy Committee (CBN) of the Central Bank of Nigeria (CBN) retained all policy rates during its last meeting for the year which held this week. The eleven members of the MPC in attendance unanimously voted to maintain Monetary Policy Rate (MPR) at 14.0% with the asymmetric corridor of +200bps/-500bps, Cash Reserve Ratio (CRR) at 22.5% and Liquidity Ratio (LR) at 30.0%.