Macroeconomic Report & Economic Updates

June 27, 2018

Nigeria Economic Update (Issue 22)

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Recently released demographic figures by the NBS shows an upward progression in population and its composition. Specifically, Nigeria’s population reached 193 million in 2016, growing at an annual average of 3.25 percent1. Going by the demographic characteristics, the population pyramid reveals that over 41 percent of the population lies between ages 0-14 – a composition of children and adolescents. This implies that fertility rate has been high, as such, a corresponding high dependency ratio. The growing share of this population age imposes supply pressure on available infrastructural amenities; from education to health systems. Similarly, the growing youth population (16-30 years) exerts pressure on the labor market, given their working-class ages




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Fuel Subsidy Reform, Social Safety Nets (SSNs) And Pro-poor Growth

The paper examines the importance of fuel subsidy reforms and how the Nigerian government can achieve a successful reform. It also examines the link between safety nets and growth to help facilitate reform and inclusive growth.

Portfolio Diversification Between Developed And Less Developed Economies

This study examines the hedging effectiveness of portfolio investment diversification between developed and developing economies; with focus on the Nigerian stock asset vis--vis the stock assets of the United States (US) and United Kingdom (UK). Its main contribution is in the analysis of optimal portfolio diversification using optimal portfolio weight (OPW) and optimal hedging ratio (OHR). Empirical findings show that the OPW and OHR are low, which indicates impressive potential gains from combining Nigerian stock assets in an investment portfolio with US and UK stock assets. In addition, exchange rate volatility is found to pose stern limitation on the potential benefits of this portfolio diversification arrangement. It is therefore recommended that the monetary authority in Nigeria should pursue policies towards reducing exchange rate volatility to the barest minimum. This will possibly attract more investors from developed economies who might be willing to combine Nigerian stock in their investment portfolio to minimize portfolio risk.