Macroeconomic Report & Economic Updates

November 16, 2017

Nigeria Economic Update (Issue 44)

Latest
Doing Business report by the World Bank ranks Nigeria as one of the top 10 economies
that showed notable improvements in doing business in 2016/2017. Precisely, the
report which presents quantitative indicators on business regulation compared
across 190 economies and ranked Nigeria 145th – up by 24 positions from
the previous report ranking, to reach its highest rank since 2013. This may not
be unexpected, given that it is consequent upon various business environment
reforms in 2016. Particularly, the Presidential Enabling Business Environment
Council (PEBEC) set up in 2016 enacted 31 reforms to improve
business(such as improving credit to small and medium-size
businesses) all of were enacted into law in May 2017.

Download Label
March 13, 2018 - 4:00 am
application/pdf
567.35 kB
v.1.7 (stable)

Related

 

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.

Nigeria Economic Update (Issue 8)

The falling tide in the international value of Naira experienced a reversal in the review week with naira appreciating significantly by 11 percent from N516/$ on February 17, 2017 to N460/$ on February 24, 2017 at the parallel market the first appreciation since December 2016. The recent rise in naira value was driven by forex supply-demand gap closure, sequel to improvements in dollar liquidity. The recent CBN Special intervention (e.g. the auction and sale of $370 million and $1.5 million respectively, by the apex bank during the week) and its revised forex policy guidelinescontributed in dousing speculations in the parallel market, thus gradually narrowing the margin between the interbank and parallel market rates. Given that the sustainability of naira appreciation is strongly hinged on the improvement in foreign reserve which is largely dependent on crude oil sales, the government should continue its efforts at calming tensions in the Niger Delta region.

Nigeria Economic Update (Issue 20)

Power sector analysis shows an increase in power generated by 15.5 percent from 3639.2 megawatt to a peak of 4196.2 megawatt between April 22, 2016 and April 29, 201612, albeit a sharp fall to 25.2 megawatts on April 23, 2016 following a system collapse13. In a bid to attain the targeted 10,000 megawatts by 2019, the Federal Government is set to complete the ongoing 47 power transmission projects across the country, which would boost power supply14. However, the delays in passing the budget into law is a major constraint to the completion of the projects. Thus government needs to speed-up the passage of the 2016 budget to provide the funds to complete the projects.

Nigeria Economic Update (Issue 32)

The naira continued its downward trajectory this week. Specifically, naira depreciated at the interbank segment by 3.45 percent to N300/$; and by 3.56 percent to 378/$ at the parallel segment. Despite the CBNs effort to support the naira with Forwards and FOREX futures, the excess demand for dollar continues to put pressure on the naira. Looking forward, the stabilization of exchange rate depends on the ability of the CBN and government to attract capital inflows; particularly by raising interest rate, tackling inflation and supporting economy recovery.