Macroeconomic Report & Economic Updates

February 3, 2016

Nigeria Economic Update (Issue 6)

Latest figures of FDI flows to Nigeria show
a decline of 27 per cent from $4.7 billion in 2014 to $3.4 billion in 20152,
representing its lowest value since 2005. This decline is largely attributed to
the oil price slump, which has generally increased uncertainty in the economy,
with adverse effects on investors confidence. The fall in FDI flows was
witnessed in most resource based economies in Africa, as FDI flows to the
continent fell by 31 percent in 2015. The forex controls in place in Nigeria
has also exacerbated the uncertainty in economy, and created obstacles for both
domestic and foreign investors. Thus a review of the forex restrictions could
send positive signals to investors.

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Nigeria Economic Update (Issue 10)

Nigerias inflation rate remained above CBNs bandwidth of 6-9 per cent. Specifically, the inflation rate increased slightly from 9.55 percent in December 2015 to 9.62 percent in January 20165. The Core sub-index remains the main driver of inflation in Nigeria. The higher prices of items in the Core sub-index such as clothing and foot wears are reflective of higher domestic production costs as a result of the decline in the value of the naira relative to the dollar. However, in the period, the price increase was moderated by the stable price of Premium Motor Spirit (PMS). Going forward, without any sustainable policy measure to prevent the further depreciation of the naira, inflation may exceed the current single digit inflation rate in the near term.

Nigeria Economic Update (Issue 3)

Provisional Monetary statistics by the CBN show an increase in currency in circulation a portion of overall money supply. Specifically, currency in circulation rose (Month-on-Month) by 14.2 percent to N2.2 million in December 2016  the highest Month-on-Month increase recorded for the year 2016. The rise in currency- outside-bank may be attributed to the growing demand for cash balances for spending activities during the festive period. This development would largely compound the liquidity problem associated with TSA implementation and ongoing CBN monetary tightening as deposit money banks might be cash-strapped. Going forward, efforts should be geared towards intensifying initiatives that promote a cashless economy that encourages cashless transactions.