The total amount of non-performing loans (NPL) of Nigerian banks declined for the year 2018, relative to 2017. At N1.79 trillion, the stock of NPL fell by 24.2 percent from N2.36 trillion in 20171. Also, gross loans as of the end of 2018 stood at N15.35 trillion, as against N15.96 trillion as at the end of 2017. The reduction in NPL shows that debtors may have relieved more of their indebtedness in 2018 compared to 2017; this may have been complemented by the Asset Management Company of Nigeria’s (AMCON) resolve to achieve its recovery mandate against erring debtors2. AMCON is saddled with the statutory responsibility, among others, of recovering the NPL hitherto disbursed by eligible banks to their customers. The decline in non-performing loans is expected to continue as the overconcentration of banking sector loans to the unpredictable and volatile oil and gas sector has been reduced to a great length. Monetary authorities should tighten mechanisms to ensure that commercial banks strictly adheres to the macroprudential guidelines that stipulate a 5 percent NPL benchmark.
Macroeconomic Report & Economic Updates
This paper explores the issues relating to the establishment of a Sovereign WealthFund (SWF) in Nigeria consistent with best practices. Experience with established SWFssuggests that successful oil- based funds tend to be underpinned by a sound oil revenuemanagement framework. The paper thus discusses the underlying issues of oil revenuemanagement, the policy choices and SWF implementation issues.
Recently released power sector report by the National Bureau of Statistics records a total average energy generation of 2,548GWH by 25 power stations, from October 2016 to December 2016. Daily Energy generation, attained the 2016Q4 highest level of 3,859.6MW in October 2016, and a lowest level of 2522MW in the same month. On the average, current daily energy generated which is below 3,000MW, prompts system malfunctions. Thus, the irregular power generation and supply experienced in recent times is attributable to shortage of gas owing to non-functional major pipelines, in addition to the inability of GENCOs to make payments for the available gas supply. Given the recent challenges to power supply, efforts should be geared towards the diversification of electricity generation. Government should consider investment in renewable as well as coal energy to complement gas power supply.
Naira appreciated in the week under review. At the parallel market, naira gained 0.54 percent to exchange at N368/$ on June 23, 20175. This is at the backdrop of injections into the forex market by the CBN to the tune of $195 million at the beginning of the review week, to meet various forex demands. This is amid a slight week-on-week increase in the external reserves (by 0.1 percent to $30.23 billion). Despite the recent naira appreciation, the long-term prospects seem bleak given that the ongoing intervention that seeks to stabilize naira by depleting reserves is unsustainable.
Crude oil price decreased in the review week. OPEC weekly basket price reduced by 3.5 percent to $42.06per barrel from November 4, 2016 to November 11, 2016, while Nigerias bonny light price decreased by 1.1 percent to $44.36per barrel in the same period. Global oil market refocused on oversupply, as indicated in the OPECs October crude data figures (global OPEC and Non-OPEC oil supply grew by 0.97mb/day to average 96.32mb/day and outpaced demand by 1.92mb/day).