Macroeconomic Report & Economic Updates

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), in its 300th meeting held on the 19th and 20th of May 2025, resolved to retain the Monetary Policy Rate (MPR) at 27.50%, maintain the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 50%, and retain the Liquidity Ratio at 30%. This tight monetary stance was adopted to combat inflation and stabilise the economy. Members of the committee noted that rising inflation was driven by high electricity prices and persistent pressure from foreign exchange demand. They also expressed concerns about the recent decline in crude oil prices, attributed to increased production by non-OPEC member countries. The current MPR marks the committee’s second consecutive hold since January 2025. While the elevated MPR and CRR help curb demand-side inflation by reducing excess liquidity in the financial system, inflation in Nigeria remains largely supply-driven. As such, monetary tightening alone may not be sufficient. Furthermore, with a CRR of 50%, domestic banks are required to keep a significant portion of their funds with the CBN, limiting banks’ lending. Therefore, emphasis should not be on monetary policies alone but should be complemented by fiscal policy. This includes investments in energy infrastructure to increase electricity supply, which in turn would lower firms' spending on alternative energy use. In addition, the government should strengthen the development bank to scale targeted lending for micro, small, and medium-sized enterprises to bolster production, which in turn would curb inflation. 

The Central Bank of Nigeria’s (CBN) Purchasing Managers’ Index (PMI) report for April 2025 revealed that composite PMI stood at 52.2 index points, marking the fifth consecutive month of economic expansion, signalling sustained positive momentum in the Nigerian economy. The industry sector (51.8 index points) recorded expansion for the fourth consecutive month, driven by increased outputs. Similarly, the services sector index, at 51.8 index points, signalled an expansion of economic activities in the month under review, which is attributable to increases in the number of incoming businesses. Most importantly, the agriculture sector led by 53.8 index points, extending its expansion streak to nine months, with increases in new orders fuelling the identified expansion in the month under review. Composite output (53.2 points), new orders (53.2 points), and employment level (50.7 points) also recorded growth in the month under review. This overall expansion sets a positive tone for Q2 2025. Despite these gains, the report reveals ongoing pressure on business profit margin as input costs continue to outpace output prices. To moderate input costs and ensure that economic expansion is sustained, there is a need to extend grants, tax reliefs, and other incentives to input manufacturing firms in Nigeria.

The Nigerian Exchange (NGX) weekly market report for the final week of April 2025 (Monday–Friday) closed with a marginal improvement, as the NGX All-Share Index (ASI) rose by 0.27% to 106,042.57 points, while market capitalisation increased by 0.28% to ₦66.65 trillion. This modest uptick signals a cautious return by investors following a persistent decline since March, largely triggered by profit-taking and macroeconomic uncertainties. However, beneath the headline gains, sectoral performance remained broadly negative. Major indices such as NGX Banking (-0.38%), Insurance ( 2.89%), AFR Bank Value (-0.04%), MERI Value ( 2.08%), Oil & Gas (-2.90%), Lotus II (-0.01%), Sovereign Bond (-0.19%), and Commodity (-1.12%) all recorded losses. These declines reflect continued investor concerns over inflationary pressures, restrictive monetary policies, and weak earnings expectations across key sectors. The marginal recovery in the ASI was supported by selective interest in fundamentally strong stocks; yet, persistent underperformance across core segments highlights the fragility of overall market sentiment. To build long-term resilience, policymakers and capital market stakeholders must prioritise restoring investor confidence through consistent macroeconomic policies, transparent regulations, and targeted, market friendly reforms. Curbing inflation, stabilising the naira, and enhancing sectoral competitiveness are critical to sustaining capital inflows and driving a more inclusive market rebound.

According to the National Bureau of Statistics’ Consumer Price Index report for March 2025, Headline inflation rate rose to 24.23%, marking a 1.05 percentage point increase from the 23.18% recorded in February 2025. The report also showed that food inflation stood at 21.79% for the month under review, reflecting a 1.72 percentage point drop from the 23.51% recorded in the previous month. By state profile, food inflation was highest in Oyo State at 34.41%, followed by Kaduna at 31.14%, and Kebbi at 30.85%. Conversely, states such as Akwa Ibom, Bayelsa, and Sokoto recorded the slowest rises in food inflation at 12.81%, 14.02%, and 14.83%, respectively. The high food inflation can be attributed to increases in the cost of complementary food staples such as garri, potatoes, and honey. Additionally, the depreciation of the naira and fluctuating exchange rates have raised the cost of imported food and agricultural products. This, coupled with escalating farmer-herder conflicts and banditry, has led to widespread farmland abandonment, particularly in the Middle Belt and Northwest regions. As inflationary pressures continue to rise, increased food prices will have dire consequences, especially for low-income households, which allocate a larger share of their income to food. Reduced purchasing power is also expected to worsen malnutrition, as high prices push families to substitute nutritious foods with cheaper, less healthy alternatives. Therefore, the government must strengthen security in agricultural zones, ensure safe farming areas in affected states, provide subsidised inputs and access to mechanised tools for smallholder farmers, and rebuild rural agricultural infrastructure

The Organization of Petroleum Exporting Countries (OPEC) April Monthly Oil Market Report reveals that Nigeria’s average daily crude oil production (based on direct communication) declined by 4.37% (64,000 bpd), from 1.465 million bpd recorded in the preceding month to 1.401 million bpd in March. The report also shows that oil production fell by 6.6% below OPEC's 1.5 million bpd quota and a staggering 32% short of the country’s 2025 target of 2.06 million bpd. Persistent shortfalls in meeting government production targets stem from systemic challenges such as chronic underinvestment and rampant oil theft, all contributing to suppressed output. The decline in oil production and the falling oil prices in the international market are likely to strain fiscal revenues, exacerbating budgetary pressures. This will detrimentally impact national reserves, thereby reducing the availability of resources for developmental spending. While the government has no control over global oil prices, it can, to some extent, meet its OPEC production quota. Therefore, the government must intensify efforts by enforcing stricter penalties for oil theft, while fostering greater collaboration with local communities. Simultaneously, there is a need to attract investment in the sector by ensuring that regulatory bodies and the judiciary work together to provide an enabling environment for investment and modernisation of oil infrastructure