Publications

Month-on-Month analysis of food prices show that average prices of selected food items reduced from December 2017 to January 2018. Precisely, total average month-on-month price decreased from 2.48 percent to 1.19 percent, with reductions in unit prices of items such as eggs, chicken, beef, rice, fish, and palm oil among others. Food prices which remains largely volatile in the short term, may have reduced in the review period due to a slight fall in consumer demand following the end of the festive period. Looking forward, the decline in food prices may be short-lived in the absence of yield-enhancing investments that can sustain food production/supply. Hence, the government should promote policies that alleviate the credit constraints to yield-enhancing investment in the private sector.

The federal government fiscal operations in 2017 shows that there were deficits for the four quarters recorded. The CBN report reveals that the federal government spent a total of N147.11 billion on capital expenditure in the four quarters (including a 2016 fiscal year roll-over due todelay in approving the 2017 budget), and N3.64 trillion as recurrent expenditure in 2017. Capital releases suggest that only about 6.6 percent of budgetary amount of N2.24 trillion was spent in the fiscal year, while recurrent expenditure represented 72 percent of N5.06 trillion budgeted for the year. Nigeria’s recurrent expenditure has always exceeded capital expenditure for infrastructure, however, the delay in the passage of the 2017 budget (in June 2017) may have triggered the slow-down in capital releases. Nonetheless, the 2017 budget is still being followed, given that the 2018 budget has not been passed. Going forward, the process of the 2018 budget release should be expedited, as delay in budget sends negative signals to foreign investors which could make them divert capital investment to other countries.

The national accounts for 2017Q4 show that the aviation sector grew year-on-year by 4.7 percent in real terms - significantly higher than the 0.48 percent in preceding quarter but significantly lower than the 13.3 percent in the corresponding quarter of 2016 Drawing from the data recently provided by the NBS, it can be inferred that the increase in the number of both domestic and international passenger traffic in the fourth quarter (by 4.9 percent YOY to 3.7 million passengers) may have partly driven the YOY real growth in the sector. This is in addition to remarkable increases in aircrafts and mail movements – by 4.6 percent and 229.6 percent respectively.

Recent media highlights suggests that the Federal Government made a non-oil-based revenue of N1.27 trillion from operating surpluses between 2007 and 2016¹. The period which covers the years of operation of the Fiscal Responsibility Act, shows a list of agencies and government organizations that paid the operating surpluses (revenues above approved budgetary expenditure at the end of each year) to the federal government.  Notably, the annual remittances shows year-on-year increases. This is likely attributable to the improved monitoring and intervention activities of the Fiscal Responsibility Committee over the years. There is greater scope for operating surpluses from public corporations with intensified efforts at monitoring the implementation of the template for calculating operating surplus liabilities across scheduled corporations.

Nigeria’s debt profile reached unprecedented high levels at the end of the year 2017. Figures obtained from the debt management office reveals that debt stock increased Year-on-Year by a significant 42.6 percent and Quarter-over-Quarter by 6.6 percent to N21.73 trillion as at December 2017¹. Domestic and foreign components of the debt profile grew to N3.35 trillion and N18.38 trillion respectively. The increased debt profile may have been triggered by domestic and foreign borrowings to fund Nigeria’s budget deficit, and excessive debt servicing costs – Nigeria serviced domestic debts to the tune of N1.48 trillion in 2017², about 29.13 percent of its total budget revenue. Implicatively, Nigeria’s debt to GDP ratio continues to increase, from 18.6 percent in 2016 to 21 percent

According to data released by the National Bureau of Statistics, states generated about N931.2 billion altogether in 2017 fiscal year¹, representing 12 percent above the N831.2 billion generated in 2016. Further breakdown shows that 31 states recorded increases, while only about 5 states recorded slight declines in revenue generated internally; Lagos state generated 36 percent of total internally generated revenue (IGR). Notably, with a net FAAC allocation of N1.7 trillion, total revenue available to states stood at approximately N2.7 trillion in 2017. However, the states are still burdened with debts, given the N3.2 trillion and $4.1 billion owed as domestic and foreign debts respectively as at the end of December 2017. Going forward, improvements in tax collection and administrative capacities of revenue-generating agencies of other states, beyond Lagos, can further improve overall IGR.

The World Economic Outlook report, recently released by the World Bank, reduced its growth projection for Nigeria to 2.1 percent in 2018¹, from 2.5 percent². The new growth projection is considerably lower than the 3.5 percent 2018 growth rate projected by the federal government of Nigeria. However, at 2.1 percent, the growth is a significant improvement from actual 2017 growth rate of 0.83 percent; and this outlook has been hinged on improving oil prices, revenue and production, and foreign exchange measures that contribute to better foreign exchange availability.

Consumer Price Index, the measure for inflation rate, declined (Year-on-Year) for the fourteenth consecutive month in March 2018. Headline inflation dropped to 13.34 percent¹ – representing a marginal 0.99 percentage-points decrease, and lowest inflation rate in two years. The sub-indices moved in tandem with headline inflation as food inflation fell from 17.59 percent to 16.08 percent, while core inflation moderated to 11.20 percent, down slightly from 11.70 percent. The year-on-year decline is attributable to base effects of higher prices in corresponding month of 2017. Additionally, stable exchange rate moderated the impact of imported consumer goods prices². Going forward, to stimulate further decline in both food and core inflation rates, it is necessary to promote investment in the agriculture sector as well as  to foster policies that promote forex reserve growth and exchange rate stability.

Nigeria’s Apex bank held the first meeting of its reconstituted Monetary Policy Committee (MPC) for the year 2018. Following a detailed review of domestic macroeconomic events, the MPC deemed it fit to retain all rates: MPR at 14% (which has remained at a record high of 14 percent since July 2016), CRR 22.5%, Liquidity Ratio 30% and Asymmetric corridor at +200 and -500 basis points around the MPR¹. The unchanged monetary policy can be attributed to the MPC’s satisfaction with the continued moderation in economic indices as well as the gradual return to macroeconomic stability. Going forward, fiscal policy authorities should consolidate these positive outcomes given monetary policy inaction.