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Recently released report by the National Bureau of Statistics indicates decline in output and contribution to GDP in the Nigeria aviation sub-sector. In real terms, output in the sub-sector decreased annually by 4.9 percent between 2015 and 2016; and declined by 13.3 percent (Year-on-Year) in 2016Q4 the largest quarterly decline in 2016. The sectoral fall in output was supply-side driven: increased cost of operations prompted cut-back on services provided by the sector as well as termination of some aviation operations. Going forward, recent improvement in forex supply in the interbank and BDC channel would enhance forex access to airline operators and facilitate smooth running of the airline industry.

OPEC basket price increased (Week-on-Week) by 1.6 percent to $49.45 per barrel on March 31, 2017- the first increase recorded in three weeks. Also, Bonny light rose by 4.7 percent to $51.92 per barrel. The rise in crude oil prices reflects demand-side expansion, consequent upon a myriad of factors: slower rise in USA crude reserves, huge supply disruptions in Libya, and the prospective extension of OPEC supply cut deals in member countries. The strengthening of crude oil price amid calm in the Niger Delta oil region, presents positive outlook for the Nigerian economy. However, given the adverse implications of sole dependence on crude oil revenue, the government should avoid returning to the norm and make efforts to intensify investments in other key sectors of the economy

Business activities in Africa slightly improved in February 2017 albeit at a slow rate. Sales Managers Index (SMI) for Africa an assessment of business condition in Pan-African Economy increased by 0.4 index points from 52.2 points in January 2017 to 52.6 points in February 2017. Sub-Saharan African countries experienced better business activities than North Africa in the review period. The two largest economies in the region, Nigeria (48.5 index points) and South Africa (49.2 Index points) registered contraction in the review period as Nigeria remained in recession while high unemployment remained a problem in South Africa. The growth in SMI recorded in the review period is driven by improvement in business confidence and sales price which outweighed the fall in other components market growth, sales output and staffing level. 

The Naira sustained its appreciation trajectory at the parallel market in the review week. Precisely, naira gained 13.3 percent (Week-on-Week) to exchange at N390/$ on March 24, 2017. Reduced pressure on the naira followed moderation in speculative activities as a result of increased forex sales and intervention by the CBN (daily intervention of $1.5 million at the interbank market.) The aim of CBN interventions (narrowing the gap between interbank and parallel market rates) seems to be on course with the continued appreciation of the naira at alternative markets. While current approach of the apex bank proves effective in improving international value of naira in the short term, however, it is expedient that the bank articulates clear and credible flexible exchange rate policy to sustain the momentum and enhance confidence in the forex market in the medium term. Nonetheless, the sustainability of the exchange rate gains is partly dependent on the prospect of crude oil price and production which is outside the purview of the monetary authorities.

Nigerias external reserve rose to its 19-month high in the week under review (March 3, 2017 to March 10, 2017). Precisely, the reserve improved by a daily average-percentage-increase of 0.21 percent, from $29.79 billion on March 3, 2017 to $30.04 billion on March 10, 2017  the highest level since August 2015. The rising reserve at the backdrop of steady revenue from improved domestic crude oil production/prices and forex inflows from rising exports, has reduced pressure on the Naira the naira has witnessed marginal but steady appreciation. While the recent improvement in oil revenue is a welcome development, concerted efforts need be made to develop the Non-oil sector so as to mitigate future oil revenue shocks.  

Recently released report by the National Bureau of Statistics (NBS) indicates price increase of selected food items for the month of February 2017, relative to January 2017. Specifically, prices of the selected 24 food items ranged from N47.42 N1, 812 in January to N42.90 N1, 955.10 in February 2017. Average price of all selected items increased month-on-month by 2.7 percent to N540.05. Non-seasonal agriculture factors such as rising cost of crop production, imported products, and transportation continue to drive domestic food prices higher as domestic food supply contracts. This is also reflective of the high food inflation rate in February (18.53 percent) relative to 17.82 percent recorded in January 2017. Strengthening Nigerias crude oil production, supporting local agricultural production, and improving forex policies to straighten the naira remain critical in improving food supply and reducing inflation.

Crude oil prices fluctuated during the review week. OPEC weekly basket price decreased marginally from $53.63 on February 24, 2017 to $53.34 on March 3, 2017. Similarly, Brent crude declined (week-on-week) by 0.84 percent to $55.15, while Bonny light decreased by 2.4 percent to $54.4 per barrel. During the week, reports of Russias incomplete compliance to agreed production cut and rising United States crude production/inventories, led to the slight pressure exerted on oil prices. The uncertainties and volatility of global crude oil price stresses the need for the government to channel efforts at developing other key sectors of the economy, particularly the manufacturing sector.

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.

Sub-Saharan Africa experienced its worst economic performance in over two decades in 2016, with growth slowing to 1.5 percent. The poor performance in South Africa and oil exporting countries is responsible for attenuating regional growth rate, due to their high collective contribution to regional GDP, despite robust performance in non-resource intensive countries. Growth in Sub-Saharan Africa is projected to slightly improve in 2017 (2.9 percent) and further strengthen in 2018 (3.6 percent). At the sub-regional level, growth prospect is estimated to be highest in West Africa (4.78 percent), attributable to 5.93 percent growth rate from West African Monetary Union (WAEMU) Countries. East Africa is expected to grow at 4.5 percent, Southern Africa 3 percent, and Central Africa 2 percent. Agricultural exporting countries are projected to grow at around 7 percent, while oil producing countries are estimated to grow at 1.9 percent, which indicates a recovery from the negative growth recorded in 2016.