This document is for CBN internal consumption


CENTRAL BANK OF NIGERIA
ECONOMIC REPORT


Third Quarter

i

ABOUT THE REPORT

The Economic Report of the Central Bank of Nigeria (CBN) is a periodic
publication by the Research Department of the Bank. The Report, which
is published on a monthly and quarterly basis, provides a review and
insights on developments in the real, fiscal, financial and external sectors
of the Nigerian economy, as well as developments in the global economy.
It also discusses the policy initiatives of the CBN during the review period.

The Report is directed at a wide spectrum of readers, including
economists, policymakers, financial analysts in government circles, the
private sector, and the general public. Subscription to the Report is
available without charge to institutions, corporations, embassies, and
development agencies. Individuals can also obtain any issue of the
publication from the CBN Website. The Report is also available for free
download from the CBN website: www.cbn.gov.ng All inquiries on the
publication should be addressed to the Director of Research, Central Bank
of Nigeria, P.M.B. 187, Garki, Abuja, Nigeria.


Contents


iii

Tables

Table 5: Federally Collected Revenue and Distribution to the Three-Tiers
Table 10: Money and Credit Growth over preceding December (per cent)

Figures

Figure 2: Percentage Population fully vaccinated as at September 30,
Figure 7: Price Changes in Selected Metals, Third Quarter 2021 (per cent)
Figure 11: Top 21 Sub-sectors with largest Contribution to GDP Growth
Figure 12: Bottom Sub-sectors with Least Contribution to GDP Growth
Figure 15: Federal Government Expenditure (N Billion), Third Quarter


iv

Figure 28: Secondary Income Balance and Remittances Inflow (US$
Figure 29: External Reserves and Months of Import Cover (US$ Billion) 45
Figure 30: Foreign Exchange Transactions through the Bank (US$
Figure 31: Foreign Exchange Sales to Authorised Dealers, Third Quarter
Figure 32: Turnover in the I&E Foreign Exchange Market (US$ Million) . 48

1 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
EXECUTIVE SUMMARY
Global economic recovery continued in the third quarter of 2021, despite
the risks posed by the resurgence of the third wave of COVID-19 pandemic
and the emergence of the deadlier Delta variant, though at a slower pace.
The sustained recovery reflects a sharp rebound in some major economies,
amid unrelenting policy interventions and greater strides in COVID-19
vaccine administration. However, economic activities were dampened by
supply chain disruptions across several countries, as reflected in the lower
purchasing managers’ indices (PMI) reported by some advanced and
emerging market and developing economies. Thus, growth prospects
remain largely uneven globally, on the back of concerns surrounding the
emergence of new COVID-19 variants and vaccine administration.
Furthermore, concerns about monetary policy outlook, the weakening
capacity of several countries to undertake further fiscal injections, and
mounting inflationary pressure underscore the fragility of future growth
expectations. Consequently, the International Monetary Fund, World
Economic Outlook for October 2021, which revised its forecast for world
output growth downwards, to 5.9 per cent from 6.0 per cent, further
stressing the risks to growth expectations across the globe.
In the domestic economy, output recovery was sustained in the third
quarter of 2021, following improvement in economic activities, supported
by the impact of sustained fiscal and monetary stimuli on the economy, as
real GDP grew, for the fourth consecutive quarter, by 4.03 per cent (yearon-year). The growth was driven, mainly, by the non-oil sector, which
expanded by 5.44 per cent, with the Services and Agriculture sub-sectors
contributing 4.01 percentage points and 0.38 percentage points,
respectively, to the GDP growth. The improvement was spurred by
renewed business confidence, which accompanied the optimism
surrounding the continued administration of the COVID-19 vaccines in the
country. However, the oil sector contracted by 10.56 per cent during the
period, dragging down the overall growth by 0.94 percentage points. The
negative contribution of the oil sector was due to lower crude oil output,
occasioned by supply disruptions caused by pipeline leakages, fire
incidents, and scheduled maintenance on some pipelines.
Inflationary pressures moderated in the third quarter of 2021, driven
largely by improvement in agricultural output and food supply chain,
occasioned by the sustained implementation of the government’s
agricultural support schemes. Consequently, headline inflation (year-onyear) dropped to 16.63 per cent in the third quarter of 2021, below the
17.75 per cent recorded in the preceding quarter. Furthermore, while food
inflation moderated to 19.57 per cent (year-on-year) in the third quarter of
2021, from 21.83 per cent in the preceding one, core inflation, on the other
hand, rose to 13.74 per cent, from 13.09 per cent in the preceding quarter.
The rise in core inflation was attributed to an increase in the cost of
transportation/logistics and lingering security challenges across the
country.

2 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Federation revenue improved in the third quarter of 2021 due to a
sustained uptick in economic activities and crude oil prices. At N2,848.66
billion, it exceeded the level in the second quarter of 2021 by 11.5 per cent
but was below the quarterly benchmark of N3,074.15 billion by 7.3 per
cent. Non-oil receipts continued to dominate the fiscal space for the fifth
consecutive quarter, constituting 59.9 per cent of total revenue, while oil
revenue made up the balance of 40.1 per cent, indicating that the
initiatives to diversify the revenue base of the government were yielding
results. Despite the rise in federation revenue, FGN retained revenue fell
short of its target, following low earnings, particularly from independent
revenue sources. At N1,114.21 billion, the retained revenue of the FGN
declined by 16.2 per cent and 44.2 per cent, relative to the second quarter
of 2021 and the budget benchmark, respectively. This led to an 11.1 per
cent expansion in the estimated level of the deficit. Total FGN debt
outstanding rose to N33,805.84 billion at end-September 2021, an
increase of 7.9 per cent relative to end-June 2021. The development was
attributed to the drive to enhance economic recovery, reduce the
infrastructural deficit, and fund COVID-19 mitigation programmes.
Domestic debt accounted for 53.9 per cent of FGN total debt, while
external debt obligations constituted 46.1 per cent.
The accommodative monetary policy stance of the Bank in the third
quarter of 2021 led to continued credit expansion to enhance economic
growth, with banking system claims on the domestic economy rising by
10.15 per cent. Accordingly, broad money supply, M3 grew by 4.6 per cent
to N40,414.78 billion at the end-September 2021, with an annualised
growth of 6.2 per cent, compared with the provisional benchmark growth
of 10.0 per cent for the fiscal year 2021. However, narrow money supply
M1 fell marginally, as the need for holding cash for transactions by
economic agents also reduced. Banking system liquidity improved in the
review period, thus, playing a major role in pushing key interest rates
downwards. In the review period, the key financial soundness indicators
also revealed a stable and resilient financial sector. Activities on the
Nigerian Exchange Limited were bullish, owing to positive sentiments
arising from investors’ expectations of releasing third-quarter earnings
reports by quoted companies.
The external sector's performance was impressive during the review
period, as pressure on the external account eased, with an overall balance
of payments surplus of US$5.28 billion. The development was driven by the
sustained global economic recovery and improved foreign exchange
receipts from the International Monetary Fund’s SDR allocation and sale of
Eurobonds. Specifically, improved trade surplus, lower payments in respect
of services, and repatriation of dividends resulted in a higher current
account surplus of US$3.68 billion, from US$0.35 billion in the second
quarter of 2021. The financial account recorded net incurrence of liabilities
of US$2.57 billion, as against acquisition of US$0.24 billion in the preceding
quarter. The external reserves at the end of September 2021 improved to

3 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
US$41.57 billion, compared with US$32.99 billion at the end-June 2021,
and could finance 11.5 months of goods only or 8.7 months of goods and
services import. At the Foreign exchange market, the average naira
exchange rate at the I&E window was relatively stable at ₦411.89/US$ in
the third quarter of 2021.
The Nigerian economy is expected to sustain its positive trajectory in the
near-term, predicated on continued oil prices recovery, rebound in
manufacturing activities, and intensified administration of COVID-19
vaccines. In addition, the optimistic projection is also supported by the
implementation of the Petroleum Industry Act (PIA), which is expected to
expand the fiscal space of government in the medium-to-long term; and
the launching of the Central Bank Digital Currency (CBDC), eNaira, which
is expected to improve cost efficiency on transactions and bolster financial
inclusion in the medium-to-long term. However, increased demand during
the festive period and food supply disruptions arising from activities of
middlemen could likely elevate food prices in the fourth quarter of 2021.
Furthermore, fiscal risks associated with the country’s elevated debt
service-revenue ratio and lingering security challenges could dampen the
prospect of improved fiscal space.


4 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
1.0 GLOBAL ECONOMIC DEVELOPMENTS
Global economic recovery continued in the third quarter; however, the
intensity of growth moderated across regions. The uptick in global inflation
was sustained due to rising consumer demand and recovery in commodity
prices. Despite the fragile global recovery, financial markets remained
resilient. However, monetary policy shifted slightly towards hawkish,
though at a slower momentum, particularly in Advanced Economies (AEs).
However, policy interest rates remained unchanged during the review
period. Crude oil prices rose marginally in the third quarter on the back of
renewed expectations of higher global demand for crude oil, following the
rise in COVID-19 vaccination rates.
1.1 Global Economic Activities
Global economic recovery continued in the third quarter of 2021;
nonetheless, the intensity of growth moderated. The global economy
sustained its growth despite the visible risks posed by the resurgence of
the third wave of COVID-19 pandemic and the emergence of the deadlier
Delta variant. The sustained recovery reflects a sharp rebound in some
major economies amid unrelenting policy interventions and greater
strides in COVID-19 vaccine administration. Nonetheless, economic
activities were dampened by supply chain disruptions across several
countries, following the outbreak of the third wave of the COVID-19
pandemic. The moderation in economic activities was also reflected in the
lower purchasing managers’ indices reported by some advanced
economies.
Table 1: Global Purchasing Managers' Index

2021Q1.
2021Q2
2021Q3
Composite
53.43
57.13
53.77
Manufacturing
54.17
55.77
54.53
Services (Business Activity)
53.03
57.90
54.17
Source: JP Morgan, IHS Markit
Growth prospects remain largely uneven globally, on the back of concerns
surrounding the emergence of new COVID-19 variants and vaccine
administration. Recovery in AEs was sustained in the third quarter of 2021,
albeit at a slower pace, as the emergence of the more transmissible Delta
variant slowed down the expected full return to normalcy. Notably, risks
to the economic prospects of several AEs heightened on account of the
prolonged disruption to global supply chains, which followed the outbreak
of the third wave of the pandemic. The Purchasing Manager Indices (PMI)
of several AEs dipped in the third quarter of 2021, though it remained
above the benchmark, signifying moderation in economic activities. Apart
from the US, there was moderation in the PMIs of several advanced
Global
Economic
Conditions
Advanced
Economies

5 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
economies in the third quarter, compared with the second quarter. In the
UK, the manufacturing PMI declined to 59.27 index points average in the
third quarter, from an average of 63.47 index points in the preceding
quarter while Germany, Italy and Japan recorded a decline to an average
of 62.30 index points, 60.30 index points and 52.40 index points
respectively, compared with 65.23 index points, 61.73 index points and
53.00 index points in the second quarter. In its WEO Report for October1
2021, the IMF revised its growth outlook for the AEs to 5.2 per cent, which
is 0.4 per cent lower than the 5.6 per cent projection in its July 2021
report.
The disparities in vaccine administration and lower capacity to undertake
policy support have continued to dampen the growth prospects of EMDEs.
Essentially, a large proportion of the population of EMDEs remains
unvaccinated on account of limited access to vaccines and, in some cases,
vaccine hesitancy. This has continued to weaken the expected return to
the pre-pandemic pace of economic activity. In addition, tighter financing
conditions and narrowing fiscal space, coupled with other pre-existing
macroeconomic challenges, have continued to constrain economic
recovery. Specifically, China’s manufacturing PMI contracted to an
average of 49.83 index points in the third quarter, from 51.73 index points,
as the country resumed containment measures against the rising cases of
the Delta strain. Economic activities in South Africa slowed with average
manufacturing PMI in the third quarter of 2021, at 52.73 index points,
compared with 57.13 index points in the preceding quarter. India
recorded further expansion in overall business conditions amidst easing
lockdown measures as manufacturing PMI increased to an average of
53.77 index points from 51.47 index points in the second quarter of 2021.
Figure 1: PMI in Selected Countries

Source: Trading Economics/Various Country Websites, CBN Staff compilation.
Note: US, UK, CHN, IND, GM, IT, JP, SA and NG represent United States, United Kingdom, China, India,
Germany, Japan, South Africa and Nigeria, respectively.


1 Note: The estimates and projections provided in the IMF WEO October 2021, are based on
statistical information available through September 27, 2021.
59.0


US
UK
GM
IT
JP
CHN
IND
SA
NG
2021Q1
2021Q2
2021Q3
50-point threshold
Emerging and
Developing
Economies

6 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 2: Percentage Population fully vaccinated as at September 30, 2021

Source: Johns Hopkins Corona virus Resource Centre, CBN Compilation.

1.2 Global Inflation
Global inflation sustained its uptick in the third quarter of 2021 due to
rising consumer demand and recovery in commodity prices. Headline
inflation in most AEs remained above their central banks’ targets,
reflecting stronger aggregate demand, rising input costs from supply
bottlenecks, as well as higher commodity prices. Specifically, headline
inflation in the US rose to 5.34 per cent in the third quarter of 2021,
relative to 4.85 per cent in the second quarter of 2021. The uptick in
inflation is attributed to stronger demand, continued supply constraints
and base effects from the previous year. Also, the UK’s inflation rose to
2.70 per cent in the third quarter of 2021, from 2.10 per cent in the
preceding quarter, due, in part, to rising restaurant and cafe prices and
low base effects. Similarly, Germany’s inflation rate rose to 3.90 per cent
in the third quarter of 2021, from 2.29 per cent in the preceding quarter,
following rising input costs and demand.

In contrast, inflationary pressures in developing and emerging economies
decreased marginally in the third quarter of 2021. Inflation decelerated in
China, as consumer prices fell to 1.0 per cent in the third quarter of 2021,
from 1.27 per cent in the preceding quarter, due to a decline in the cost
of food, transportation and communication. In India, inflation fell to 4.82
per cent in the third quarter of 2021, from 5.33 per cent in the preceding
quarter, owing to a sharp decline in the cost of food and a slower rise in
energy prices. Similarly, inflation moderated in South Africa as it remains
unchanged at 4.93 per cent in the third quarter of 2021, from the level in
the preceding quarter, due to lower costs of transport, food, and nonalcoholic beverages.

Ethiopia
Nigeria
Kenya
Ghana
Angola
Egypt
South Africa
India
Russia
Mexico
Brazil
Japan
United States
France
United Kingdom
Germany
Italy
Canada
Spain
United Arab Emirates
Global
Inflation

7 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021

Figure 3: Inflation Rates in Selected Countries, Average (per cent)

Source: Organisation for Economic Cooperation and Development (OECD)
Note: US, UK, CHN, CDN, FRN, IND, IN, GM, IT, JP, MEX, TUR SA represent United States, United
Kingdom, China, Canada, France, India, Indonesia, Germany, Italy, Japan, Mexico, Turkey, South Africa,
respectively.

1.3 Global Financial Markets
The global financial markets remained resilient in the third quarter of
2021, reflecting sustained global recovery at a slower momentum. Major
equity indices in AEs generally closed higher, based on improved economic
prospects, ongoing vaccine administration, and fiscal stimuli that boosted
investors’ confidence. The positive development was moderated by the
slower pace of growth and elevated inflation levels, which negatively
impacted investors' sentiments towards the end of the quarter.
The S&P 500 and NASDAQ closed higher at 0.23 per cent and 0.92 per
cent, respectively, relative to their levels as of end-June 2021. Similarly,
the NIKKEI225 closed at 2.29 per cent in the third quarter. The slower
momentum recorded in the equities was driven by double-digit drops in
large technology stocks, arising from the Fed’s plans to slow its purchases
of government-backed bonds. Furthermore, Washington gridlock and
debt ceiling showdown in US, and instability in China’s real estate
contributed to the slide in stock performance.


US
UK
JP
CDN
FRN
GM
IT
CHN
IND
IN
MEX
TUR
SA
Per cent (%)
2020Q3
2021Q2
2021Q3

8 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 4: Global Stock Market Equity Indices

Source: Bloomberg data and Central Bank of Nigeria (CBN) Staff computation.

In the US and Europe, government yields were largely unchanged in the
third quarter, as the decline at the beginning of the quarter was reversed
towards the end of the quarter. Yields on the US 10-year Treasury Bond
stood at 1.49 per cent in the third quarter, due to rising inflation and
expected withdrawal of monetary policy support. Also, the UK’s 10-year
government bond yields increased from 0.71 per cent in the second
quarter of 2021 to 1.02 per cent at the end of the third quarter, due to the
hawkish shift in a policy stance of the Bank of England. Within the EMDEs
block, government bond yields generally rose, as emerging market
currencies fell against the US dollar.

Figure 5: 10-Year Government Bond Yields, 2020Q2 – 2021Q3

Source: Bloomberg data, CBN Staff computation.
Note: US, UK represent United States, United Kingdom


S&P500
FTSE100
Nasdaq-100 Dow Jones
EURO
STOXX50
NIKKEI 225
TOPIX
EGX100
DAX
NGSEINDX
as at June 30, 2021
as at Sept 30, 2021

US
Canada Germany Europe
UK
France
Japan
China
Brazil
as at June 30, 2021
as at September 30, 2021

9 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
1.4 Central Banks’ Policy Rates
The monetary policy stance was slightly hawkish, though policy interest
rates remained unchanged during the quarter. The Fed and ECB have
announced an upcoming reduction in the pace of its asset purchases,
while the BoE’s latest guidance suggests a likely rise in policy rates by early
next year. Notably, there has been tightening through the year in Mexico,
as the monetary authorities aim to keep inflation and inflation
expectations within target. In contrast, the Central Bank of Turkey took a
dovish stance in the third quarter of 2021, reducing its 1-week repo rate
to 18.0 per cent, from 19.00 per cent in 2021Q2.
Table 2: Central Bank Policy Rates (Per cent)
Country
2021Q1
2021Q2
2021Q3
United States
0.25
0.25
0.25
United Kingdom
0.10
0.10
0.10
Japan
-0.10
-0.10
-0.10
Canada
0.25
0.25
0.25
Euro Area
0.00
0.00
0.00
China
3.85
3.85
3.85
India
4.00
4.00
4.00
Mexico
4.00
4.25
4.75
Indonesia
3.50
3.50
3.50
Turkey
18.00
19.00
18.00
South Africa
3.50
3.50
3.50
Ghana
14.50
13.50
13.50
Nigeria
11.50
11.50
11.50
Source: Various Central Bank Websites

1.5 Global Oil Market
Crude oil spot prices rose significantly in the third quarter of 2021, due to
the renewed expectations of higher global demand for crude oil, following
the rise in COVID-19 vaccination rates. The average spot price of Nigeria’s
reference crude oil, the Bonny Light (34.9° API), was US$73.78 per barrel
(pb) in the third quarter of 2021, representing an increase of 7.4 per cent,
compared with US$68.70 pb recorded in the second quarter of 2021. The
prices of Brent, at US$74.09 pb, Forcados, at US$73.95 pb, and WTI, at
US$70.77 pb, exhibited similar upward movements as the Bonny Light.
The OPEC Reference Basket (ORB) rose by 7.7 per cent in the third quarter
of 2021, to US$72.58 pb, compared with US$67.42 pb in the second
quarter of 2021 (Figure 6).
The increase in crude oil prices was driven by concerns about short-term
oil supply disruptions, occasioned by fire incidence on an offshore oil
platform operated by Pemex in Mexico. In addition, a decline in the US
World Crude
Supply and
Demand

10 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
crude oil inventories for four consecutive weeks in August 2021
contributed to the surge in prices.

Figure 6: Global Crude Oil Prices (US$ per barrel)

Source: Reuters data, CBN staff compilation.

1.6 Global Commodity Market Developments
The average indices of the major export agricultural commodities
monitored showed an increase, with five of the eight indices increasing in
the third quarter of 2021. The average indices rose by 4.06 per cent above
the preceding quarter. Coffee, cotton, palm oil, cocoa, and groundnut
recorded increases of 23.15 per cent, 9.58 per cent, 5.72 per cent, 3.11
per cent, and 1.11 per cent, respectively, while soya beans, wheat, and
rubber declined by 6.03 per cent, 3.99 per cent, and 0.17 per cent,
respectively. The price increases were largely influenced by increased
demand from key importers, as major countries gradually relaxed
restrictions to curb the spread of the third wave of COVID-19 infection. In
addition, supply constraints, increasing freight costs, and delays in
shipment contributed to the pressure on the prices of the commodities.
Specifically, speculations oversupply shortfall in major producing
countries on account of adverse weather conditions influenced the coffee
price, while the price of cotton rose on account of robust global demand
amidst tighter supply. The price of rubber increased due largely to firm
demand arising from stockpiling by China while that of palm oil was
influenced, largely, by the challenges of labour shortage in Malaysia, one
of the world’s largest producers.
However, improved US harvests weighed on soya beans and wheat prices,
while the marginal decline in the price of rubber was attributed to rising
output from producing regions.

Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
US$ Per Barrel
Spot Brent
Bonny Light
Forcados
OPEC Ref Basket
WTI
Agricultural
Commodity Prices

11 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Table 3: Agricultural Export Commodities, Third Quarter 2021
Indices of Average World Prices of Nigeria's Major Agricultural Export
Commodities for July 2021 (in dollars; Dec. 2010=100)
Commodity
2020Q3
2021Q2
2021Q3
% Change
(1) & (3)
(2) & (3)

Cocoa

Cotton

Coffee

Wheat

Rubber

Groundnut

Palm Oil

Soybeans

Average
Change

Sources: Index Mundi & World Bank pink sheet

The gold, silver, platinum and palladium prices declined in the third quarter
of 2021. Spot prices of gold and silver in the third quarter of 2021 averaged
US$1,789.69 per ounce (oz) and US$24.29 per oz, representing a decline
of 1.3 per cent and 9.0 per cent, compared with US$1,813.88 per oz and
US$26.68 per oz recorded in the second quarter of 2021. The decline in
the prices of gold and silver was due to the rise in the real yields on US
treasury bonds and a stronger dollar. In addition, inflationary pressure in
the US showed signs of easing off.


Other Mineral
Commodities

12 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 7: Price Changes in Selected Metals, Third Quarter 2021 (per cent)

Source: Refinitiv Eikon IV (Thomson Reuters)
Similarly, spot prices of platinum and palladium averaged US$1,021.50 per
oz and US$2,449.44 per oz in the third quarter of 2021, representing a
decline of 13.4 per cent and 12.1 per cent, respectively, below the levels
in the second quarter of 2021. The development was a result of a chip
shortage that affected vehicle production companies, which led to a fall in
demand.
The performance of emerging market currencies against the US dollar was
mixed during the review period. The Russian ruble appreciated by 1.0 per
cent in the third quarter of 2021. However, the Nigerian naira, the South
African rand and the Chinese RMB depreciated against the dollar by 4.3
per cent, 2.9 per cent and 0.2 per cent, respectively, relative to the levels
in the preceding quarter.
Figure 8: EMEs Currencies' Values to the US Dollar

Source: Central Bank of Nigeria & Exchange Rates UK


Gold
Silver
Platinum
Palladium
with preceding quarter
with corresponding quarter

Chinese RMB
Nigerian Naira
South African
Rand
Russian Ruble
Depreciation/Appreciation
Q3 2020
Q1 2021
Q2 2021
Q3 2021
Emerging markets
currencies

13 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Table 4: EMEs Currencies' Rates to the US Dollar
Period
Chinese
RMB
Nigerian
Naira
South African
Rand
Russian
Ruble
2020 Q3

2021 Q2

2021 Q3


Source: Central Bank of Nigeria & Exchange Rates UK.


14 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
2.0 DOMESTIC ECONOMIC DEVELOPMENTS
2.1 REAL SECTOR DEVELOPMENTS
2.1.1. Domestic Output and Business Activities
The recovery path of domestic output was sustained in the third quarter of
2021, following improvement in economic activities, supported by the
effect of sustained fiscal and monetary stimuli on the economy. For the
fourth consecutive quarter, real GDP grew by 4.03 percent (year-on-year)
in the third quarter of 2021, compared with 5.01 in the preceding quarter.
The growth in the third quarter of 2021 indicates a steady recovery from
the COVID-19 pandemic triggered by the recession. On a quarter-onquarter basis, the Real GDP grew by 11.07 per cent to N18,543.05 billion
in the third quarter of 2021, from N16,694.67 billion in the second quarter
of 2021, signifying an improvement in the performance of the economy
relative to the preceding quarter.
Growth in the period was driven mainly by the non-oil sector, which
expanded by 5.44 per cent in the third quarter of 2021. Specifically, the
Services and Agriculture sub-sectors contributed 4.01 percentage points
and 0.38 percentage points, respectively, to the GDP growth. The
improvement was spurred by renewed business confidence, which
accompanied the optimism surrounding the country's sustained
administration of the COVID-19 vaccines. Also, the sustained fiscal and
monetary stimuli contributed to the recovery.
However, the oil sector contracted by 10.56 percent in the third quarter
of 2021 and contracted the overall growth by 0.94 percentage points. The
negative contribution of the oil sector was due to lower crude oil output,
which fell to 1.46 mbd in the third quarter of 2021, compared with 1.53
mbd produced in the corresponding quarter of 2020. Supply disruptions
was caused by pipeline leakages, fire incidents, and scheduled
maintenance on some pipelines. However, the performance of the oil
sector improved marginally, as the contraction narrowed by 3.33
percentage points from 13.89 per cent in the corresponding quarter of

15 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 9: Real GDP Growth Rate, 2020Q1-2021Q3

Source: National Bureau of Statistics (NBS).

Sectoral Performance
The Services and Agriculture sectors grew, in real terms, in the third
quarter of 2021, while the Industry sector dipped, owing to the contraction
of some of its activity sectors. The Services sector recorded an improved
growth of 8.41 per cent (year-on-year), in contrast to a contraction of 5.49
per cent in the corresponding quarter of 2020. Finance and Insurance,
Trade, and ICT sub-sectors drove the growth, which grew by 23.23 per
cent, 11.90 per cent and 9.66 per cent, respectively. The performance of
the finance and insurance sub-sector was in response to the improvement
in economic activities, which led to increases in the volume and value of
credit disbursed to finance business and consumer expenditures.
Figure 10: Sectoral Growth Rates of Real GDP, 2020Q1-2021Q3

Source: National Bureau of Statistics and CBN Staff Compilation.

The Agriculture sector recorded a slower growth of 1.22 per cent in the
third quarter of 2021, compared with 1.39 per cent in the corresponding

2020Q1
2020Q2
2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
Per cent (%)
Oil GDP
Non-oil GDP

2020Q1
2020Q2
2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
Per cent (%)
Agriculture
Industry
Services
GDP

16 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
quarter of 2020. The slower growth in the sector was attributed to the
3.97 per cent contraction in the fishing sub-sector caused by the seasonal
rise in the water levels. Crop production, livestock, and forestry subsectors, on the other hand, grew by 1.36 per cent, 0.12 per cent, and 1.98
per cent, respectively.
The performance of the Industry sector improved in the third quarter of
2021, recording a lower contraction of 1.63 per cent, compared to 6.12
per cent in the corresponding quarter of 2020. The sector's improvement
was due largely to the performance of the Manufacturing and Mining &
Quarrying sub-sector.
Figure 11: Top 21 Sub-sectors with largest Contribution to GDP Growth and
their Growth Rates

Source: Staff Computation using data from NBS


(5.10%) Insurance
(0.73%) Other Services
(1.03%) Textile, Apparel and Footwear
(12.97%) Water supply, sewage, waste Mang.
(10.02%) Chemical and Pharmaceutical Products
(1.37%) Education
(33.31%) Air Transport
(3.44%) Motion Pictures, Sound recording and...
(4.99%) Human Health & Social Services
(1.11%) Professional, Scientific & Technical Serv.
(3.92%) Broadcasting
(14.36%) Electricity,Gas,Steam & Air conditioner
(5.68%) Cement
(2.32%) Real Estate
(4.10%) Construction
(21.11%) Road Transport
(6.07%) Food, Beverage and Tobacco
(1.36%) Crop Production
(25.50%) Financial Institutions
(10.87%) Telecommunications and Information...
(11.90%) Trade

17 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 12: Bottom Sub-sectors with Least Contribution to GDP Growth and
their Growth Rates

Source: Staff Computation using data from National Bureau of Statistics

2.1.2. Index of Industrial Production
The increase in business activities and confidence reflected a rise in
Industrial production. The index of industrial Production at 104.4
(2010=100) in the third quarter of 2021, indicated a 5.2 per cent increase
compared with 98.4 per cent in the preceding quarter. The improvement
in the third quarter was attributed, majorly, to an increase in mining and
manufacturing activities.
Manufacturing sector activities witnessed improvement in the review
period. At 179.2 (2010=100) points, index of manufacturing production
rose in the third quarter of 2021, reflecting an increase of 8.7 per cent,
compared with 164.8 points in the second quarter 2021. The increase was
attributed to improved production and business activities due to increased
consumer demand and improved business confidence.
Capacity utilisation increased in the review period resulting from
improvement in manufacturing activities. The estimated average capacity
utilisation in the third quarter of 2021 stood at 55.8 per cent, reflecting an
increase of 1.1 percentage points above its level in the second quarter of
2021. The increase in capacity utilisation was attributed to improvement
in production activities in the quarter.
Mining sector activities showed an increase in the review period. The
mining production index in the third quarter of 2021 at 67.5 (2010=100)
index points rose by 6.3 per cent, compared with 63.5 index points
recorded in the second quarter of 2021. The improvement was driven by
the increase in crude petroleum & natural gas and quarrying activities.
2.1.3. Consumer Prices
Inflationary pressure moderated in the third quarter of 2021, compared
with the preceding quarter, driven largely by improved agricultural output

Quarrying and Other Minerals (-
4.20%)
Fishing (-3.97%)
Oil Refining (-47.83%)
Crude Petroleum and Natural Gas
(-10.73%)
Headline
Inflation
Industrial
Production
Manufacturing
Capacity
Utilisation
Mining

18 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
and the food supply chain. Headline (year-on-year) inflation moderated to
16.63 per cent in the third quarter of 2021, compared with 17.75 per cent
in the preceding quarter. The development was attributed to the positive
impact of sustained implementation of the government’s agricultural
support schemes and increased flow of goods.
Figure 13: Headline, Food and Core Inflation (y-o-y) (per cent)

Source: National Bureau of Statistics (NBS)

Food inflation dropped to 19.57 per cent (year-on-year) in the third
quarter of 2021, from 21.83 per cent in the second quarter of 2021, driven
by the impact of the various FGN and CBN intervention programmes on
agriculture and the real sector, bumper harvest, and improved flow of
goods and services.
Core inflation, on the other hand, rose to 13.74 per cent in the review
period, from 13.09 per cent in the preceding quarter. The rise in core
inflation
was
attributed
to
an
increase
in
the
cost
of
transportation/logistics and lingering security challenges across the
country.

2.1.4. Crude Oil Market Developments
Domestic crude oil production and export remain unchanged in the third
quarter of 2021 but below its current OPEC production quota. Nigeria’s
crude oil production, including Agbami, remained unchanged at 1.46
mbpd in the third quarter of 2021, the same as the level recorded in the
preceding quarter. In the third quarter of 2021, an average of 1.01 mbpd
was billed for export, while the balance of 0.45 mbpd was allocated for
domestic consumption. Nigeria produced lower than its current OPEC
quota of 1.52 mbpd. The decrease in production and export was due to
leakages, fire incidents, and a declaration of a force majeure arising from

2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3
Per cent
Headline
Core
Food
Food
Inflation
Core
Inflation
Crude Oil Production
and Export

19 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
the collapse in infrastructure on the Forcados, Qua Iboe, and Agbami oil
facilities.
2.1.5. Energy Sector
Activities in the energy sector improved, following the positive impact of
refurbishing existing facilities and collaborations between government and
other key stakeholders in the power sector. The continuous metering of
households under the National Mass Metering Program (NMMP)
enhanced the performance of Electricity Distribution Companies (DISCOs).
The estimated average electricity generation for the third quarter of 2021
stood at 4,051.40 MW/h, compared with 3,995.9 MW/h recorded in the
preceding quarter, showing an increase of 1.4 per cent. Improvement in
the water supply to hydropower plants led to increased electricity
generation.
Similarly, the estimated average electricity consumption for the third
quarter of 2021, at 3,631.62 MW/h relative to 3,557.42 MW/h recorded
in the preceding quarter, indicated an increase of 2.1 per cent. This
development was due to the upgrade in the transmission facilities across
the country.

2.1.6. Development Financing
The Bank sustained her interventions in Agriculture, Manufacturing,
Energy/infrastructure, and Micro, Small and Medium Enterprises (MSMEs)
to support economic recovery and contain the downside risks to other
domestic and external shocks to the economy. Agricultural
activities in the quarter centred on the harvesting of various root crops
and planting of late-maturing crops following the favourable rainfall.
Farmers intensified the rearing of poultry products during the last month
of the quarter, in preparation for the festive season.
In the third quarter of 2021, government efforts were targeted at
increasing output and cushioning the effects of rising domestic food
prices. Some of these include the establishment of farm estates in Borno
and Kwara States by the Federal Government under the National
Agricultural Land Development Agency (NALDA) to increase agricultural
output and generate employment opportunities in the states. Similarly,
the Federal Ministry of Agriculture and Rural Development (FMARD)
established two Gum Arabic processing centres in Kano and Borno States.
The Ministry had earlier refurbished the Gum Arabic testing laboratory at
the Rubber Research Institute of Nigeria (RRIN) for quality assurance and
established a cottage processing centre in Damaturu, Yobe State.
Development
Financing
Electricity
Generation
Electricity
Consumption

20 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Similarly, the Ogun State Government, via a Public-Private-Partner (PPP)
with Tulip Cocoa Processing Limited donated 10,000 improved cocoa
seedlings to farmers in the State at Itele, Ijebu-East. The effort was
expected to boost the production of cash crops in the country. In related
development, the National Palm Produce Association of Nigeria (NPPAN)
distributed 10 million oil palm seedlings to farmers across 24 States to
promote the cultivation of the crop.
2.1.7. Socio-Economic Developments
Vaccination against COVID-19 infections continued during the period,
despite increases in the country's number of active, confirmed, and death
cases. Data from the National Primary Health Care Development Agency
showed that 4.4 per cent of the eligible target population, which
represents a total of 4,873, 080 persons, had received the first dose of the
COVID-19 vaccine as at September 30, 2021. Similarly, about 1.8 per cent
of the population (a total of 2,042,235 eligible clients) had received the
second dose of the vaccine as at end-September 2021.
However, figures from the National Centre for Disease Control (NCDC)
showed that as at end-September 2021, the number of confirmed cases
in the country rose by 20.4 per cent to 205,765 from 167,618 in the
preceding quarter. The number of discharged cases also increased to
193,617, compared with 164,244 at the end-June 2021. Thus, as at endSeptember 2021, the number of active cases spiked to 9,428, from 1,254
in the preceding quarter, while the number of deaths rose from 2,120 to
2,720 in the same period. The rise in incidence cases points to the
emergence of the new Delta variant.
To further improve the vaccination drive, the National Primary Health Care
Development Agency (NPHCDA) received about 1.2 million doses of the
Johnson & Johnson vaccine through the AVATT platform, coordinated by
the African Union Commission, as part of the 39.8 million doses procured
by the Federal Government.


Health: COVID19 Update

21 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 14: COVID-19 Statistics, September 20212

Source: Nigeria Centre for Disease Control (NCDC)


2 Covid-19 data as at August 31, 2021.

16384
65536
262144
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
No. of Cases
Total Confirmed Cases
Discharged Cases
Death Toll

22 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
2.2 FISCAL SECTOR DEVELOPMENTS
The fiscal policy thrust in the third quarter of 2021 was hinged on the 2021
Appropriation Act, the Medium-Term Expenditure Framework and Fiscal
Strategy Papers (MTEF & FSP 2021-2023), and the Medium-Term Debt
Strategy (MTDS 2020-2023), which seek to achieve macroeconomic
stability, food security, job creation, and mitigate the immediate impact of
COVID-19, among others. Driven by a sustained rise in crude oil prices and
the positive effect of non-oil tax reforms, federation earnings in the third
quarter of 2021 grew by 18.3 per cent, relative to the second quarter of
2021. However, the retained revenue of the Federal Government (FGN)
declined by 16.2 per cent and 44.2 per cent, compared with receipts in the
second quarter of 2021 and the revenue target, respectively; an indication
of the persisting revenue challenge. The fall in revenue coupled with a 0.4
per cent marginal drop in Federal Government expenditure recorded in the
third quarter of 2021 resulted in an 11.1 per cent expansion in the overall
deficit. Triggered by new domestic and external borrowing, total public
debt outstanding at the end-September 2021 grew by 7.9 per cent to
N33,805.84 billion.
2.2.1 Federation Account Operations
Federation revenue improved in the third quarter of 2021, due to a
sustained uptick in economic activities and crude oil prices. Total
federation receipts in the third quarter of 2021 at N2,848.66 billion
exceeded the level in the second quarter of 2021 by 11.5 per cent.
However, it was below the quarterly benchmark of N3,074.15 billion by
7.3 per cent. The improved revenue in the period was attributed to
rallying crude oil prices and greater implementation of the Strategic
Revenue Growth Initiatives (SRGI) of the FGN, as contained in the Finance
Acts 2019 and 2020. Notwithstanding, non-oil receipts continued to
dominate the fiscal space for the fifth consecutive quarter, constituting
59.9 per cent of total revenue, while oil revenue made up the balance of
40.1 per cent. This is an indication that the initiatives to diversify the
revenue base of the government are yielding result
Non-oil earnings, at N1,705.96 billion, exceeded the level in the second
quarter of 2021 and the quarterly target of N1,556.37 billion by 7.4 per
cent and 9.6 per cent, respectively. Collections from Corporate Income
Tax (CIT) and Customs & Excise Duties drove non-oil revenue
performance, growing by 28.3 per cent and 29.3 per cent in the period.
The performance was due to the response of companies to the July 31st,
2021 deadline for filing CIT returns, as requested by the Federal Inland
Revenue Service and the relative rebound in ports activities.
Summary
Drivers of
Federation
Revenue

23 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
At N1,142.70 billion, oil revenue outperformed collections in the second
quarter of 2021 by 18.4 per cent. The dynamics in oil receipts were driven,
majorly, by collections from the Petroleum Profit Tax (PPT) & Royalties,
and domestic crude oil sales, which constituted 72.9 per cent and 24.2 per
cent of total oil revenue, respectively. However, oil earnings in the period
were below the quarterly target of N1,517.78 billion by 24.7 per cent.
Owing to improvement in federation collections in the third quarter of
2021, disbursements to the three tiers of government rose to N2,140.77
billion, from N1,786.67 billion in the second quarter of 2021. The higher
disbursement was due to the lower statutory deductions provision of
N717.27 billion in the third quarter of 2021, compared with N872.52
billion in the second quarter of 2021. Consequently, the sums of N889.09
billion, N641.91 billion, and N478.90 billion were allocated to the Federal,
State, and Local governments, respectively.

Table 5: Federally Collected Revenue and Distribution to the Three-Tiers of
Government (N Billion)

Q3-

Q2-

Q32021 1/

Budgeted
Federation Revenue (Gross)

Oil

Crude Oil & Gas Exports

PPT & Royalties

Domestic Crude Oil/Gas Sales

Others

Non-oil

Corporate Tax

Customs & Excise Duties

Value-Added Tax (VAT)

Independent Revenue of Fed. Govt.

Others*

Total Deductions/Transfers*

Federally Collected Revenue

Less Deductions & Transfers**
plus:


Additional Revenue

Excess Crude Revenue

Non-oil Excess Revenue

Exchange Gain

Total Distributed Balance

Federal Government

Statutory

VAT

State Government

Statutory

VAT

13% Derivation

Local Government

Statutory

VAT

Source: Office of the Accountant-General of the Federation and Central Bank of Nigeria Staff Estimates
Note: * Includes Education Tax, Customs Special Levies (Federation Account), National Technology Development, Customs
Special Levies, Solid Mineral & Other Mining revenue, and other Non-regular earnings; ** Deductions includes the cost of revenue
collections and JVC cash calls; while transfers entails provisions for FGN Independent revenue and other Non-Federation revenue.
Federation
revenue
allocation

24 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021

2.2.2. Fiscal Operations of the Federal Government
The fiscal deficit rose by 11.1 per cent, due to a 0.4 per cent marginal
contraction in estimated aggregate expenditure combined with the 16.2
per cent decline in FGN retained revenue, relative to the second quarter of
2021. The FGN recorded a provisional fiscal deficit of N2,039.35 billion,
which was 45.6 per cent above the quarterly benchmark, reflecting the
expansionary fiscal policy stance of the government to implement
infrastructural development programmes (Table 7).
Table 6: Fiscal Balance (N Billion)

Q3-2020
Q2-2021
Q3-2021
Benchmark
Retained revenue

Aggregate expenditure

Primary balance

Overall balance

Source: Compiled from Office of the Accountant-General of the Federation (OAGF) figures and CBN
Staff Estimates
Note: The figures are provisional pending the receipt of consolidated data from the OAGF

Despite the rise in federation revenue, FGN retained revenue fell short of
its target, following low earnings, particularly from independent revenue
sources. At N1,114.21 billion, the retained revenue of the FGN declined by
16.2 per cent and 44.2 per cent, relative to the second quarter of 2021
and the budget benchmark, respectively. The shortfalls reflected declines
in non-statutory inflow (excess revenue and exchange gain) and the
independent revenue sources of the FGN. However, compared to
N1,015.47 billion in the third quarter of 2020, retained revenue rose by
9.7 per cent, due to improvement in Federation revenue, VAT, and Federal
Government Independent Revenue.
Table 7: FGN Retained Revenue (N Billion)

Q3-2020
Q2-2021
Q3-2021
Benchmark
Revenue
FGN Retained Revenue

Federation Account

VAT Pool Account

FGN Independent Revenue

Excess Oil Revenue

Excess Non-Oil

Exchange Gain

Others*

Source: Compiled from Office of the Accountant-General of the Federation figures
Note: * Others include revenue from Special Accounts and Special Levies
FGN Retained
Revenue
Overall Balance of
the FGN

25 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Provisional aggregate expenditure of the FGN in the third quarter of 2021,
at N3,153.56 billion, was 7.2 per cent below the budget benchmark of
N3,397.01, notwithstanding legislative approvals for procurement of
COVID-19 vaccines, security hardware, infrastructural development, and
capital releases. It was also marginally (0.4 per cent) lower than the level
in the second quarter of 2021 (Figure 16 and Table 9). A disaggregated
analysis revealed that recurrent expenditure declined by 8.6 per cent,
relative to the second quarter of 2021, but remained dominant in total
government spending, accounting for 63.5 per cent; while capital
expenditure and transfers constituted the balance of 32.5 per cent and 4.0
per cent, respectively.
Figure 15: Federal Government Expenditure (N Billion), Third Quarter 2021

Source: CBN Staff Estimates and compilation from OAGF data

Table 8: Federal Government Expenditure (N Billion


Q3-20
Q2-21
Q3-21
Budgeted
Billion naira
Aggregate Expenditure
Recurrent

2020Q3
2021Q2
2021Q3
Benchmark
Aggregate Expenditure

Recurrent

of which:


Personnel Cost

Pension and Gratuities

Overhead Cost

Interest Payments

Domestic

External

Capital Expenditure

Transfers

Source: CBN Staff Estimate
FGN expenditure

26 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
In the third quarter, public borrowing was hinged on the 2020 - 2023
Medium-Term Debt Strategy. FGN debt outstanding rose to N33,805.84
billion at end-September 2021, an increase of 7.9 per cent, relative to endJune 2021. The development was attributed to the drive to enhance
economic recovery, reduce the infrastructural deficit, and fund COVID-19
mitigation programmes. Domestic debt accounted for 53.9 per cent of
FGN total debt, while external debt obligations constituted 46.1 per cent.
This fell short of the domestic-external debt target of 70:30 in the 20202023 medium-term debt strategy of the FGN. External debt stock grew by
13.6 per cent, while domestic debt outstanding rose by 3.4 per cent
relative to end-June 2021.
FGN bond issues remained dominant in the domestic debt portfolio,
accounting for 73.8 per cent of the total domestic debt, followed by
Treasury Bills (19.2 per cent); Promissory Notes (4.4 per cent); FGN Sukuk
(2.0 per cent); and others (0.6 per cent). The distribution was in tandem
with the FGN’s objective to issue more long-term than short-term
domestic debt instruments (75:25). In the composition of the external
debt, Multilateral, Commercial and Bilateral loans accounted for 48.2 per
cent, 38.6 per cent and 11.6 per cent of the total external debt stock,
respectively, while promissory notes accounted for the balance of 1.6 per
cent.
Debt service obligations in the third quarter of 2021 amounted to
N1,022.99 billion, compared with N440.63 billion in the second quarter of
2021. The increase was due, largely, to the rise in the payment of FGN
Bonds and principal repayment of promissory notes.
Figure 16: FGN External and Domestic Debt Composition (N Billion)

Source: Compiled from Debt Management Office (DMO) figures


2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
Domestic Debt
External Debt
Total Debt Outstanding (rhs)
FGN Debt

27 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 17: Composition of External Debt Stock (per cent)

Source: Compiled using data from the Debt Management Office (DMO)

Figure 18: Composition of Domestic Debt Stock (per cent)

Source: Compiled using data from the Debt Management Office (DMO)


Multilateral
48.2%
Bilateral
11.6%
Commercial
40.2%
FGN Bonds
73.8%
Treasury Bills
19.2%
Others
7.0%

28 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
2.3 MONETARY AND FINANCIAL SECTOR
There was increased credit to key sectors of the economy to further spur
economic activities and drive growth, as the monetary policy stance
remained accommodative in the third quarter of 2021. Banking system
liquidity improved in the review period, compared with the level in the
preceding quarter, leading to a downward trend in key interest rates.

2.3.1 Monetary Developments
Reserve money rose in the third quarter of 2021 due to increased currencyin-circulation and liabilities to Other Depository Corporations (ODCs). CBN
liabilities to ODCs inched up due to the increase in Cash Reserve Ratio
debits, while currency-in-circulation (CIC) increased, owing to liquidity
injection in the banking system through matured CBN bills and Federation
Accounts Allocation Committee (FAAC). Consequently, the 4.97 per cent
growth in liabilities to ODCs, and the 3.49 per cent growth in CIC resulted
in a 5.0 per cent rise in the level of reserve money to N12,905.94 billion at
end-September 2021 above N12,333.79 at end-June 2021. The broad
money multiplier declined by 0.06 to 3.13 at the end of September 2021,
suggesting a slower rate of monetary expansion in the review period.
Consequently, the Broad money supply grew by 4.63 per cent at endSeptember 2021.
Table 9: Components and uses of Reserve Money (N Billion)

Dec-20
Jun-21
Sep-21
Monetary Base
13,103.09
12,333.79
12,905.94
Currency-In-Circulation
2,908.46
2,741.26
2,837.06
Liabilities to ODCs
10,194.63
9,592.53
10,068.88
Source: Central Bank of Nigeria
Note: ODCs = Other Depository Corporations

The growth in broad money supply remained modest in the third quarter
of 2021, although credit expansion by the banking system was sustained.
The accommodative monetary policy stance of the Bank in the third
quarter of 2021 led to continued credit expansion to enhance economic
growth. Claims on other sectors rose by 12.2 per cent in the review period
driven, majorly, by the claims on the private sector with a substantial
contribution of 9.4 percentage points to the growth in total monetary
assets. Similarly, Net claims on the Central Government increased by 5.07
per cent at end-September 2021, as loans by the Bank to the Central
Government outweighed the increase in liabilities to the Central
Government.
Summary
Monetary
Aggregates
Reserve
Money

29 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021

The rise in Net claims on Central Government, coupled with increased
claims on other sectors, culminated in a 10.15 per cent rise in banking
system domestic claims on the economy. However, due to the significant
increase in liabilities to non-residents arising from an increase in other
loans from non-residents and the sale of bills to non-residents by the Bank,
net foreign assets declined by 20.4 per cent at the end of the review
quarter, compared with the decline of 0.6 per cent at end-June.

Accordingly, broad money supply, M3 grew by 4.6 per cent to N40,414.78
billion at the end-September 2021, with an annualised growth of 6.2 per
cent, compared with the provisional benchmark growth of 10.0 per cent
for the fiscal year 2021. The development indicated room for monetary
expansion while being mindful of inflationary pressures.

Table 10: Money and Credit Growth over preceding December (per cent)
Source: Central Bank of Nigeria


Contribution
to M3
growth
(Sept-21)
Sep-20
Jun-21
Sep-21
Net Foreign Assets

Claims on Non-residents

Liabilities to Non-residents


Net Domestic Assets

Domestic Claims

Net Claims on Central Government

Claims on Central Government

Liabilities to Central Government

Claims on Other Sectors

Claims on Other Financial Corporations

Claims on State and Local Government

Claims on Public Nonfinancial
Corporations

Claims on Private Sector

Broad Money

Currency Outside Depository Corporations

Transferable Deposits

Narrow Money (M1)

Other Deposits

Broad Money (M2)

Securities Other Than Shares

Total Monetary Liabilities(M3)


30 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
The growth in total monetary liabilities results from the rise in other
deposits (12.6 per cent) and transferable deposits (0.7 per cent). The surge
in other deposits was driven, largely, by the rise in savings and time
deposits, brought about by the more attractive yields on deposits, as rates
on term deposits of 1 month, 6 months and 12 month tenors rose to 3.71
per cent, 5.83 per cent and 6.72 per cent, respectively, in the review
period, above 3.36 per cent, 5.14 per cent and 6.54 per cent, respectively,
in the second quarter of 2021.
The growth in foreign currency deposits slowed to 1.85 per cent in the
third quarter of 2021, compared with the growth of 6.70 per cent in the
preceding quarter. The modest growth was buttressed by the decline in
the share of foreign currency deposits to total deposit from 19.26 per cent
at end-June 2021 to 19.12 per cent at end-September 2021. The
development may be attributed to a reduction in the accessibility to
foreign exchange for speculative purposes by economic agents, following
the stoppage of allocation of foreign exchange to Bureau De Change by
the Bank.
The need for holding cash for transactions by economic agents also
declined in the review quarter, as currency outside depository
corporations fell by 5.0 per cent at the end-September 2021.
Consequently, narrow money supply (M1) fell by 0.2 per cent to
N15,948.09 billion in the review quarter.
The sustained credit expansion by the ODCs to other sectors increased
sectoral credit. Credit utilisation by sectors of the economy grew by 4.1
per cent to N22,802.10 billion at the end-September 2021, owing, largely,
to increased credit to trade/general commerce. A breakdown of the credit
showed that the industry and services sectors remained the dominant
sectors, as their share in total credit stood at 41.7 per cent and 52.9 per
cent, respectively, compared with 42.3 per cent and 52.4 per cent at the
end-June 2021. The agricultural sector's share increased marginally to 5.4
per cent compared with 5.3 per cent at the end-June 2021.
Table 11: Sectoral Utilisation of Credit

Dec-20
Jun-21
Sep-21
Agriculture
5.2
5.3
5.4
Industry
41.9
42.3
41.7
Construction
4.7
5.0
4.8
Services
52.9
52.4
52.9
Trade/General
Commerce
6.6
6.3
6.9


Source: Central Bank of Nigeria
Sectoral
Utilisation of
Credit


31 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021

Consumer credit outstanding increased owing to the increase in personal
loans. Consumer credit outstanding, at ₦1,942.87 billion, rose by 5.6 per
cent in the third quarter of 2021, compared with its level of ₦1,840.24
billion in the preceding quarter, accounting for 8.7 per cent of total credit
to the private sector. The rise was due, majorly, to the fall in the maximum
lending rate, inducing an increase in the volume of extended loans.
Figure 19: Consumer Credit

Source: Central Bank of Nigeria

A breakdown of consumer loans showed that personal loans accounted
for the largest share of 75.7 per cent, while retail loans explained the
remaining 24.3 per cent.

Figure 20: Composition of Consumer Credit in Nigeria

Source: Central Bank of Nigeria

2.3.2 Financial Developments
The financial market remained resilient in the third quarter of 2021 despite
the mutating and more fatal strains of the COVID-19 virus. The improved


2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
₦'million
Per cent (%)
Consumer Credit
Consumer Credit as a share of private sector credit

2020Q3
2020Q4
2021Q1
2021Q2
2021Q3
Per cent (%)
Personal
Retail
Consumer Credit


32 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
economic prospects led to a bullish run for the major equity market indices,
which helped to boost investors’ sentiments and offset concerns about
rising inflation.

2.3.3 Money Market Developments
Liquidity conditions in the banking system improved in the third quarter of
2021. The average net industry liquidity position increased by 211.0 per
cent in the third quarter of 2021, to ₦154.32 billion, from ₦49.62 billion
in the preceding quarter. Repayment of matured CBN bills and higher
FAAC allocation constitute major injections into the banking system. On
the other hand, provisioning and settlement of foreign exchange
purchases, Cash Reserve Ratio (CRR) debits, and purchase of CBN bills
were sources of liquidity withdrawals from the banking system
culminating in a net injection of ₦1,039.84 billion in the banking system.
The Bank intervened in the money market through Open Market
Operations and discount window activities to manage banking system
liquidity in the third quarter of 2021. CBN bills with tenor to maturity of
218.5 days (±136.5) were auctioned through Open Market Operations
(OMO) in the review quarter. There was an increase in the volume of
subscriptions in the review quarter to ₦718.02 billion, compared with
₦486.23 billion in the preceding quarter, with a slightly lower bid rate of
8.53 per cent (± 1.73), compared with 9.39 per cent (± 2.60). This led to
increased liquidity in the banking system in the review period
The increased level of liquidity was further evident in the pattern of
transactions at the Bank’s standing facilities window, as a total request for
Standing Deposit Facilities by banks increased by 28.2 per cent to ₦568.15
billion in the review period, while request at the standing lending window
declined significantly to ₦1,393.60 billion, from ₦7,271.20 billion in the
second quarter of 2021.
Investment in the debt securities market increased, due largely to the
attractive yield. NTBs of 91-, 182- and 364-day tenors were issued in the
review period. A total of ₦1,021.98 billion, ₦2,941.54 billion, and
₦1,523.32 billion NTBs were offered, subscribed to, and allotted,
respectively, in the review period. The subscriptions to the 364-day tenor
accounted for 96.1 per cent of the total subscriptions to NTBs in the
review period, reflecting investors' preference for longer tenor
instruments. This was also obvious in the volume of subscriptions to FGN
Bonds, which increased from ₦965.13 billion in the second quarter of
2021 to ₦980.45 billion in the third quarter of 2021. The development
Primary
Market
Liquidity Flows
Open Market
Operations
Standing
Facilities Window
Operation

33 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
may be due to expectations of lower yield, as the economy continues the
path of recovery.
Key short-term interest rates dipped in the third quarter of 2021, due to
increased banking system liquidity. The average inter-bank call and OBB
rates declined from 14.52 per cent and 16.45 per cent to 12.94 per cent
and 11.93 per cent, respectively, due mainly to increased liquidity in the
banking system in the review period. However, the 30-day and 90-day
NIBOR traded at averages of 11.56 per cent and 12.53 per cent,
respectively, in the third quarter of 2021, above their respective levels of
10.22 per cent and 12.06 per cent in the preceding quarter.

Increased banking system liquidity was reflected in the value of lending
transactions, which rose by 5.27 per cent to N22,021.56 billion in the
review quarter. Consequently, the average maximum lending rate
declined by 0.99 percentage points to 27.70 per cent, from 28.69 in the
second quarter of 2021. Despite the decline in lending rate, it remained
positive in real terms.
The average term-deposit rate rose by 0.15 percentage points to 3.86 per
cent, resulting in a narrower spread between the deposit and lending
rates. The spread between the average term deposit and maximum
lending rates narrowed by 2.10 percentage points to 23.24 per cent in the
third quarter of 2021. The proportion of term deposit in total deposit
increased to 32.66 per cent above 23.51 per cent at end-June 2021,
reflecting increased savings. Although the increase in term deposits
reduces long-term liquidity risks, it is more costly for banks than demand
deposits.
Figure 21: Interest Rate Trend (per cent)

Source: Central Bank of Nigeria

Interest Rate
Developments

34 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
2.3.4 Financial Sector Soundness
In the review period, the key financial soundness indicators revealed a
stable and resilient financial sector. The industry Capital Adequacy Ratio
(CAR) fell by 0.5 percentage points to 15.0 per cent in the third quarter of
2021 relative to 15.5 per cent recorded in the preceding quarter.
However, the ratio was still above the regulatory benchmark of 10.0 per
cent. The decline relative to the levels in the preceding quarter was
attributed to the increase in banks' risk-weighted assets, which was more
than offset the increase in total qualifying capital of the banks.
There was also an improvement in banks’ loan quality indicator, although
it stood above the 5.0 per cent prudential requirement. The nonperforming loan (NPL) ratio improved to 5.4 per cent in the third quarter
of 2021 from 5.7 per cent recorded in the preceding quarter, due mainly
to the increase in loan recoveries by banks. The industry liquidity ratio (LR)
declined by 2.9 percentage points to 61.0 per cent in the review period,
compared with 63.9 per cent at the end-June 2021, reflecting a decrease
in the stock of liquid assets held by banks. At that level, the LR remained
above the regulatory benchmark of 30.0 per cent.

2.3.5 Capital Market Developments
Activities on the Nigerian Exchange Limited (NGX) were bullish during the
third quarter of 2021, owing to the positive sentiments arising from
investors’ expectations of the release of the third quarter 2021 earnings
reports by quoted companies. Aggregate market capitalisation
appreciated by 6.2 per cent to N40.55 trillion in the review quarter,
compared with N38.19 trillion in the preceding quarter. A breakdown of
the components of the Aggregate Capitalisation showed that the equities,
exchange-traded funds (ETF), and bond components stood at N20.96
trillion, N0.01 trillion, and N18.40 trillion, respectively.
The equities market capitalisation, which constituted 53.2 per cent of the
aggregate, rose by 6.0 per cent to N20.96 trillion, compared with N19.77
trillion at the end-June 2021, owing to gains recorded by blue-chip stocks.
The All-Share Index (ASI), which opened at 37,907.78 at the beginning of
the review quarter, grew by 6.1 per cent to close at 40,221.17 at the endSeptember 2021, driven by price appreciation in the medium and
capitalised stocks.


Market
Capitalisation
All Share Index
Capital Adequacy
Ratio

35 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 22: Market Capitalisation and All-Share Index

Source: Nigeria Exchange Limited (NGX)

All indices trended upward, except for five (5) indices that trended
downward (Table 13).
Table 12: Nigeria Exchange (NGX) Limited Indices
NGX Indices
2021Q2
2021Q3
Changes (%)
NSE-OIL/GAS
313.08
376.95
20.4
NSE-PREMIUM
3,527.67
3,759.92
6.6
NSE-INDUSTRIAL
1,887.76
1,975.31
4.6
NSE-AFR Div Yield
2,329.50
2,427.21
4.2
NSE-BANKING
366.47
381.35
4.1
NSE Sovereign
792.96
822.93
3.8
NSE-PENSION
1,479.77
1,525.88
3.1
NSE- 30- INDEX
1,594.87
1,639.22
2.8
NSE- CG
1,199.29
1,226.94
2.3
NSE- MERI VALUE
1,801.66
1,840.97
2.2
NSE-LOTUS
2,760.73
2,818.57
2.1
NSE-AFR
BANK
VALUE
1,057.09
1,070.34
1.3
NSE-MERI GROWTH
1,789.98
1,806.78
0.9
NSE-INSURANCE
203.84
197.77
-3.0

NSE-MAIN BOARD
1,600.77
1,556.44
-2.8
NSE-CONSUMER
GOODS
600.88
597.66
-0.5
NSE-Asem
703.94
701.75
-0.3
NSE Growth Index
1,028.75
1,026.97
-0.2
Source: Nigeria Exchange Limited (NGX)

A total turnover of 16.08 billion shares worth N145.24 billion in 239,729
deals was traded by investors on the floor of the Exchange, compared with
a total of 13.90 billion shares valued at N164.88 billion in 215,842 deals.


Index
N' Billion
Market Capitalization (LHS)
All-Share Index (RHS)

36 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 23: Volume and Value of traded Securities

Source: Nigeria Exchange Limited (NGX)

There were three (3) new and one (1) supplementary listing in the review
period. The new listings created an avenue for price discovery and an
additional source of liquidity for existing and new investors and improved
investor confidence.


Value (N' Billion)
Volume (Billion)
Volume of traded securities (LHS)
Value of securities (RHS)

37 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Table 13: Listing on the Nigerian Exchange Limited (NGX) at end-September 2021
Company
Additional Shares (Units)
Reasons
Listing
Dangote Cement PLC
SPV Plc: Listing of
Bonds
N50 Billion 3 years 11.25%
Tranche
A
Senior
Unsecured
Fixed
Rate
Bond due 2024
N50 Billion 5 years 12.50%
Tranche
B
Senior
Unsecured
Fixed
Rate
Bond due 2026.
N50 Billion 7 years 13.50%
Tranche
C
Senior
Unsecured
Fixed
Rate
Bond due 2028.
N300b
Debt
Issuance
programme
New Listing
8.864% FGNSB AUG

204,965 units
Bond
Issuance
New Listing
9.864% FGNSB AUG

683,248,000
units
Bond
Issuance
New Listing
12.98% FGN MAR

104,814,900
units
Bond
Issuance
Supplementary
Listing
Coronation MB Funding
SPV Plc: Listing of
Bonds
N25 Billion 5 years 6.25%
Series One (1) Fixed Rate
Subordinated Unsecured
Bonds due 2025 under the
Coronation MB Funding
SPV Plc’s N100 Billion
Bond Issuance Program.
Bond Issuance
New Listing
16.2884% FGN MAR

74,443,853 units
Bond Issuance
Supplementary
Listing
14.80% FGN APR 2049
113,954,700 units
Bond Issuance
Supplementary
Listing
12.50% FGN MAR

171,093,317 units
Bond Issuance
Supplementary
Listing
12.98% FGN MAR

171,093,317 units
Bond Issuance
Supplementary
Listing
8.350% FGS July 2021
341,012 units
Bond Issuance
New Listing

9.350% FGS July 2024
620,986 units
Bond Issuance
New Listing
8.915% FGS SEP 2024
561,303 Units
Bond Issuance
New Listing
9.889% FGS JUN 2024
221,332 Units
Bond Issuance
New Listing
Chemical and Allied
Products Plc
88,259,520 Ordinary
shares of 50 Kobo each
Rights Issuance
Supplementary
Listing
Source: Nigeria Exchange Limited (NGX).


38 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
2.4. EXTERNAL SECTOR DEVELOPMENTS
The external sector's performance was impressive during the review
period, as the pressure in the external account eased, with an overall
balance of payments surplus of US$5.28 billion in contrast to a deficit of
US$2.14 billion in the preceding quarter. This was driven by the sustained
global economic recovery and improved foreign exchange receipts from
the International Monetary Fund’s SDR allocation and sale of FGN
Eurobond. The improved trade surplus, lower payments in respect of
services, and repatriation of dividends resulted in a higher current account
surplus of US$3.68 billion, from US$0.35 billion in the second quarter of
2021. The financial account recorded net incurrence of liabilities worth
US$2.57 billion, as against acquisition of US$0.24 billion in the second
quarter of 2021. The external reserves at the end of September 2021, was
US$41.57 billion, compared with US$32.99 billion at the end-June 2021.
The level could finance 11.5 months of goods or 8.7 months of goods and
services import. The average naira exchange rate at the I&E was relatively
stable at ₦411.89/US$ in the third quarter of 2021. Public external debt at
end-September 2021 stood at US$37.96 billion, compared with US$33.47
billion at the end-June 2021.
2.4.1 Current and Capital Account
The lingering supply chain disruption, particularly with the emergence of
the Delta variant of the COVID-19, moderated the import of goods and
services. This, coupled with lower repatriation of dividends and improved
inflow of transfers, resulted in a higher current account. The surplus in the
current account increased significantly to US$3.68 billion (3.4 per cent of
GDP), from US$0.35 billion (0.4 per cent of GDP), in the preceding quarter.
The development reflected increased trade surplus, resulting from lower
imports; higher inflow of both government transfers and workers’
remittances; and lower repatriation of dividends by non-resident
investors. A higher goods account surplus of US$1.77 billion was recorded,
relative to US$0.31 billion in the second quarter of 2021. The deficit in the
services accounts narrowed by 20.3 per cent to US$2.51 billion (2.3 per
cent of GDP), induced by lower payments for travel services, reflecting the
lingering effects of travel restrictions in some jurisdictions.
Similarly, the deficit in the primary income account contracted to US$2.03
billion, compared with US$2.72 billion in the second quarter of 2021,
attributed to lower repatriation of dividends by non-resident investors.
The surplus in the secondary income account increased to US$6.46 billion,
compared with the US$5.92 billion in the second quarter of 2021, as
grants received by the general government and remittances from
migrants living abroad increased during the review period.
Major Highlights

39 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021

Figure 24: Current Account Balance GDP Ratio (per cent)

Source: Central Bank of Nigeria

The sustained improvement in global crude oil prices and higher earnings
from non-oil and gas exports boosted export receipts in the third quarter
of 2021. Aggregate export rose marginally by 0.3 per cent to US$12.65
billion, relative to US$12.61 billion in the second quarter of 2021. A
disaggregation showed that crude oil export receipts dropped marginally
by 1.1 per cent to US$9.81 billion, compared with US$9.92 billion in the
second quarter of 2021, on account of the decline in domestic production,
occasioned by challenges in some oil facilities, such as Agbami and Qua
Iboe. Gas export receipts, on the other hand, grew by 4.1 per cent to
US$1.35 billion, relative to US$1.30 billion in the preceding quarter, due
to higher petrochemical demand for propane in preparation for winter.
Non-oil export earnings improved further during the review period. Nonoil export receipts also grew by 7.0 per cent to US$1.49 billion, relative to
US$1.39 billion in the second quarter of 2021, owing to higher export of
agricultural commodities during the review period. In terms of share of
total export receipts, crude oil export remained dominant with 77.5 per
cent, while gas and non-oil export constituted 10.7 per cent and 11.8 per
cent, respectively.
The Delta variant of the COVID-19 adversely affected economic activities
and supply chain across the globe, thus, dampening imports in the review
period. Consequently, aggregate merchandise import declined by 11.6 per
cent to US$10.88 billion in the third quarter of 2021, compared with
US$12.31 billion in the second quarter of 2021, owing to the 17.1 per cent
decline in non-oil import. Petroleum products import increased by 5.9 per
cent to US$3.15 billion, compared with US$2.98 billion in the second
quarter, on account of higher demand for premium motor spirit and
automotive gas oil. Non-oil import dropped to US$7.73 billion in the
review period, from US$9.33 billion in the second quarter, reflecting the
effect of the resurgence of COVID-19 infections on economic activities.

Q1 2021
Q2 2021
Q3 2021
Crude Oil and Gas
Export
Non-Oil Export
Merchandise Import

40 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
The share of non-oil imports remained dominant, accounting for 71.0 per
cent of total imports, while petroleum products accounted for the balance
of 29.0 per cent.
A breakdown of non-oil import by sector revealed that importation of raw
materials and machinery for industrial use accounted for the highest share
of 40.1 per cent, followed by manufactured products, with a share of 28.2
per cent. Importation of food products accounted for 17.4 per cent, while
imports by the oil, transport, agricultural and mineral sectors accounted
for 7.8 per cent, 2.8 per cent, 2.2 per cent, and 1.7 per cent, respectively.

Figure 25: Share of Service Out-Payments (per cent)

Source: Central Bank of Nigeria
A breakdown showed that services receipt increased by 4.6 per cent to
US$0.92 billion, compared with US$0.88 billion in the second quarter of
2021. A further breakdown showed that receipts from financial services
export increased by 50.4 per cent to US$0.21 billion, from US$0.14 billion
in the second quarter of 2021. Insurance services receipts also increased
by 74.7 per cent to US$0.01, relative to the level in the second quarter of
2021. Transportation services receipts, which constituted 52.9 per cent of
services receipts declined by 4.8 per cent to US$0.49 billion, compared
with US$0.50 billion in the second quarter of 2021, driven by the reduction
in freight and other transportation services receipts. Government services
receipts also declined by 0.7 per cent to US$0.11 billion, relative to
US$0.12 billion in the second quarter of 2021.


Transportation
38.8%
Travel
24.8%
Insurance Services
4.8%
Communication
Services
0.7%
Financial
Services
Telecommunication
, computer &
information
Services
2.4%
Charges for the use
of intellectual
property n.i.e.
1.8%
Government
Services
2.1%
Other Bussiness
Services
21.2%

41 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 26: Share of Services Receipts (per cent)

Source: Central Bank of Nigeria

Repatriation of dividends and profits by non-resident investors moderated
in the review period, resulting in a lower primary income account deficit. A
lower deficit of US$2.03 billion was recorded in the third quarter of 2021,
compared with the US$2.72 billion in the second quarter of 2021. The
development was based, majorly, on lower repatriation of dividends and
distributed branch profits, as most companies declared their profit earlier
in the year. The compensation of employees sub-account maintained a
surplus position, at US$0.06 billion, higher than the US$0.05 billion in the
preceding period.
Figure 27: Primary Income Balance (US$ Million)

Source: Central Bank of Nigeria
Increased inflow of general government transfers, majorly to address the
COVID-19 pandemic and security challenges, coupled with increased
inflow of remittances, arising from the positive impact of the Banks’
Naira4Dollar policy, improved the surplus in the secondary income
account. The surplus in the secondary income increased by 9.2 per cent to
US$6.46 billion, compared with US$5.92 billion in the second quarter of
2021 due, largely, to an increase in both general government and other
Transportatio
n
52.9%
Travel
5.5%
Insurance and
pension
1.6%
Communicatio
n Services
3.6%
Financial
Services
23.1%
Government
goods and
services n.i.e
12.5%
Other
Bussiness
Services

3RD QTR

4TH QTR

1ST QTR

2ND QTR

3RD QTR

Primary Income
Secondary Income

42 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
sectors receipts. Personal transfers, including workers’ remittances,
improved by 1.3 per cent to US$4.90 billion in the third quarter of 2021,
compared with US$4.84 billion in the preceding quarter. Similarly, receipts
by the general government in the form of transfers increased by 44.0 per
cent to US$1.56 billion in the review period, relative to US$1.08 billion in
the second quarter of 2021.
Figure 28: Secondary Income Balance and Remittances Inflow (US$ Million)

Source: Central Bank of Nigeria
2.4.2 Financial Account
The receipt of FGN Eurobond proceeds by the government and increased
inflow for the purchase of short-term money market instruments resulted
in net incurrence of financial liabilities of US$2.57 billion (2.3 per cent of
GDP), in contrast to net acquisition of US$0.24 billion (0.4 per cent of GDP)
in the second quarter of 2021.
The aggregate financial inflow of US$11.88 billion was recorded in the
third quarter of 2021, compared with US$1.75 billion in the second
quarter of 2021, due, majorly to increased inflow of portfolio investment,
following the receipt of FGN Eurobond proceeds and higher inflow for the
purchase of money market instruments. Portfolio investment rose to
US$7.46 billion, in contrast to a reversal of US$0.27 billion in the preceding
quarter. Similarly, the inflow of other investments increased to US$4.43
billion, compared with repayment of US$0.78 billion in the preceding
quarter, due to an increase in other liabilities as a result of additional SDR
allocation by the IMF and higher loan liabilities of both the banks and the
private sector. However, direct investment recorded a divestment of
US$0.01 billion in the third quarter of 2021 in contrast to an inflow of
US$2.80 billion in the preceding quarter, due majorly to a decrease in
reinvested earnings as some companies declared losses.
The aggregate financial asset was US$9.31 billion in the third quarter of
2021, compared with US$2.00 billion in the second quarter of 2021,

3RD QTR

4TH QTR

1ST QTR

2ND QTR

3RD QTR

Secondary Income Balance
Workers' Remittances
Net Incurrence of
Liability
Financial Account
Developments
Net Acquisition of
Asset

43 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
reflecting increased claims on direct investment enterprises abroad and
accretion to external reserves, due mainly to receipt of FGN Eurobond
proceeds and additional SDR allocation by the IMF. A disaggregation
showed that FDI increased significantly to US$0.82 billion, from US$0.10
billion in the preceding quarter.
Portfolio and other investment assets, on the other hand, declined below
their levels in the preceding period to US$0.01 billion and US$3.20 billion,
respectively. Portfolio investment declined due to the lower purchase of
debt securities by resident investors, while other investments dropped
due to the holdings of foreign currency deposits of the private sector.
External reserves asset recorded accretion of US$5.28 billion in the review
period, in contrast to depletion of US$2.14 billion in the preceding period.
2.4.3 External Debt
Additional loans from commercial and bilateral sources resulted in a 13.4
per cent increase in Nigeria’s public sector external debt stock at endSeptember 2021. Public sector external debt stock at end-September 2021
rose to US$37.96 billion, compared with US$33.47 billion at end-June
2021. Similarly, external debt service payment increased by 73.3 per cent
to US$0.52 billion, relative to US$0.30 billion at the end-June 2021. A
breakdown showed that the multilateral loans from the World Bank,
International Monetary Fund, and African Development Bank Groups
amounted to US$18.28 billion, accounting for 48.2 per cent of the total. A
total of US$14.67 billion was borrowed from commercial sources in the
form of Euro and Diaspora Bonds (38.7 per cent), an increase of 37.5 per
cent above the US$10.67 billion at the end of the preceding quarter of
2021. Loans from bilateral sources were US$4.40 billion or 11.6 per cent
of the total, while promissory notes were US$0.60 billion, or 1.5 per cent
of the total debt stock.
A disaggregation of external debt service payments showed that principal
repayment amounted to US$0.17 billion, accounting for 32.7 per cent of
the entire payment. Of the principal payments, US$0.11 billion was to
multilateral institutions, while US$0.06 billion was in respect of bilateral
loans. Interest payment was US$0.32 billion, or 61.5 per cent of the total,
with interest on commercial loans amounting to US$0.25 billion. Other
payments, at US$0.03 billion, made up the balance.
2.4.4 International Investment Position (IIP)
In the review period, claims on non-resident investors increased, resulting
in a lower net financial liability position. Nigeria’s International Investment
Position (IIP) recorded a net liability of US$78.51 billion at end-September
2021, relative to US$79.05 billion at end-June 2021. The stock of financial
External Debt
International
Investment Position

44 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
assets rose by 13.8 per cent to US$102.57 billion at end-September 2021,
compared with US$90.17 billion at end-June 2021. This was due largely to
26.0 per cent, 7.3 per cent, and 6.7 per cent increase in the stock of
reserve assets, other assets, and direct investment assets, respectively, in
the review period.
The stock of financial liabilities representing foreign investors' claims on
the economy increased by 7.0 per cent to US$181.08 billion at the endSeptember 2021, compared with US$169.21 billion at end-June 2021. The
development reflected the 25.4 per cent (US$36.96 billion), 9.1 per cent
(US$51.65 billion) and 0.1 per cent (US$90.47 billion) increase in the stock
of portfolio, other investment, and FDI liabilities in the third quarter of
2021, from US$29.48 billion, US$47.36 billion and US$90.37 billion in the
second quarter of 2021, respectively.
2.4.5 International Reserves
External reserves position was boosted by additional SDR allocation of
US$3.4 billion by the IMF and the receipt of US$4.0 billion FGN Eurobond
in the review period. Consequently, Nigeria’s international reserves
increased to US$41.57 billion at the end-September 2021, above the
US$32.99 billion at the end-June 2021. The level of external reserves could
cover 8.7 months of import for goods and services or 11.5 months of
import for goods only.


International
Reserves

45 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 29: External Reserves and Months of Import Cover (US$ Billion)

Source: Central Bank of Nigeria

A breakdown of the external reserves by ownership showed that the share
of CBN was US$30.99 billion (74.5 per cent); Federal Government,
US$10.52 billion (25.3 per cent); while the Federation accounted for the
balance of US$0.06 billion (0.2 per cent). In terms of currency
composition, the US dollar was US$31.64 billion, (76.1 per cent); Chinese
Yuan US$4.18 billion (10.0 per cent); Special Drawing Rights US$5.38
billion (12.9 per cent); GB Pounds, US$0.26 billion (0.6 per cent); Euro
US$0.12 billion (0.3 per cent); and other currencies accounted for the
balances.

2.4.6 Foreign Exchange Flows Through the Economy
Foreign exchange inflow to the economy improved in the review period due
to increased non-oil receipts. Foreign exchange inflow into the economy
rose significantly by 65.0 per cent to US$30.20 billion, compared with
US$18.30 billion in the preceding period. The development was driven by
the 158.4 per cent and 13.4 per cent increased inflow through the CBN
and the autonomous sources, respectively. Foreign exchange inflow
through the Bank at US$16.83 billion increased significantly above the
US$6.51 billion in the preceding quarter due to additional SDR allocation
and proceeds from the Euro bond sales. A disaggregation showed that
non-oil receipts increased to US$14.97 billion, compared with the US$4.60
billion in the preceding quarter. However, receipts from oil-related
sources fell by 2.7 per cent to US$1.86 billion, relative to the value in the
second quarter of 2021. Foreign exchange inflow through autonomous
sources was US$13.37 billion, compared with US$11.79 in the preceding
period, as a result of improved inflow from invisible purchases and non-oil
export receipts.


US$ Billion
External Reserves - LHS
Months of Import (Goods only)
Months of Import (Goods and Services)
Foreign Exchange
Flows through the
Economy

46 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Foreign exchange outflow through the economy at US$10.22 billion
increased by 4.6 per cent, compared with the level in the second quarter
of 2021, driven largely by higher utilisation of foreign exchange for
invisible imports. Aggregate foreign exchange outflow through the Bank
was US$7.98 billion, reflecting a decrease of 10.6 per cent, relative to
US$8.92 billion in the second quarter of 2021. The development resulted
from the decline in the Bank’s intervention in the foreign exchange
market, due to the stoppage of sales to BDC operators. Outflow through
autonomous sources at US$2.24 billion increased by 165.1 per cent, above
the level in the preceding quarter, due to a significant increase in invisible
imports.
Accordingly, foreign exchange flow through the economy resulted in a net
inflow of US$19.98 billion in the third quarter of 2021, compared with
US$8.53 billion in the preceding quarter of 2021. A net inflow of US$8.85
billion was recorded through the Bank, in contrast to a net outflow of
US$2.41 billion in the preceding quarter of 2021. Similarly, a higher net
inflow of US$11.13 billion was recorded through autonomous sources in
the review period, compared with US$10.94 billion in the preceding
period.
Figure 30: Foreign Exchange Transactions through the Bank (US$ Million), in the
2021Q3

Source: Central Bank of Nigeria

2.4.7 Foreign Exchange Market Developments
The foreign exchange market was relatively liquid and stable, following the
Bank’s sustained intervention in the market. During the review period, the
Bank discontinued sales of foreign exchange to Bureau De Change (BDC)
operators and suspended the processing and issuance of new licenses for
BDC operations. Consequently, forex sales were rechannelled to
commercial banks to meet the PTA/BTA needs of customers. Furthermore,
commercial banks were directed to publish customers' names that
Q3 2020
Q2 2021
Q3 2021
Inflow
6,971.01
6,512.89
16,831.30
Outflow
6,954.18
8,924.85
7,981.37
Netflow

Inflow
Outflow
Netflow

47 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
circumvent the Bank’s policy on the sale of forex on their website, to
curtail sharp practices.
Total foreign exchange sales to authorised dealers by the Bank was
US$5.35 billion, a decrease of 11.6 per cent, compared with the level in
the preceding quarter. A disaggregation showed that sales to interbank
and secondary market intervention sales (SMIS) rose by 33.9 per cent and
35.7 per cent to US$0.73 billion and US$2.09 billion, relative to the levels
in the preceding quarter. However, matured swap contracts, I&E window,
and BDCs declined by 19.5 per cent, 21.3 per cent, and 69.0 per cent to
US$0.88 billion, US$0.80 billion, and US$0.44 billion, respectively, relative
to the levels in the preceding quarter. Similarly, SME interventions
decreased by 3.9 per cent to US$0.41 billion, relative to US$0.42 billion in
the preceding quarter.
Figure 31: Foreign Exchange Sales to Authorised Dealers, Third Quarter 2021 (US$ Billion)

Source: Central Bank of Nigeria

The average turnover at the Investors and Exporters (I&E) segment
increased by 42.3 per cent to US$0.16 billion, from US$0.12 billion in the
second quarter of 2021, reflecting increased liquidity in the window.


Q1 2019Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021
US$Bn
Transactions in the
Foreign Exchange
Market

48 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
Figure 32: Turnover in the I&E Foreign Exchange Market (US$ Million)

Source: Financial Markets Derivatives Quotations (FMDQ)

2.4.8 Exchange Rate Movement
There was relative stability of exchange rate at the I&E window in the
review period. At the I&E window, the average exchange rate slightly
depreciated by 0.2 per cent to ₦411.89/US$, compared with the level in
the second quarter of 2021.


Q 3
2 0 1 9
Q 4
2 0 1 9
Q 1
2 0 2 0
Q 2
2 0 2 0
Q 3
2 0 2 0
Q 4
2 0 2 0
Q 1
2 0 2 1
Q 2
2 0 2 1
Q 3
2 0 2 1
Per cent
US $ (M)
Average Turnover
Rate of Turnover
Average Exchange
Rate

49 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
3.0 ECONOMIC OUTLOOK
3.1 Global Outlook
The optimistic growth outlook for the medium-term is threatened by the
emergence of new COVID-19 variants and the pace of vaccine
administration. The IMF global GDP projection for 2021 was revised
downwards by 0.1 percentage points to 5.9 per cent in the October WEO
on account of the resurgence of the COVID-19 pandemic and the
attendant disruption of supply chains. In addition, the wide disparity in the
pace of vaccination between advanced economies and low-income
developing countries is expected to further dampen the growth outlook in
the medium-term, as the low-income countries continue to lag other
country groups. Going into 2022, the growth projection remains
unchanged at 4.9 per cent, owing to the expectation of strong consumer
demand supported by accommodative policy support and improved pace
of vaccination. However, the expected policy normalisation in most
advanced economies and the emergence of more virulent strains of
coronavirus disease pose downside risks to the outlook.
3.2. Domestic Outlook
The Nigerian economy is expected to sustain its positive trajectory in the
near- term. The positive outlook is predicated on continued recovery of
oil prices, rebound in manufacturing activities, and intensified
administration of COVID-19 vaccine. In addition, the implementation of
the Petroleum Industry Act (PIA), which is expected to expand the fiscal
space of government in the medium-to-long term; and the launching of
the Central Bank Digital Currency (CBDC), eNaira, which is expected to
improve cost efficiency on transactions and financial inclusion in the
medium-to-long term; are potential growth enablers.
Consequently, the economy is projected to grow at 2.86 per cent in the
fourth quarter of 2021, with an annual growth of 3.10 per cent in 2021.
However, the potential third wave of COVID-19 pandemic, amid rising
cases of the Delta variant across the world, persisting insecurity, limited
fiscal space, weak commodity value chain, infrastructure deficit and poor
electricity supply, are likely headwinds that could have a negative impact
on the outlook of growth.

Inflationary pressure is expected to ease in the short-to-medium term in
response to the positive impact of the various CBN and Federal
Government interventions on agriculture and the real sector. Furthermore,
the harvest season is expected to boost food supply, leading to a gradual
fall in food prices and moderation in food inflation. Against this backdrop,
Economic Outlook
for the Fourth
Quarter of 2021

50 | P a g e Central Bank of Nigeria Economic Report Third Quarter 2021
ECONOMIC REPORT, THIRD QUARTER 2021
headline inflation is expected to decline marginally to 14.97 per cent at
the end of the fourth quarter. However, increased demand during the
festive period, lingering security challenges, and food supply disruptions
caused by hoarding and activities of middlemen could likely elevate food
prices in the near term.
The fiscal outlook for the rest of the year is optimistic, consequent on the
rise in crude oil prices and fiscal reforms. An increase in crude oil prices
above the US$40pb budget benchmark, robust implementation of the
strategic revenue growth initiatives of the FGN, and widespread
availability and administration of COVID-19 vaccines could improve the
fiscal space in the fourth quarter. However, this prospect is dampened by
the fiscal risks associated with the country’s elevated debt servicerevenue ratio and lingering security challenges.
It is anticipated that the monetary policy stance will be sustained,
considering that the path to economic recovery continues. The Bank is
expected to continue its interventions through OMO and CRR debits to
neutralise the effect of the expected inflows from maturing CBN bills. The
opportunity available at the OMO window may sustain Foreign Portfolio
Investments (FPI), engendering short-to-medium-term stability at the
Nigerian foreign exchange market. Money market rates are expected to
move in tandem with the level of liquidity, while yields on fixed-income
securities are expected to trend in line with current realities, as investors
in the equities market anticipate a sustained rise in market indicators.
Nigeria’s external reserves outlook is positive, owing to the sustained high
global crude oil price. The level of external reserves is projected to increase
in the near term, expecting crude oil prices to continue to increase.
However, rising global crude oil production (driven by OPEC, Russia, and
the United States) tends to negatively impact prices, thus posing a threat
to external reserves accretion. Increased incidences of COVID-19 variants
could also activate movement restrictions and negatively impact oil prices.