Classified as


CENTRAL BANK OF NIGERIA
ECONOMIC REPORT


First Quarter

i

ABOUT THE REPORT

The Central Bank of Nigeria (CBN) Economic Report presents economic
developments in Nigeria, intended for dissemination to the public. The
Report provides insights on current developments in the real, fiscal,
financial, and external sectors of the Nigerian economy, as well as on
global issues of interest. It also reflects the policy initiatives of the CBN in
pursuit of its mandate.

The Report is targeted at a wide range of readers, including economists,
policymakers, financial analysts in the government and private sectors,
and the public. Free copies of the Report, both current and past issues, can
be obtained from the CBN website: www.cbn.gov.ng. All inquiries
concerning the report should be directed to the Director, Research
Department, Central Bank of Nigeria, P.M.B. 187, Garki, Abuja, Nigeria.


Contents


iii

Tables
Table 3: Indices of Average World Prices of Nigeria's Major Agricultural

Figures
Figure 22: Transaction at the CBN Standing Facility Window (N Billion) 32


iv


1 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

SUMMARY
Global economic activity rebounded in 2023Q1, as supply-chain and
inflationary pressures eased. Consequently, the average J.P. Morgan’s
global composite Purchasing Manager’s Index (PMI) increased to 51.73
index points from 48.40 index points in 2022Q4, driven by the expansion in
the services sector. Inflationary pressures, though abating, remained
elevated, as economic activities were buoyed by the easing of supply-chain
bottlenecks in both advanced and emerging market and developing
economies, although some grappled with the effect of tight financial
conditions. Global equity markets were bullish, on the back of the strong
performance of the tech and energy sectors, albeit the turbulence in the
US banking sector. In the fixed-income space, the 10-year government
bond yield rallied, as prices rose. The average spot price of Nigeria’s
reference crude, the Bonny Light (34.9° API), fell by 7.8 per cent to
US$83.86 per barrel (pb) from US$90.98 pb in the preceding quarter. The
prices of Brent, at US$81.75 pb, Forcados at US$84.29 pb, West Texas
Intermediate (WTI) at US$77.46 pb and OPEC Reference Basket (ORB) at
US$80.55 pb, exhibited similar trend as the Bonny Light.
On the domestic front, the economy grew at a slower pace in 2023Q1,
amidst headwinds. The real GDP grew by 2.31 per cent, compared with
3.52 per cent in 2022Q4, driven by the 2.77 per cent growth in non-oil
sector. However, the growth outcome was dragged by the 4.21 per cent
contraction in the oil sector, despite the renewed effort to tackle vandalism
and crude oil theft, which boosted crude oil production to 1.28 million
barrels per day (mbpd) from 1.15 mbpd produced in 2022Q4. Inflation
remained elevated, as headline inflation rose to 22.04 per cent, compared
with 21.34 per cent in 2022Q4. Core inflation inched to 19.86 per cent,
compared with 18.49 per cent in the preceding quarter, due to an increase
in the cost of imported and locally manufactured goods. Food inflation also
rose to 24.45 per cent from 23.75 per cent in the preceding quarter,
following increased demand pressures.
The fiscal operations of the FGN resulted in a wider overall deficit, on
account of lower oil receipts. The estimated retained revenue of the FGN
fell by 10.7 per cent, to N1,342.15 billion from the level in 2022Q4. Oil
receipts declined by 3.0 per cent and 43.5 per cent, relative to 2022Q4 and
quarterly target, while non-oil receipts, improved over the preceding
quarter by 1.2 per cent, but was 9.6 per cent below the quarterly target. In
the same vein, provisional aggregate expenditure of the FGN declined by
1.3 per cent and 36.0 per cent, relative to 2022Q4 and the quarterly
budget, respectively. Consequently, the FGN overall deficit widened by 9.6
per cent relative to 2022Q4 but narrowed by 22.1 per cent when compared
with the proportionate budget. Total public debt outstanding as at endDecember 2022 was N46,250. 37 billion (22.8 per cent of GDP), remained
within the statutory threshold.

2 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

The financial system was resilient, on the back of sustained supervision and
implementation of prudential guidelines, ample liquidity and positive
investors’ sentiment. Banking system liquidity increased, resulting in
decreased activity in the standing lending facility (SLF) window, increased
subscription in both the Nigerian Treasury Bills (NTBs) and Federal
Government of Nigeria(FGN) bonds segments, and credit expansion to key
sectors of the economy. The broad money supply (M3) grew by 4.8 per cent
at the end of March 2023, owing to increase in both net foreign and
domestic assets. Activity on the Nigerian Exchange (NGX) Limited was
bullish, arising from strong buying interest in the equities market
occasioned by positive 2022 full year corporate dividend/earnings
declaration.

Uncertainties surrounding the general elections in Nigeria exerted pressure
on the external sector, as the overall balance of payments deficit widened.
The current account posted a surplus of US$2.49 billion, buoyed by positive
trade performance. Capital reversal of US$0.78 billion was recorded in
2023Q1, in contrast to an inflow of US$1.94 billion in 2022Q4, reflecting in
part, the policy normalisation by the Advanced Economies and
uncertainties surrounding the country’s general elections. Aggregate
financial assets recorded a disposal of US$1.30 billion, in contrast to an
acquisition of US$1.09 billion in 2022Q4. The international reserves at
US$35.14 billion was equivalent to 6.68 months of import for goods and
services or 9.01 months for goods only. The average exchange rate of the
naira per US dollar at the I&E window was ₦460.93/US$, compared with
₦445.71US$ in 2022Q4. The international investment position recorded a
net financial liability of US$76.62 billion. Public sector external debt stock
and external debt service payment at end-December 2022 stood at
US$41.69 billion and US$0.80 billion, respectively.
The global outlook for growth in 2023 remains uncertain, on account of
tight
financial
conditions,
geo-economic
fragmentation,
and
macroeconomic uncertainties that continued to trail the Russia-Ukraine
War. Thus, the IMF revised global growth projection to 2.8 per cent in 2023
from an estimated 3.4 per cent in 2022. Domestic growth outlook remains
positive in the near-term, despite headwinds. The recovery of crude oil
prices, increased crude oil production, rebound in consumer demand and
sustained policy support formed the basis for the optimism.


3 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


1.0 GLOBAL ECONOMIC DEVELOPMENTS
Global economic activity rebounded in 2023Q1, propelled by easing of
supply-chain and inflationary pressure, and the reopening of Chinese
economy resulting in marked expansion in services and employment levels
across regions. Also, inflationary pressure moderated in most economies
on the back of easing food and energy costs as well as the crystallisation
of tight monetary policy stance. The cooling off of inflation, receding fears
of a possible recession in the Advanced Economies, and strong
performance of tech and energy sectors led to improvement across the
different financial market segments. Crude oil prices fell, due to increased
crude oil supply and investors’ pessimism owing to uncertainties in the US
banking sector.
1.1 Global Economic Activity
Global economic activity rebounded in 2023Q1 as supply-chain and
inflationary pressure eased. Consequently, the average J.P. Morgan’s
global composite Purchasing Manager’s Index (PMI), stood at 51.73 index
points from 48.40 index points in 2022Q4. The increase in output was
supported by significant expansion in the services sector. Specifically,
price pressure eased as the input prices index fell to 59.80 points from
62.27 points, and the output prices index fell to 55.07 index points from
55.77 index points. Employment level index also expanded to 51.30 index
points from 48.93 index points in the preceding quarter as firms recruit
more workers to meet the increasing new business orders.
Table 1: Global Purchasing Managers' Indices (PMIs)

2022Q4
2023Q1
Composite Index
48.40
51.73
Employment Level
48.93
51.30
New Business Orders
48.50
51.23
New Export Business Orders
50.60
48.37
Future Output
59.83
64.33
Input Prices
62.27
59.80
Output Prices
55.77
55.07


Manufacturing Index
48.93
49.53
Services (Business Activity) Index
48.47
52.33
New Business
48.77
52.13
New Export Business
47.70
50.20
Future Activity
60.43
65.00
Employment
50.73
51.57
Outstanding Business
48.50
50.33
Input Prices
63.47
61.40
Prices Charged
55.77
55.37
Source: J.P Morgan
Summary
Global
Economic
Conditions

4 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


The services sector expanded to 52.33 index points from 48.47 index
points in the preceding period, driven by new business, new export
business, and future activity. In contrast, the manufacturing sector
remained in contractionary territory, as the average manufacturing PMI
rose, albeit marginally, to 49.53 index points from 48.93 index points in
the preceding quarter.
In the Advanced Economies (AEs), economic activities were buoyed by the
softer pace of inflation and easing supply-chain bottlenecks. In the UK,
output expanded as the PMI rose to 51.27 index points from 48.50 index
points in the preceding quarter, reflecting higher consumer spending and
business investment on account of lower prices. Similarly, economic
activities in Europe remained resilient during the quarter, as expansion
was recorded across most European countries, given the broad decline in
food and energy prices. Consequently, the PMI levels rose to 51.07 index
points, 52.87 index points, 55.2 index points and 51.6 index points in
Germany, Italy, France and Spain, respectively. Similarly, higher demand
pushed Japan’s PMI to 51. 57 index points from 50.1 index points, in the
preceding period.
Nonetheless, in the US, economic activities contracted due to tight
financial conditions, resulting in lower consumer and investment
spending, thus, dampening activities in the manufacturing and services
sectors. Consequently, the average composite PMI rose to 49.73 index
points from 46.5 index points in 2022Q4.

Figure 1: Selected Advanced Economies’ PMIs
Source: Trading Economics/Various countries’ websites
Economic
activity in
Advanced
Economies

United
States
Canada
Japan
United
Kingdom
Germany
Italy
Spain
France
Index Points
2022Q1
2022Q4
2023Q1
50-point threshold

5 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

The performance of the Emerging Markets and Developing Economies
(EMDEs) was mixed, as some economies grappled with tight financial
conditions. Notably, economic activities expanded in China as
manufacturing and business activities rose, following the reopening of the
economy. Thus, the PMI rose to 55.43 index points from 47.90 index
points in the preceding quarter. Also, the PMI in India rose to 58.3 index
points from 57.20 index points, as factory activities picked up, given a rise
in new business orders and export. In Turkey, despite the negative effects
of the earthquakes on economic activities, output remained resilient,
supported by domestic and international policies. This resulted in an
expansion of the PMI to 50.37 index points from 46.70 index points in the
preceding quarter.
In South Africa, the PMI contracted to 49.63 index points from 50.10 index
points, owing to power cuts and supply shortages, while weak consumer
demand in Kenya, contributed to the fall in the PMI to 49.27 index points
from 50.90 index points, in the preceding quarter. The PMI in Ghana, at
49.43 index points, reflected a softer pace of contraction from 45.43 index
points, owing to relatively high consumer prices and production costs.
Figure 2: PMI in Selected EMDEs
Source: Trading Economics/Various countries’ websites.

1.2 Global Inflation
Inflationary pressure, though abating, remained elevated. Headline
inflation moderated due to monetary policy tightening, lower crude oil
prices, and weaker consumer demand. In most Advanced Economies,
headline inflation declined, driven by lower energy and food prices,
persistent monetary policy tightening, and the easing of global supply
chain disruptions. In the US, inflation moderated to 5.81 per cent from
Economic
activity in
EMDEs
Advanced
Economies

Brazil
Russia
India
China
South
Africa
Mexico
Indonesia
Turkey
Ghana
Kenya
Index Points
2022Q1
2022Q4
2023Q1
50-point threshold

6 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

7.10 per cent in 2022Q4, due to lower food and energy prices and the
culminating effect of several policy rate hikes. Similarly, in Canada,
headline inflation fell to 5.59 per cent from 6.67 per cent in 2022Q4,
following a sustained tight monetary policy stance and lower crude oil
prices. In the euro area, average inflation fell in France, Italy, Spain and
Germany to 6.00, 9.56, 5.96 and 8.24 per cent, induced by lower cost of
food, energy, transportation and housing. Inflation eased in the UK to 9.00
per cent from 9.37 per cent in 2022Q4, owing to reduced cost of transport,
gasoline, housing and furniture. Likewise, in Japan, inflation moderated to
3.80 per cent from 3.83 per cent in 2022Q4.
Figure 3: Inflation Rates in Selected Advanced Economies
Source: OECD, Trading Economics

In Emerging Markets and Developing Economies (EMDEs), inflation
moderated due to lower food prices. China’s inflation rate fell to 1.55 per
cent from 1.83 per cent, in the preceding period, driven by a slowdown in
the cost of food. In South Africa, consumer prices fell to 7.27 per cent from
7.68 per cent in the preceding quarter, due to moderation in transport,
energy and food prices. Inflation declined in Indonesia to 5.24 per cent
from 5.55 per cent in 2022Q4, driven by lower cost of food and transport.
In Turkey, inflation remained substantially elevated at 54.46 per cent,
nonetheless gradually
moderating
due
to
declining
costs
of
transportation, housing and utility. Largely, due to the base effect on
account of the Russia-Ukraine war, inflation in Russia fell significantly to
8.77 per cent from 12.17 per cent in 2022Q4. Contrarily, in India, retail
prices edged up to 6.16 per cent from 5.66 per cent in 2022Q4 due to
higher food prices.


Emerging
Markets and
Developing

United
States
Canada
Japan
United
Kingdom
France Germany
Italy
Spain
Per cent (%)
2022Q1
2022Q4
2023Q1

7 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 4: Inflation Rates in Selected EMDEs

Source: OECD, Trading Economics and Staff Computations


1.3
Global Financial Markets Development
Global financial conditions eased, despite a tight monetary policy stance,
as fears of a possible recession in the Advanced Economies ebbed and
inflation softened. Global equities were bullish during the quarter on the
back of the resilience of the tech and energy sectors, overcoming the
turbulence in the banking sector. In the fixed-income space, the 10-year
government bond yield rallied, as prices rose while the yield fell. Equity
markets in North America, Europe, and Japan notched up at the end of the
quarter. Specifically, in the US markets, the NASDAQ, S&P 500 and Dow
Jones rose by 20.5, 7.0 and 0.4 per cent, respectively, with strong
performance in tech stocks. This was attributed to the swift containment
of systemic risk associated with the collapse of Silicon Valley Bank, which
swayed market confidence, amid optimism that the Fed would halt
interest rate hikes. In Canada, the S&P/TSX rose by 3.7 per cent, driven by
the gains recorded in information technology, due to improved investor
optimism. Similarly, the EURO STOXX 50 rose by 13.8 per cent, buoyed by
a strong recovery of domestically focused sectors, following the release of
data showing that the economy was performing better than earlier
forecast.
The lead indices of the Spanish, Italian, French and German stock markets
rose by 12.2, 14.4, 13.1 and 12.5 per cent, respectively. Gains were driven,
mainly, by the information technology, consumer discretionary stocks and
communication services sectors. The UK FTSE-100 also gained 2.4 per
cent, owing to greater market optimism, as the economy performed
better than expected. In Japan, the depreciation of the yen buoyed market

China
India
Turkey
South
Africa
Indonesia
Mexico
Brazil
Russia
per cent (%)
2022Q1
2022Q4
2023Q1

8 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

sentiment for export-based companies. Consequently, the NIKKEI 225 and
TOPIX gained 7.5 and 5.9 per cent, respectively.
Within the EMDEs, performance of equity markets was mixed. Mexico’s
MEXBOL index inched up by 11.2 per cent, owing to improved economic
data that spurred confidence in the economy. Renewed optimism
following the reopening of the economy and the easing of regulatory
pressure on Internet services led to a rise in the Chinese Shanghai Stock
Exchange-A by 7.2 per cent. The South African JSE All-Share Index rose by
4.2 per cent, propelled by gains in financials, tech and resource-link areas.
On the flip side, some equity markets dipped during the quarter. The
Brazilian BOVA11 BZ fell by 7.0 per cent, as investors cautiously assessed
the new administration’s plan for the economy. India’s BSE and the
Turkish BORSA Istanbul 100 indices fell by 20.9 and 12.8 per cent,
respectively. The plunge in India’s equity market was triggered, largely, on
account of alleged unethical practices against a major business
conglomerate in the country. Equities declined in Turkey as investors fret
over the uncertainty associated with the presidential elections, amid the
devastation caused by the February earthquake.
Figure 5: Key Global Stock Indices
Source: Bloomberg.

Long-term government treasury bond yields fell in most advanced and
emerging economies. Thus, their prices rose, influenced by the
expectation of a slowdown in monetary policy rate hikes in several
economies. In the US and Canada, the 10-year Treasury yield dropped to
3.47 and 2.90 per cent, respectively, from 3.88 and 3.30 per cent, in the
preceding quarter. Similarly, in the UK and the euro area, the 10-year
government bond yield dropped to 3.49 and 2.29 per cent from 3.66 and
2.57 per cent, respectively.

-30
-20
-10

US - S&P

US -
Nasdaq-100
Japan -
NIKKEI 225
Canada
Germany -
DAX
Italy
Brazil
India - BSE
IN
South Africa
- JALSH
Indonesia -
JCI Index
Per cent
Growth in 2022Q4
Growth in 2023Q1

9 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Within the EMDEs, the 10-year bond yields exhibited mixed
developments. For instance, in Mexico and India, the yield fell by 0.18 and
0.02 percentage point to 8.84 and 7.31 per cent, respectively, from their
levels in the preceding quarter. The decline was due, mainly, to rise in
subscription by foreign investors. In Indonesia, the 10-year government
bond yield declined to 6.77 per cent from 6.92 per cent in 2022Q4.
However, the 10-year bond yield in China rose marginally by 0.01
percentage point to 2.85 in 2023Q1, following investor optimism on the
reopening of the economy. Similarly, bond yields in Brazil, Turkey and
South Africa rose to 6.27, 11.79 and 11.04 per cent from 6.17, 10.92 and
10.79 per cent, respectively.

Figure 6: 10-year Government Bond Yields for Selected Countries
Source: Bloomberg

Selected emerging market currencies depreciated against the US dollar
during the review period. The Russian ruble and South African rand
depreciated by 14.0 and 0.8 per cent, respectively, relative to their levels
in the preceding quarter. The depreciation of the Russian ruble was due
to lower sales of foreign exchange by exporters, while the depreciation of
the South African rand was due to a firmer U.S. dollar and strong U.S.
labour data. In contrast, the Chinese RMB appreciated by 3.9 per cent
based on a bullish economic recovery outlook.


Brazil
Russia
India
China
South Africa
Mexico
Indonesia
Turkey
United States
United Kingdom
Japan
Canada
Euro Area
Germany
France
Italy
Spain
Emerging and Developing Economies
Advanced Economies
Per cent (%)
2022Q1
2022Q4
2023Q1
Naira against
Emerging Market

10 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 7: EMEs Currency Values to the US dollar
Sources: Central Bank Nigeria & Reuters

Table 2: EMEs Currency Rates to the US dollar

Chinese
RMB
Nigerian
Naira
South
African
Rand
Russian
Ruble
2022Q1

2022Q4

2023Q1

Sources: Central Bank of Nigeria & Reuters

1.4
Global Commodity Market Developments
Total world crude oil supply declined as OPEC+ maintained its decision to
adjust downward the overall production by 2.0 mbpd. Total world crude
oil supply declined by 1.06 per cent to 100.11 mbpd in 2023Q1, compared
with 101.18 mbpd in the preceding quarter. The fall in world crude oil
supply was due, largely, to lower supply from non-OECD countries,
particularly OPEC. Non-OECD supply declined by 1.99 per cent to 66.50
mbpd, from 67.85 mbpd in 2022Q4. However, total OECD supply rose by
0.87 mbpd to 33.61 mbpd in 2023Q1, from 33.32 mbpd in the preceding
quarter.
OPEC’s crude oil supply fell by 1.6 per cent to 28.46 mbpd in 2023Q1, from
28.92 mbpd in the preceding quarter. The decline was due, mainly, to
member countries’ compliance with the OPEC+ decision to reduce
production by 2.0 mbpd, starting in November 2022. On the demand side,
world crude oil demand rose by 0.3 per cent to 10.34 mbpd in 2023Q1,
from 101.00 mbpd in the preceding quarter. The rise was on account of
increased demand from China and India.
-30
-20
-10

Chinese RMB
Nigerian Naira
South African
Rand
Russian Ruble
Depreciation/Appreciation
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
World Crude Supply
and Demand

11 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Crude oil spot prices fell, due to uncertainties in the US banking sector. The
average spot price of Nigeria’s reference crude oil, the Bonny Light (34.9°
API), fell by 7.8 per cent to US$83.86 pb in 2023Q1, from US$90.98 pb in
the preceding quarter. The prices of Brent at US$81.75 pb, Forcados at
US$84.29 pb, West Texas Intermediate (WTI) at US$77.46, pb and OPEC
Reference Basket (ORB) at US$80.55 pb, all exhibited similar trends as the
Bonny Light. The decline in crude oil prices was due, largely, to investors’
pessimism arising from fears that the collapse of some US banks would
have a wider systemic impact on US demand for crude oil.
Figure 8: Quarterly Crude Oil Prices
Source: Reuters

Developments in agricultural prices were mixed in the first quarter of 2023.
At 123.6 index points (January 2010=100), the All Commodities Index was
0.9 per cent higher than its level in the preceding quarter. The increase in
the overall index was driven, largely, by the rise in the prices of cocoa,
rubber and coffee by 11.0, 6.9 and 6.3 per cent, respectively. The rise in
the prices of the commodities was on account of inclement weather and
labour shortages that affected supply in major producing countries.
Conversely, the prices of wheat, cotton and soya beans decreased by 8.2,
2.2 and 0.8 per cent, respectively, on the back of ample supply by leading
exporters of the commodities.


Agricultural
Commodity Prices
Crude Oil
Prices

Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
US$ per barrel
Bonny Light
Brent
Forcados
WTI
Opec Basket

12 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Table 3: Indices of Average World Prices of Nigeria's Major
Agricultural Export Commodities for 2023Q1 (in dollars; Jan.
2010=100)
Commodity
2022Q1/a
2022Q4/a
2023Q1/b
% Change

(1) & (3)
(2) & (3)

All Commodities


Cocoa


Cotton
177.3
129.8

-28.3
-2.2

Coffee


Wheat


Rubber


Groundnut
123.8
136.6
143.6

5.1

Palm Oil


Soya Beans


Sources: (a) World Bank Pink Sheet (b) Staff Estimates.


Average spot prices of gold, silver and platinum increased, following
increased demand for precious metals. The average spot prices per ounce
of gold, silver and platinum rose by 9.2, 6.0 and 1.8 per cent to sell at
US$1,890.51, US$22.57 and US$990.62, from US$1,731.77, US$21.29 and
US$972.92, respectively, in the preceding quarter. The increase in the
prices of the precious metals was due to higher demand for the metals as
safe haven assets, due to the banking crisis in the US. However, the price
of palladium declined by 19.2 per cent to sell at US$1,563.44 per ounce,
from US$1,934.29 per ounce in the preceding quarter. The price of the
palladium declined due to falling demand from the auto industry,
following the increasing shift to the production of electric vehicles, and
the substitution of platinum in the industry.
Figure 9: Price Changes in Selected Metals (per cent)


Gold
Silver
Platinum
Palladium
With corresponding quarter
With preceding quarter

13 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

1.5
Monetary Policy Stance
Monetary policy tightening continued in the quarter, as most central banks
continued to raise benchmark rates to rein in inflation. The US Federal
Reserve raised policy rates by 33 basis points to 4.83 per cent, during the
quarter, as inflation remained elevated and labour market conditions
remained tight. Also, the Bank of England and the European Central Bank
raised interest rates twice during the quarter. While the former hiked the
rate by 50 bps and 25 bps, the latter maintained a more hawkish stance,
hiking by 50 bps in each instance. Similarly, the Bank of Canada increased
its rate by 25 bps to 4.50 per cent and signalled a pause in monetary
tightening as inflationary pressures eased. In India, the hiking cycle
continued as the Reserve Bank increased its key policy rate to 6.50 per
cent. The Bank of Mexico also increased its policy rate by a cumulative 75
basis points to 11.25 per cent.
However, the Central Bank of Turkey sustained an accommodative stance
to ease financial conditions as the authorities continued to favour
unorthodox monetary policy measures. Consequently, the repo rate was
lowered by 50 bps during the quarter. On the other hand, the central
banks of Brazil, Russia and China left their policy rates unchanged at 13.75
,7.50 and 3.65 per cent, respectively. Japan also retained its policy rate at
-0.10 per cent.
Table 4: Central Bank Policy Rates (per cent)
Country
2022Q3
2022Q4
2023Q1
United
States
3.25
4.50
4.83
United
Kingdom
2.25
3.50
4.25
Japan
-0.10
-0.10
-0.10
Canada
3.25
4.25
4.50
Euro Area
1.25
2.50
3.50
China
3.65
3.65
3.65
India
5.90
6.25
6.50
Mexico
9.25
10.50
11.25
Indonesia
4.25
5.50
5.75
Turkey
12.00
9.00
8.50
Brazil
13.75
13.75
13.75
Russia
7.75
7.50
7.50
South
Africa
6.25
7.25
7.75
Source: Various Central Banks’ websites


14 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


2.0 DOMESTIC ECONOMIC DEVELOPMENTS
2.1 Real Sector Developments
The economy grew at a slower pace in 2023Q1, driven mainly by activities
in the non-oil sector. Growth was driven by election-related expenditures
which fueled economic activities, though constrained, mainly, by supply
shocks that accompanied the currency redesign exercise, amid other
headwinds. Headline inflation surged further on account of higher energy
prices and limited access to cash that exacerbated supply shocks.
The economy was characterised by an increased push by the fiscal
authorities to ramp up the stock of infrastructure in the country in 2023Q1,
given the transition to a new democratic regime. Aggregate demand was
spurred by election-related expenditure, thus, supporting growth in the
quarter. However, supply bottlenecks, caused mainly by the RussiaUkraine crisis, and supply shocks that accompanied the currency redesign
exercise, amid other headwinds, slowed the pace of growth in the quarter.
Consequently, real GDP grew by 2.31 per cent in 2023Q1 (year-on-year),
compared with 3.52 per cent in 2022Q4, driven by the non-oil sector,
which grew by 2.77 per cent. However, growth was dragged by the oil
sector, despite the modest improvement recorded in the sector. The oil
sector contracted by 4.21 per cent, compared with a contraction of 13.38
per cent in the preceding quarter. The lower contraction was on account
of renewed efforts to tackle vandalism and crude oil theft, which
supported increased crude oil production to 1.28 million barrels per day
from 1.15 mbpd produced in 2022Q4. However, persisting infrastructural
and security challenges continued to weigh on the sector’s output.
Summary
Domestic Output
and Economic
Activities

15 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 10: Real GDP Growth Rate, 2021Q1-2023Q1, Year-on-Year
Source: National Bureau of Statistics

2.1.1 Sectoral Performance
The Services and Industry sectors grew, while the agricultural sector
contracted. The services sector continued to drive growth, contributing
2.44 percentage points to the realised growth. The sector grew at a slower
pace by 4.35 per cent in 2023Q1, compared with 5.69 per cent in 2022Q4.
Figure 11: Sectoral Growth Rate of Real GDP, 2021Q1-2023Q1
Source: National Bureau of Statistics

Within the Services sector, Information & Communications, Financial &
Insurance, Trade and Transport & Storage subsectors drove overall
growth, contributing 1.67, 0.92, 0.21 and 0.10 percentage points,
respectively. The sub-sectors grew by 10.32, 21.37, 1.31 and 9.36 per cent,
respectively. The growth witnessed in the various sub-sectors, particularly
in the ICT sub-sector was due majorly to the increasing number of internet


2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1
Percent (%)
Oil GDP
Non-oil GDP
Total GDP

2021Q1
2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
2023Q1
Per cent
Agriculture
Industry
Services
Total GDP

16 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

service subscribers, mobile service subscribers, and the growth in
broadband penetration. Also, the effect of the electioneering-induced
transport activities, and the increased patronage of fintech services due to
the currency redesign policy, contributed to the growth in the Services
sector.

The Agricultural sector contracted by 0.90 per cent, compared with a
growth of 2.05 per cent in the preceding quarter, on account of the large
decline in livestock production. This was occasioned by the persisting
security challenges affecting cattle husbandry, and the limited access to
cash that dominated the quarter, thereby, constraining economic
activities, since most of the activities within the sector are cash-driven,
particularly in the livestock subsector. Thus, livestock and fishery subsectors contracted by 30.57 and 2.92 per cent, compared with a
contraction of 1.59 and 3.02 per cent in 2022Q4, respectively. However,
crop production and forestry subsectors grew at a slower pace by 1.93 and
1.24 per cent, compared with 2.41 and 1.63 per cent in 2022Q4,
respectively.

Industry sector performance improved, as it grew by 0.31 per cent in
2023Q1, in contrast to a contraction of 0.94 per cent in 2022Q4. Growth
was witnessed in Manufacturing (1.61 per cent), Electricity (9.53 per cent),
Water supply (5.57 per cent) and construction (3.27 per cent) sub-sectors,
compared with a growth of 2.83, 15.22, 8.81 and 3.80 per cent,
respectively in the preceding quarter. The performance of the sub-sectors
was on account of the combined effects of continued policy support to the
industry sector, as well as an uptick in investments in infrastructure which
spurred activities in the sector, especially manufacturing.
Specifically, the slower growth of the Electricity sub-sector was on account
of low water levels at the hydro generation plants, technical faults, and
shutdown for upgrade and maintenance of generation, transmission and
distribution networks. The development led to a decrease in the average
volume of electricity generated and consumed in the quarter by 5.3 and
1.4 per cent to 3,984.6 MW/h and 3,256.9 MW/h, respectively, from the
levels in the preceding quarter.
Though the Mining and Quarrying sub-sector remained in the contraction
region, there was an improvement as the contraction narrowed to 3.96
per cent from a contraction of 11.39 per cent in the preceding quarter.
The Index of Industrial Production (IIP), a measure of industry
performance, indicated a similar performance for Industry. The index, at

17 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

101.8 index points (2010=100), increased by 15.2 per cent, compared with
88.4 index points in the preceding quarter. This was majorly attributed to
improvements in mining and manufacturing activities. Similarly, at 205.3
index points (2010=100), the Index of Manufacturing Production rose by
8.0 per cent, compared with 190.1 index points in 2022Q4, due partly to
improved demand, notably in the food, beverages and tobacco subsectors,
following the 2023 general elections. Thus, manufacturing capacity
utilization rose by 1.2 percentage points to 56.4 per cent in 2023Q1,
relative to the preceding quarter.
The performance of sub-sectoral activities showed that 18 sub-sectors
witnessed growth, while 4 sub-sectors contracted.
Figure 12: Top 16 Contribution of Subsectors to GDP and Growth Rates, 2023Q1
Source: National Bureau of Statistics


Figure 13: Least Contributing Subsectors to GDP and Growth Rates, 2023Q1
Source: National Bureau of Statistics

(5.57%) Water supply, sewage, waste Mang.
(0.72%) Education
(5.47%) Arts, Entertainment & Recreation
(2.46%) Human Health & Social Services
(9.53%) Electricity,Gas,Steam & Air conditioner
(2.03%) Public Administration
(3.59%) Accommodation and Food Services
(1.70%) Real Estate
(3.08%) Professional, Scientific & Technical...
(9.36%) Transportation and Storage
(3.27%) Construction
Manufacturing (1.61%)
(1.31%) Trade
(1.93%) Crop Production
(21.37%) Financial and Insurance
(10.32%) Information and Communication
Growth rate
Contribution

Fishing (-2.92%)
Mining and Quarrying (-3.96%)
Livestock (-30.57%)
Other Services (-20.05%)
Growth rate
Contribution

18 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.1.2 Consumer Prices
Headline inflation remained elevated, following increase in both food and
non-food components of the CPI basket. The rise was due to persisting high
energy, especially Petroleum Motor Spirit (PMS) and other input costs,
which impacted negatively on production, transport and logistics costs.
Also, limited access to cash constrained economic activities, particularly,
small and medium enterprises (SMEs), thus, driving further increase in
price. Consequently, headline inflation (year-on-year) rose to 22.04 per
cent in 2023Q1, compared with 21.34 per cent in 2022Q4.

Figure 14: Headline, Food and Core Inflation (year-on-year)
Source: NBS and Staff Estimates

Core inflation inched up to 19.86 per cent in 2023Q1, compared with
18.49 per cent in the preceding quarter. The rise was attributed to the
continuous increase in the cost of imported and locally manufactured
goods, due to the pass-through effect of high global inflation, tighter
economic conditions, exchange rate constraints, higher energy and input
costs, as well as other structural factors.

Food inflation also rose by 24.45 per cent from 23.75 per cent in the
preceding quarter. The rise was due, largely, to demand pressures amid
supply constraints, which led to increase in the prices of both imported
and processed foods. Also, the ripple effect of higher energy prices and
increased transportation/logistics costs contributed to the rise in food
inflation.

Headline
Inflation
Food
Inflation
Core
Inflation

Percent (%)
Headline
Core
Food

19 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.1.3 Socio-Economic Developments
The Federal Executive Council (FEC) approved ₦95.80billion for the
dualisation of Akure/Ita Ogbolu-Iju/Ado-Ekiti Road, linking Ekiti and Ondo
states. The first section of the road project on the Ondo side was awarded
at the cost of ₦46.60billion, while the balance of ₦49.20billion would be
expended on the second section of the project from the Ekiti state border.
Furthermore, BUA Group received approval from the Federal Government
to construct four major roads worth ₦330.00billion under the Federal
Government Infrastructure Tax Credit Scheme (Executive Order 7). The
roads to be constructed are Kosubosu-Kaiama-Bode Saadu highway
(130km); Bacita-Shonga-Lafiagi highway (83km); Eyenkorin-Afon-OffaOdo Ottin highway (49km); and Okuta-Bukuro Road (32km) which
connects to Benin Republic. The projects upon completion will facilitate
the movement of goods and people, especially agricultural produce, with
huge potentials for economic development and food security.

The Federal Government approved the sum of ₦320.34billion as
intervention fund to public tertiary institutions across the country. To this
end, the sum of ₦1.15billion will be disbursed to each university. This
comprises ₦954.70million as annual direct disbursement and
₦200.00million as zonal intervention. Similarly, each polytechnic would
recieve ₦699.30million, comprising ₦569.30million as annual direct
disbursement and ₦130.00million as zonal intervention. Furthermore,
each college of education would recieve ₦800.00million, comprising
₦670.00million as annual direct disbursement and ₦130.00million as
zonal intervention.

2.1.4 Domestic Crude Oil Market Developments
Domestic crude oil production and export rose, because of increased
pipeline surveillance. Nigeria’s average crude oil production and export
rose by 11.3 and 18.6 per cent to 1.28 mbpd and 0.83 mbpd in 2023Q1,
from 1.15 mbpd and 0.70 mbpd, respectively, in the preceding quarter.
The rise in crude oil production and export was due to increased
surveillance of the country’s pipeline infrastructure, which curtailed
incidences of crude oil theft and sabotage. However, the production level
fell short of the OPEC quota of 1.742 mbpd, by 462,000 bpd on account of
continued technical, infrastructural and persisting security challenges.


Educatio
Crude Oil
Production
Transportation

20 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


2.2
FISCAL SECTOR DEVELOPMENTS
The fiscal performance in 2023Q1 was impaired by low oil revenue
realisation. Consequently, the retained revenue of the FGN fell by 10.7 per
cent, relative to 2022Q4, and was 46.1 per cent below the quarterly target.
FGN aggregate expenditure also declined by 1.3 and 36.0 per cent, relative
to the preceding quarter and the quarterly target, respectively. Thus, the
FGN overall deficit widened relative to 2022Q4, but narrowed by 22.1 per
cent when compared with the proportionate budget. Consolidated public
debt, as at end-December 2022, stood at N46,250.37billion (or 22.8 per
cent of GDP).

2.2.1 Federation Account Operations
Federation Account earnings declined, due to lower-than-anticipated
receipts from both oil and non-oil revenue sources. At N3,478.79billion,
gross federation revenue fell below the levels in 2022Q4 and the budget
benchmark by 0.4 and 26.6 per cent, respectively. Non-oil revenue
continued to dominate Government revenue, accounting for 61.4 per
cent, while oil receipts accounted for 38.6 per cent.

Oil revenue, at N1,341.12billion, declined by 3.0 and 43.5 per cent,
relative to 2022Q4 and quarterly target. The subpar performance was
indicative of revenue shortfalls from Petroleum Profit Tax and Royalties,
following lower domestic crude production.

Conversely, non-oil receipts, at N2,137.67billion, improved against the
preceding quarter by 1.2 per cent, but was 9.6 per cent below the
quarterly target of N2,365.91billion. The improvement was attributed to

Summary

21 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

the strong performance of value-added tax (VAT), which exceeded
collections in the preceding quarter and quarterly target by 13.9 and 21.4
per cent, respectively. Generally, non-oil revenue performance in the
quarter, reflected seasonality in tax returns.


22 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Table 5: Federally Collected Revenue and Distribution (N
Billion)

2022Q1
2022Q4 1/
2023Q1 1/
Budget
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

Balance in Special Account from 2019

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: OAGF and CBN 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 include cost of revenue collections and JVC cash calls; while transfers entail
provisions for FGN Independent revenue and other Non-Federation revenue.


A net distributable balance of N2,463.03billion was disbursed to the three
tiers of government, after accounting for statutory deductions and
transfers, as well as additional revenue from oil and non-oil excess
revenue, and exchange gain. Of this amount, the Federal Government got
N929.60billion, while state and local governments received N954.47billion
and N578.97billion, respectively. Of the disbursement to states, the sum
of N169.46billion was distributed to oil-producing states as 13.0 per cent
Derivation Fund. Total disbursement to the federating units was 5.3 per

23 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

cent above allocation in 2022Q4, but 31.6 per cent below the quarterly
estimate.

2.2.2 Fiscal Operations of the Federal Government
The retained revenue of the FGN declined on the back of lower receipt from
FGN independent revenue sources and allocation from the Federation
Account. Estimated retained revenue of the FGN stood at
N1,342.15billion, 10.7 per cent below receipts in 2022Q4 and 46.1 per
cent short of the quarterly target. Receipt into the Federation Account and
FGN independent revenue fell by 9.3 and 8.0 per cent below collections in
the preceding quarter and were 36.1 and 62.0 per cent short of the
quarterly target, respectively. Other revenue components, excess oil
revenue and exchange gain, at N60.58billion and N66.56billion,
respectively, augmented revenue realisations in the quarter.

Table 6: FGN Retained Revenue (N Billion)


2022Q1
2022Q4
2023Q1
Budget
FGN Retained
Revenue


Federation Account

VAT Pool Account

FGN IR


Excess Oil Revenue

Excess Non-Oil

Exchange Gain

Others*


Source: Office of the Accountant-General of the Federation (OAGF)
Note: * Others include revenue from Special Accounts, Special Levies and share of dividend.
The Budget figures are provisional, IR = Independent Revenue


Following a decline in interest payments, the provisional aggregate
expenditure of the FGN decreased by 1.3 and 36.0 per cent, relative to
2022Q4 and the quarterly budget, respectively. The provisional aggregate
expenditure of the FGN in 2023Q1 amounted to N2,772.98billion. A
decomposition of FGN spending showed that recurrent expenditure,
capital expenditure, and transfers accounted for 84.6, 9.8 and 5.6 per
cent, respectively.


Federal
Government
Retained Revenue
Federal
Government
Expenditure

24 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


Figure 15: Federal Government Expenditure (N Billion)

Source: Office of the Accountant-General of the Federation (OAGF) and CBN Staff
Estimates.

The fiscal operations of the FGN in 2023Q1 resulted in a deficit. At
N1,430.83billion, the provisional fiscal deficit of the FGN was 9.6 per cent
higher than the level in the preceding quarter but 22.1 per cent below
the target.
Table 7: Fiscal Balance (N Billion)

2021Q4
2022Q4
2023Q1
Budget
Retained revenue

Aggregate
expenditure

Recurrent

Non-debt

Debt Service

Capital

Transfers

Primary balance

Overall balance

Source: Office of the Accountant-General of the Federation (OAGF) and CBN Staff
Estimates
Note: The figures are provisional.


Overall Fiscal
Balance

25 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Government borrowing in the review period remained anchored on the
Medium-Term Debt Strategy 2020-2023 of the FGN. The total public debt
outstanding as at the end of December 2022 was N46,250. 37billion (22.8
per cent of GDP). It rose by 5.0 per cent and 16.9 per cent, relative to endSeptember 2022 and end-December 2021, respectively; nevertheless,
remained within the 40.0 per cent domestic total public debt-to-GDP
threshold. Domestic debt accounted for 59.6 per cent of the consolidated
public debt, while external debt obligations constituted 40.4 per cent. Out
of the public debt stock, FGN owed N40,912.62billion (or 88.5 per cent)1,
while State governments’ domestic debt stock made up the balance of
N5,337.75billion (11.5 per cent).

Of the total FGN debt obligations, domestic debt was N22,210.36billion
(or 54.3 per cent), while external debt was N18,702.26billion (or 45.7 per
cent). This is against the sustained 70:30 Domestic: External debt mix
anticipated in the prevailing medium-term debt framework. Detailed
analysis shows that FGN bond issues maintained its dominance, with 73.9
per cent of the total domestic debt, while Treasury Bills (19.9 per cent),
FGN Sukuk (3.3 per cent), Promissory Notes (2.4 per cent), and others (0.4
per cent) constituted the balance. With regards to external debt holdings,
Multilateral, Commercial and Bilateral loans accounted for 48.5 per cent,
37.5 per cent and 12.1 per cent, respectively, while ‘other’ loans
constituted 1.9 per cent. Debt service obligations in 2022Q4, amounted
to N548.86billion, compared with N1,167.02billion in 2022Q3. The decline
was attributed to lower demand for external borrowing.

Figure 16: FGN External and Domestic Debt Composition (N Billion)

Source: Debt Management Office (DMO).


Federal
Government Debt

26 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 17: Composition of Domestic Debt Stock by Instrument

Source: Compiled from DMO figures.


Figure 18: Composition of External Debt Stock by Instrument

Source: Compiled from DMO figures.


FGN Bonds
73.9%
T/Bills
19.9%
FGN Sukuk
3.3%
Promissiory Notes
2.4%
Others
0.4%
Multilateral, 48.5%
Commercial, 37.5%
Bilateral, 12.1%
Others, 1.9%

27 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.3
MONETARY AND FINANCIAL DEVELOPMENTS
The financial sector remained safe and sound on the back of sustained
supervision and implementation of prudential guidelines. Key monetary
aggregates grew in 2023Q1, owing to increases in both net foreign and
domestic assets. Banking system liquidity increased, resulting in decreased
activity in the standing lending facility window, increased subscription in
both the NTBs and FGN bonds segments, and credit expansion to key
sectors of the economy. Key short-term interest rates showed a mixed
pattern during the quarter, a resultant effect of both hike in monetary
policy rate (MPR) and the relative surge in liquidity. The publication of
favourable 2022 full-year corporate earnings results spurred interest in the
equities market, leading to bullish activities in the capital market.

2.3.1 Monetary Developments
Reserve money fell by 0.35 per cent in 2023Q1, due to the decline in
currency-in-circulation (CIC). The Bank’s naira redesign policy-induced a
decline in CIC by 44.1 per cent. A further decomposition of the CIC shows
that the value of notes and coins declined by 44.4 per cent, while the
eNaira component increased significantly by 89.8 per cent at end-March
2023. Liabilities to Other Depository Corporations (ODCs), on the other
hand, grew by 9.8 per cent, triggered by the 19.1 per cent growth in
required
reserves.
Consequently,
reserve
money
declined
to
N15,975.74billion from N16,032.05billion in the preceding quarter.

Table 8: Components of Reserve Money (N Billion)

Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Monetary Base

Currency-In-Circulation
3,245.60
3,255.56

3,228.75

3,012.06
1,683.50
Of which:


Notes and coins

eNaira

Liabilities to ODCs

Monetary Base
(% Growth over `Preceding
December)


Broad Money Multiplier (M3)


Source: Central Bank of Nigeria

However, the increase in broad money multiplier to 3.42 from 3.25 in the
preceding quarter, amplified the monetary base, resulting in a 4.8 per cent
growth in broad money supply (M3). Broad money supply stood at
N54,634.06billion, compared with N52,155.42billion at the end of the
Summary
Reserve Money

28 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

preceding quarter. On annualized basis, the 4.8 per cent growth in M3
translated to 19.0 per cent for the annual benchmark target, surpassing
the benchmark target by 1.8 percentage points.

Figure 19: Composition of Currency-in-Circulation (N Billion)

Source: Central Bank of Nigeria.

Net foreign and domestic assets increased by 40.9 and 1.5 per cent,
contributing 3.3 percentage points and 1.4 percentage points,
respectively, to the growth in broad money supply. The rise in Net Foreign
Assets (NFA) was due to the decline in liabilities to non-residents by
depository corporations by 13.7 per cent, which outweighed the 3.2 per
cent decline in claims on non-residents. The major driver of the growth in
Net Domestic Asset (NDA) was the 11.7 per cent growth in net claims on
central government, followed by the 3.2 per cent growth in claims on
other sectors.


Mar.-22
Jun-22
Sep-22
Dec-22
Mar-23
Notes & Coins (LHS)
eNaira (RHS)

29 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


Table 9: Money and Credit Growth over preceding December (%)

Mar-

Jun-22
Sep-22
Dec-22
Mar-

Contribution
to M3
growth
Annualise
d Growth
(Mar-23)

Provisional
Benchmark
(Mar-23)
Net Foreign Assets

Claims on Nonresidents


Liabilities to Nonresidents


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


Total Monetary
Assets (M3)

Currency Outside
Depository
Corporations


Transferable Deposits


Narrow Money (M1)


Other Deposits


Broad Money (M2)

Securities Other than
Shares


Total Monetary
Liabilities(M3)

Source: Central Bank of Nigeria

On the liabilities side, the growth in M3 was induced by 5.8 per cent
growth in other deposits, which accounted for a 3.5 percentage points
surge in the monetary aggregate, followed by the 9.6 per cent growth in
transferable deposits, accounting for 3.4 percentage points. Currency
outside depository corporations (CODC), significantly declined by 43.7 per
cent in the reviewed quarter, an indication of increased adoption and
usage of electronic payment channels in tune with the Bank’s cashless
policy initiative.


30 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.3.2 Sectoral Credit Utilisation
Total credit to key sectors of the economy increased by 3.1 per cent to
N30,346.13billion, compared with N29,445.87billion at end-December
2022, driven by increased liquidity in the banking system. The Services
sector maintained its dominance and accounted for the largest share (53.1
per cent), of total credit, followed by industry with 40.7 per cent, while
agriculture accounted for the balance of 6.2 per cent.
Table 10: Sectoral Credit Allocation
Sector
Billion Naira
Share of total (%)
Sep-22
Dec-22
Mar-23
Sep-22
Dec-22
Mar-23
Agriculture

Industry

of which
Manufacturing

Services

of which Finance,
Insurance & Capital Market

Trade/General
Commerce

Total Private Sector Credit

Source: Central Bank of Nigeria

The increase in banking system liquidity and enhanced access to formal
financial services, especially through fintech channels, that accompanied
the naira redesign policy, boosted consumer credit. Thus, consumer credit
increased by 1.3 per cent, to N2,349.88billion from N2,318.63billion at the
end of the preceding quarter and accounted for 8.1 per cent of total claims
in private sector. A disaggregation of consumer credit showed that
personal loans stood at N1,751.60billion, or 74.5 per cent, while retail
loans, at N598.28billion, accounted for the balance of 25.5 per cent.


Consumer
Sectoral
Credit
Utilisation

31 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


Figure 20: Consumer Credit Outstanding
Source: Central Bank of Nigeria


Figure 21: Composition of Consumer Credit
Source: Central Bank of Nigeria.

2.3.3 Financial Developments
2.3.3.1 Money Market Developments
Banking system liquidity grew on the net effects of fiscal and monetary
operations. Total fiscal injection and repayment of matured CBN bills rose
to N2,448.04billion and N309.44billion from N2,309.07billion and
N231.19billion in the preceding quarter, respectively. Consequently, the
average closing net industry balance rose by 73.2 per cent to
N486.39billion from ₦280.86billion in the preceding quarter.


Industry
Liquidity
6.5

7.5

8.5

9.5


Mar.-22
Jun-22
Sep-22
Dec-22
Mar-23
Per Cent
₦ Billion
Consumer Credit
Share of private sector credit


Mar.-22
Jun-22
Sep-22
Dec-22
Mar-23
Per cent
Personal
Retail

32 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Resultantly, requests at the standing lending facility window declined to
N4,956.39billion,
with
daily
average
of
N78.67billion,
from
N7,049.52billion, with a daily average of N115.57billion in the preceding
quarter. Conversely, requests at the standing deposit facility increased to
N1,924.20billion, with a daily average of N30.07 billion, from
N669.46billion, with a daily average of N10.97billion in the preceding
quarter. The lower activity at the SLF window and increased activity at the
SDF window reflected higher banking system liquidity in the period.
Figure 22: Transaction at the CBN Standing Facility Window (N Billion)
Source: Central Bank of Nigeria

Activities increased in both the NTBs and FGN bond segments due to higher
yields and inflation expectations. At the auctions, NTBs worth
₦1,289.87billion, ₦4,893.00billion, and ₦1,589.87billion were offered,
subscribed and allotted, respectively, relative to ₦972.99billion,
₦2,655.07billion, and ₦852.93billion in the preceding quarter. A
breakdown showed that longer-term securities (364-day) accounted for
N4,528.66billion (92.6 per cent) of the total subscription, revealing
investors’ preference for longer-tenorred instruments because of higher
yields and inflation expectations.


Primary
Market


Mar.-22
Dec-22
Mar-23
SLF
SDF

33 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023


Figure 23: Primary Market NTBs (N Billion)

Source: Central Bank of Nigeria

Similarly, the total amount of FGN bonds offered, subscribed, and allotted
at N1,080.00billion, N2,605.88billion and N1,996.53billion was higher,
compared with N400.00billion, N650.47billion and N516.80billion,
respectively, in the preceding quarter. The bid and marginal rates stood at
14.3 (±3.3) and 15.0 (±1.0) per cent, compared with 16.3 (±2.8) and 15.4
(±0.9) per cent, respectively, in the preceding quarter.

Figure 24: Primary Auctions of FGN Bond (N Billion)

Source: Central Bank of Nigeria


Mar.-22
Dec-22
Mar-23
Offered (LHS)
Allotment (LHS)
Subscription (RHS)


Mar.-22
Dec-22
Mar-23
Offered
Subscription
Allotment

34 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

On the whole, key money market rates were consistent with the liquidity
trajectory in the banking system. The average Interbank call and Open Buy
Back (OBB) rates stood at 12.1 and 12.2 per cent, compared with 11.7 and
13.3 per cent, respectively, in the preceding quarter. Similarly, the Nigeria
Interbank Offered Rate (NIBOR 30-day and 90-day) stood at 12.5 and 13.3
per cent, relative to 12.5 and 13.7 per cent, respectively, in the preceding
quarter.
Figure 25: Developments in Short-term Interest Rates
Source: Central Bank of Nigeria.

The average prime lending rate increased slightly by 0.4 percentage point
to 13.8 per cent from 13.4 per cent in the preceding quarter, while the
average maximum lending rate shed 0.4 percentage point to 28.1 per cent
from 28.5 per cent in the preceding quarter. The weighted average term
deposit (WAVTD) rate fell to 5.5 per cent from 7.2 per cent in the
preceding quarter. Consequently, the average spread between the
weighted average term deposit and maximum lending rates declined to
21.03 percentage points from 21.33 percentage points in the preceding
quarter.


Interest
Rate

Per cent (%)
Interbank call
OBB
NIBOR-30
NIBOR-90
MPR

35 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 26: Trend in Average Term Deposit and Lending Rates

Source: Central Bank of Nigeria.
Note: PLR= Prime lending rate; MLR= Maximum lending rate;
WAVTD= Weighted Average term deposit rate; SPRD= Spread.

2.3.4 Capital Market Developments
Activities on the Nigerian Exchange (NGX) Limited were bullish, following
strong buying interest in the equities market, occasioned by positive 2022
full year corporate dividend/earnings declaration. Aggregate market
capitalisation increased by 4.2 per cent to N53,326.29billion from
N51,188.87billion in the preceding quarter. A disaggregation showed that
the equities, debts, and Exchange Traded Funds (ETF) gained 5.7, 2.4, and
7.8 per cent to close at N27,965.74billion, N23,214.72billion and
N8.42billion, respectively. The development was driven by increased
trading activities in the capital market, following the release of favourable
2022 year-end corporate earnings. The equities, debt, and ETF
components constituted 55.4, 44.5, and 0.1 per cent, respectively, of the
aggregate market capitalisation.

The All-Share Index (ASI) rose by 5.8 per cent to 54,232.34 points, relative
to the 51,251.06 points at the end of the preceding quarter. The
performance of the NGX-ASI was driven by strong buying interest,
following the release of better-than-expected 2022 full year
dividend/earnings.


Mar.-22
Jun-22
Sep-22
Dec-22
Mar-23
PRL (LHS)

MXLR (LHS)

WAVTD (LHS)

SPRD (RHS)


Percentage points
Per cent (%)
Market
Capitalisation
NGX All-Share
Index

36 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 27: Aggregate Market Capitalisation and All-Share Index

Source: Nigeria Exchange (NGX) Limited

The performance of all the major indices were bullish, except the NGXSovereign bond, which trended downward and the NGX-ASeM which
remained flat, reflecting the strong performance of the capital market
during the review quarter.

Table 11: Nigeria Exchange (NGX) Limited sectorial Indices
NGX Indices
2022Q4
2023Q1
Changes
(%)
NGX-Growth
1,798.3
2,799.2
55.6
NGX-Consumer Goods
588.9
702.7
19.3
NGX-Premium
4,715.6
5,280.2
12.0
NGX-Oil/Gas
462.5
510.8
10.5
NGX- AFR Bank Value
991.1
1,081.5
9.1
NGX- Lotus II
3,240.8
3,525.8
8.8
NGX-Banking
417.5
453.0
8.5
NGX- AFR Div Yield
3,321.5
3,591.6
8.1
NGX- MERI Value
2,308.2
2,484.3
7.6
NGX-CG
1,276.5
1,363.7
6.8
NGX-Pension
1,792.6
1,906.5
6.4
NGX-30
1,842.5
1,933.3
4.9
NGX-Main Board
2,328.5
2,440.5
4.8
NGX-MERI Growth
2,297.3
2,351.8
2.4
NGX-Industrial Goods
2,403.2
2,456.5
2.2
NGX-Insurance
174.4
177.5
1.8
NGX-ASeM
659.4
659.4
0.0
NGX-Sovereign Bond
818.3
802.1
-2.0
Source: Nigeria Exchange (NGX) Limited.


Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
Index Points
N Billion
Aggregate Market Capitalisation (LHS)
All-Share Index (RHS)

37 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

The value and volume of traded securities on the NGX increased by 45.0
and 48.9 per cent to N260.02billion and 18.04billion, respectively, relative
to N179.43billion and 12.22billion in the preceding quarter. However, the
total deals traded declined by 7.5 per cent to 230,629 deals, compared
with 246,966 deals in the preceding quarter.

Figure 28: Volume and Value of Traded Securities on the NGX
Source: Nigeria Exchange (NGX) Limited.

There were 25 new and two supplementary listings on the Exchange,
compared with six new listings in the preceding quarter. The increase in
listings evidenced investors’ positive sentiments towards the capital
market.

Q1-22
Q2-22
Q3-22
Q4-22
Q1-23
N Billion
Billion
Volume of Traded Securities (LHS)
Value of Traded Securities (RHS)

38 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Table 12: Listings on the Nigerian Exchange Limited in 2023Q1
Company/Security
Shares Units/Price
Remarks
Listing
Family Homes Sukuk Issuance
Program Plc:
20,000,000 units at 100% of
par (N 1,000)
N 20,000,000,000 14.00%
Series II Ijara Lease Sukuk
due 2029
New
14.00% FHSUK SEP 2029
ELLAH LAKES PLC
One Billion (1,000,000,000)
ordinary shares of 50 kobo
each at N2.90 per share
Rights issue
New
Taj Sukuk Issuance
Programme SPV Plc
11,359,989 at N 1000 per
unit
15% Series I Mudarabah
Sukuk Issuance
New
9.075% FGNSB JUL2025
915,865,
Savings Bond
New
8.075% FGNSB JUL 2024
451,037
Savings Bond
New
8.205% FGNSB JUNE 2024
769,920 units
Saving Bond
New
9.205% FGNSB JUNE 2025
1,104,748 units
Saving Bond
New
9.413% FGNSB AUG 2024
528,996
Saving Bond
New
10.413% FGNSB AUG 2025
933,599
Saving Bond
New
11.041% FGNSB SEP2024
530,728
Saving Bond
New
12.041% FGNSB SEP 2025
1,596,794
Saving Bond
New
11.382% FGNSB OCT 2024
282,093
Saving Bond
New
12.382% FGNSB OCT 2024
945,618
Saving Bond
New
12.255% FGNSB DEC 2024
297,811
Saving Bond
New
13.255% FGNSB DEC 2025
908,647
Saving Bond
New
9.600% FGNSB JAN 2025
145,416
Saving Bond
New
10.600% FGNSB JAN 2026
387,614
Saving Bond
New
7.934% FGNSB MAY 2024
358,011
Saving Bond
New
10.043% FGNSB FEB 2025
322,301units
Saving Bond
New
11.043% FGNSB FEB 2026
948,849 units
Saving Bond
New
8.934% FGNSB MAY 2025
748,449
Saving Bond
New
Lagos State Government.
13.00% LAB DEC 2031
137,328,000 units at 100% of
par (N 1,000)
Unsecured Bond
New
NEIMETH INTERNATIONAL
PHARMACEUTICALS PLC
2,373,947,500 Ordinary
Shares of 50 Kobo Each at N
N 1.55 Per Share
Rights issue
Supple
mentar
y
FTN COCOA PROCESSORS PLC
1,700,000,000 Ordinary
Shares of 50 Kobo Each at 50
Kobo per Share
Debt Conversion program
Supple
mentar
y
ROYAL EXCHANGE PLC
4,116,296,059 units of
ordinary shares of 50 kobo
each at 50 kobo per share
Rights Issue
New
NGX30 Index
Futures Contract N2,069.25
Derivative
New
NGX30 Index
Futures Contract
NGXPENSIONU3, N 2,007.75
Derivative
New
Notes: FGNSB=Federal Government of Nigeria Saving Bond; Plc=Public Limited Liability Company; and
NOV=November.
Source: Nigeria Exchange Limited (NGX).


39 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.3.5 Financial Soundness Indicators
The banking industry was resilient, as key financial soundness indicators
remained within the industry regulatory thresholds. The industry Capital
Adequacy Ratio (CAR) rose marginally by 0.4 percentage point to 14.2 per
cent, relative to the 13.8 per cent in the preceding quarter. The ratio
remained above the 10.0 per cent benchmark for banks with
national/regional authorisation.

The banks’ asset quality, measured by the ratio of non-performing loans
(NPLs) was below the prudential benchmark of 5.0 per cent, despite rising
marginally by 0.3 percentage point to 4.5 per cent from the level in the
preceding quarter. The industry liquidity ratio (LR) at 51.4 per cent, was
above the minimum regulatory benchmark of 30.0 per cent, showing the
ability of banks to meet their short-term financial obligations. The LR
decreased by 1.6 percentage points, compared with the preceding
quarter, reflecting banks’ appetite for long-term assets.

Table 13: Financial Soundness Indicators (Per cent)
Key Indicators
2022Q4
2023Q1
Prudential
Benchmark
Capital Adequacy Ratio
13.8
14.2
10.0
Non-Performing Loans Ratio
4.2
4.5
5.0
Liquidity Ratio
53.0
51.4
30.0
Source: Central Bank of Nigeria


40 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.4
EXTERNAL SECTOR DEVELOPMENTS
Nigeria’s current account posted a surplus of US$2.49billion, buoyed by
positive trade performance, particularly crude oil export, lower payments
for services and sustained surplus in the secondary income account. The
financial account showed a net reduction in financial liabilities of
US$0.52billion, reflecting uncertainties surrounding the country’s general
elections. The international reserves at US$35.14billion was equivalent to
6.7 months of import for goods and services or 9.1 months for goods only.
The average exchange rate of the naira per US dollar at the I&E window
was ₦460.93/US$, compared with ₦445.71US$ in 2022Q4. The
international investment position recorded a net financial liability of
US$76.62billion. Public sector external debt stock and external debt service
payment at the end of December 2022 stood at US$41.69billion and
US$0.80billion, respectively.
2.4.1 Current and Capital Account
Improved crude oil export earnings, lower deficit in the services account,
and increased surplus in the secondary income account resulted in a higher
current account surplus in 2023Q1. The surplus in the current account
increased to US$2.49billion (2.2 per cent of GDP) from US$2.35billion (1.8
per cent of GDP) in 2022Q4, due to favourable trade balance, lower
demand for services and increased surplus in the secondary income
account.
Figure 29: Current Account Balance

Source: Central Bank of Nigeria


Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
US$ Billion
Summary

41 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Aggregate merchandise export earnings decreased marginally, as
proceeds from non-oil export declined, attributed to lower commodity
prices. Aggregate export earnings declined by 1.4 per cent to
US$14.38billion, from US$14.59billion in 2022Q4. This indicated lower
earnings from non-oil export, attributed majorly to a downward trend in
commodity prices in the international market.

A breakdown shows that crude oil and gas export receipts increased
slightly by 0.2 per cent to US$12.66billion, from US$12.63billion in
2022Q4. The development was mainly attributed to the improvement in
crude oil production to an average of 1.28 barrels per day (mbpd) in
2023Q1, from 1.15 million mbpd in 2022Q4, reflecting the positive
outcome of the enhanced government pipeline surveillance. Conversely,
non-oil export receipts declined by 11.8 per cent to US$1.72billion, from
US$1.95billion in the preceding quarter, on account of lower commodity
prices at the global market. Crude oil and gas export constituted 88.0 per
cent of total export, while non-oil export accounted for the remaining 12.0
per cent.

Merchandise import fell marginally, following lower demand for non-oil
products. Import declined by 0.7 per cent to US$11.70billion, from
US$11.79billion in 2022Q4, due to the 4.7 per cent decline in non-oil
import, which fell to US$7.48billion, from US$7.85billion in 2022Q4, on
account of high global inflation. However, import of petroleum products
grew by 7.3 per cent to US$4.22billion, from US$3.93billion in the
preceding quarter of 2022. The share of non-oil import remained
dominant, accounting for 63.9 per cent of the total, while petroleum
products constituted the balance of 36.1 per cent.
A breakdown of import by sector revealed that raw materials and
machinery accounted for the largest share of 51.1 per cent, reflecting an
inclination towards support to the industrial sector. Other sectoral import
shares were manufactured products, 15.1 per cent; food products, 13.7
per cent; petroleum products, 9.4 per cent; minerals, 5.6 per cent;
transport, 3.6 per cent; and agricultural products, 1.6 per cent.

The deficit in the services account narrowed, owing to lower payments for
services, particularly transportation and travels. The deficit narrowed by
3.9 per cent to US$3.01billion from US$3.13billion in 2022Q4. The
reduction in deficit was due, largely, to the decrease in freight charges,
and lower payments in respect of education and health-related travels.
Analysis of trade in services showed that payment for services fell to
Merchandise
Import
Services
Export
Performance

42 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

US$4.08billion, from US$4.42billion in the preceding quarter. Payments
for transportation, travel, telecommunications and other business
services declined by 14.6, 12.7, 6.6, and 3.5 per cent, respectively, to
US$1.95billion, US$0.99billion, US$0.13billion and US$0.59billion.
Payments for financial, insurance and pensions declined by 69.4 and 4.0
per cent to US$0.05billion and US$0.14billion, respectively. However,
payments for government services increased by 3.9 per cent to
US$0.08billion. In terms of share, transportation accounted for the
largest, while financial accounted for the least.

Figure 30: Share of Service Out-Payments (percentage)

Source: Central Bank of Nigeria.

Receipts from services declined by 17.3 per cent to US$1.07billion, from
US$1.30billion in the preceding quarter. This was due, mainly, to decline
in receipts from financial, travel, telecommunications and transportation
services by 40.1, 19.7, 15.5 and 8.6 per cent, respectively. In terms of
share, receipt from transportation was the largest.
Transportation
47.7%
Travels
24.2%
Insurance
3.4%
Communications
, 3.3%
Government
2.0%
Other business
14.5%
Financial
1.2%
Others
3.7%

43 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Figure 31: Share of Services Receipts (Percentage)
Source: Central Bank of Nigeria.

Higher dividend payments to non-resident investors widened the deficit in
the primary income account. The deficit in the primary income account
widened by 18.7 per cent to US$2.69billion in 2023Q1, due, primarily to
the 34.9 per cent increase in investment income payments, which
amounted to US$3.09billion, from US$2.77billion in 2022Q4. Income on
direct investment in the form of dividends rose by 12.1 per cent to
US$2.71billion, relative to US$2.42billion in 2022Q4. Similarly, interest
payments on portfolio investments rose to US$0.09 billion, from
US$0.05billion in 2022Q4. Interest earnings on reserve assets increased
by 35.7 per cent to US$0.20billion, from US$0.15billion in 2022Q4.
Conversely, interest payments on loans declined by 0.7 per cent to
US$0.30billion.
The compensation of employees’ account maintained a surplus position,
increasing by 6.2 per cent to US$0.06billion, relative to the level in
2022Q4.
Figure 32: Primary Income Balance (US$ Billion)
Source: Central Bank of Nigeria.

Primary
Transportation
44.4%
Travels
20.8%
Financial
14.4%
Communications
11.0%
Government
5.3%
Others

Q 1 2 0 2 2
Q 2 2 0 2 2
Q 3 2 0 2 2
Q 4 2 0 2 2
Q 1 2 0 2 3
US$ BILLION

44 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

The surplus in the secondary income account improved, due to a higher
inflow of general government transfers. The surplus in the secondary
income account increased by 11.4 per cent to US$5.51billion, from
US$4.95billion in 2022Q4. The development was due to increased inflow
of general government transfers by 47.3 per cent to US$0.73 billion, from
US$0.49billion in 2022Q4. Personal transfers, including diaspora
remittances decreased by 2.0 per cent to US$4.85billion, from
US$4.95billion in the preceding quarter.

Figure 33: Secondary Income Balance and Remittances Inflow
Source: Central Bank of Nigeria.

2.4.2 Financial Account
Non-residents’ redemption of matured investments and the withdrawal of
foreign currency and deposits resulted in a net reduction in financial
liabilities. The financial account recorded a net reduction in financial
liabilities of US$0.52billion (0.5 percent of GDP), compared with
US$0.85billion (0.7 percent of GDP) in 2022Q4. This reflected tight global
financial conditions and uncertainties surrounding the macroeconomy as
a result of the country’s general elections.
Non-residents’ claims on the economy reduced significantly as investors
redeemed matured investments. A capital reversal of US$0.78billion was
recorded in 2023Q1, in contrast to an inflow of US$1.94billion in 2022Q4.
The development was due to reversals of portfolio investments and
withdrawal of foreign currency and deposits from domestic money banks.
Also, the uncertainties surrounding the 2023 general elections and the
quest for a safer haven by investors contributed to the divestment. A
portfolio investment reversal of US$1.17billion was recorded, in contrast
to an inflow of US$0.34billion in 2022Q4, occasioned by the redemption
of investments in short-term debt securities by non-resident investors.
Secondary Income
Net Incurrence
of Liability
Financial Account
Developments


Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
US$ Billion
Secondary Income Balance
Diaspora Remittances

45 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Similarly, ‘other investment’ recorded a reversal of US$0.86billion, as
against an inflow of US$0.85billion in 2022Q4, due to withdrawal of
foreign currency and deposits in Nigerian banks by non-residents.
However, FDI inflow improved significantly to US$1.20billion, from
US$0.75billion in 2022Q4, owing to inflow of fresh equity, particularly to
the telecommunications sector.
Aggregate financial assets recorded a disposal of US$1.30billion, in
contrast to an acquisition of US$1.09billion in 2022Q4. The development
reflected a higher depletion in reserve assets and the withdrawal of
foreign currency deposits by banks and the general government. Other
investment assets recorded a significantly lower net acquisition of
US$0.24billion, compared with US$1.70billion in 2022Q4. Following the
Bank's effort to enhance liquidity in the foreign exchange market and
meet balance of payments needs, reserve assets were depleted by
US$1.62billion, relative to US$1.11billion in 2022Q4. Acquisition of FDI
asset was low at US$0.02billion, compared with US$0.27billion in the
preceding period.
2.4.3 External Debt
Nigeria’s public sector external debt stock and external debt service
payment at the end of December 2022 stood at US$41.69billion (32.1 per
cent of GDP) and US$0.80billion, respectively. A breakdown showed that
the multilateral loans, from the World Bank, International Monetary Fund,
and African Development Bank Groups, amounted to US$20.2billion,
accounting for 48.5 per cent of the total. A total of US$15.62billion or 37.5
per cent of the total was borrowed from commercial sources in the form
of Euro and Diaspora Bonds. Loans from bilateral sources was
US$5.07billion, or 12.2 per cent of the total, while promissory notes were
US$0.55billion, or 1.3 per cent of the total debt stock.

The external debt service payment stood at US$0.31billion at endDecember 2022, relative to US$0.80billion in the preceding quarter. A
breakdown showed that the principal repayment was US$0.09billion,
accounting for 29.7 per cent of the entire payment. Interest payments
totalled US$0.19billion, or 62.4 per cent of the total, while other payments
made up the balance. An analysis of interest payments showed that
interest payments on commercial borrowings accounted for 77.3 per cent
of the total at US$0.15billion, while multilateral institutions accounted for
16.4 per cent of the total or US$0.03billion. Interest payments on bilateral
loans accounted for the balance.


Public Sector
External Debt
Net Acquisition
of Asset

46 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

2.4.4 International Investment Position (IIP)
Nigeria's International Investment Position recorded a lower net financial
liability of US$76.62billion. The stock of financial assets decreased slightly
to US$108.16billion at end-March 2023, compared with US$109.14billion,
due, largely to the 4.0 per cent decrease in reserve assets. The stock of
portfolio investment assets remained unchanged at US$3.57billion,
relative to the preceding quarter, while that of direct investment assets
decreased slightly by 0.1 per cent to US$13.65billion, from its level at endDecember 2022, due to lower equity investment by residents. Other
investment assets increased marginally by 0.6 per cent to US$52.45billion
from US$52.13billion in 2022Q4.

The stock of financial liabilities decreased by 1.2 per cent to US$184.78
billion, compared with US$186.99billion at end-December 2022, due,
largely to the decrease in the stock of other investment and portfolio
investment liabilities. The stock of other investment and portfolio
investment liabilities decreased by 4.0 and 3.4 per cent to US$56.75billion
and US$34.95billion, from US$59.12billion and US$36.17billion,
respectively. However, the stock of direct investment liabilities increased
by 1.4 per cent to US$89.72billion, from the level at end-December 2022.

2.4.5 External Reserves
The external reserves remained above the standard benchmark of 3.0
months of import cover. The international reserves stood at
US$35.14billion, relative to US$36.61billion at end-December 2022. The
level of external reserves could cover 6.68 months of import for goods and
services or 9.01 months of import for goods only.
Figure 34: External Reserves and Months of Import Cover

Source: Central Bank of Nigeria


Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
US$ Billion
External Reserves - LHS
Months of Import (Goods only)
Months of Import (Goods and Services)
International
Investment
Position

47 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

A breakdown of the external reserves showed that the share of CBN was
US$34.20billion; Federal Government, US$0.94billion; while the
Federation accounted for the balance of US$0.007billion. In terms of
currency composition, the US dollar was US$26.19 billion, (74.5 per cent);
Special Drawing Rights US$5.08billion (14.4 per cent); Chinese Yuan
US$3.48billion (9.9 per cent); British Pounds US$0.20billion (0.6 per cent);
Euro US$0.19billion (0.6 per cent); while other currencies accounted for
the balance.
2.4.6 Foreign Exchange Flows through the Economy
The economy recorded a higher net foreign exchange inflow of
US$7.20billion. Foreign exchange inflow into the economy increased by
17.5 per cent to US$17.18billion from US$14.62billion in the 2022Q4.
Foreign exchange inflow through the Bank increased to US$7.17billion,
from US$6.21billion in the preceding quarter. Foreign exchange inflow
through autonomous sources increased to US$10.08billion from
US$8.41billion in the preceding period.
Foreign exchange outflow through the economy increased by 12.8 per
cent to US$9.98billion, relative to US$8.85billion in the 2022Q4. Outflow
through the Bank increased by 17.9 per cent to US$8.86billion from
US$7.51billion in the preceding quarter. However, autonomous outflow
fell by 16.2 per cent to US$1.12 billion from US$1.34billion in the
preceding quarter.
Consequently, net foreign exchange inflow through the economy
increased by 24.7 per cent to US$7.20billion from US$5.78billion in the
preceding quarter. Similarly, net inflow through autonomous sources rose
to US$8.89 billion from US$7.08 billion in the preceding quarter. However,
a net outflow of US$1.69billion was recorded through the Bank, compared
to a net outflow of US$1.30billion in the preceding quarter.
Figure 35: Foreign Exchange Transactions through the Economy

Source: Central Bank of Nigeria
Q1 2022
Q4 2022
Q1 2023
Inflow
17.62
14.62
17.18
Outflow
10.98
8.85
9.98
Netflow
6.64
5.78
7.20

US$ Billion
Inflow
Outflow
Netflow
Foreign Exchange
Flows through the
Economy

48 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

The average turnover at the I & E window of the foreign exchange market
decreased by 12.7 per cent to US$0.10billion, relative to US$0.12billion in
2022Q4.
The average exchange rate of the naira per US dollar at the I & E window
was ₦460.93/US$, compared with ₦445.71US$ in 2022Q4.
Figure 36: Turnover in the I&E Foreign Exchange Window

Source: Central Bank of Nigeria.


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

49 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

3.0 ECONOMIC OUTLOOK
3.1 Global Outlook
The outlook for global economic growth in 2023 remains pessimistic on
account of tight financial conditions, geo-political tensions and
fragmentation, and macroeconomic uncertainties that continued to trail
the Russia-Ukraine War. The outlook is crowded by high debt levels
constraining critical investments and other fiscal operations in several
Emerging Market and Developing Economies (EMDEs). Accordingly, the
IMF projects a softening of global growth to 2.8 per cent in 2023, from an
estimated 3.4 per cent in 2022. In the Advanced Economies (AEs), growth
is projected to slow to 1.3 per cent in 2023 from 2.7 per cent in 2022,
reflecting the effects of the aggressive rate hikes, and supply-chain
disruptions resulting from the economic sanctions imposed on Russia.
Meanwhile, growth prospect in EMDEs is projected to be more robust at
3.9 per cent in 2023, despite external headwinds. The outlook is
predicated on expectation of more resilient domestic demand in India and
some parts of Latin America, as well as the reopening of China. However,
the growth projection is 0.1 percentage point lower than the estimated
performance in 2022.
Global inflation, although elevated, is expected to moderate to 7.0 per cent
in 2023 from 8.7 per cent in 2022. The downward projection, partly,
reflects lower global food and commodity prices, including fuel and the
cooling effects of monetary policy tightening across several central banks.
Nonetheless, the gains to price moderation could be truncated and
inflation turning out more persistent than anticipated if the Russia-
Ukraine war intensifies, resulting in another rounds of spike in food and
energy prices.
3.2 Domestic Outlook
Nigeria’s economic growth outlook remains positive in the near term
subject to some downside risks. The positive outlook is predicated on
continued recovery of crude oil prices, ramp up in crude production,
rebound in manufacturing activities and sustained policy support.
Furthermore, expected discontinuation of the costly subsidy scheme on
PMS by end of June 2023, in line with the Petroleum Industry Act (PIA), is
expected to free up more resources for investment in growth-enhancing
sector. However, contraction in global demand, persistent security
challenges, lingering crude oil production bottlenecks as well as
infrastructural deficit are major headwinds to domestic growth prospects.

50 | P a g e Central Bank of Nigeria Economic Report First Quarter 2023
ECONOMIC REPORT, FIRST QUARTER 2023

Inflationary pressures are expected to moderate in the next quarter, due
to relative stability in the exchange rate, tight monetary conditions, and
improvement in global supply chain. This outlook is anchored on the
Bank’s aggressive monetary tightening and the crystallisation of various
supply-side interventions by the Bank and the FGN in growth-enhancing
sectors of the economy. However, a total discontinuation of the subsidy
scheme on PMS by middle of the year and external headwinds, could have
system-wide effect and add pressure on headline inflation.
Barring any unanticipated spending shocks, a positive fiscal outlook is
envisaged in the near-term, with expected uptick in crude oil prices,
improvement in domestic crude oil production, expansion in economic
activity and zero PMS under-recovery payments. The economic climate is
expected to adjust southwards, as businesses shift into the new climate
and the softening of the naira redesign policy measures propel aggregate
demand. The ensuing quarter coincides with the mid-year filing of tax
returns by companies in Nigeria, raising hopes of higher government
receipts. In the absence of any unforeseen spending shocks, fiscal
conditions are expected to improve in the near term.

There is positive prospect for Nigeria’s external reserves on the back of
favourable crude prices and expected cessation of PMS subsidy payments
by end 2023Q2. However, lower than expected crude oil-related earnings
on account of production bottlenecks and increased cost of external debt
servicing could weigh down reserves’ accretion.