This document is for CBN internal consumption


CENTRAL BANK OF NIGERIA
ECONOMIC REPORT


Fourth Quarter

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This document is for CBN internal consumption
ABOUT THE REPORT

The Central Bank of Nigeria (CBN) Economic Report presents economic
developments in Nigeria, intended for dissemination to the public. The
Report, which is published on monthly and quarterly basis, 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.


This document is for CBN internal consumption
CONTENTS


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

Figures
Figure 12: Top 13 Subsectors with largest Contribution to GDP Growth
Figure 13: Subsectors with Least Contribution to GDP Growth and Growth


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Figure 33: Secondary Income Balance and Remittances Inflow (US$ Billion)
Figure 35: Foreign Exchange Transactions through the Economy (US$

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EXECUTIVE SUMMARY
Global economic activity contracted, amid elevated inflation, monetary
and fiscal tightening, and the continuation of hostilities between Russia
and Ukraine in 2022Q4. Output decreased, following contractions in
both the manufacturing and services sectors, as demand fell due to a
higher cost of living and tight monetary conditions. This development
was reflected in the average J.P. Morgan’s global composite Purchasing
Manager’s Index (PMI), which dropped to 48.4 index points from 49.9
index points, recorded in 2022Q3. Similarly, the employment level
continued to be on a downward trajectory, declining to 50.6 index
points, from 51.8 index points in the preceding quarter. Global
inflationary pressures, though moderating, remain elevated and left
inflation rates higher than central banks targets, as headline inflation in
the period increased despite lower crude oil prices, weaker consumer
demand, and monetary tightening.
The domestic economy sustained its growth momentum, driven by
activities in the non-oil sector, particularly the services sub-sector. Real
GDP grew by 3.52 per cent, in 2022Q4 (year-on-year), compared with
2.25 per cent in 2022Q3, reflecting broad based improvement in
economic activities, particularly in the services and agriculture subsectors. The non-oil sector grew by 4.44 per cent compared with 4.27
per cent in the preceding quarter. The oil sector continued to be a drag
on growth despite the smaller contraction of 13.38 per cent, compared
with 22.67 per cent in the preceding quarter. The contraction in the oil
GDP was due to legacy challenges confronting the sector. The inflation
rate remained elevated, due to an uptick in the prices of food and nonfood items, driven by persisting high transport and logistics costs and
demand pressures occasioned by the festive season, as well as increased
production costs, and other structural issues, which continued to impact
output and prices during the quarter. Consequently, headline inflation
(Year-on-Year) rose to 21.34 per cent from 20.77 per cent in 2022Q3.
The fiscal position of the Federal Government of Nigeria (FGN) remained
constrained, because of the lower crude oil exports and rising cost
recovery payments. Notably, FGN retained revenue fell by 18.2 per cent,
relative to its level in 2022Q3, following a significant drop in allocation
from other revenue sources, as retained revenue shrank by 39.7 per cent
compared with the quarterly benchmark. Aggregate expenditure fell,
for the third consecutive quarters, by 18.8 per cent, relative to the level
in 2022Q3. This was lower than the 2022 quarterly benchmark by 47.6
per cent. Consequently, fiscal deficit narrowed by 20.0 per cent,
compared with the preceding quarter. Total public debt at N46,250.37
billion (or 23.2 per cent of GDP) at end-December 2022, remained within
the statutory threshold.

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The Bank maintained a hawkish monetary policy stance, to stem
heightened inflationary pressures. The financial system remained
resilient, as various indicators were within prudential requirements.
Banking system liquidity increased, resulting in increased activities at
the Standing Deposit Facility window. The direction of interest rates in
the review quarter was mixed but largely tilted in the upward trajectory,
driven by the sustained policy rate hike. The capital market was bullish,
against the backdrop of strong buying interest in the equities market,
amid price appreciation in hugely capitalised stocks and portfolio
reshuffling by investors seeking for alpha stocks, in anticipation of the
2022 full year dividend/earnings declaration.
The weakening global economic conditions continued to weigh on the
external sector’s performance. Consequently, the overall balance of
payments deficit position was estimated at US$0.84 billion. The current
account estimate of US$0.34 billion showed a lower deficit position,
buoyed by positive trade performance and a surplus in the secondary
income account. The financial account recorded a lower net incurrence
of financial liabilities of US$0.97 billion, compared with the level in
2022Q3, reflecting the impact of monetary tightening across major
advanced economies. The external reserves at end-December 2022
stood at US$36.55 billion, compared with US$37.39 billion at endSeptember 2022. The level could cover 6.1 months of import for goods
and services or 8.6 months of import for goods only, well above the
international benchmark of 3 months import cover. The average
exchange rate of the naira per US dollar at the I & E window was
₦445.71/US$, compared with ₦426.34US$ in 2022Q3. Public sector
external debt stock and external debt service payment at end-December
2022 stood at US$41.69 billion and US$0.31 billion, respectively.
Global growth outlook remains positive in 2023, predicated on central
banks stemming inflationary pressures facing many economies, and the
pace of recovery from the COVID-19 resurgence in China. Nigeria’s
economic growth outlook remains positive in the near term amid
mounting downside risks. The positive outlook is predicated on the
assumption that the current trend in crude oil prices will be sustained,
and the effective implementation of the Medium-Term National
Development Plan (MTNDP), as well as the positive impacts of CBN
interventions on growth-enhancing sectors, among others. However,
contraction in global demand, persistent security challenges, as well as
legacy infrastructural challenges remain headwinds to growth.


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1.0 GLOBAL ECONOMIC DEVELOPMENTS
1.1
Global Economic Activity
Global economic activity contracted, amidst elevated inflation, monetary
and fiscal tightening, and the continuation of hostilities between Ukraine
and Russia. Output decreased following contractions in both the
manufacturing and service sectors, as demand fell, due to a higher cost
of living and tight monetary conditions. Consequently, the average J.P.
Morgan’s global composite Purchasing Manager’s Index (PMI) stood at
48.4 index points, reflecting a decrease from 49.9 index points in the
preceding quarter. The average manufacturing PMI also declined to
48.9 index points from 50.7 index points in 2022Q3. A broad-based
weakness was also recorded in the services sector, with all three
categories of activity covered (business, consumer, and financial
services) witnessing declines. Similarly, the employment level
continued to be on a downward trajectory, declining to 50.6 index
points, from 51.8 index points in the preceding quarter.
Table 1: Global Purchasing Managers' Index (PMI)

2022Q2
2022Q3
2022Q4
Composite
52.00
49.93
48.40
Manufacturing
53.33
50.73
48.93
Services (Business Activity)
52.67
50.10
48.50
Employment Level
53.23
51.83
50.60
Source: JP Morgan, IHS Markit.

In Advanced Economies (AEs), suppressed demand emanating from tight
monetary conditions slowed economic activities. The US PMI further
contracted to 46.5 index points from 47.3 index points in 2022Q3, as
declining real disposable income and higher interest rates continued to
moderate consumer demand, especially spending on residential
investment. The UK PMI also dropped to 48.5 index points from 50.3
index points in the preceding quarter, reflecting lower consumer
spending and business investment on account of higher inflation rates
and tighter monetary policy.
A weak PMI index was recorded across Europe, reflecting spillover
effects from the war in Ukraine, with especially sharp downward
revisions for economies most exposed to the Russian gas supply cuts,
and tighter financial conditions. Consequently, the PMI levels fell
slightly in Italy and Germany to 48.1 index points and 46.8 index points,
from 48.3 index points and 46.9 index points, respectively, in the
Economic activity
in Advanced
Economies
Global Economic
Conditions

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previous quarter. Similarly, a fall in new orders due to weak demand
pushed Japan’s PMI down to 50.1 index points, relative to 50.2 in the
preceding period.

Figure 1: Heatmap of Selected Advanced Economies’ PMIs

2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
United States
50.5
54.9

47.3
46.5
United
Kingdom

Japan

Italy

Germany

Source: Trading Economics/Various countries’ websites, Staff compilation.


The performance of economic activities in Emerging Markets and
Developing Economies (EMDEs) was mixed, as most economies grappled
with weak consumer demand and high inflationary pressures. Economic
activities in China were subdued as factory activity fell, due to a drop in
new orders and lower employment. Accordingly, the PMI contracted to
47.9 index points, from 52.0 index points in the preceding quarter. Also,
the PMI in Turkey dipped further to 46.7 from 47.1 index points as
factory activity slowed due to weak demands in both domestic and
export markets. Though above the 50-point benchmark, the PMI level
in South Africa and Indonesia slowed to 50.1 index points and 51.0
index points, from 51.2 index points and 52.2 index points, respectively,
as export orders fell, owing to weaker international demand. However,
economic activities in India remained robust, and expanded further, as
the PMI rose to 57.2 index points from 56.6 index points, as the
manufacturing and services sectors expanded following subdued
wholesale inflation.

Economic activity
in EMDEs

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Figure 2: Heatmap of PMI in Selected EMDEs

2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
China
50.5

44.4

47.9
India

Turkey

South
Africa

Indonesia
54.9
52.1

52.2

Source: Trading Economics/Various countries’ websites, Staff compilation.


1.2
Global Inflation
Inflationary pressures, though moderating, remained elevated, with
inflation rates higher than central banks targets. In 2022 Q4, headline
inflation increased despite lower crude oil prices, weaker consumer
demand, and monetary tightening. In most advanced economies,
headline inflation rose, for the fifth consecutive quarters, driven by
energy and food prices, the fallout of the war in Ukraine, and subsisting
disruptions to the global supply chain, as China faced a renewed surge
of the Pandemic. In the UK, inflation soared further to 9.37 per cent, in
2022 Q4, from 8.73 per cent in 2022Q3, due to upward pressure from
housing and household services cost, fueled by higher energy prices.
Similarly, in Germany and Italy, inflation rose to 9.66 per cent and 11.75
per cent, from 8.48 per cent and 8.39 per cent in 2022Q3, respectively,
due to the depreciation of the euro, an aggravated energy crisis, and
lingering supply chain disruptions. In some advanced economies,
however, inflation declined from record highs. For instance, in the US
and Canada, headline inflation fell to 7.10 per cent and 6.67 per cent,
in 2022Q4, from 8.33 per cent and 7.15 per cent, in the preceding
quarter, respectively, on the back of weaker demand, fall in global
crude oil prices, the reopening of refineries in the United States, and
the sustained tight stance of monetary authorities.


Global Inflation

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Figure 3: Inflation Rates in Selected Advanced Economies

Source: Organisation for Economic Co-operation and Development, and the National Bureau of
Statistics.

In Emerging Markets and Developing Economies (EMDEs), inflation
moderated marginally, due to weaker domestic demand and lower food
prices. China’s inflation rate fell to 1.83 per cent, from 2.67 per cent, in
the preceding period, driven by a slowdown in the cost of food.
However, prices inched up slightly in December, following increased
consumption, occasioned by an improvement in the COVID-19
situation. Likewise, India’s retail prices fell to 5.75 per cent from 6.04
per cent, in 2022Q3, due to lower food prices. Inflation moderated
marginally in South Africa, as consumer prices fell to 7.68 per cent per
cent, from 7.92 per cent in the preceding quarter, due to a slowdown
in the rise of transport prices, as energy costs fell. Similarly, inflationary
pressures in Turkey moderated, due to slower increases in
transportation and housing, and utility components of inflation. Albeit
inflation in Turkey remains substantially elevated at 78.06 per cent in
2022Q4, it is lower than the record high of 81.10 per cent in the
preceding quarter. On the flip side, headline inflation in Indonesia
marginally increased to 5.55 per cent, from 5.19 per cent, in the
preceding quarter, driven, mainly, by the rising cost of food, transport
and communication.


U N I T E D
S T A T E S
U N I T E D
K I N G D O M
J A P A N
C A N A D A
G E R M A N Y
F R A N C E
I T A L Y
Per Cent (%)
Q4-2021
Q3-2022
Q4-2022

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Figure 4: Inflation Rates in Selected EMDEs, Average (per cent)

Source: OECD and NBS.

1.3
Global Financial Markets
Global financial conditions in advanced and emerging market economies
broadly eased in the fourth quarter, as the pace of rate hikes by the US
Fed decelerated and inflation softened. The treasury market was weaker
in 2022Q4, with Government bond yields broadly higher and prices
lower, as central banks sustained their aggressive tightening.
Remarkably, within the fourth quarter of 2022, the bond rates peaked
in early November, signaling the bond market’s belief that the policy
rate hike campaign is nearing its end. The US Fed and the Bank of
England raised rates twice within the quarter, spurring an increase in
the 10-year government bond yield during the quarter to 3.82 per cent
and 3.53 per cent, respectively. In Japan, the modification of the yield
curve control policy1 announced by the Bank of Japan, fueled the rise
in the 10-year Japanese government bond to 0.27 per cent. Similar
trends occurred in emerging markets, as the bond yields in China and
Brazil rose to 2.79 per cent and 6.18 per cent, respectively.


1 The Bank of Japan said it would allow the yield on its 10-year bonds to move
in a range of plus or minus 0.5 per cent, broadening the band from 0.25 per
cent.

C H I N A
I N D I A I N D O N E S I A M E X I C O
T U R K E YS O U T H A F R I C A
N I G E R I A
Q4-2021
Q3-2022
Q4-2022
Global Bond
Markets

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Figure 5: Growth in Selected Equity Indices (per cent)

Source: Bloomberg

Figure 6: 10-year Bond Yield in Selected Countries (per cent)

Source: Bloomberg

In the currency markets, though the dollar outperformed the
currencies of most AEs and EMDEs in 2022, some of the gains were
pared in 2022Q4, as the pace of the Fed’s interest rate hikes
decelerated, and inflation softened. Among the AEs, the British pound
and the euro appreciated against the dollar by 6.53 per cent and 3.92
per cent, respectively, as their central banks sustained policy rate hikes.
Conversely, the rate of depreciation of the Japanese Yen declined to
10.11 per cent, during the fourth quarter of 2022, on account of the
policy shift of the Bank of Japan. The currencies of most EMDEs


2022Q3
2022Q4

2022Q2
2022Q3
2022Q4
Global Currency
Markets

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depreciated against the dollar, due to Fed’s tight monetary policy
stance and various domestic developments. The South African Rand
depreciated against the dollar by 10.35 per cent, due largely to the
electricity crisis and political risks. Also, the Chinese Yuan and Brazilian
Real fell by 7.64 per cent and 2.54 per cent, respectively.
Figure 7: Foreign Exchange Market
(exchange rates against the US Dollar, average percentage change)

Source: Bloomberg and CBN Staff Calculations.
Note: Average January to September 2022 and October to December 2022.

1.4
Central Bank’s Policy Rates
Most central banks maintained a hawkish stance as inflationary
pressures remained ubiquitous. Although inflation had begun to
moderate in most economies, it remained above the medium-term
average in most economies, with adverse effects on consumer and
investor sentiments. Thus, the US Federal Reserve maintained
monetary tightening, increasing its policy rate during the quarter by a
cumulative 125 bps, to 4.50 per cent. The Fed also hinted at its plan to
lift the rate above 5.00 per cent in 2023, if the inflation rate remained
high. Alike, the Bank of England raised its policy rate to 3.50 per cent
from 2.25 per cent in 2022Q3. This development pushed the cost of
borrowing in the UK to its highest level since 2008. The BoE also gave
forward guidance, indicating the possibilities of rate hikes, in the near

S OUT H A F RIC A
BRA ZIL
C H INA
NIGE RIA
UA E
JA P A N
E URO ARE A
SW IT ZE RLAND
UK
E ME RGING & DE VE LOP ING
E C ONOMIE S
A DVA NC E D
E C ONOMIE S
January to September
Since October 1

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term, to guarantee a return of inflation to the target range. Similarly,
the Bank of Canada raised its policy rates further to 3.25 per cent as
core inflation failed to show any sign of easing. However, the Bank of
Japan maintained its ultra-low interest rate policy at -0.1 per cent in a
bid to continue the support for the economy.

Similarly, several central banks in the EMDEs sustained monetary
tightening, as prices remained elevated amid economic growth
concerns and low capital flows. For instance, the Bank of Mexico
increased its repo rate by 125bps, cumulatively, to 10.50 per cent.
Banxico’s move was particularly designed to support the peso and tame
inflation. Similarly, policy rates were hiked by the central banks of
Canada, Indonesia, and Europe. In the case of Turkey, despite the
tumbling lira, soaring inflation and unbalanced current account, the
policy rate was reduced to 9.0 per cent, as the central bank continued
to pursue unorthodox monetary policy. The People’s Bank of China
(PBoC) left its anchor rate unchanged to strike a balance between
growth and rising inflation. The monetary authorities in India and South
Africa also raised their respective key repo rates to 6.25 per cent and
7.25 per cent as the inflation rate remained above the Banks’ upper
limit target. The Bank of Ghana hiked its anchor rate by cumulative 500
basis points, during the quarter, to 27.0 per cent in a bid to support the
plunging cedi, and curb inflationary pressure. Likewise, the Central
Bank of Nigeria raised its policy rate to 16.5 per cent as inflation
continued to accelerate.

Table 2: Central Bank Policy Rates (per cent)
Country
2022Q2
2022Q3
2022Q4
United States
1.75
3.25
4.50
United Kingdom
1.25
2.25
3.50
Japan
-0.10
-0.10
-0.10
Canada
1.50
3.25
4.25
Euro Area
0.00
1.25
2.00
China
2.85
3.65
3.65
India
4.90
5.90
6.25
Mexico
7.75
9.25
10.50
Indonesia
3.50
4.25
5.50
Turkey
14.00
12.00
9.00
South Africa
4.70
6.25
7.25
Ghana
19.00
22.00
27.00
Nigeria
13.00
15.50
16.50
Source: Various Central Banks’ websites.


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1.5
Global Commodity Market
Total world crude oil supply and demand rose in 2022Q4, due to
increased supply from OECD producing countries and improved demand
from China, respectively, reflecting a rebound in economic activities.
Total world crude oil supply rose by 0.3 per cent to 101.30 million
barrels per day (mbpd) in 2022Q4, relative to the preceding quarter.
The rise was, largely, due to a boost in supply from OECD producing
countries to 33.37 mbpd in 2022Q4, from 32.50 mbpd in 2022Q3,
particularly, with a marginal recovery in China output, as well as the
sale of the final batch of crude oil by the US in completion of the gradual
drawdown of 180 million barrels from the US Strategic Petroleum
Reserve, which began in April 2022. Similarly, supply from non-OECD
producing countries also increased to 67.92 mbpd, from 68.52 mbpd in
the preceding quarter as Russia increased supply of crude to both China
and India.
OPEC’s crude oil supply fell by 1.5 per cent to 34.21 mbpd in 2022Q4,
relative to 34.72 mbpd in the preceding quarter. The decline was
driven, mainly, by the OPEC+ decision to cut production by 2.0 million
barrels per day in 2022Q4 to balance supply and demand and ensure
the long-term stability of the oil market.
On the demand side, total world demand rose by 0.12 per cent to
100.62 mbpd in 2022Q4, relative to 2022Q3. The mild improvement in
global crude oil demand was attributed to China’s recovery from the
impact of post COVID-19 lockdown restrictions, coupled with increased
fuel needs for power generation and gas-to-oil switching by many OECD
and non-OECD countries.
Crude oil spot prices fell in 2022Q4, due to US drawing down on its
strategic reserve, as well as lingering pessimism among market
participants about the prospects of a recession. The average spot price
of Nigeria’s reference crude oil, the Bonny Light (34.9° API), declined by
14.4 per cent to US$91.29 per barrel (pb) in 2022Q4, compared with
US$106.70 pb in the preceding quarter. The prices of UK Brent at
US$90.81 pb, Forcados at US$91.63 pb, WTI at US$84.06 pb and OPEC
Reference Basket (ORB) at US$88.03 pb, all exhibited similar downward
movements.


World Crude Oil Supply
and Demand
Crude Oil Prices

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Figure 8: Quarterly Crude Oil Prices (US$ per barrel)

Source: Reuters Data, CBN Staff Compilation

The prices of most of the monitored agricultural export commodities at
the international market maintained a downward trend in 2022Q4,
impelled by improved global supply prospects, as well as a tail-off in
demand. The average price index for all the monitored commodities
stood at 89.5 points (2010=100), indicating a contraction of 3.9 per cent
(quarter-on-quarter) and 3.7 per cent (year-on-year). The commodities
accounting for the decline ranged from 4.6 per cent for soya beans to
19.2 per cent for cotton. The development was largely driven by falling
demand amid deteriorating global economic conditions, improved
global supply of products such as cotton and coffee, as well as concerns
about the EU’s move to stop deforestation-linked commodities into its
market, which affected the price of palm oil. However, the prices of
cocoa, wheat, and groundnut increased by 5.4 per cent, 5.3 per cent
and 0.8 per cent, respectively, on account of supply constraints and
worries about global shortages.

Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Bonny Light
Brent
Forcados
WTI
Opec Basket
Agricultural
Commodity Prices

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Table 3: Indices of Average World Prices of Nigeria's Major Agricultural Export
Commodities 2022Q4 (Dollar based) (Jan. 2010=100)
Commodity
2021Q4
2022Q3
2022Q4
% Change
(1) & (3)
(2) & (3)

All Commodities


Cocoa


Cotton
72.2

59.8
-17.2
-19.2
Coffee

Wheat

Rubber


Groundnut

Palm Oil

Soya Beans
101.2

117.3
15.9
-4.6
Sources: World Bank Pink Sheet


Average spot prices of gold, silver, and platinum rose in 2022Q4 as
demand for the precious metals rose due to portfolio switches to precious
metals as safe-haven assets, in response to higher US Treasury yields. The
average spot prices of gold, silver and platinum rose by 0.7 per cent,
11.60 per cent and 10.57 per cent, quarter-on-quarter, to sell at
US$1,739.32 per ounce, US$21.46 per ounce, and US$978.39 per
ounce, respectively. On the other hand, price of palladium declined by
7.46 per cent to sell at US$1,923.42 per ounce in 2022Q4, in response
to pessimism about future demand, due to unfavourable global
economic outlook, which may affect vehicle manufacturing2.
Figure 9: Price Changes in Selected Metals (per cent) for Q42022

Source: Refinitiv Eikon IV (Reuters)

2 Palladium is used in production of auto catalysts to reduce pollution in
automobiles.

Gold
Silver
Platinum
Palladium
With corresponding quarter
With preceding quarter
Other Mineral
Commodities

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2.0 DOMESTIC ECONOMIC DEVELOPMENTS
2.1
REAL SECTOR DEVELOPMENTS
2.1.1 Output
The economy sustained its growth momentum in 2022Q4, driven by
activities in the non-oil sector, especially the services sub-sector. Real
GDP grew by 3.52 per cent in 2022Q4 (year-on-year), compared with
2.25 per cent in 2022Q3, reflecting higher economic activities,
particularly in the non-oil sector. The realised growth reflected broad
based improvement, particularly in the services and agriculture subsectors. The non-oil sector grew by 4.44 per cent, compared with 4.27
per cent in the preceding quarter. The oil sector continued to be a drag
on growth despite the lower contraction of 13.38 per cent compared
with 22.67 per cent in the preceding quarter. The contraction in the oil
GDP was due to legacy challenges confronting the sector, despite
modest improvements due to recent reforms to tackle vandalism and
crude oil theft, thus ramping up crude oil production to 1.22 million
barrels per day (mbd) from 1.13 mbd produced in 2022Q3.

Figure 10: Real GDP Growth Rate, 2020Q4-2022Q4, Year-on-Year
Source: National Bureau of Statistics


2020Q4
2021Q1
2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
Percent (%)
Oil GDP
Non-oil GDP
Total GDP

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The Services and Agriculture sectors grew in 2022Q4, while the industry sector
remained in the contraction region, despite the improvement. At 5.69 per cent, the
Services sector grew at a slower pace in 2022Q4, compared with 7.01 per cent in
2022Q3, but contributed the most to growth by 3.14 percentage points. Within
the Services sector, Information & Communications, Trade, Financial & Insurance,
and Real Estate subsectors drove overall growth, contributing 1.57, 0.71, 0.43,
and 0.17 percentage points, respectively.

Figure 11: Sectoral Growth Rate of Real GDP, 2020Q4-2022Q4
Source: National Bureau of Statistics

The agriculture sector grew by 2.05 per cent, compared with 1.34 per cent and
3.16 per cent, recorded in the preceding and corresponding quarters of 2022, on
the back of increased crop harvests, and demand which accompanied the end of
year festivities. Thus, crop production contributed 0.59 percentage points to the
overall GDP growth of 3.52 per cent, while livestock and fishing, respectively,
dragged growth by 0.03 and 0.05 percentage points, on account of security
challenges.

The industry sector contracted marginally by 0.94 per cent in 2022Q4, reflecting
a significant improvement, compared with a contraction of 8.00 per cent in
2022Q3, occasioned by the growth in manufacturing sub-sector. This was
attributed, majorly, to decline in crude oil and natural gas production. The
performance of the industry sector also reflected in the Index of Industrial
Production, which dipped by 5.4 per cent, to 88.4 index points, compared with
93.4 points, in the preceding quarter. The Manufacturing sub-sector grew by 2.83
per cent, on account of strengthened demand by consumers in preparation for
the festive season. Similarly, the index of manufacturing production rose by 4.1
Sectoral
performance


2020Q4
2021Q1
2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
Per Cent
Agriculture
Industry
Services
Total GDP

16 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
per cent, to 190.1 (2010) and capacity utilisation increased to 55.2 per cent in
2022Q4, from 54.6 per cent in the previous quarter. Likewise, electricity and
water supply subsectors grew by 15.22 per cent and 8.81 per cent, respectively.
Construction subsector, however, grew at a slower pace, by 3.80 per cent
compared to 5.52 per cent in the preceding quarter owing to seasonal factors.
Though the mining and quarrying subsector remained in the contraction region,
there was an improvement as the contraction narrowed to 11.39 per cent from
21.31 per cent in the preceding quarter. This development was also reflected in
the index of energy production which fell to 41.2 (2010=100) from 53.1 index
points in 2022Q3.

Figure 12: Top 13 Subsectors with largest Contribution to GDP Growth (percentage points)
and their Growth Rates in 2022Q4 (Per cent)

Source: National Bureau of Statistics

Figure 13: Subsectors with Least Contribution to GDP Growth and Growth Rates in
2022Q4

Source: National Bureau of Statistics

(1.23%) Education
(4.20%) Human Health & Social Services
(1.43%) Public Administration
(5.12%) Accomadation and Food Services
(15.22%) Electricity,Gas,Steam & Air...
(2.92%) Professional, Scientific &...
(3.80%) Construction
(2.78%) Real Estate
(2.83%) Manufacturing
(11.61%) Financial and Insurance
(2.41%) Crop Production
(4.54%) Trade
(10.35%) Information and Communication

Fishing (-3.02%)
Livestock (-1.59%)
Mining and Quarrying (-11.39%)


17 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.1.2
Prices
The inflation rate rose in 2022Q4, due to an uptick in the prices of
food and non-food items. Headline inflation (Year-on-Year) rose to
21.34 per cent from 20.77 per cent in 2022Q3. This increase was
driven by the hike in food prices owing to persisting high transport
and logistics cost and demand pressure because of the festive
season. Also, increased production costs, and other structural
issues continued to impact on output and prices during the
quarter.

Figure 14: Headline, Food and Core Inflation (Year-on-Year)

Source: NBS and Staff Estimates

Core inflation, year-on-year, rose to 18.49 per cent from 17.60 per cent
in the preceding quarter. The rise in core inflation was attributed to an
increase in the cost of imported and locally manufactured goods due to
tighter global economic conditions and structural deficiencies.
Food inflation (year-on-year) also inched up to 23.75 per cent,
compared with 23.34 per cent in 2022Q3. The upward trend in food
inflation was due mainly to shortages in farm produce supply,
necessitated by the flood witnessed during the year. In addition, high
cost of inputs, including energy prices, and the demand pressure from
the end of year festivities drove prices upward.


2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q22022Q32022Q4
Percent (%)
Headline
Core
Food
Headline
Inflation
Food
Inflation
Core
Inflation

18 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.1.3
Energy Sector
Activities in the energy sector improved, following increased electricity
generation resulting from sustained maintenance and upgrade of the
electricity ecosystem, coupled with increased gas supply to thermal
stations. The average electricity generation at 4,206.36 MW/h,
increased by 9.1 per cent, compared with 3,855.73 MW/h in the
preceding quarter. Similarly, the average electricity consumption at
3,302.38 MW/h, showed an increase of 11.8 per cent in 2022Q4,
relative to 2,953.88 MW/h in 2022Q3.

Figure 15: Electricity Generation and Consumption (mw/h)

Source: NERC

Domestic crude oil production and exports rose quarter-on-quarter, as a
result of increased surveillance of pipeline infrastructure against vandals
and theft in the Niger Delta region. Nigeria’s crude oil production
increased by 7.96 per cent to 1.22 million barrels per day (mbpd) in
2022 Q4 compared with 1.13 in the previous quarter. Out of the 1.22
mbpd produced, crude oil export averaged 0.77 mbpd, while the
statutory allocation for domestic consumption, at 0.45 mbpd,
accounted for the balance. Nigeria’s production level remained below
the OPEC quota of 1.79 mbpd for Q4 2022 by 0.57 mbpd.


Crude Oil
Production
and Export
Electricity
Generation

19 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption


Box Information 1☹)
The prices of major domestic farm produce maintained an upward trend in Q4 2022, relative
to the preceding period. Prices of all the monitored domestic agricultural commodities
recorded increases during the review period. The upward price trend ranged from 3.7 per
cent for maize (yellow) to 11.5 per cent for palm oil. This development was largely driven by
escalating energy costs due to fuel scarcity, demand effects emanating from end of year
festivities, and the security challenges in the food producing belts of the country.
Prices of Selected Domestic Agricultural Commodities in 2022Q4


2021Q4/a
2022Q3/a
2022Q4
%
Change
%
Change

UNIT

(1) & (3)
(2) & (3)
Agric eggs medium size
1kg

Beans: brown, sold loose
"

Beans: white black eye, sold
loose
"

Gari white, sold loose
"

Gari yellow, sold loose
"

Groundnut oil: 1 bottle, specify
bottle
"

Irish potato
"

Maize grain white, sold loose
"

Maize grain yellow, sold loose
"

Onion bulb
"

Palm oil: 1 bottle, specify
bottle
"

Rice agric, sold looe
"

Rice local, sold loose
"

Rice, medium grained
"

Rice, imported high quality,
sold loose
"

Sweet potato
"

Tomato
"

Vegetable oil: 1 bottle, specify
bottle
"

Wheat flour: prepackaged
(Golden Penny)
2kg

Yam tuber
1kg

Sources: (a) National Bureau of Statistics


20 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.2
FISCAL SECTOR DEVELOPMENTS
The fiscal position of the Federal Government of Nigeria (FGN) remained
constrained in 2022Q4, occasioned by lower crude oil exports and rising
cost recovery payments. Notably, FGN retained revenue fell by 18.2 per
cent, relative to 2022Q3, following a 70.8 per cent drop in allocation
from other revenue sources. Compared with the quarterly target,
retained revenue shrank by 39.7 per cent. Aggregate expenditure fell
for the third consecutive quarter in 2022, declining by 18.8 per cent and
47.6 per cent, relative to 2022Q3 and the 2022 quarterly benchmark,
respectively. Consequently, the fiscal deficit narrowed by 20.0 per cent
and 58.3 per cent, compared with the preceding quarter and the
quarterly budget, respectively. Total public debt at N46,250.37 billion
(or 23.2 per cent of GDP) at end-December 2022, remained within the
statutory threshold.

2.2.1
Federation Account Operations
Federation Account earnings declined due to lower-than-expected
receipts from oil and non-oil revenue sources. At N3,494.45 billion, gross
federation revenue fell below the level in 2022Q3 and the budget
benchmark of N4,741.02 billion by 8.2 per cent and 26.3 per cent,
respectively. Non-oil revenue continued to maintain its dominance in
terms of contribution to total revenue, accounting for 60.4 per cent,
while oil receipts contributed the balance of 39.6 per cent.

Oil revenue, at N1,382.82 billion, improved by 12.2 per cent relative to
the preceding quarter. This was driven by improved domestic crude oil
production and the 18.8 per cent rise in receipt from petroleum profit
tax and royalties. It however, fell short of the quarterly benchmark oil
receipt by 41.8 per cent, owing to lower export receipts and cost
recovery payments.
In contrast, non-oil receipts at N2,111.63 billion, declined by 18.0 per
cent and 10.7 per cent, relative to 2022Q3 and the quarterly budget,
respectively. The decrease was largely attributed, to lower collections
from company income tax, customs and excise duties, and VAT.
Nonetheless, collections from company income tax and value-added
tax, at N569.46 billion and N650.83 billion, exceeded their quarterly
targets by 14.6 per cent and 6.6 per cent, respectively. The decline in
non-oil revenue relative to the preceding quarter, reflected seasonality
in tax returns.
Summary
Drivers of Federation
Revenue

21 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Table 4: Federally collected Revenue and Distribution (N Billion)

2021Q4
2022Q3
1/
2022Q4
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: Office of the Accountant-General of the Federation (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 NonFederation revenue.

A net distributable balance of N2,339.07 billion was disbursed to the
three tiers of government after accounting for statutory deductions
and transfers, as well as additional revenue from non-oil excess
revenue and exchange gain. Of this amount, the Federal Government
got N915.11 billion, while State and Local governments received

22 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
N729.18 billion and N539.99 billion, respectively. The balance of
N154.79 billion was distributed to oil-producing states as a 13.0 per
cent Derivation Fund. Total disbursement to the federating units was
3.7 per cent below the amount shared in 2022Q3 and 35.1 per cent
short of the quarterly projection.

2.2.2
Fiscal Operations of the Federal Government
The retained revenue of the FGN declined, on the back of a lower
allocation from the Federation Account. At N1,502.52 billion, estimated
retained revenue of the FGN was 18.2 per cent below receipts in
2022Q3 and 39.7 per cent short of the quarterly target. Although,
receipt from FGN independent revenue, at N448.24 billion, exceeded
collection in the preceding quarter by 20.4 per cent, it was short of the
target by 58.7 per cent.

Table 5: FGN Retained Revenue (N Billion)


2021Q4
2022Q3
2022Q4
Budget
FGN Retained Revenue


Federation Account


VAT Pool Account

FGN IR


Excess Oil Revenue

Excess Non-Oil

Exchange Gain

Others*


Source: Compiled from the Office of the Accountant-General of the Federation
(OAGF) Figures
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 and capital spending, provisional
aggregate expenditure of the FGN decreased by 18.8 per cent and 47.6
per cent, relative to 2022Q3 and the quarterly budget, respectively. The
provisional aggregate expenditure of the FGN in 2022Q4 amounted to
N2,268.12 billion. A breakdown shows that recurrent expenditure,
capital expenditure, and transfers accounted for 83.6 per cent, 10.7 per
cent and 5.7 per cent of total expenditure, respectively, a deviation
from the projected expenditure mix of 61.8 per cent, 40.5 per cent, and
6.7 per cent in the 2022 budget.
Federal Government
Retained Revenue
Federal Government
Expenditure

23 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption

Figure 16: Federal Government Expenditure (N Billion)

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


The decline in expenditure in the review period, induced a contraction in
the overall deficit. At N765.61 billion, the provisional fiscal deficit of the
FGN was 20.0 per cent and 58.3 per cent below the levels in the
preceding quarter and the 2022 proportionate budget, respectively.
Table 6: Fiscal Balance (N Billion)

2021Q4
2022Q3
2022Q4
Budget
Retained revenue

Aggregate expenditure

Recurrent

Non-debt

Debt Service

Capital
820.54
478.74
242.88 1,366.85
Transfers

Primary balance

Overall balance

Source: Compiled from OAGF figures and CBN Staff Estimates
Note: The figures are provisional.

Government borrowing in the review period remained anchored on the
Medium-Term Debt Strategy 2020-2023 (MTDS 2020- 2023) of the FGN.
Total public debt outstanding as at end-December 2022 was N46,250.
37 billion (22.8 per cent of GDP). It rose by 5.0 per cent and 16.9 per
cent, relative to end-September 2022 and end-December 2021,


2021Q4
2022Q3
2022Q4
Budget
Recurrent
Capital
Transfers
Aggregate Expenditure
Overall Fiscal Balance
Federal Government
Debt

24 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
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 N40,912.62 billion (or 88.5 per cent)3, while State governments’
domestic debt stock made up the balance of N5,337.75 billion (11.5 per
cent).

Of the total FGN debt obligations, domestic debt was N22,210.36 billion
(or 54.3 per cent), while external debt was N18,702.26 billion (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 others4 (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 ‘other5’ loans constituted 1.9 per cent.
Debt service obligations in 2022Q4, amounted to N548.86 billion,
compared with N1,167.02 billion in 2022Q3. The decline was attributed
to lower demand for external borrowing.


3 This includes the external debt of State governments, which are contingent liabilities of the
Federal government.
4 This includes Treasury bonds (0.2 per cent), Green bond (0.1 per cent) and Special FGN Savings
bond (0.1 per cent).
5 This includes Promissory notes (2.4 per cent) and Syndicated loans, arranged by the AFC
(0.23 per cent).

25 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption


Figure 17: FGN External and Domestic Debt Composition (N Billion)

Source: Debt Management Office (DMO)

Figure 18: Composition of Domestic Debt Stock by Instrument
Source: Debt Management Office

2021 Q3
2021 Q4
2022 Q1
2022 Q2
2022 Q3
2022 Q4
External Debt
Domestic Debt
Total Debt
FGN Bonds
73.9%
T/Bills
19.9%
FGN Sukuk
3.3%
Promissiory Notes
2.4%
Others
0.4%

26 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 19: Composition of External Debt Stock by Instrument
Source: Debt Management Office


2.3
MONETARY AND FINANCIAL DEVELOPMENTS
The Bank maintained a hawkish monetary policy stance in the fourth
quarter to stem heightened inflationary pressures. The financial system
remained resilient, as various indicators were within the prudential
requirements. Banking system liquidity increased, resulting in increased
activities at the Standing Deposit Facility window. The direction of
interest rates in the review quarter was mixed but largely tilted in the
upward trajectory, driven by the sustained policy rate hike. The capital
market was bullish, against the backdrop of strong buying interest in
the equities market amid price appreciation in large capitalised stocks
and portfolio reshuffling by investors seeking for alpha stocks in
anticipation of the 2022 full year dividend/earnings declaration.

2.3.1
Monetary Developments
Reserve money grew by 20.6 per cent at end-2022Q4 driven by the 30.7
per cent growth in liabilities to Other Depository Corporations. The
growth in liabilities to Other Depository Corporations (ODCs) was due
to the 22.9 per cent growth in required reserves, prompted by the
impact of the increase in CRR to 32.5 per cent toward the beginning of
the quarter. Notably, the growth in liabilities to ODCs was sufficient to
cover for the 9.4 per cent contraction in currency-in-circulation and
induce a 20.6 per cent growth in reserve money.


Reserve Money
Summary
Multilateral, 48.5%
Commercial, 37.5%
Bilateral, 12.1%
Others, 1.9%

27 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption

Table 7: Components of Reserve Money (N Billion)

2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
Monetary Base

Currency-In-Circulation

Of which:


Naira and Coins

eNaira

Liabilities to ODCs

Monetary Base (% Growth
over Preceding December)

Broad Money Multiplier
(M3)

Source: Central Bank of Nigeria

At 3.25, the level of the money multiplier prompted a 17.32 per cent
growth in money supply. Broad Money supply (M3) stood at
N52,140.95 billion at the end of the review quarter above N49,333.08
billion at the end of the preceding quarter, implying a growth of 17.32
per cent. The growth rate surpassed the programme target of 14.92 per
cent by 2.4 percentage points and underscores the persistent
inflationary pressures in the economy.

Growth in broad money assets stemmed from the 36.5 per cent
increase in Net Domestic Assets which outweighed the 54.5 per cent
decline in Net Foreign Assets. The major driver of the growth in net
domestic assets (NDA) was the 78.2 per cent growth in net claims on
central government, followed by the 19.7 per cent growth in claims on
other sectors. The contribution of the NDA to the growth in broad
money assets stood at 28.8 percentage points with net claims on the
central government and claims on other sectors contributing 24.3
percentage points and 15.5 percentage points, respectively. Net
Foreign Assets (NFA) declined by 54.5 per cent, driven wholly by the
55.4 per cent rise in liabilities to non-residents buoyed by increased
loans and the sale of CBN bills to non-residents.
Table 8: Money and Credit Growth over preceding December (%)

Contribution
to M3 growth
2021Q4
2022Q1
2022Q2
2022Q3
2022Q4

Benchmark
(2022Q4)
Net Foreign Assets

Claims on Nonresidents

Liabilities to Nonresidents

Net Domestic
Assets

Domestic Claims

Net Claims on
Central
Government

Claims on Central
Government


28 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Source: Central Bank of Nigeria

Broad money liabilities increased on account of the 19.9 per cent and
17.7 per cent growth in transferable deposits and other deposits,
respectively. ‘Other deposits’ was the major contributor to the growth
in broad money supply at 10.5 percentage points, followed by
transferable deposits at 6.8 percentage points. Currency outside
depository corporations (CODC) sustained its downward trajectory, an
indication of increased adoption and usage of electronic payment
channels coupled with the naira redesign policy.

2.3.2
Sectoral Credit Utilisation
The industry and services sectors sustained dominance in the share of
credit to the private sector. Credit utilization by sectors rose by 4.4 per
cent to N29,445.87 billion, relative to N28,204.27 billion in the
preceding quarter as higher deposit rates and other credit policies
continued to spur credit delivery to critical sectors of the economy.
Notably, credit utilisation increased across the three main sectoral
categories above their levels in the preceding quarter, with the
Agriculture sector recording the highest growth of 9.3 per cent,
followed by the Industry and Services sectors at 5.2 per cent and 3.3
per cent, respectively. The Services sector accounted for the most
credit utilised with a share of total credit utilisation of 52.8 per cent,
followed by the Industry sector at 41.0 per cent, while the Agriculture
sector accounted for a marginal share of 6.2 per cent.


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)

Total Monetary
Liabilities(M3)

Sectoral
Utilisation of
Credit

29 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption

Table 9: Relative Share in Total Sectoral Credit (Per cent)

2021Q4
2022Q3
2022Q4
Agriculture
5.98
5.88
6.15
Industry
40.66
40.7
41.01
of which Construction
4.39
4.15
3.96
Services
53.36
53.42
52.84
of which
Trade/General
Commerce

7.01
7.12
7.52
Source: Central Bank of Nigeria

Consumer credit declined owing to the effect of higher cost of borrowing
following the 250-basis points policy rate hike that characterised the
period. Consumer credit declined by 3.5 per cent to N2,318.63 billion at
the end of the fourth quarter of 2022 from N2,402.67 billion recorded
at the preceding quarter. Consequently, consumer credit as a share of
total claims on the private sector declined by 0.6 percentage point to
8.1 per cent, from 8.7 per cent in the preceding quarter.
Figure 20: Consumer Credit Outstanding

Source: Central Bank of Nigeria
A disaggregation of consumer credit reveals that personal loans accounted for
75.6 per cent of the total consumer credit, while retail loans accounted for 24.4
per cent compared with 76.9 per cent and 23.1 per cent, respectively, in the third
quarter of 2022.


2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
Percentage Points
N'billion
Consumer Credit (LHS)
Share in Private Sector Credit (RHS)
Consumer Credit

30 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 21: Composition of Consumer Credit

Source: Central Bank of Nigeria

2.3.3
Financial Developments
2.3.3.1 Money Market Developments
Increased fiscal and monetary operations spurred banking system
liquidity during the quarter. The level of banking system liquidity rose in
the fourth quarter of 2022, driven by repayment of maturing CBN bills
and fiscal disbursements to the 3 tiers of Government which
outweighed outflow via provisioning and settlement of foreign
exchange purchases, and auctioning of CBN bills, as well as Cash
Reserve Ratio (CRR) debits. Net inflow from OMO transactions stood at
N35.00 billion (N85.00 billion worth of repayments and N50.00 billion
worth of sales during the review period). Relative to the preceding
quarter, the average net industry balance stood at N195.91 billion,
which was 41.8 per cent higher than the preceding quarter’s N138.16
billion.
Activities at the standing deposit facility (SDF) increased, mirroring the
increased banking system liquidity. Also, ODCs took advantage of higher
rates triggered by increases in the monetary policy rate. Total SDF
requests increased to N669.46 billion from N536.50 billion in the
preceding quarter, while average daily requests increased to N10.63
billion from N8.52 billion in the preceding quarter. Activities at the
standing lending facility (SLF) also increased, despite the improvement
in banking system liquidity within the quarter. Total SLF requests in the
quarter totaled N6,989.43 billion, with daily average requests of
N110.93 billion, compared to total requests of N3,404.68 billion and

2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
Per cent
Personal Loan
Retail Loan
Industry Liquidity
Condition
Standing Facility
Window
Operations

31 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
daily average requests of N56.74 billion in the preceding quarter. The
development is not unconnected with the liquidity structure of banks.

Figure 22: Trend at the CBN Standing Facility Windows (N Billion)
Source: Central Bank of Nigeria

Investments in both the NTBs and FGN bonds segments rose significantly
in the review quarter as investors took advantage of improved yield.
Demand for NTBs increased during the quarter as reflected in the total
offered, subscribed to, and allotted bills of ₦972.99 billion, ₦2,665.07
billion, and ₦852.93 billion, respectively, translating to a bid-to-cover
ratio of 3.1. Comparatively, total offered, subscribed to, and allotted
bills were ₦1,369.37 billion, ₦1,494.33 billion, and ₦1,133.49 billion,
and a bid-to-cover ratio of 1.3 in the preceding quarter.
Figure 23: Primary Market NTBs (N Billion)

Source: Central Bank of Nigeria


Offer
Subscription
Allotment
Repayment
2022Q4

2022Q3

2021Q4

2022Q4
2022Q3
2021Q4
Primary Market

SLF
SDF
2022Q3
2022Q4

32 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Activities in the primary market segment of FGN bonds followed a
similar trajectory. FGN bonds of 10- and 20-year tranches totaling
₦675.00 billion, ₦995.39 billion, and ₦641.55 billion were offered,
subscribed to, and allotted, respectively, during the review quarter,
which is higher than the ₦450.00 billion, ₦635.82 billion, and ₦553.62
billion offered, subscribed to, and allotted in the third quarter of 2022.
Similarly, marginal rates at the auctions in the review quarter increased
to a range of 15.4(±0.9) per cent, from a range of 12.8(±1.8) per cent in
the preceding quarter. The demand for fixed-income securities was
sustained, driven, mainly by the attractiveness of the rates in the review
quarter.

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

Source: Central Bank of Nigeria
The direction of interest rates in the review quarter was mixed but largely
tilted in the upward trajectory, driven by the sustained policy rate hike.
Average OBB, NIBOR-30 and NIBOR-90 rates increased to 13.29 per
cent, 12.85 per cent, and 13.74 per cent in the review quarter from
12.90 per cent, 11.50 per cent and 11.71 per cent, respectively, in the
preceding quarter. The increase in these rates was occasioned by the
increase in average MPR to 15.94 per cent relative to the preceding
quarter’s level of 13.94 per cent. However, the interbank call rate shed
230 basis points to close the period at 11.70 per cent from 14.00 per
cent in the third quarter, possibly driven by a reduced appetite for noncollateralised lending at the interbank market.


Offer
Subscription
Allotment
NonCompetitive
2022Q4

2022Q3

2021Q4

2022Q4
2022Q3
2021Q4
Interest Rate
Development

33 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 25: Developments in Short-term Interest Rates (Percent)
Source: Central Bank of Nigeria

Similarly, prime, and maximum lending rates increased relative to the
preceding quarter from 12.29 per cent and 27.99 per cent, to 13.25 per
cent and 28.53 per cent, respectively, as banks repriced their lending
rates in line with the policy rate hikes in the quarter. The weighted
average term deposit (AVTD) rate also rose by 1.55 percentage points
to 5.43 per cent from 3.88 per cent in the preceding period reflecting
the current realities of the hike in MPR. Hence, the spread between the
average term deposit and maximum lending rates moderated to 23.11
percentage points, from 24.11 percentage points in the preceding
period, implying that the policy rate hike had a stronger impact on
deposit rates than on lending to households and small businesses.
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.


Prime
Maximum
WAVTD
Spread
Per cent
2022Q3
2022Q4

MPR
OBB
NIBOR-Call
NIBOR-30
NIBOR-90
2022Q3
2022Q4

34 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.3.4
Capital Market Developments
Activities on the Nigerian Exchange (NGX) Limited were bullish, against
the backdrop of strong buying interest in the equities market amid price
appreciation in large capitalise stocks and portfolio reshuffling by
investors seeking alpha stocks in anticipation of the 2022 full year
dividend/earnings declaration. Consequently, the aggregate market
capitalisation increased to N51,188.87 billion in the fourth quarter of
2022, compared with the N49,533.09 billion recorded in the preceding
quarter, reflecting a 3.3 per cent appreciation. A disaggregation of the
components of the aggregate market capitalisation portrayed that the
equities, debts and Exchange Traded Funds (ETF) components gained
5.7 per cent, 0.6 per cent and 23.1 per cent to close at N27,965.74
billion, N23,214.72 billion and N8.42 billion, respectively. The
development was driven by bargain hunting activities in the equities
market in anticipation of favourable end of the year 2022 corporate
earnings results. The equities, debt, and ETF components of the market
capitalisation constituted 54.6 per cent, 45.3 per cent and 0.1 per cent,
respectively.

The All-Share Index (ASI), which opened at 48,879.74 index points at
the beginning of 2022Q4, closed at 51,251.06 index points at the end
of the quarter, reflecting a 4.5 per cent, quarter-on-quarter
appreciation. The positive performance of the NGX-ASI was driven by
portfolio reshuffling to alpha stocks ahead of the 2022 full year dividend
earnings results.

Figure 27: Aggregate Market Capitalisation and All-Share Index

Source: Nigeria Exchange (NGX) Limited


2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
Index Points
N Billion
Aggregate Market Capitalisation (LHS)
All-Share Index (RHS)
Market
Capitalisation
NGX All Share
Index

35 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
On the sectoral indices, the performance was bullish across all the
major indices tracked except for the NGX Sovereign bond and Oil & Gas
sector, which traded southward. The improved performance in the
major indices reflected the bullish stance in the overall capital market.


Table 10: Nigeria Exchange (NGX) Limited sectorial Indices
NGX Indices
2022Q3
2022Q4
Changes (%)
NGX-Industrial Goods
1773.22
2403.24
35.5
NGX- AFR Bank Value
837.40
991.06
18.3
NGX- AFR Div Yield
2911.40
3321.49
14.1
NGX- MERI Value
2061.42
2308.19

NGX-Banking
379.20
417.50
10.1
NGX-CG
1177.21
1276.51
8.4
NGX-Growth
1659.11
1798.28
8.4
NGX-Pension
1659.38
1792.58

NGX-MERI Growth
2135.97
2297.30
7.6
NGX- Lotus II
3039.72
3240.83
6.6
NGX-Premium
4438.40
4715.57
6.2
NGX-30
1746.95
1842.50
5.5
NGX-Insurance
168.60
174.36
3.4
NGX-Main Board
2251.59
2328.51
3.4
NGX-Consumer Goods
584.68
588.93
0.7
NGX-ASeM
658.99
659.42
0.1
NGX-Sovereign Bond
837.85
818.27
-2.3
NGX-Oil/Gas
508.26
462.48
-9
Source: Nigeria Exchange (NGX) Limited
The level of trading activities was strong as the value of traded
securities increased by 16.0 per cent to N179.43 billion, compared with
N154.67 billion in the preceding quarter. Similarly, the total deals
traded appreciated by 0.9 per cent to 249,209 deals, compared with
246,966 deals recorded in the preceding period. However, the total
volume traded depreciated by 0.7 per cent to 12.22 billion, compared
with 12.30 billion recorded in the preceding quarter.


36 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption


Figure 28: Volume and Value of Traded Securities on the NGX

Source: Nigeria Exchange (NGX) Limited.

The capital market improved in its depth as it continues to record new
listings. There were six (6) new listings on the Exchange, comprising of
1 equity share, 1 senior unsecured bond, 2 derivatives and 2 saving
bonds, compared with twelve (12) new listings and four (4)
supplementary listings recorded in the previous quarter.


Table 11: Listings on the Nigerian Exchange Limited in 2022Q4
Company/Security
Shares Units/Price
Remarks
Listing
Geregu Power Plc
2,500,000,000 ordinary
shares of
Equity Share
New
50 Kobo each at
N100.00 per share
Dangote Industries Funding
Plc
Tranche A: 10,465,500
units at N1,000.00
each; and Tranche B:
177,119,045 at
N1,000.00 each
Senior
New
Unsecured Bonds
NGX-30
At unit price of
N1,836.25
Derivative
New
Index Futures Contracts
NGX-Pension Index Futures
Contracts
At unit price of
N1,782.00
Derivative
New
12.492% FGS NOV 2024
414,795 units
Saving Bonds
New

2021Q4
2022Q1
2022Q2
2022Q3
2022Q4
N Billion
Billion
Volume of traded securities (LHS)
Value of traded securities (RHS)

37 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
13.492% FGS NOV 2025
1,325,536 units
Saving Bonds
New
Source: Nigeria Exchange Limited (NGX).
Notes: FGS=Federal Government of Nigeria Saving Bond; Plc=Public Limited Liability Company; and
NOV=November.


2.3.5
Financial Soundness Indicators
The banking industry remained resilient to fragile macroeconomic
conditions, as the key financial soundness indicators were within
regulatory benchmarks. The banking system capital adequacy ratio
(CAR) remain unchanged at 13.8 per cent, the same level as the
preceding quarter. The ratio remained above the 10.0 per cent
benchmark for banks with national/regional authorisation, but below
the 15.0 per cent threshold for banks with international authorisation.

The banks’ asset quality, measured by the ratio of non-performing loan
(NPL ratio) improved to 4.2 per cent in the fourth quarter of 2022 from
4.9 per cent in the previous quarter, reflecting a 0.7 percentage point
decrease, driven by sustained improvement in loan recoveries by banks
and lower loan default. Thus, the ratio remains below the prudential
benchmark of 5.0 per cent. The Industry Liquidity Ratio (LR) decreased
by 3.7 percentage points to 53.0 per cent, compared with 56.7 per cent
recorded in the preceding quarter, reflecting a lower holding of liquid
assets by banks. The LR was above the minimum regulatory benchmark
of 30.0 per cent, showing the banks’ ability to meet their obligations.


38 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.4
EXTERNAL SECTOR DEVELOPMENTS
2.4.1
External Balance
The weakening global economic conditions continue to weigh on the
external sector performance. Consequently, the external account
recorded an overall balance of payments deficit position of US$1.11
billion in 2022Q4. The current account, however, posted an impressive
surplus position of US$2.35 billion, buoyed by positive trade
performance and lower deficits in the services and primary income
accounts, as well as sustained surplus in the secondary income account.
The financial account recorded a lower net incurrence of financial
liabilities of US$0.85 billion, compared with US$2.69 billion in 2022Q3,
reflecting tight global monetary conditions. The external reserves at
end-December 2022 stood at US$36.61 billion, compared with
US$37.39 billion at end-September 2022. The level could cover 6.8
months of import for goods and services or 9.3 months of import for
goods, above the international standard benchmark of 3 months import
cover. The average exchange rate of the naira per US dollar at the I & E
window was ₦445.71/US$, compared with ₦426.34US$ in 2022Q3.
Public sector external debt stock and external debt service payment at
end-December 2022 stood at US$41.69 billion and US$0.31 billion,
respectively.

2.4.2
Current & Capital Account Developments
The current account recorded an impressive surplus position in 2022Q4,
driven largely by higher trade surplus and lower deficits in the services
and primary income accounts. The current account swung into a surplus
position of US$2.35 billion (1.8 per cent of GDP), from a contraction of
US$2.06 billion (-1.7 per cent of GDP) in 2022Q3. This development was
due to increased export earnings, lower repatriation of dividends by
non-resident investors and sustained inflow of diaspora remittances.


Summary

39 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 29: Current Account Balance (US$ Billion)

Source: Central Bank of Nigeria

Export performance improved, following increase in crude oil production
and higher non-oil export earnings, signifying the success of the Bank’s
policies aimed at boosting non-oil export receipts. Export earnings rose
by 2.9 per cent to US$14.59 billion in 2022Q4, from US$14.17 billion in
2022Q3, driven mainly by the significant increase in non-oil export
receipts. Despite the improvement in crude oil production to
1.22mbpd, from 1.13mbpd in 2022Q3, following improved government
pipeline surveillance, crude oil and gas export receipts declined by 2.2
per cent to US$12.63 billion in 2022Q4, relative to the level in 2022Q3.
The development was majorly driven by the decline in the price of
Nigeria’s reference crude, the Bonny Light by 14.9 per cent to US$90.81
per barrel, from US$106.71 in 2022Q3. Non-oil export receipts
increased significantly by 55.3 per cent to US$1.95 billion, compared
with US$1.26 billion in the preceding quarter, driven by the Bank’s
favourable policies to boost non-oil export receipts and sustained high
commodity prices at the international market. In terms of share in total
export, crude oil and gas export receipts remained dominant,
accounting for 86.6 per cent, while non-oil exports accounted for the
balance of 13.4 per cent.

Lower merchandise import was recorded on account of decline in both oil
and non-oil import, reflecting the substitution effect, particularly on nonoil products. Merchandise import fell by 17.1 per cent to US$11.79
billion, from US$14.21 billion in 2022Q3, due, largely to the 21.9 per
cent and 14.4 per cent drop in the importation of petroleum products

Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
US$ BILLION
Merchandise
Import
Export
Performance

40 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
and non-oil products, respectively. Oil import declined to US$3.93
billion, compared with US$5.04 billion in the preceding quarter. The
development reflects the improved supply of petroleum products in
2022Q4. Similarly, non-oil import declined to US$7.85 billion in
2022Q4, from US$9.17 billion in 2022Q3. A breakdown of non-oil
import by sector reveals that import of raw materials and machinery
for industrial use accounted for the largest share of 48.7 per cent,
reflecting inclination towards import substitution in the economy.
Other sectoral import shares were: manufactured products (23.2 per
cent); food products (12.6 per cent); oil (5.4 per cent); transport (3.8
per cent); mineral (3.6 per cent); and agricultural products (2.7 per
cent). The share of non-oil import remained dominant, accounting for
66.6 per cent of the total, while petroleum products constituted the
balance of 33.4 per cent.
The deficit in the services account narrowed, mainly due to lower
payments for services in the review period. The deficit in the services
account narrowed significantly by 22.7 per cent to US$3.13 billion, from
US$4.05 billion in the preceding quarter. The lower deficit was a result
of declines in service payments for transport, government, and other
business services by 24.9 per cent, 25.6 per cent and 15.5 per cent,
respectively. Analysis of trade in services shows that payment for
services amounted to US$4.43 billion, of which transportation, travels,
and other business services were US$2.02 billion, US$1.16 billion, and
US$0.63 billion, respectively, accounting for 45.6 per cent, 26.2 per
cent and 14.3 per cent of total payments. Payments for insurance and
pensions was US$0.15 billion, constituting 3.3 per cent, while
telecommunications, financial services, and government goods and
services, were US$0.15 billion (3.5 per cent), US$0.16 billion (3.6 per
cent), and US$0.07 billion (1.7 per cent), respectively.


Services

41 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 30: Share of Service Out-Payments (per cent)

Source: Central Bank of Nigeria.

Receipts from services declined by 2.2 per cent to US$1.30 billion, from
US$1.32 billion in the preceding quarter. This was due mainly to decline
in receipts from transportation, travels, telecommunications and
insurance services by 2.7 per cent, 20.6 per cent, 8.9 per cent and 28.8
per cent, respectively. In terms of share in total, receipts from
transportation, travel, financial, government and telecommunications
services were 40.2 per cent, 21.4 per cent, 19.9 per cent, 9.0 per cent
and 5.1 per cent, respectively.
Figure 31: Share of Services Receipts (per cent)

Source: Central Bank of Nigeria.
Transportation
45.6%
Travels
26.2%
Insurance
3.3%
Communications
3.5%
Government
1.7%
Other business
14.3%
Financial
3.6%
Others
1.8%
Transportation
40.2%
Travels
21.4%
Financial
19.9%
Communications
5.1%
Government
9.0%
Others
4.4%

42 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption


The deficit in the primary income account narrowed, following lower
repatriation of investment income by non-resident investors in the review
period. The deficit in the primary income declined significantly by 34.0
per cent to US$2.26 billion in 2022Q4, from US$3.43billion in the
preceding quarter. This was primarily as a result of the 25.6 per cent
decrease in investment income payments to US$2.77 billion, from
US$3.72 billion in 2022Q4. Income on equity and investment fund
shares in form of dividends declined by 10.4 per cent to US$2.34 billion,
relative to US$2.98 billion in 2022Q3. Similarly, interest payments on
loans declined significantly 53.9 per cent to US$0.30 billion, from
US$0.65 billion in 2022Q3.

Figure 32: Primary Income Balance (US$ Billion)

Source: Central Bank of Nigeria.

The surplus in the secondary income account decreased, on account of
lower inflow of general government transfers. The surplus in the
secondary income account declined by 9.4 per cent to US$4.95 billion
in 2022Q4, compared with US$5.46 billion in 2022Q3. This was due to
declined inflow of general government transfers. Personal transfers,
including diaspora remittances increased by 3.0 per cent to US$4.95
billion, from US$4.80 billion in the preceding quarter. Conversely,
general government transfers in the form of aids and grants fell by 36.2
per cent to US$0.49 billion, compared with US$0.77 billion in 2022Q3.


Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
US$ BILLION
Primary
Income
Secondary Income

43 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 33: Secondary Income Balance and Remittances Inflow (US$ Billion)

Source: Central Bank of Nigeria.

2.4.3 Financial Account
The financial account recorded a lower net incurrence of financial
liabilities, reflecting the effect of tight global financial conditions. The
financial account recorded a lower net incurrence of liabilities of
US$0.85 billion (0.7 per cent of GDP), relative to US$2.69 billion (2.2 per
cent of GDP) in the preceding quarter.
An Inflow of US$1.94 billion was recorded in 2022Q4, relative to
US$3.57 billion in 2022Q3. This was attributed to significantly lower
inflow of portfolio and other investment in the review period. FDI inflow
increased to US$0.75 billion, compared with US$0.50 billion in the
preceding quarter. On the other hand, portfolio investment inflow
decreased to US$0.34 billion, from US$1.00 billion in the preceding
quarter. The development was as a result of lower inflow of portfolio
equity and reversal of investments in debt securities. Similarly, inflow
of “other investment” fell substantially to US$0.85 billion, from
US$2.07 billion in the preceding period. This was due to lower inflow of
loans and repayments by deposit taking corporations and the private
sector.
Aggregate financial assets rose to US$1.09 billion in 2022Q4, compared
with US$0.88 billion in the preceding quarter, as a result of higher
acquisition of FDI assets amounting to US$0.27 billion, in contrast to a
divestment of US$0.09 billion in 2022Q3. Portfolio investment assets
also recorded a higher acquisition of US$0.22 billion, relative to
US$0.18 billion, owing to increased investment long-term debt


Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
US$ Billion
Secondary Income Balance
Diaspora Remittances
Net Acquisition of
Asset
Net Incurrence of
Liability
Financial Account
Developments

44 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
securities. Other investment assets declined to US$1.70 billion in
2022Q4, compared with US$2.23 billion in 2022Q3, driven by lower
foreign currency holdings of the private sector. Reserve assets depleted
by US$1.114 billion, relative to US$1.44 billion in the preceding quarter,
following the Bank's continuous effort to enhance liquidity in the
foreign exchange market.

2.4.4
External Debt
Nigeria’s public sector external debt stock and external debt service
payment at end-December 2022 stood at US$41.69 billion and US$0.31
billion, respectively. A breakdown shows that the multilateral loans,
from the World Bank, International Monetary Fund, and African
Development Bank Groups, amounted to US$20.2 billion, accounting
for 48.5 per cent of the total. A total of US$15.62 billion 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$5.07
billion, or 12.2 per cent of the total, while promissory notes were
US$0.55 billion, or 1.3 per cent of the total debt stock.

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

45 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.4.5
International Investment Position (IIP)
Nigeria's International Investment Position (IIP) recorded a lower net
financial liability of US$74.48 billion at end-December 2022. The stock of
financial assets increased to US$109.33 billion at end-December 2022,
compared with US$108.05 billion at end-September 2022. This was
due, largely to the increase in the stock of financial assets, mainly,
investments in other assets. Portfolio investment assets increased by
3.9 per cent to US$3.57 billion. Similarly, direct investment assets
increased by 2.3 per cent to US$13.63 billion, from its level at endSeptember 2022, driven by higher acquisition of equity and direct
investment fund shares by resident investors. Other investment assets
also increased by 3.2 per cent to US$52.37 billion in the review period,
from US$50.72 billion in the third quarter of 2022.

The stock of financial liabilities representing foreign investors' claims on
the economy increased marginally by 0.2 per cent to US$183.81 billion
at end-December 2022, compared with US$183.45 billion at endSeptember 2022. The development was largely due to the increase in
the stock of direct investment liabilities, relative to their levels at endSeptember 2022. The stock of direct investment liabilities increased by
1.2 per cent to US$88.20 billion at end-December 2022, compared with
US$87.18 billion at end-September 2022. The stock of other investment
liabilities also increased by 0.3 per cent to US$56.30 billion at endDecember 2022, compared with US$56.12 billion at end-September
2022. However, the stock of portfolio investment liabilities, decreased
by 2.2 per cent to US$36.14 billion, compared with US$36.97 billion at
end-September 2022.

2.4.6
International Reserves
The international reserves remained above the standard benchmark of
3.0 months of import cover. The international reserves stood at
US$36.61 billion at end-December 2022, relative to US$37.39 billion at
end-September 2022. The level of external reserves could cover 6.8
months of import for goods and services or 9.3 months of import for
goods only.


International Investment
Position
International Reserves

46 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
Figure 34: External Reserves and Months of Import Cover

Source: Central Bank of Nigeria.

A breakdown of the external reserves by ownership shows that, the
share of CBN was US$34.98 billion (95.6 per cent); Federal
Government, US$1.62 billion (4.4 per cent); while the Federation
accounted for the balance. In terms of currency composition, the US
dollar was US$27.74 billion, (75.7 per cent); Special Drawing Rights
US$5.02 billion (13.7 per cent); Chinese Yuan US$3.44 billion (9.4 per
cent); GB Pounds, US$0.20 billion (0.5 per cent); Euro US$0.20 billion
(0.6 per cent); and other currencies accounted for the balance.

2.4.7
Foreign Exchange Flows through the Economy
Net foreign exchange inflow to the economy stood at US$5.78 billion in
2022Q4, compared with US$7.29 billion in the preceding quarter. Foreign
exchange inflow into the economy decreased by 15.1 per cent to
US$14.62 billion, from US$17.22 billion in the preceding quarter. The
development was driven by the 14.7 per cent and 15.4 per cent
decreased inflow through the CBN and the autonomous sources,
respectively. Foreign exchange inflow through the Bank at
US$6.21billion, fell below the US$7.28 billion in the preceding quarter.
Foreign exchange inflow through autonomous sources decreased to
US$8.41 billion, from US$9.94 billion in the preceding period.
Similarly, foreign exchange outflow from the economy decreased by
10.9 per cent to US$8.85 billion, relative to the level in the third

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

47 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
quarter. Outflow through the Bank at US$7.51 billion, decreased by
12.1 per cent, from US$8.54 billion. Autonomous outflow also fell by
3.6 per cent to US$1.34 billion, from US$1.39 billion in the preceding
quarter.
Consequently, the economy recorded a net foreign exchange inflow of
US$5.78 billion in 2022Q4, from US$7.29 billion in 2022Q3. Similarly,
autonomous sources recorded a net inflow of US$7.08 billion, from
US$8.55 billion in 2022Q3. However, a net outflow of US$1.30 billion
was recorded through the Bank, compared to a net outflow of US$1.26
billion in 2022Q3.
Figure 35: Foreign Exchange Transactions through the Economy (US$ Million)

Source: Central Bank of Nigeria.

The average turnover at the I & E segment increased by 11.7 per cent
to US$0.12 billion, relative to the level in 2022Q3, reflecting improved
liquidity in the segment.

Figure 36: Turnover in the I&E Foreign Exchange Market

Source: Central Bank of Nigeria.

Q4 2021
Q3 2022
Q4 2022
Inflow
Outflow
Netflow

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

PERCENT
US $ (M)
Average Turnover
Rate of Turnover

48 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
2.4.8
Exchange Rate Movements
The average exchange rate of the naira per US dollar at the I & E window
was ₦445.71/US$, compared with ₦426.34US$ in 2022Q3.

3.0
Economic Outlook
According to the IMF's growth outlook, expansion of the global economy
is expected to moderate to 2.90 percent in 2023. The outlook is
predicated on central banks continuing the fight against inflation to
stem the cost-of-living crisis facing many economies. Also, the pace of
recovery from the COVID-19 resurgence in China is expected to heavily
weigh on the outlook.
In Advanced Economies (AEs) growth is projected at 1.2 per cent in
2023, reflecting the effects of fast rate hikes, the ongoing RussiaUkraine war and the attendant sanctions imposed on Russia, which are
expected to have a direct negative impact on both countries, with
international spillovers. Meanwhile, EMDEs are projected to grow
marginally to 4.0 per cent in 2023, fuelled by resilient domestic demand
in India and some parts of Latin America, despite external headwinds.
Global inflation is expected to moderate to 6.60 per cent in 2023,
notably above most central bank targets and above pre-pandemic
levels of about 3.50 per cent. Tailwinds to the inflation outlook partly
reflect lower global commodity prices, including fuel and also, the
expected effects of monetary policy tightening across several central
banks. Headwinds to the inflation outlook remain a less-than-expected
recovery in China; escalation of the war in Ukraine and debt distress
levels rising further.
Nigeria’s economic growth outlook remains positive in the near term
amid mounting downside risks. The optimistic outlook is predicated on
the assumption that the current trend in crude oil prices will be
sustained. It is also predicated on the effective implementation of the
Medium-Term National Development Plan (MTNDP), and the positive
impact of CBN interventions on growth-enhancing sectors, among
others. However, contraction in global demand, persistent security
challenges, as well as legacy infrastructural challenges remain
headwinds to growth.
Inflationary pressures are expected to moderate in the next quarter, due
to tight monetary conditions and improvement in global supply chain
Average
Exchange Rate
Domestic Economic
Outlook
Global Economic
Outlook

49 | P a g e Central Bank of Nigeria Economic Report
Fourth Quarter 2022
ECONOMIC REPORT, FOURTH QUARTER 2022
This document is for CBN internal consumption
conditions. Headline inflation is expected to continue a downward trend
in the near term driven by the CBN’s monetary tightening as well as the
various supply-side interventions by the Bank and the FGN in the
growth-enhancing sectors of the economy. Major headwinds to the
inflation outlook include: intensified supply chain disruptions
emanating from geo political tensions; higher exchange rate passthrough; and resurgence of the Pandemic and persisting security
challenges.

The fiscal outlook in the near-term is cautiously optimistic, in view of the
sustained rally in crude oil prices and improving domestic crude oil
production, amidst a procyclical political cycle. Besides the positive
outlook on oil returns, the swift passage of the 2022 Finance Bill, is
expected to complement existing fiscal reforms under the Strategic
Revenue Growth Initiatives (SRGI’s) in mobilising government revenue,
particularly as businesses close their books for the year. The 2023
general elections in February, is expected to raise recurrent
expenditure for the effective conduct of the election, which is likely to
further contract the fiscal space.

The external sector is expected to remain resilient in 2023. The optimism
is hinged on the expectation of sustained favourable crude oil and other
commodity prices at the international market. In addition, government
efforts at tackling domestic crude oil production challenges are
expected to yield positive results. However, headwinds to the outlook
include the weak global demand and tight monetary conditions amid
high global inflation.