ECONOMIC REPORT
FOURTH QUARTER 2016


CENTRAL BANK OF NIGERIA


C e n t r a l B a n k o f N i g e r i a
Page ii
Economic Report Fourth Quarter

The Central Bank of Nigeria Quarterly Economic Report is designed for the dissemination
of financial and economic information on the Nigerian economy on current basis. The
Report analyses developments in the financial, fiscal, real and external sectors of the
economy, as well as international economic issues of interest. The Report is directed at
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Economic Report Fourth Quarter

Contents


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Economic Report Fourth Quarter


Text Tables

Appendix Tables


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Economic Report Fourth Quarter

Figures


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Economic Report Fourth Quarter

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Economic Report Fourth Quarter

1.0 Summary
The significant increase in domestic credit (net), foreign assets (net)
and other asset (net) led to growth in key monetary aggregates in
the fourth quarter of 2016. Broad money supply (M2) and narrow
money supply (M1) grew by 7.8 per cent and 15.9 per cent,
respectively, over the levels at end-September 2016. Relative to the
level at end-December 2015, M2 and M1 grew by 19.0 per cent and
15.9 per cent, respectively, compared with the growth of 10.4 per
cent and 8.9 per cent at the end of third quarter of 2016.
On the back of the continued restrictive monetary policy stance of
the Bank, banks’ deposit and lending rates generally trended
upwards in the fourth quarter of 2016. The margin between the
average savings deposit and the maximum lending rates widened
from 23.96 percentage points to 24.37 percentage points, while the
spread between the weighted average term deposit and maximum
lending rates narrowed from 21.09 percentage point to 20.36
percentage point at the end of the fourth quarter of 2016. The
weighted average inter-bank call rate fell to 15.43 per cent,
reflecting the liquidity condition in the banking system.
The total value of money market assets outstanding at the end of
the fourth quarter of 2016 stood at N10,870.51 billion reflecting an
increase of 1.8 per cent over the level at the end of the third quarter
of 2016. The development was due to the rise in FGN Bonds and
Nigerian Treasury Bills outstanding. Developments on the Nigerian
Stock Exchange (NSE) were bearish in the review quarter as all the
major indices trended downward.
Shortfall in receipts from oil and non-oil revenue due to persistent low
price of crude oil and domestic output, continued to impact
negatively on government revenue. Consequently, at N1,434.49
billion, total federally-collected revenue was lower than both the
quarterly budget estimate and the preceding quarter’s receipts.
Gross oil and non-oil receipts were also lower than the provisional
quarterly budget estimates and their levels in the preceding quarter.
Federal Government retained revenue and total expenditure were
N647.83 billion, respectively, resulting in an estimated deficit of
N667.03 billion in the fourth quarter of 2016.
Agricultural activities during the fourth quarter of 2016 were
dominated by harvesting of crops. In the Southern part of the
country, harvesting of tubers, fruits and vegetables was the major
farming activity, while farmers in the Northern part, engaged in the
harvesting of late maturing grains and pre-planting operations in
preparation for dry season planting. In the livestock sub-sector,
farmers engaged in the fattening of cattle and stocking of broilers in


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Economic Report Fourth Quarter

anticipation of the end of year sales. The end-period inflation rate,
on year-on-year and 12-month moving average basis for the fourth
quarter of 2016, was 18.55 per cent and 15.70 per cent, respectively.
World crude oil demand and supply were estimated at 95.35 mbd
and 96.87 mbd, respectively, in the fourth quarter of 2016. Nigeria’s
crude oil production, including condensates and natural gas liquids,
was also estimated at an average of 1.54 million barrels per day
(mbd) or 141.68 million barrels (mb) for the fourth quarter of 2016.
Crude oil export was estimated at 1.09 mbd or 100.28 million barrels,
while deliveries to the refineries for domestic consumption was 0.45
mbd or 41.40 million barrels in the review quarter. The average price
of Nigeria’s reference crude, the Bonny Light (370 API), was US$49.84
per barrel in the review quarter.
Provisional data showed that foreign exchange inflow and outflow
through the CBN amounted to US$6.64 billion and US$5.31 billion,
respectively, resulting in a net inflow of US$1.33 billion. Foreign
exchange sales by the CBN to the authorised dealers amounted to
US$2.90 billion. The average exchange rate of the naira vis-à-vis the
US dollar at the inter-bank market depreciated further to
N305.21/US$.
Other major international economic developments and meetings of
importance to the domestic economy in the review period included:
the 2016 Annual Meetings of the Board of Governors of the World
Bank Group (WBG), the International Monetary Fund (IMF) and the
sideline meetings of Inter-Governmental Group of Twenty-Four (G24) on International Monetary Affairs and Developments held in
Washington D. C., USA from October 3 – 9, 2016. The West African
Monetary Zone (WAMZ) 8th Trade Ministers’ Forum was also held in
Monrovia, Liberia, at the Boulevard Palace Hotel from November 2
to 4, 2016.


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Economic Report Fourth Quarter

2.0 Financial Sector Developments
2.1 Monetary and Credit Developments
On quarter-on-quarter basis, growth in the key monetary aggregates
accelerated at the end of the fourth quarter of 2016, reflecting the
rise in foreign assets net (NFA), net domestic assets (NDA) and other
assets net (OAN). Developments in banks’ deposit and lending rates
were mixed. The value of money market assets outstanding
increased, due, largely, to the rise in FGN Bonds and Nigerian
Treasury Bills. Developments on the Nigerian Stock Exchange (NSE)
were bearish as the major indices trended downward.
Monetary policy was largely restrictive in the fourth quarter of
2016 with the monetary policy rate at 14.0 per cent. However,
efforts were made to support real sector growth during the
period.
Consequently,
growth
in
the
key
monetary
aggregates accelerated at the end of the fourth quarter of
2016. On quarter-on-quarter basis, broad money supply (M2),
at N23,840.39 billion, grew by 7.8 per cent, compared with the
growth of 2.0 per cent at the end of the third quarter of 2016.
The growth in M2 was attributed to the significant increase in
foreign assets (net) and aggregate credit of the banking
system. Over the level at end-December 2015, broad money
supply (M2) grew by 19.0 per cent, compared with the growth
of 10.4 per cent at the end of the third quarter. The
development reflected the 11.2 per cent per cent growth in
foreign assets (net) of the banking system.
Narrow money supply (M1), rose by 15.9 per cent to N11,520.17
billion, compared with 8.9 per cent and 19.9 per cent growth
at the end of the third quarter of 2016 and the corresponding
period of 2015, respectively . The development was attributed
to the 23.2 per cent and 14.7 per cent growth in currency
outside banks and demand deposits, respectively. Over the
level at end-December 2015, narrow money supply (M1) rose
by 34.4 per cent, reflecting the 25.0 per cent and 36.3 per
cent increase in its currency outside banks and demand
deposit components, respectively.
In contrast to the decline of 3.0 per cent recorded in the
preceding quarter, quasi-money grew by 1.1 per cent to
N12,320.23 billion in the fourth quarter of 2016. The growth in
quasi-money was due to an increase in time and savings
deposits of banks. Over end-December 2015, quasi money
Key monetary
aggregates grew
during Q4 of 2016.


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Economic Report Fourth Quarter

increased by 7.5 per cent, compared with the 6.3 per cent
growth at the end of the preceding quarter (Fig. 1, Table 1).
Figure 1: Growth Rate of Narrow Money (M1) and Broad Money (M2)1

During the review period, there was increased borrowing by
the Federal Government through the issuance of treasury bills.
Accordingly, at N26,967.0 billion, aggregate domestic credit
(net) to the economy, on quarter-on-quarter basis, grew by
2.5 per cent, compared with the growth of 8.2 per cent and
0.4 per cent at the end of the preceding quarter and the
corresponding period of 2015, respectively. Over the level at
end-December 2015, net domestic credit grew by 24.8 per
cent, compared with the growth of 21.7 per cent and 12.1 per
cent at end-September 2016 and the corresponding period of
2015, respectively. The development was attributed to the
substantial growth in net claims on the Federal Government
and claims on the private sector.
Banking system‟s credit (net) to the Federal Government
increased by 25.5 per cent to N4,595.58 billion, compared with
the increase of 26.6 per cent at the end of the preceding
quarter. The development reflected significant growth in

1 QM1 and QM2 represent quarter-on-quarter changes, while CM1 and CM2 represent
cumulative changes (year-to-date).

-15
-10
-5

-10
-5

Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Quarterly (%)
Cumulative (%)
QM1 (RHS)
QM2 (RHS)
CM1 (LHS)
CM2 (LHS)
Banking system’s
credit to the Federal
Government
increased by 25.5 per
cent at the end of the
review period.


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Economic Report Fourth Quarter

direct loans (34.1 per cent) and holding of treasury securities,
especially treasury bills and FGN Bonds, which grew by 6.7 per
cent and 5.0 per cent, respectively, at the end of the review
period. Relative to the level at end-December 2015, net
claims on the Federal Government grew by 58.8 per cent,
compared with the 26.6 per cent growth at end-September
2016.
At N22,374.72 billion, banking system‟s credit to the private
sector fell by 1.2 per cent quarter-on-quarter, in contrast to the
growth of 5.7 per cent at end-September 2016. The
development was due, mainly, to the decline in claims on the
core private sector. Over the level at end-December 2015,
banking system‟s credit to the private sector grew by 19.5 per
cent, compared with the growth of 3.3 per cent at the end of
the preceding quarter.
Figure 2: Growth Rate of Aggregate Domestic Credit to the Economy

Net foreign assets of the banking system rose by 65.5 per cent
to N9,353.5 billion at end-December 2016, in contrast to a
decline of 18.7 per cent at the end of the corresponding
period of 2015. The growth in NFA was 20.8 per cent, quarteron-quarter, compared with 9.0 per cent at end-September
2016 and reflected the significant growth in foreign assets of
the CBN on the heels of foreign asset revaluation, following
the adoption of a flexible exchange rate regime.


-50

-50

Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Quarterly (%)
Cumulative (%)
QCP (RHS)
QCG (RHS)
QAC (RHS)
CCP (LHS)
CCG (LHS)
CAC (LHS)
Foreign assets (net)
of the banking
system grew at the
end of the review
quarter.


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Economic Report Fourth Quarter

Table 1: Growth in Monetary and Credit Aggregates (Per cent) Over
Preceding Quarter
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Foreign Assets (Net)

Other Assets (Net)

Broad Money Supply (M2)

Quasi-Money

Narrow Money Supply (M1)

Memorandum Items:
Reserve Money (RM)


2.2
Currency-in-circulation (CIC) and Deposits at CBN

At N2,179.17 billion, currency-in-circulation rose by 21.5 per
cent relative to the level in the third quarter of 2016. The
development was due, largely, to the increase in its currency
outside banks component.

Total deposits at the CBN amounted to N12,371.38 billion,
indicating an increase of 2.7 per cent above the level at the
end of the third quarter of 2016. The development reflected
an increase in the private sector and Federal Government
deposits in the review quarter. Of the total deposits at CBN,
the shares of the Federal Government, Banks and „‟Others‟‟
were N5,215.17 (42.1 per cent), N3,658.15 billion (29.6 per cent)
and N3,498.06 billion (28.3 per cent), respectively.
Reserve money (RM) fell by 5.4 per cent to N5,837.32 billion at
the end of the fourth quarter of 2016, reflecting a decrease in
DMBs‟ reserves with the CBN. Over the level at end-December
2015, reserve money rose by 0.4 per cent.
2.3
Money Market Developments
There was stability in the financial market despite mixed
liquidity trends in the domestic money market. Open Market
Operations (OMO) was used for liquidity management using
varying tenors. Both the intra-day liquidity facility and the
Standing Facilities were also available for players to square up
their positions at the close of business. Despite regular sales of
foreign exchange sourced through remittances to the
Bureaux-De-Change (BDC) segment, the much expected
The financial market
was relatively liquid
during the review
period .
Reserve money (RM)
fell at the end of the
fourth quarter of
2016.


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Economic Report Fourth Quarter

convergence at the two segments of the foreign exchange
market could not be achieved as the premium between the
interbank and the BDC widened.

Provisional data indicated that the total value of money
market assets outstanding at the end of the fourth quarter of
2016 stood at N10,870.51 billion, showing 1.8 per cent rise,
compared with the increase of 2.1 per cent at the end of the
third quarter. The development was attributed to the 2.9 and
0.5 per cent growth in FGN Bonds and Nigerian Treasury Bills
outstanding, respectively.

2.3.1
Interest Rate Developments
The Monetary Policy Committee (MPC) maintained a
restrictive stance in the review period, retaining the policy rate
at 14.00 per cent. However, interest rates, which reflected
liquidity
positions
fluctuated
following
special
foreign
exchange interventions in the secondary market and
moderated by inflow from maturing CBN bills and fiscal
injections.

Available data showed mixed movements in banks‟ deposit
and lending rates in the fourth quarter of 2016. The average
term deposit rate rose by 1.93 percentage points above the
level in the preceding quarter to 8.09 per cent at endDecember 2016. The average prime rate declined by 0.06
percentage point to 17.08 per cent, while the maximum
lending rate increased by 1.2 percentage point to 28.45 per
cent. Consequently, the spread between the weighted
average term deposit and maximum lending rates narrowed
by 0.73 percentage point to 20.36 percentage points, at the
end of the fourth quarter of 2016. However, the margin
between the average savings deposit and the maximum
lending rates expanded by 0.41 percentage point to 24.37
percentage points. With headline inflation at 18.6 per cent at
end-December 2016, the prime lending and deposit rates
were negative in real terms, while the maximum lending rate
was positive in real terms.
At the inter-bank funds segment, the weighted average interbank call rate, which stood at 23.42 per cent at endSeptember 2016, fell by 7.99 percentage points to 15.43 per
Interbank call
rate fell in Q4
2016.
The spread between
the weighted –
average term deposit
and maximum
lending rates
narrowed at the end
of the fourth quarter
of 2016.


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Economic Report Fourth Quarter

cent, in the fourth quarter of 2016, reflecting the liquidity
condition in the banking system. The Nigeria inter-bank offered
rate (NIBOR) for the 30-day tenor fell from 17.72 per cent in
the preceding quarter to 17.17 per cent in the fourth quarter
of 2016. Similarly, the weighted average rate at the Open-BuyBack (OBB) segment declined by 5.79 percentage points to
9.06 per cent (Fig. 3, Table 2).
Figure 3: Selected DMBs Interest Rates (Average)


Table 2: Selected Interest Rates (Percent, Averages)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Average Term Deposits

Prime Lending

Interbank

Maximum Lending


2.3.2
Commercial Paper (CP)

Commercial Paper (CP) outstanding held by DMBs fell by 7.6
per cent to N0.49 billion at the end of the fourth quarter of
2016, compared with N0.53 billion at the end of the preceding
quarter. The development was due to the fall in commercial
banks investment in CP during the review quarter. Thus, CP
constituted 0.005 per cent of the total value of money market
assets outstanding during the review period, same as in the
preceding quarter.

Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Percent per Annum
Percent per Annum
Prime
Interbank
Maximum
Average Term Deposits (RHS)

Investment in CP by
banks fell in the
fourth quarter of
2016.


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Economic Report Fourth Quarter

2.3.3
Bankers’ Acceptances (BAs)
BAs decreased by 39.0 per cent to N27.8 billion from N45.6
billion at the end of the preceding quarter. The development
was attributed to the fall in DMBs investment in BAs during the
quarter. Consequently, BAs accounted for 0.3 per cent of the
total value of money market assets outstanding at the end of
the fourth quarter of 2016, compared with 0.4 per cent at the
end of the preceding quarter.

2.3.4 Open Market Operations
In furtherance of its restrictive policy stance, the Bank
continued to deploy different monetary policy tools to
achieve its mandate. In that vein, there were regular
interventions through Open Market Operations (OMO) in the
review period. Total amount subscribed to and allotted was
N2,127.94 billion and N1,977.79 billion, respectively during the
review quarter. The bid rates ranged from 17.0000 to18.7500
per cent, while the stop rate ranged from 18.0000 to 18.6000
per cent. Included in the total sales was N444.14 billion foreign
exchange swaps at 12.00 per cent. CBN bills worth N1,215.28
billion matured in the period, translating to a net withdrawal of
N762.51 billion.
2.3.5
Primary Market
At the government securities market, short and long-term debt
instruments were issued at the primary segment on behalf of
the Debt Management Office (DMO). NTBs of 91- 182- and
364-day tenors, amounting to N858.67 billion, N1,104.98 billion
and N758.47 billion were offered, subscribed to and allotted,
respectively, at the auctions held in the fourth quarter of 2016.
All were oversubscribed.
The bid rates ranged from 10.0000 to 20.1123, 12.0000 to
23.0000, and 16.5000 to 21.0000 per cent, respectively, for the
91-, 182- and 364-day tenors, while the stop rates ranged
from 13.9000 per cent to 14.0000 per cent, 17.0900 per cent to
17.5000 per cent and 18.2500 per cent to 18.7000 per cent,
respectively. In the preceding quarter, a total of N1,066.55
billion, N2,550.72 billion and N1,239.55 billion, respectively,
were offered, subscribed to and alloted for the three tenors.


DMBs’ holdings of
BAs decreased
during Q4 of 2016.


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Economic Report Fourth Quarter

2.3.6
Bonds Market
Tranches of the 5-, 10-, and 20-year bonds, were re-opened
during the review period. The term to maturity of the bonds
ranged from 4 years, 7 months to 19 years, 5 months. Total
amount offered, subscribed and allotted were N295.00 billion,
N337.80 billion and N203.20 billion, respectively. The marginal
rates for the 5-year bond ranged from 15.2990 to 15.9900 per
cent; for the 10-year bond ranged from 15.4771 to 16.2400 per
cent, and the 20-year bond ranged from 15.4880 to 16.4348
per cent. However, for all the tenors, the marginal rates were
between 15.2990 to 16.4348 per cent, higher than the
preceding quarter.
2.3.7
CBN Standing Facilities
In the fourth quarter of 2016, banks continued to access the
Standing Facilities window at the CBN to smoothen their
liquidity needs. The trend showed more requests for Standing
Lending Facility (SLF) than the Standing Deposit Facility (SDF) in
the review period. Applicable rates for the SLF and SDF stood
at 16.00 per cent and 9.00 per cent, respectively.
Total request for SLF (including the Intra-day lending facilities
(ILF) converted to overnight repo) in the review quarter
amounted to N13,007.35 billion with interest income of N9.97
billion, compared with SLF of N11,864.66 billion and interest
income of N9.28 billion in the preceding quarter. Penal rate of
an additional 500 basis points was charged on institutions that
failed to redeem their lending as at when due.
Total SDF granted during the review period was N2,958.22
billion with a daily average of N20.14 billion, compared with N
2,576.79 billion in the third quarter of 2016. The interest
payment on SDF in the fourth quarter stood at N1.05 billion,
compared with N0.95 billion in the preceding quarter.
2.4
Deposit Money Banks’ Activities
The total assets and liabilities of the commercial banks stood
at N31,682.82 billion at the end of the fourth quarter of 2016,
representing a decrease of 0.3 per cent below the level at the
end of the third quarter of 2016. The funds were sourced,
mainly, from mobilisation of time, savings and foreign currency
deposits as well as demand deposits. They were used to
extend credit to the Central Government, raise the stock of
reserves, reduce unclassified and foreign liabilities and
Subscription for FGN
Bonds of various
maturities were reopened during the
fourth quarter of
2016.


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Economic Report Fourth Quarter

unclassified liabilities. At N21,450.30 billion, banks‟ credit to the
domestic economy, fell by 0.2 per cent, relative to the level at
end-September 2016. The development was attributed to the
decrease in claims on the private sector, in the review quarter.
Central Bank‟s credit to the commercial banks rose by 16.0
per cent to N992.27 billion, at the end of the review quarter.
Total specified liquid assets of the banks stood at N7,061.34
billion, representing 37.6 per cent of their total current
liabilities. At that level, the liquidity ratio expanded by 0.6
percentage point above the level at the end of the
preceding quarter and was 7.6 percentage points above the
stipulated minimum ratio of 30.0 per cent. The loans-to-deposit
ratio, at 79.95 per cent, was 1.1 percentage points, below the
level at the end of the preceding quarter and 0.05
percentage point below the prescribed maximum of 80.0 per
cent.
2.5
Capital Market Developments
2.5.1
Secondary Market
The challenging economic environment, including declining
output (Gross Domestic Product), demand-supply imbalance
of foreign exchange and rising inflation continued to weaken
the performance of the capital market. Consequently, despite
the intensification of market recovery efforts by capital market
regulators, available data indicated bearish developments on
the Nigerian Stock Exchange (NSE) in the review period. The
aggregate volume and value of traded securities fell by 17.2
per cent and 25.5 per cent to 15.3 billion shares and N112.8
billion, respectively, in 166,841 deals, compared with 18.5
billion shares valued at N151.4 billion in 214,694 deals,
recorded in the third quarter of 2016. The Financial Services
Sector (measured by volume) led the activity chart with 11.6
billion shares valued at N46.5 billion, traded in 93,011 deals,
compared with 15.5 billion shares worth N83.1 billion, traded in
124,198 deals, in the preceding quarter. Traded securities in
the financial services sector accounted for 76.0 per cent and
41.3 per cent of the total equity turnover volume and value,
respectively, in the review period. Provisional data also
indicated that the Banking sub-sector was the most active
(measured by volume) with 2.3 billion shares valued at N12.2
billion traded in 25,550 deals, compared with 7.6 billion shares
Liquidity ratio in Q4
was
above
the
stipulated minimum,
while the Loan-todeposit ratio was
below
the
prescribed
maximum.


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Economic Report Fourth Quarter

worth N59.1 billion, traded in 71,002 deals in the third quarter
of 2016.
There were no Over-the-Counter (OTC) transactions in the
review month.
Figure 4: Volume and Value of Traded Securities

Table 3: Traded Securities on the Nigerian Stock Exchange (NSE)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Volume (Billion)


18.5
15.3
Value (N Billion)


2.5.2
New Issues Market/Supplementary Listings
There were one new and two supplementary equity listings
in the review period.
Table 4: New and Supplementary Listing on the Nigerian Stock Exchange
S/N Company
Additional Shares (Units)
Reasons
Listing

The Initiates Plc
889,981,552 Ordinary Shares
Introduction
New

Lafarge Africa Plc.
413,175,709 ordinary shares
acquisition of indirect shares of UCC Ltd
supplementary

Lafarge Africa Plc.
41,317,570 ordinary shares
Bonus issue accruable to Holcibel S.A.
supplementary


A total of 13,305,279,997 units at N1.00 per unit of ARM Money
Market Fund under memorandum listing was admitted by
introduction on the Daily Official List of the Exchange on the
28th of November, 2016. Effective from December 1, 2016, six
(6) companies, including Lennards (Nigeria) Plc, P.S Mandrides
& Company Plc, Premier Breweries Plc, Costain (W.A) Plc,

Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Value (N billion)
Volume (Billion)
Volume of traded securities (LHS)
Value of securities (RHS)


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Economic Report Fourth Quarter

Navitus Energy Plc, and Nigerian Ropes Plc, were delisted from
the Daily Official List of The Exchange.

In addition, following the completion of the Year-End Review
of the NSE 30 and the sectoral Indices, there were changes in
the composition of companies for three indices, including the
NSE-30, NSE-Insurance and NSE-Pension, while no change was
made in respect of the other sectoral indices.

2.5.3
Market Capitalisation
Despite some notable improvements in the last two weeks of
the quarter, loss of value across the different asset classes
manifested due, largely, to sell pressure by anxious foreign
and local investors. Consequently, the aggregate market
capitalisation for all listed securities (Equities and Debts) fell by
1.2 per cent to N16.2 trillion at end-December, 2016 from
N16.4 trillion at the end of the third quarter of 2016. Similarly,
market capitalisation for the equity segment fell by 4.7 per
cent to N9.3 trillion and constituted 57.2 per cent of the
aggregate market capitalisation, compared with N9.7 trillion
and 59.3 per cent at end-September 2016.

2.5.4 NSE All-Share Index
The persistent lull in the market negatively impacted on the
performance of quoted stocks on the Nigeria Stock Exchange
in the review period. The All-Share Index, which opened at
28,335.40 at the beginning of the quarter, closed at 26,874.62,
representing a decrease of 4.7 per cent below the level in the
preceding quarter. Similarly, available data indicated that the
sectoral indices generally trended downward in the review
period. The NSE Industrial Goods index, at 1,595.33 at endDecember 2016, recorded a significant decline of 13.03 per
cent below the level at the beginning of the quarter. The NSEOil and Gas, NSE-Consumer Goods, NSE-Premium, NSE-Lotus
Islamic, NSE-Pension, NSE-Insurance, NSE-ASeM and NSEBanking indices fell by 6.9 per cent, 5.9 per cent, 4.3 per cent,
3.8 per cent, 3.5 per cent, 2.5 per cent, 2.0 per cent and 0.2
per cent to 312.68, 712.65, 1,695.51, 1,841.59, 810.04, 126.29,
1,189.69 and 274.32, respectively, at end-December 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Figure 5: Market Capitalization and All-Share Index


Table 5: Market Capitalization and All Share Index (NSE)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Market Capitalization (N trillion)

All-Share Index (Equities)
34,657.15

31,744.82

33,456.86

31,217.77

26,871.24

27,385.69

29,597.79

28,335.40

26,874.62


15.5

16.5

17.5
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Index
N billion
Market Capitalization (LHS)
All-Share Index (RHS)


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

3.0
Fiscal Operations
3.1
Federation Account Operations
Federally-collected revenue in the fourth quarter of 2016, at
N1,434.49 billion, was lower than the quarterly budget2
estimate of N2,378.12 billion by 39.7 per cent. It was also below
the receipts in the preceding quarter by 22.4 per cent. The
decline in federally-collected revenue (gross) relative to the
proportionate quarterly budget estimate was attributed to the
shortfall in both oil and non-oil revenue during the review
quarter (Fig. 6, Table 6).
Figure 6: Components of Gross Federally Collected Revenue

Table 6: Gross Federation Account Revenue (N billion)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Federally-collected revenue (Gross)

Oil Revenue

Non-Oil Revenue


Gross oil receipts, at N673.10 billion or 46.9 per cent of the total
revenue, was lower than the quarterly budget estimate by
23.8 per cent. It was also lower than the receipts in the third
quarter of 2016 by 17.7 per cent. The decline in oil revenue
relative to the quarterly budget estimate was attributed to the

2 Quarterly Budget is arrived at by prorating the Annual budget into four equal proportions.

Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Oil Revenue Gross
Non-Oil Revenue
Gross federally -
collected revenue
fell by 22.4 per
cent below the
level in the third
quarter of 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

shortfall in receipts from crude oil/gas export, owing to the
drop in the price of crude oil in the international market and
low domestic production due to the shut-ins and shut-downs
at some NNPC terminals, arising from vandalism of oil
infrastructure in the Niger Delta region (Fig. 7, Table 7).

Figure 7: Gross Oil Revenue and Its Components

Table 7: Components of Gross Oil Revenue (N billion)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Oil Revenue Gross

Crude oil/Gas Sales

PPT/Royalties

Others

Non-oil receipts (gross), at N761.39 billion or 53.1 per cent of
total revenue, fell below the quarterly budget estimate and
the level in the third quarter of 2016 by 49.1 per cent and 26.2
per cent, respectively. The shortfall in non-oil revenue relative
to the quarterly budget estimate was due, largely, to the
decline in all components of non-oil revenue except Customs
Special Levies (Federation Account component), during the
review quarter (Fig. 8, Table 8).
-


Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
N billion
Others
PPT/Royalties
Crude oil/Gas Sales


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Figure 8: Gross Non-Oil Revenue and its Components

Table 8: Components of Gross Non-Oil Revenue (N Billion)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Non-Oil Revenue

Value-Added Tax (VAT)

Companies Income Tax & Other Taxes

Customs & Excise Duties

Others/1

1/ Include FGN Independent Revenue, Education Tax, NITDF & Customs Federation/Non-Federation
Account Levies (Port, Sugar, ETLS, Steel, CISS & Cement Levies)
A net sum of N638.69 billion was retained in the Federation
Account after the statutory deductions and transfers of
N386.13 billion and N409.66 billion, respectively, from the gross
federally-collected revenue. This amount was distributed
among the three tiers of government and the 13.0% Derivation
Fund as follows: Federal Government, N314.92 billion; States,
N159.73 billion; and local governments, N123.15 billion. The
balance of N40.89 billion was allocated to the 13.0%
Derivation Fund for distribution among the oil-producing
states. In addition, the Federal Government received N30.16
billion from the VAT Pool Account, while the state and local
governments received N100.54 billion and N70.38 billion,
respectively.
The sum of N117.57 billion was also distributed as Exchange
Gain among the three tiers of government and the 13%
Derivation Fund as follows: Federal Government (N55.18
-

1,000
1,200
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
N billion
Others
Customs & Excise Duties
Companies Income Tax & Other Taxes
Value-Added Tax (VAT)
The
sum
of
N638.69
billion
out of the gross
federally collected
revenue
was
distributed among
the three tiers of
government
and
13.0% Derivation
Fund
for
oil
producing states.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

billion);
State
Governments
(N27.99
billion);
Local
Governments (N21.58 billion) and 13% Derivation Fund (N12.82
billion). Similarly, the sum of N238.49 billion was drawn-down in
the quarter from the Excess Crude Account for distributiuon
among the three tiers of government and 13% Derivation Fund
as follows: Federal Government; N109.31 billion, state
governments, N55.44 billion and local governments received
N42.74 billion, while the balance of N31.00 billion was
distributed among the oil-producing states as 13% Derivation
Fund.
Furthermore, the sum of N18.99 billion was received by the
Federal Government being refund of indebtedness by the
NNPC to the Federal Government in the fourth quarter of
2016.
Thus, the total statutory and VAT revenue allocation to the
three tiers of government in the fourth quarter of 2016
amounted to N1,214.84 billion, compared with the quarterly
budget estimate of N1,485.70 billion and N1,484.71 billion
received in the third quarter of 2016.
3.2
The Fiscal Operations of the Three Tiers of
Government

3.2.1
The Federal Government

Provisional data indicated that the Federal Government
retained revenue for the fourth quarter of 2016 amounted to
N647.83 billion. This was below the quarterly budget estimate
and receipts in the preceding quarter by 36.0 per cent and
32.2 per cent, respectively. Of the total revenue, Federation
Account share was for 48.6 per cent, while Federal
Government Independent Revenue, Excess Crude, Exchange
Gain, VAT, and NNPC Refund accounted for 18.4, 16.9, 8.5, 4.7
and 2.9 per cent, respectively (Fig. 9, Table 9).


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Figure 9: Federal Government Retained Revenue

Table 9: Federal Government Fiscal Operations (N Billion)
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Retained Revenue

Expenditure

Overall Balance: Surplus(+)/Deficit(-)


At N1,314.87 billion, the estimated Federal Government
expenditure for the fourth quarter of 2016 was lower than the
quarterly budget estimate of N1,567.93 billion by 16.1 per cent.
It was also lower than the level in the preceding quarter by 2.8
per cent. The development relative to the quarterly budget
estimate was attributed, mainly, to the decrease in capital
expenditure in the review period. A breakdown of the total
expenditure
showed
that
the
recurrent
component
accounted for 86.9 per cent, while capital and statutory
transfers accounted for 6.4 and 6.7 per cent, repectively (Fig.
5). A further breakdown of the recurrent expenditure showed
that the non-debt component accounted for 58.2 per cent,
while debt service payments accounted for the balance of
41.8 per cent.
The fiscal operations of the Federal Government resulted in a
deficit of N667.1 billion, which was 1.6 per cent higher than the
quarterly budget deficit of N555.49 billion.
Federation
Account
48.6%
VAT Pool
Account
4.7%
FGN
Independent
Revenue
18.4%
Excess Crude
16.9%
NNPC Refund
2.9%
Exchange Gain
8.5%
Fiscal
operations
of the FG resulted
in an estimated
deficit of N667.1
billion in Q4 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Figure 10: Federal Government Expenditure

3.2.2
Statutory Allocations to State Governments

Total allocation to state governments from the Federation
Account, including 13.0% Derivation Fund and the VAT Pool
Account stood at N428.42 billion during the review quarter.
This was lower than the quarterly budget estimate and the
level in the preceding quarter by 17.7 per cent and 13.3 per
cent, respectively. A breakdown showed that receipts from
the Federation Account was N327.88 billion (76.5 per cent),
while VAT contributed N100.54 billion (23.5 per cent). The share
of Federation Account was lower than the budget estimate
by 4.5 per cent. Similarly, receipts from the VAT Pool Account
was also below the budget estimate by 43.2 per cent.
3.2.3
Statutory Allocations to Local Government Councils

Provisional allocations to local governments
from the
Federation and VAT Pool Accounts in the fourth quarter of
2016 was N257.85 billion. This was below the quarterly budget
estimate and the level in the preceeding quarter by 25.4 per
cent and 18.2 per cent, respectively. Of the total amount,
allocation from the Federation Account was N187.47 billion
(72.7 per cent), while VAT Pool Account accounted for the
balance of N70.38 billion (27.3 per cent).


Recurrent,
86.9%
Capital,
6.4%
Transfers,
6.7%


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

4.0
Domestic Economic Conditions
Activities in the agrcultural sector during the fourth quarter of 2016
was dominated by the harvest of tubers, fruits and pre-planting
operations in preparation for dry season planting. Livestock farmers
were involved in the fattening of cattle and stocking of broilers in
anticipation of the end of year sales. Crude oil production was
estimated at 1.54 million barrels per day (mbd) or 141.68 million
barrels, for the quarter. End-period inflation rate for the fourth quarter
of 2016, on year-on-year and 12-month moving average basis, were
18.6 per cent and 15.7 per cent, respectively.
4.1
Agricultural Sector
Agricultural activities during the fourth quarter of 2016 were
dominated by harvesting of crops. In the Southern part of the
country, farming activities centered on harvesting of tubers,
fruits and vegetables, while farmers in the Northern part
engaged in the harvesting of late maturing grains, and preplanting operations in preparation for dry season planting. In
the livestock sub-sector, farmers engaged in the fattening of
cattle and stocking of broilers in anticipation of the end of
year sales.
4.2
Agricultural Credit Guarantee Scheme
In terms of credit to the farmers, a total of N2,325.0 million
was guaranteed to 16,923 farmers under the Agricultural
Credit Guarantee Scheme (ACGS) in the fourth quarter
of 2016. The amount represented an increase of 8.3 per
cent above the level in the preceding quarter, but a
decrease of 24.9 per cent below the level in the
corresponding period of 2015. The breakdown by subsectors showed that food crops got the largest share of
N1,511.7 million (65.0 per cent), guaranteed to 11,238
beneficiaries; livestock, N259.0 million (11.1 per cent),
guaranteed to 1,322 beneficiaries; cash crops, N197.4
million (8.5 per cent), guaranteed to 1,430 beneficiaries;
while mixed crop received N173.5 million (7.5 per cent),
guaranteed to 1,705 beneficiaries. The fisheries subsector received N99.2 million (4.3 per cent), guaranteed
to 445 beneficiaries; and „Others‟ received a total of
N84.3 million (3.6 per cent), guaranteed to 783
beneficiaries. Analysis by states showed that 32 states


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

and the Federal Capital Territory benefited from the
Scheme in the review period, with the highest and lowest
sums of N267.2 million (11.5 per cent) and N1.95 million
(0.08 per cent) guaranteed to Benue and Lagos States,
respectively. The four states that did not benefit during
the fourth quarter were Bauchi, Borno, Kogi and Taraba.
As at December 20, 2016, the sum of N393.5 billion was
released to the economy under CACS in respect of 478
projects. This comprised releases from the Receivable
from DMBs Account (N199.831 in respect of 273 projects)
and the Repayment Account N193.628 billion in respect
of 205 new projects (Table 10).


Table 10: Disbursement of Credit Under the Commercial Agriculture Credit Scheme (CACS)
S/N
Participating Banks
Amt Disbursed (N billion)
Number of Projects/State Governments

Access Bank Plc
19.63

Citibank Plc
3.00

Diamond Bank Plc
4.73

ECOBANK
6.38

FCMB Plc.
11.37

Fidelity Bank Plc
15.91

First Bank of Nigeria Plc
41.89

GTBank Plc
25.70

Heritage Bank Plc
6.81

Keystone Bank
3.55

Jaiz Bank Plc
1.00

Skye Bank Plc
11.77

Stanbic IBTC Bank
23.41

Sterling Bank Plc
29.68

Union Bank Nigeria PLC
22.91

United Bank for Africa (UBA) Plc
59.76

Unity Bank Plc
24.33

Wema Bank
1.82

Zenith Bank
79.84

TOTAL
393.5

C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

4.3
Industrial Production
Persistent supply-demand imbalance in the foreign exchange
market, subdued demand and high cost of raw materials,
continued to adversely impact on business confidence and
business transactions in the review period. However, the
performance of the Industrial Sector during the review period
was slightly better than in the previous quarter.
At 108.4 (2010=100), the estimated index of industrial
production rose marginally by 0.01 per cent, compared with
the level in the preceding quarter, but declined by 1.1 per
cent below the level in the corresponding period of 2015. The
marginal increase was attributed to improved performance in
the manufacturing and mining subsectors, while the electricity
subsector showed a marginal decrease.
The estimated index of manufacturing production in the fourth
quarter of 2016, at 186.7 (2010=100), showed a marginal
increase of 0.02 per cent, compared with the preceding
quarter, but decreased by 0.01 per cent relative to the
corresponding period of 2015. Capacity utilisation remained
at 48.46 per cent. Although the problems of erratic power
supply and foreign exchange challenges continued to impact
negatively on manufacturing activities, efforts to meet
outstanding demand led to a slight increase in the sub-index
(Fig.11).
Figure11: Manufacturing Capacity Utilization Rate


Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Percent
Industrial activities
slighly rose in the
review quarter due to
increased activities in
all sub-sectors.
Industrial capacity
utilization
remained at 48.46
percentage points
during the review
quarter.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

At 76.7 (1990=100), the estimated index of mining production
in the fourth quarter of 2016 rose by 0.2 per cent, compared
with
the
levels
in
the
preceding
quarter
and
the
corresponding period of 2015, respectively. The increase in
mining production during the review quarter was majorly
attributed to a rise in crude oil and gas production.
The estimated average electricity generation in the fourth
quarter of 2016 at 3,200.3 MW/h, fell by 3.2 per cent,
compared with the level in the preceding quarter. Decreased
generation from the various hydro power plants in the country
accounted for the fall in electricity supply during the review
period.
Average estimated electricity consumed, at 2,785 MW/h, also
fell by 2.4 per cent, compared with the level attained in the
preceding quarter. The decrease in electricity consumption
was attributed to the decrease in generation (Fig. 12, Table
11).
Figure 12: Index of Industrial Production (2010=100) 3

Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
Index
Mining
All Sectors
Manufacturing


3 Index measurement at (2010=100) from first quarter15
Average electricity
generation and
consumption fell
during the review
quarter.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Table 11: Index of Industrial Production and Manufacturing Capacity Utilization Rate
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
All Sectors (1990=100)

Manufacturing

Mining


62.7
76.7
Capacity Utilization (%)


4.4
Petroleum Sector
Nigeria‟s crude oil production, including condensates and
natural gas liquids, averaged 1.54 mbd or 141.68 million barrels
(mb) in the review quarter. This represented an increase of
0.06 mbd or 4.3 per cent, compared with 1.48 mbd or 136.16
mb recorded in the preceeding quarter.
Crude oil export stood at 1.09 mbd or 100.28 mb, representing
an increase of 6.2 per cent, compared with 1.03 mbd or 94.76
mb recorded in the preceding quarter. The development
relative to the preceding quarter‟s level was due to reduced
militancy activities in the Niger Delta region. Allocation of
crude oil for domestic consumption was 0.45 mbd or 41.40
million barrels in the review quarter.
Oil prices surged in the review period after the historic joint
OPEC and non-OPEC decision to cut production. The
development led to a 5.3 per cent increase in the price of
Nigeria‟s reference crude, the Bonny Light (37o API), to
US$49.84 per barrel in the review quarter above an estimated
average of US$47.33 per barrel in the preceding quarter. The
average prices of other competing crudes, namely the UK
Brent at US$48.53/b, the WTI at US$49.37/b and the Forcados
at US$49.30/b, exhibited a similar trend as the Bonny Light.
The average price of OPEC basket of eleven selected crude
streams was US$47.52/b in the fourth quarter of 2016,
indicating a 10.9 per cent increase above the level in the
preceding quarter (Fig. 13, Table 12).
Crude oil and natural
gas production
increased in the
fourth quarter of
2016.
Crude oil export
increased in Q4
2016.
Average crude oil
prices, including
Nigeria’s Bonny
Light (37o API) rose
in the international
crude oil market in
Q4 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Figure13: Trends in Crude Oil Prices

Table 12: Average Crude Oil Prices in the International Oil Market
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Bonny Light

OPEC Basket


4.5
Consumer Prices4
Headwinds arising from foreign exchange rate pass-through
remained a dominant source of upward pressure on the price
level during the review period. The all-items composite
Consumer Price Index (CPI), at end-December 2016, was
213.6 (November 2009=100), representing an increase of 1.1
per cent and 18.6 per cent, above the levels in the third
quarter of 2016 and the corresponding quarter of 2015,
respectively. The development was driven, largely, by the
increase in the prices of food and non-alcoholic beverages;
housing, water, electricity, gas and other fuel; clothing and
footwear;
transport;
education;
furnishing,
household
equipment and maintenance; and health.

4 New CPI with November 2009 = 100 as base and new weight based on the 2003/2004 Nigeria
Living Standard Survey (NLSS) was released by the National Bureau of Statistics (NBS) ON 18TH
October 2010.

Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
US$ per barrel
Bonny Light
OPEC Basket
The general price
level rose in Q4,
compared with the
level in the third
quarterof 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

The urban all-items CPI at the end of the fourth quarter of 2016
was 215.3 (November 2009=100), indicating an increase of 2.7
and 20.1 per cent, above the levels in the third quarter of 2016
and the corresponding period of 2015, respectively. Similarly,
the rural all-items CPI, at 212.2 (November 2009=100),
represented increase of 2.7 per cent and 17.2 per cent above
the levels at end-September 2016 and the corresponding
period of 2015, respectively (Fig. 14, Table 13).
The composite food index (with a weight of 50.7 per cent) was
218.6 per cent, representing an increase of 3.1 per cent,
compared with the 212.0 per cent at the end of the
preceding quarter. The development was attributed to the
increase in the prices of farm produce (vegetables, yam,
potatoes, and other tubers, rice, millet, and fruits) and
processed food.
Figure 14: Consumer Price Index


Table 13: Consumer Price Index (November 2009=100)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Composite


213.6
Urban

Rural


157.5

162.5

167.5

172.5

177.5

182.5

187.5

192.5

197.5

202.5

207.5

212.5

217.5

Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Index
Composite
Urban
Rural


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

The inflation rate at the end of the review quarter, on a yearon-year basis, was 18.6 per cent, compared with 17.9 and 9.6
per cent in the third quarter of 2016 and the corresponding
period of 2015, respectively. On a twelve-month moving
average basis, the inflation rate was 15.7 per cent, indicating
a 2.2 percentage points increase, above the level in the
preceding quarter (Fig. 15, Table 14).
Figure 15: Inflation Rate


Table 14: Headline Inflation Rate (%)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
12-Month Moving Average

Year-on-Year


Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Percent
12-Month Average
Year-on-Year
The headline
inflation (y-o-y)
stood at 18.6 per
cent in Q4 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

5.0
External Sector Developments
The persisitent downside risks on the current account due to the
umimpressive performance of both the domestic oil production and
crude oil prices int the global oil market contivued to weaken the
external sector in the review quarter.This development led to the
decline in foreign exchange flows through the economy. Provisional
data showed that foreign exchange inflow through the CBN in the
fourth quarter of 2016, increased by 18.3 per cent above the level in
the preceding quarter, while outflow declined by 32.9 per cent.
Total non-oil export receipts rose by 127.9 per cent, relative to the
level in the preceding quarter. The average exchange rate at the
inter-bank segment was N305.21/US$, compared with N303.16/US$
at end-September 2016. At US$26.99 billion, the gross external
reserves rose by 13.4 per cent, compared with the level at the end
of the third quarter of 2016.
5.1
Foreign Exchange Flows
The persisitent downside risks on the current account due to
the umimpressive performance of both the domestic oil
production and crude oil prices int the global oil market
contivued to weaken the external sector in the review quarter.
Provisional data showed that foreign exchange inflow and
ouflow through the CBN in the fourth quarter of 2016 were
US$6.64 billion and US$5.31 billion, respectively. This resulted in
a net inflow of US$1.33 billion, in contrast to the net outflow of
US$2.29 billion in the preceding quarter. Relative to the level at
end-september 2016, inflow through the Bank rose by 18.3 per
cent, but it fell by 7.0 per cent relative to the corresponding
period of 2015. The outflow of foreign exchange through the
CBN declined to US$5.31 billion, against US$7.91 billion and
US$7.76 billion in the preceding quarter and the corresponding
period of 2015, respectively. The development reflected the
reduction in foreign exchange forwards, interbank sales, and
other official payments (Fig.16, Table 15).


Foreign exchange
inflow through the
CBN rose by 18.3 per
cent, but outflow fell
by 32.9 percent. This
resulted in a net
inflow of US$1.33
billion in Q4 of 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Figure 16: Foreign Exchange Flows Through the CBN


Table 15: Foreign Exchange Flows Through the CBN (US$ million)
Q4-14
Q1-15
Q2-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Inflow
8,307.23

6,976.02

11,111.00

7,135.41

3,942.89

5,875.18

5,613.01

6,637.94

Outflow
12,875.77

8,194.56

9,523.32

7,757.49

4,487.05

6,023.10

7,912.02

4,649.85

Netflow
(4,568.54)

(1,218.54)

1,587.68

(622.08)

(544.16)

(147.92)

(2,299.01)

1,988.09


Provisonal data on aggregate foreign exchange inflow into
the economy indicated that total inflow was US$16.43 billion.
This represented a decline of 3.8 per cent and 19.1 per cent
below the levels at the end of the third quarter of 2016 and
the
corresponding
period
of
2015,
respectively.
The
development was attributed to the fall in oil and autonomous
receipts. Oil sector receipts, which accounted for 11.4 per
cent of the total, stood at US$1.87 billion, compared with
US$3.55 billion and US$3.99 billion, in the third quarter of 2016
and the corresponding period of 2015, respectively.
Non-oil public sector inflow, at US$4.77 billion (29.0 per cent of
the total), increased by 131.5 per cent and 51.5 per cent
above the levels at the end of the third quarter and the
corresponding period of 2015, respectively. Autonomous
inflow, which accounted for 59.6 per cent of the total,
decreased by 14.6 per cent, compared with the level in the
preceding quarter of 2016.
At US$5.31 billion, aggregate foreign exchange outflow from
the economy fell by 37.6 per cent and 38.4 per cent below
the levels in the preceding quarter and the corresponding
Autonomous inflow
into the economy
fell by 19.1 per cent
in Q4 2016 .
-10,000
-5,000


Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
US$ million
Inflow
Outflow
Netflow


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

period of 2015, respectively. The development was attributed,
mainly, to the 77.5 per cent and 83.9 per cent decline in
foreign exchange forwards and inter-bank sales, respectively.
Consequently, foreign exchange flows through the economy
resulted in a net inflow of US$11.12 billion in the review quarter,
compared with US$8.56 billion and US$11.67 billion in the third
quarter of 2016 and at end-December 2015, respectively.
5.2
Non-Oil Export Earnings by Exporters
Provisional data showed that non-oil export receipts by banks
in the fourth quarter of 2016 stood at US$1.14 billion, indicating
an increase of 127.9 per cent and 366.7 per cent above the
levels in the third quarter and the corresponding period of
2015. The development was arributed to the 991.1 and 16.3
per cent increase in manufactured products and industrial
sub-sector, respectively. A further analysis showed that
proceeds
from
food
products,
transport
sub-sector,
agricultural sub-sector and minerals decreased by 42.4 per
cent, 42.6 per cent, 53.5 per cent, and 0.3 per cent to
US$19.02 million, US$0.07 million, US$68.29 million and US$183.70
million, respectively, from their levels in third quarter of 2016.
The percentage shares of manufacturing, minerals, industrial,
agricultural, food products and transport sub-sectors in total
non-oil export proceeds were 67.6 per cent, 16.1 per cent, 6.7
per cent, 6.0 per cent, 1.7 per cent and 0.01 per cent,
respectively.
5.3
Sectoral Utilisation of Foreign Exchange

The sectoral utilisation of foreign exchange in the fourth
quarter of 2016 decreased by 54.6 per cent to US$4.58 billion,
compared with the level in third quarter of 2016. Of this, visible
imports, representing 74.5 per cent of the total foreign
exchange utilisation, shrunk by 49.6 per cent to US$3.41 billion.
The industial sub-sector, which accounted for the bulk (29.1
per cent), of total foreign exchange disbursed in the fourth
quarter of 2016, declined by 38.6 per cent relative to the
preceding quarter‟s level of US$2.17 billion. This was followed
by the minerals and oil sub-sector (26.7 per cent). The
contributions of the other sectors in a descending order were:
invisible imports (25.5 per cent), manufactured products (8.1
.
The industrial subsector accounted
for the bulk of the
total foreign
exchange disbursed
during Q4 2016.
Total non-oil export
earnings by
exporters rose
during the fourth
quarter of 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

per cent), food products (6.9 per cent), agricultural products
(2.2 per cent) and transport sector (1.5 per cent) (Fig.17).
Figure17: Sectoral Utilisation of Foreign Exchange

5.4
Foreign Exchange Market Developments5
In the fourth quarter of 2016, the cumulative sales of foreign
exchange by the Bank was US$2.90 billion, a decrease of 45.3
per cent and 58.6 per cent, relative to the levels in third
quarter of 2016 and the corresponding period of 2015,
respectively. This was as a result of reduced matured foreign
exchange forwards contracts and interbank sales in the
review period. Of the total, swap contracts disbursed at
maturity were valued at US$1.96 billion or 67.4 per cent,
matured forwards contracts at US$0.80 billion or 27.5 per cent
and interbank sales amounted to US$104.26 million or 3.6 per
cent. The balance was accounted for by BDC sales valued at
US$0.04 million or 1.5 per cent of the total supply of foreign
exchange in the review period (Fig. 18, Table 16).


5 Market Closed (MC) - wDAS and rDAS window was closed in February 2015


Percent of Total
Q2-16
Q3-16
Q4-16
Supply for foreign
exchange by
authorized dealers
fell during Q4 2016.


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Economic Report Fourth Quarter

Figure 18: Supply of Foreign Exchange


Table 16: Demand for and Supply of Foreign Exchange (US$ billion)
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Forex Sales at rDAS/Interbank

Supply of Swaps

Supply of Forex to BDC

Total Forex Supply(BDC and rDAS)


Scarcity of dollar in the foreign exchange market and the
economy contributed to the depreciation of naira in the
fourth quarter of 2016. At the interbank segment of the foreign
exchange market, the exchange rate of the naira per US
dollar averaged N305.21/US$, a depreciation of 0.7 per cent
and 35.5 per cent, relative to the levels in the preceding
quarter and the corresponding period of 2015, respectively.
At the BDC segment, the exchange rate of the naira per US
dollar averaged N445.03/US$, a depreciation of 10.7 per cent
and 46.3 per cent relative to the levels in the preceding
quarter and the corresponding period of 2015, respectively
(Fig. 19, Table 17).

Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
US$ billion
Forex Sales at rDAS/Interbank
Supply of Swaps
Supply of Forex to BDC
Total Forex Supply
The average naira
exchange rate vis-àvis the US dollar was
N305.21/US$ at the
interbank segment in
Q4 2016.


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Economic Report Fourth Quarter

Figure 19: Average Exchange Rate Movements

Table 17: Exchange Rate Movements and Exchange Rate Premium
Average Exchange Rate (N/US$)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
rDAS
162.33
169.68
N/A
N/A
N/A
N/A
N/A
N/A
N/A
BDC

Interbank

Premium (%)
rDAS/BDC
9.8
23.5
N/A
N/A
N/A
N/A
N/A
N/A
N/A
rDAS/Interbank
6.1
12.6
N/A
N/A
N/A
N/A
N/A
N/A
N/A
BDC/Interbank


Figure 20: Exchange Rate Premium


5.5
Gross Official External Reserves
Following the increase in other official receipts, the
unadjusted foreign exchange reserves rose from US$23.81
billion at end-September 2016 to US$26.99 billion at endDecember 2016. However, it declined by US$1.30 billion when
compared with the level at end-December 2015. The external
reserves would cover 10.3 months of imports for goods only,

Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q4-16
N/US $
Average BDC
Average Interbank

Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Per cent
Interbank/BDC
Interbank/BDC
Gross external
reserves increased
during the fourth
quarter of 2016.


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

and 7.4 months for goods and services. A breakdown of
external reserves by ownership showed that Federation
reserves was US$2.63 billion (9.7%); Federal Government
reserves, US$8.84 billion (32.8%), and the CBN reserves,
US$15.52 billion (57.5%) of the total (Fig. 21, Table 18).

Figure 21: Gross Official External Reserves


Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
US$ million

Table 18: Gross Official External Reserves (US$ million)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
External Reserves
34,241.5

29,357.2

28,335.2

29,880.2

28,284.8

27,336.4

26,505.4

23,806.5

26,986.2


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Economic Report Fourth Quarter

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Economic Report Fourth Quarter

6.0 Global Economic Conditions
6.1 Global Inflation
Global inflation continued to rise, due, mainly, to higher
commodities prices, though cost of global raw materials
remained low, as commodities markets remained
oversupplied. Disinflationary pressures were still strong in a
number of advanced economies. Against this backdrop,
most
central
banks
sustained
the
largely
accommodative monetary policy stance. Consequently,
global inflation was expected to rise marginally to 2.4 per
cent in 2017 and projected to rise slowly going forward
as the effects of past falls in oil and other commodity
prices continue to diminish, lessening the drag on
headline inflation.
6.2 Global Commodity Demand and Prices
World crude oil demand was estimated at 95.4 mbd in the
fourth quarter of 2016, representing an increase of 0.2 per
cent, compared with the 95.2 mbd recorded in the
preceding quarter. World crude oil supply in the review
quarter was estimated at 96.9 mbd, representing an increase
of 1.3 per cent over the level in the preceding quarter.
The price of OPEC Reference Basket (ORB) in December 2016,
was US$47.52. This represented an increase of 10.9 per cent
over the level in the preceding quarter. The development was
attributed
to
positive
sentiments
arising
from
possible
cooperation between OPEC and non-OPEC suppliers towards
stabilising the market.
6.3 International Financial Markets
Developments in the international stock markets were mixed
during the review period. In Africa, the South African JSE AllShare and Egyptian EGX CASE 30 rose by 2.5 and 12.5 per
cent, respectively, while the Nigerian NSE All-Share, Kenyan
Nairobi NSE 20 and Ghanaian GSE ASI indices fell by 6.2, 19.7
and 11.0 per cent, respectively in the review period. In North
America, the United States S&P 500, Canadian S&P/TSX
Composite and the Mexican Bolsa indices increased by 6.1,
13.2 and 9.9 per cent, respectively. In South America, the


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Economic Report Fourth Quarter

Brazilian Bovespa, Argentine Merval and Colombian COLCAP
indices fell by 34.6, 42.8 and 16.0 per cent, respectively.
In Europe, the FTSE 100 and MICEX indices rose by 10.5 and
12.3 per cent, respectively, while the CAC 40 and DAX fell by
4.1 and 2.2 per cent, respectively. In Asia, the India‟s BSE
Sensex index rose by 6.7 per cent while the Japan‟s Nikkei 225
and China‟s Shanghai Stock Exchange-A indices fell by 13.6
and 15.1 per cent, respectively.
Developments in the international foreign exchange
market were mixed in the review period. In Europe, the
Russian ruble appreciated against the dollar, while the
euro and British pound depreciated against the dollar. In
North America, the Canadian dollar and Mexican peso
depreciated against the U.S. dollar by 2.24 and 6.46 per
cent, respectively. Moreover, in South America, the
Brazilian real remained stable, reflecting improved
economic stability and gradual lifting from the long-term
recession that engulfed it. The Argentine peso and
Colombian peso depreciated against the U.S. dollar by
3.59, and 4.02 per cent, respectively. In Africa, the
Nigerian naira appreciated against the U.S. dollar by 0.08
per cent, while the South African rand, Kenyan shilling,
Egyptian pound and Ghanaian cedi depreciated
against the U.S. dollar by 0.15, 1.21, 51.05 and 7.31 per
cent, respectively. In Asia, the Japanese Yen, Chinese Yuan
and Indian Rupee depreciated against the U.S. dollar by
13.35, 3.88 and 1.91 per cent, respectively.
6.4 Other International Economic Developments and
Meetings
Other major international economic developments and
meetings of importance to the domestic economy during the
review period included: the 2016 Annual Meetings of the
Board of Governors of the World Bank Group (WBG), the
International Monetary Fund (IMF) and the side lines meetings
of the Inter-Governmental Group of Twenty-Four (G-24) on
International Monetary Affairs and Developments held in
Washington D. C., USA from October 3 – 9, 2016. The highlights
of the meeting were:


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

The
G24
Ministers
expressed
concern
over
the
prolonged weakness in global recovery and increasing
levels of inequality;

The G24 Ministers continued their call on the IMF, World
Bank
Group
and global
financial
regulators
to
strengthen
their
work
toward
finding
concrete
solutuions to address the decline of correspondent
banking relationshiops (CBR);

The IMFC reinforced their commitment to a strong,
sustainable, inclusive, job-rich and balanced growth.
They encouraged countries hit hard by a persistent
decline in their terms of trade t proceed with their
policy adjustment.
The West African Monetary Zone (WAMZ) 8th Trade Ministers‟
Forum was also held in Monrovia, Liberia, at the Boulevard
Palace Hotel from November 2 to 4, 2016. The meeting was
convened by the West African Monetary Institute (WAMI) on
the theme “Opportunities for Development Through Regional
Trade Integration”. The objective of the meeting was to
create a platform for member countries to share experiences
on cross-border trade issues and peer review on the status of
implementation of ECOWAS trade integration commitments
with a view to achieving WAMZ trade integration goals.


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Economic Report Fourth Quarter

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Economic Report Fourth Quarter

APPENDIX TABLES


C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

C e n t r a l B a n k o f N i g e r i a

Economic Report Fourth Quarter

Table A1: Money and Credit Aggregates


1/ Quasi money consist of Time, Savings and Foreign Currency Deposit at Deposit Money Banks excluding Taking from Discount
Houses.

2/ Demand Deposit consist of State, Local and Parastatals Deposits at CBN, State, Local Government and Private Sector Deposits as well
as Demand Deposits of non-financial Public Enterprises at Deposit Money Banks.


Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Domestic Credit (Net)

Claims on Federal Government (Net)

Central Bank (Net)

Banks

Claims on Private Sector

Central Bank

Banks

Claims on Other Private Sector

Central Bank

Banks

Claims on State and Local Government

Central Bank

DMBs

Claims on Non-financial Public Enterprises

Central Bank

DMBs

Foreign Assets (Net)

Central Bank

DMBs and Non Interest Banks

Other Assets (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

Banks' Deposit with CBN

N billion


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Economic Report Fourth Quarter

Table A2: Money and Credit Aggregates (Growth Rates)
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Claims on State and Local Government

Claims on Non-financial Public Enterprises
Foreign Assets (Net)

Other Assets (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/


Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

DMBs Demand Deposit with CBN

Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Claims on State and Local Governments

Claims on Non-financial Public Enterprises
Foreign Asset (Net)

Other Asset (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

DMBs Demand Deposit with CBN

Percentage Change Over Preceding Quarter
Percentage Change Over Preceding December

1/ Quasi money consist of Time, Savings and Foreign Currency Deposit at Deposit Money Banks excluding Taking from Discount Houses.
2/ Demand Deposit consist of State, Local and Parastatals Deposits at CBN, State, Local Government and Private Sector Deposits as well as Demand Deposits of
non-financial Public Enterprises at Deposit Money Banks.


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Economic Report Fourth Quarter

Table A3: Federal Government Fiscal Operations (N billion)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Retained Revenue

Federation Account

VAT Pool Account

FGN Independent Revenue

Excess Crude

Others/SURE-P

Expenditure

Recurrent

Capital

Transfers

Overall Balance: Surplus(+)/Deficit(-)


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