CENTRAL BANK OF NIGERIA
ECONOMIC REPORT


Half Year

i


Central Bank of Nigeria


Economic Report
First Half of 2020


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


Central
Bank
of
Nigeria
Corporate Head Office

Tafawa
Balewa
Way
Central Business District
P.M.B. 0187
Garki, Abuja
Website: www.cbn.gov.ng

Contact Centre
Tel: +234 (0) 700 225 5226
©2020 Central Bank of Nigeria
ISSN 1597-2976


iii


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
GOVERNANCE FRAMEWORK
Members of the Committee of Governors
1 Godwin I. Emefiele, CON
-
Governor (Chairman)
2 Edward L. Adamu
-
Deputy Governor (Corporate Services)
3 Kingsley I. Obiora
-
Deputy Governor (Economic Policy)
4 Aishah N. Ahmad
-
Deputy Governor (Financial System Stability)
5 Folashodun A. Shonubi
-
Deputy Governor (Operations)
6 Alice Karau
-
Secretary to the Board

Members of the Monetary Policy Committee (MPC)

Godwin I. Emefiele, CON

Governor (Chairman)

Edward L. Adamu

Deputy Governor (Corporate Services)

Kingsley I. Obiora

Deputy Governor (Economic Policy)

Aishah N. Ahmad

Deputy Governor (Financial System Stability)

Folashodun A. Shonubi

Deputy Governor (Operations)

Adeola F. Adenikinju

Member

Aliyu R. Sanusi

Member

Robert C. Asogwa

Member

Dahiru H. Balami

Member

Mike I. Obadan

Member

Mahmud Isa-Dutse

Member


Hassan Mahmud

Secretary


iv


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


List of Departmental Directors

Samuel C. Okojere
-
Banking Services

Hassan Bello
-
Banking Supervision

Musibau F. Olatinwo
-
Branch Operations

Aisha A. Balewa
-
Capacity Development Department

Haruna B. Mustafa
-
Consumer Protection

Isaac A. Okorafor
-
Corporate Communications

Alice Karau
-
Corporate Secretariat

Ahmad B. Umar
-
Currency Operations

Yusuf P. Yila

-
Development Finance

Benjamin A. Fakunle

-
Finance

Angela Sere-Ejembi

-
Financial Markets

Kevin N. Amugo
-
Financial Policy and Regulation

Suleyman M. Dabai
-
FSS 2020

Jeremiah Abue
-
Governors

Umma A. Dutse
-
Human Resources

Rakiya S. Mohammed
-
Information Technology

Lydia I. Alfa
-
Internal Audit

Sirajuddin Kofo Salam-Alada
-
Legal Services

Muhammed A. Shehu
-
Medical Services

Mahamud Hassan
-
Monetary Policy

Nkiru E. Asiegbu
-
Other Financial Institutions Supervision

Musa Itiokpa Jimoh
-
Payments System Management

Arinze A. Stanley
-
Procurement and Support Services

Adebiyi M. Adebayo
-
Research

Abba Salihi
-
Reserve Management

Oluwafolakemi J. Fatogbe
-
Risk Management

Oluwakemi Osa-Odigie
-
Security Services

Mohammed M. Tumala
-
Statistics

Clement O. Buhari
-
Strategy Management

Scholastica O. Nnaji
-
Trade and Exchange

Eunice N. Egbuna

-
West African Monetary Institute


v


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


List of Branch Controllers/Currency Officers

Adayi C.O.
-
Abakaliki

Oseni W.L.
-
Abeokuta

Amagwu I.F.
-
Abuja

Atobatele A.G.
-
Ado-Ekiti

Yusuf F.A.
-
Akure

Ukwu P.N.
-
Asaba

Maduagwu B.I.C.
-
Awka

Idris H.A.
-
Bauchi

Jumbo R.D.
-
Benin

Mohammed T.G.
-
Birnin-Kebbi

Sokari C.M.
-
Calabar

Joda A.H.
-
Damaturu

Ibrahim S.A.
-
Dutse

Okonjo C.E.
-
Enugu

Goringo S.A.
-
Gombe

Jino B.
-
Gusau

Ogundero O.
-
Ibadan

Amao B.A.
-
Ilorin

Minya J.S.
-
Jalingo

Duniya Y.B.
-
Jos

Wali A.M.
-
Kaduna

Ali A.I.
-
Kano

Usman D.N.
-
Katsina

Isuwa A.S.
-
Lafia

Ehakator A.J.
-
Lagos

Sule A.I.
-
Lokoja

Lawan T.K.
-
Maiduguri

Itaha J.O.
-
Makurdi

Ibrahim M.T.
-
Minna

Madojemu A.D.
-
Osogbo

Nwankwo G.U. O
-
Owerri

Randle R.A.
-
Port Harcourt

Wali Y.B.
-
Sokoto

Ogbu O.M.
-
Umuahia

Ogbomon-Paul M.I.
-
Uyo

Osidele S.K.
-
Yenagoa

Jatau S.J.
-
Yola


vi


CONTENTS


GOVERNANCE FRAMEWORK

iii


Members of the Committee of Governors


iii


Members of the Monetary Policy
Committee (MPC)


iii


List of Departmental Directors


iv


List of Branch Controllers/Currency
Officers

v


EXECUTIVE SUMMARY

xi


SERVING THE NIGERIAN PEOPLE


DELIVERING ON THE CBN’s
MANDATE


THE GLOBAL ECONOMY


The CBN’s Mandate

CBN Strategic Priorities:
Five-Year Policy Thrust

2.1 Global Output Growth

Key Elements

2.2 Global Inflation

2.3 Global Financial Markets

2.4 Central Banks’ Response

2.5 Fiscal Measures

THE DOMESTIC ECONOMY


OUTLOOK


ADDITIONAL INFORMATION


3.1 Monetary Policy

Global and domestic outlook

Regional Meetings

3.2 The Real Economy

Global Engagements

3.3 Fiscal Developments

3.4 Financial Developments

3.5 Payments System Management

3.6 External Sector Development

vii


LIST OF TABLES
Table 2.1. 1: Growth and Inflation in Selected
Table 2.1. 2: Selected Countries’ Purchasing Manager

Table 3.2.1: Domestic Prices of Selected Agricultural
Table 3.2.2: Disbursements on Interventions in the

Table 3.3. 1: Federally Collected Revenue and
Table 3.3.3: Federal Government Retained Revenue
Table 3.3.4: Economic Classification of Government
Table 3.3.5: Federal Government Expenditure (N’

Table 3.4. 1: Growth in Monetary Assets and
Table 3.4. 2: Contribution to the Growth in Monetary
Table 3.4.5: Money Market Rates, Weighted Average
Table 3.4.6: DMBs Deposits and Lending Rates (per
Table 3.4.7: Records on Credit Risk Management

Table 3.5.1: Licensed Payments System Participants
Table 3.5.2: Volume and Value of Electronic

Table 3.6. 1: EMEs Exchange Rates to the US dollar 81


LIST OF FIGURES
Figure 2.2. 1: Inflation Rates in Selected Countries

Figure 2.3.1: Key Global Stock Indices and Credit
Figure 2.3.2: Five-year Government Bond Yields for
Figure 2.3.3: Monetary Policy Rates of Selected

Figure 2.5.1: Economic Growth (Actual & Projections

Figure 3.2.1: Composite Purchasing Managers’
Figure 3.2.3: Services Sector Performance, 2020H1
Figure 3.2.4: Industry Sector Performance, First Half
Figure 3.2.5: Index of Industrial Production, First Half
Figure 3.2.6: Agriculture Sector Performance, First
Figure 3.2.10: Prices of World Agricultural


viii


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.3.1: Trends in the Global Demand and
Figure 3.3.2: Structure of Gross Federation Revenue
Figure 3.3.5: Subnational Government Revenue (N’
Figure 3.3.6: Distribution to the Three Tiers of
Figure 3.3.7: Composition of Federal Government
Figure 3.3. 9: Breakdown of Total Debt Service, First
Figure 3.3. 10: Breakdown of External Debt Stock,

Figure 3.4. 1: Reserve Money and its Components:
Figure 3.4.2: Reserve Money and its Components:
Figure 3.4.3: Currency-Reserve Deposit Ratio and
Figure 3.4. 4: Distribution of Bank Loans and
Figure 3.4. 5: Maturity Structure of Bank Deposits
Figure 3.4. 6: Market Concentration Ratios of Banks
Figure 3.4.7: Measures of Competition in Banks:
Figure 3.4.8: Consumer Credit and Ratio of Claims on
Figure 3.4.9: Examination of Other Financial
Figure 3.4.10: Nigerian Treasury Bills Outstanding (N’
Figure 3.4. 13: Volume and Value of Transactions at
Figure 3.4.14: All-Share Index and Market
Figure 3.4.15: Banking Industry Solvency Stress
Figure 3.4.16: Banking Industry Solvency Stress
Figure 3.4.17: Banking Industry Solvency Stress

Figure 3.5.1: Composition of e-Payments
Figure 3.5.2: Share of e-Payments Transaction by
Figure 3.5.3: Volume of RTGS Transactions (Million)

Figure 3.6.1: Current and Capital Account Balance
Figure 3.6 2: Non-Oil Export Receipts by Banks (US$
Figure 3.6.3: Export, Import and Trade Balance (US$
Figure 3.6.5: Share of Services Receipts (First Half
Figure 3.6.7: Foreign Capital Inflows (US$ Billion) ... 73
Figure 3.6.8: External Reserves Stock and Months of
Figure 3.6.9: Foreign Exchange Disbursements


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CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6.10: Foreign Exchange Flows through the
Figure 3.6.12: Average Exchange Rate Movements
Figure 3.6. 13: Interbank/Bureau-de-Change Foreign
Figure 3.6.14: Sectoral Utilisation of Foreign
Figure 3.6.15: Sectoral Utilisation of Foreign


BOX INFORMATION
Box 1: Monetary and Fiscal Measures to Cushion the
Box 2: Coping Strategies during the COVID-19
Box 3: Policy Support and Developments in the Real
Box 4: Federal Government Revises the 2020 Budget
Box 6: Dynamic Macroeconomic and Banking
Industry Stress Testing Framework and Models for
Box 7: COVID-19 Pandemic and Nigeria’s Payments


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CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
EXECUTIVE SUMMARY
The Global Economy: The global growth of 2.9
per cent in 2019 was reversed, owing to the
devastating effect of the COVID-19 pandemic.
The IMF, in its June World Economic Outlook,
projected that the global economy would shrink
by 4.9 per cent, in 2020, which was 1.9
percentage points below the April 2020
projection. Purchasing Managers’ Indices for
most economies were below the 50 points
threshold since March 2020, reflecting the
precarious global economic conditions. The
worsened global inflation remained generally,
muted, both in advanced and emerging market
economies, except for marginal rises in a few
emerging and developing economies. Global
financial
conditions,
following
market
participants’ reaction to COVID-19 pandemic,
regained stability towards the end of the first
half of 2020. Policy responses by central banks
were aimed at injecting liquidity and restoring
financial stability. Also, governments responded
with fiscal measures to stimulate aggregate
demand.
The Real Economy: Domestic economic activity
slowed in the first half of 2020, following the
effects of COVID-19 pandemic. Both oil and nonoil sectors performed relatively poorly. Overall,
output contracted by 4.97 per cent, reversing
the growth trajectory since 2017, when the
economy exited recession. Inflationary pressure
remained elevated during the first half of the
year. Headline inflation (year-on-year), rose
from 12.13 per cent in January 2020 to 12.26 per
cent in March 2020, before peaking at 12.56 per
cent in June 2020. Global crude oil production
declined as oil producing countries complied
with OPEC+ supply cut agreements, in a bid to
reverse prices. Crude oil prices were lower in the
first half of 2020 relative to the level in the
corresponding period of 2019. The Bonny Light,
Nigeria’s reference crude, on the average,
traded for US$40.60 pb, compared with
US$68.00 pb in the corresponding period of
2019. Unemployment and underemployment
rates increased in the review period relative to
its position in Q3 2018. The unemployment rate,
at 27.1 per cent in the review period, was 4.0
percentage points, up from the 23.1 per cent
recorded in Q3 2018. The underemployment
rate also increased from 20.1 per cent in Q3 2018
to 28.6 per cent in Q2 2020.
The
Federal
Government
and
the
CBN
responded promptly to ease credit conditions
and improve household income. Particularly, the
Bank initiated new measures pursuant to its
development financing function to ameliorate
the impact of the COVID-19 pandemic on the
economy.
Fiscal Developments: The effects of the COVID19 pandemic on economic activities, significantly
worsened Federation revenue, particularly nonoil receipts in the first half of 2020. However,
owing to the lagged nature of oil revenue
receipts, the plunge in crude oil prices and oil
production-cut did not affect oil revenue in the
review period as oil receipts, at N2,793.84
billion, rose by 57.6 per cent relative to the
proportionate budget of N1,772.32 billion.
Contrastingly, non-oil revenue, at N1,868.66
billion (2.7 per cent of GDP), declined by 43.5 per
cent below its benchmark, owing to shortfalls in
Corporate Tax, Value-Added Tax and Customs
and Excise Duties. The total debt outstanding of


xi


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
the Federal Government stood at N24,522.05
billion at end-March 2020, driven, largely, by
rising fiscal deficits.
Financial Developments: The financial sector in
the first half of 2020 was characterised by
volatility in stock prices and the exchange rate,
rising corporate and public debt, capital flow
reversals, excess liquidity in banks and drastic
declines in oil prices, which posed major
challenges to monetary policy. Notwithstanding
the continued lull in the global financial markets
and adverse shocks to global capital flows due to
the impact of the COVID-19 pandemic, the
financial sector remained stable in the review
period, as the key financial soundness indicators
showed resilience. The CBN eased credit
conditions to support critical sectors of the
economy. Broad money supply (M3), at
N35,625.9 billion, grew by 2.4 per cent, and this
was below the target for 2020. The growth was
driven by increases in net domestic claims and
net foreign claims.
Liquidity in the financial sector was influenced,
largely, by fiscal operations of governments,
effects of CRR, foreign exchange intervention
and settlement of matured bills. Average interbank, deposit and lending rates were, generally,
lower than their levels in the corresponding
period of 2019. Capital market activities closed
on a mixed note, as the NSE All-Share Index (ASI)
fell, while the aggregate market capitalisation
rose at the end of the first half of 2020. The fall
of the ASI renewed selling pressure on some
stocks and widespread profit-taking across all
the sectors. However, market capitalisation
inched higher,
due
to
bargain hunting,
occasioned by the release of favourable financial
results by some blue-chip companies.
The health of banks was, generally, sound in the
review period, as industry levels of capital
adequacy and liquidity ratios remained higher
than the regulatory minimum. The stress test
result of the banking industry solvency and
liquidity position was positive and resilient under
mild to moderate scenarios. CBN’s intervention
funds to agriculture and the health sector, as
well
as,
micro, small- and medium-size
enterprises (MSMEs), geared towards mitigating
the effects of COVID-19 pandemic on the
Nigerian economy, were channeled through the
DFIs
and
other
participating
financial
institutions, in the review period.
Following the introduction of new policy
measures to enhance the resilience of the
payments system infrastructure and expand
electronic payment options by the CBN during
the review period, there was an uptick in the use
of contactless payments platforms.
External Sector Developments: The COVID-19
pandemic weighed negatively on Nigeria’s
external balance due to huge capital reversals,
limited export earnings, and declines in
remittances. Following these developments, the
pressure on the external account persisted, with
an overall balance of payments deficit of
US$2.30 billion or 1.0 per cent of GDP. The deficit
in the current and capital account, however,
narrowed by 8.3 percent to US$8.86 billion (4.3
percent of GDP), in the first half of 2020. The
financial account recorded a net acquisition of
financial asset of US$3.87 billion or 1.9 per cent


xii


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
of GDP, compared with US$24.73 billion (9.7
percent of GDP) in the first half of 2019.
Gross external reserves at end-June 2020 stood
at US$35.77 billion, compared with US$38.09
billion and US$44.75 billion at end-December
and end-June 2019, respectively. The level could
finance 7.2 months of import of goods and
services or 10.5 months of goods only, which was
higher than the 3.0 months international
benchmark. The ratio of external reserves to
short-term liabilities was also adequate at 367.4
per cent, above the benchmark of 100.0 per cent
short-term debt cover of the GreenspanGuidotti measure of external reserves adequacy.
Public external debt stock at end-March 2020, at
US$27.67 billion (6.0 per cent of GDP), was
below the US$27.68 billion at end-December
2019.
The Bank adjusted the naira exchange rate in all
segments of the foreign exchange market,
towards convergence and stability of the
currency. The end-period exchange rate of the
naira to the US dollar at the inter-bank, BDC and
I&E windows were N361.00/US$, N455.00/US$,
and N386.50/US$, respectively, at end-June
2020.
Outlook:
The
Nigerian
economy
remains
exposed to global shocks. The external sector,
particularly,
remained
vulnerable,
as
the
pressure on the external account was expected
to persist for the rest of 2020, given the
continued partial lockdown of the economy.
With regard to fiscal policy, the COVID-19
pandemic
weakened
government
revenue
through its effect on global oil prices. However,
fiscal outlook for the rest of the year was less
grim, owing to the gradual recovery in oil prices.
The outlook for the financial sector of the
Nigerian economy remains optimistic, due to the
spillover effects of the COVID-19 pandemic on
global financial institutions and markets. Overall,
the outlook for the domestic economy for the
second half of 2020 is relatively optimistic given
the successes in containing the effect of COVID19 pandemic. A rebound in output would
depend on the effectiveness of the various
stimulus packages and intervention measures
put in place by government and the Bank to
stimulate
productivity,
strengthen
output
growth and improve livelihoods.

Blank page.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
1.0 CBN MANDATE AND STRATEGY


• Be THE MODEL CENTRAL BANK
delivering PRICE and FINANCIAL
SYSTEM STABILITY and promoting
SUSTAINABLE ECONOMIC
DEVELOPMENT.
• Specifically, to:
Vision
Become the model central bank
Deliver price stability conducive to
economic growth
Achieve safe, stable, and sound
financial system
Deliver credible, reliable, and efficient
payments system
Promote sustainable finance and
inclusive economic growth
• To be proactive in providing a stable
framework
for
the
economic
development of Nigeria, through
the
effective,
efficient
and
transparent
implementation
of
monetray and exchnage rate policy,
and management of the financial
sector.
Mission
Mandate
(as contained in the CBN Act 2007)
• Ensure monetary and price stability;
• Issue legal tender currency in Nigeria;
• Maintain external reserves to safeguard
the international value of the legal
tender currency;
• Promote a sound financial system in
Nigeria; and
• Act as Banker and provide economic
and financial advice to the Federal
Government.
Established by the CBN Act 1958
(as amended)
Commenced operation July 1, 1959
THE CENTRAL
BANK OF
NIGEIRIA

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


CBN Strategic Priorities (2019 – 2024): 5-Point Agenda
Foster the Development of a Robust
Payments System
Conserve the utilization of reserves
for critical raw materials and imports
that are not produced locally
Improve consumer spending and
investment by MSMEs through
affordable and adequate credit
Grow our External Reserves
Improve Access to Credit
Promote inclusive growth and
private sector investment by
leveraging on monetary tools to
maintain a low inflation environment
while trying to seek exchange rate
stability
Preserving macroeconomic and
financial stability
Drive the cashless initiative across
the country to enhance efficiency
and propel the financial inclusion
drive
Diversify the Economy through
intervention programmes
Boost productivity growth in both
the agricultural and manufacturing
sectors through end-to-end value
chain credit intervention
programmes

2.0 THE GLOBAL ECONOMY


Dynamics in the global economy and how global events
shaped domestic economies around the world.
❖ Global Output Growth
❖ Global Inflation
❖ Global Financial Markets
❖ Central Banks’ Responses
❖ Fiscal Measures

2.1 GLOBAL OUTPUT GROWTH
The modest global growth in 2019 plummeted
in many economies, owing to the devastating
shock of COVID-19 pandemic. The growth rate
fell sharply from 2.9 per cent in 2019 with output
contractions in many countries, and, thus,
heightened
uncertainty
in
the
global
environment
(Table
2.1.1).
The
elevated
uncertainty was accentuated by the mitigation
measures adopted by various governments, such
as, restrictions on free movement, shutdown of
the services sector and partial restriction of
production to limit the spread of COVID-19.
These measures adversely affected consumer
demand, supply of goods and services, and
international value chain, which obstructed
economic activities, such as, global trade,
tourism, financial and commodity markets.
Accordingly, the IMF, in its June 2020 World
Economic Outlook (WEO), revised the global
growth projection for 2020 to negative 4.9 per
cent, which was 1.9 percentage points below the
April 2020 growth projection. The sharp
contraction was devastating on the vulnerable
population in emerging markets and developing
economies (EMDEs) and on global poverty. The
forecast also showed a recovery path of 5.4 per
cent growth in 2021 (Table 2.1.1).
Advanced Economies (AEs)
The majority of the advanced economies (AEs)
might plunge into recession. Many of these
economies contracted sharply, owing to public
health measures, including social distancing and
movement
restrictions,
which
depressed
economic activities and collapsed both domestic
Table 2.1. 1: Growth and Inflation in Selected Countries
Country
Growth

Inflation

2020f
2021f

Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Global
2.9
-4.9
5.4


Advanced
Economies
1.7
-8.0
4.8


United States
2.3
-8.0
4.5


United Kingdom
1.4
-10.2
6.3


Japan
0.7
-5.8
2.4


Germany
0.6
-7.8
5.4


Italy
0.3
-12.8
6.3


Emerging Market &
Developing
Economies
3.7
-3.0
5.9


Russia
1.3
-6.6
4.1


China
6.1
1.0
8.2


India
4.2
-4.5
6.0


Sub-Saharan Africa
3.1
-3.2
3.4


South Africa
0.2
-8.0
3.5


Nigeria
2.2
-5.4
2.6


Source: IMF WEO, June 2020 and Trading Economics, ‘f’ indicates projections

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
and external demand. The AEs growth was
projected to contract by 8.0 per cent well below
the decline of 6.1 per cent in the March 2020
forecast (Table 2.1.1). Sharp growth contractions
were mainly from countries that were severely
impacted by COVID-19 pandemic, such as, Italy,
the United Kingdom and the US. However, AE’s
growth is expected to improve in 2021 to about
4.8 per cent, once the COVID-19 abates and antipandemic measures lifted.
Table 2.1. 2: Selected Countries’ PMIs

Jan-

Feb-

Mar-

Apr-

May-

Jun-

United
States

United
Kingdom


China

India

Germany

Italy

Japan

South
Africa

Nigeria

Egypt


Kenya

Source: FXEMPIRE.


Emerging Markets and Developing Economies
(EMDEs)
Growth performance is expected to decline in
emerging markets and developing economies
(EMDEs), due to spillover effects of the COVID19 pandemic in advanced economies and weak
domestic demand. The outbreak of the COVID19 pandemic in EMDEs and spillover effects of
weakness in major economies, alongside the
disruptions in supply chains, dovetailed into
significant output contractions in EMDEs. IMF
WEO June 2020 forecast output contraction of
3.0 per cent for EMDEs in 2020 (Table 2.1.1).
However, the degree of contraction was diverse,
with relatively higher burdens on economies
that were dependent on commodity exports,
external financing and tourism. For instance,
China is predicted to grow by 1.0 per cent, India
by negative 4.5 per cent. In Latin America, Brazil
and Mexico are projected to shrink by 9.1 and
10.5 per cent, respectively in 2020. The output
contraction
in
EMDEs
elevated
market
sentiment
that
triggered
sudden
capital
reversals, causing heightened pressure in the
foreign exchange markets. However, in 2021, the
growth rate for EMDEs is projected to increase
to 5.9 per cent.
Purchasing Managers’ Index (PMI)
The PMI reflected the precarious global
economic conditions as most economies’ indices
plunged below 50 points since March 2020,
except in China, and South Africa, where it
edged above 50 points since May, and lately in
the US and the UK in June 2020. Economic
activity is, however, expected to improve once
the
pandemic
abates,
and
containment
measures are lifted (Table 2.1.2). Thus, by end2021, a recovery is expected in the advanced
economies with fewer job losses and fewer firm
bankruptcies.
2.2 GLOBAL INFLATION
Global inflation remained, generally, muted
both in advanced and emerging economies,
except for a marginal rise in a few EMDEs.
Inflation expectations in advanced economies
remained dampened owing to weak aggregate
demand, despite the various fiscal and monetary
measures adopted by the governments and the
central banks. Other factors that contributed to
the subdued inflation included the settlement of
first phase of the US-China trade deal and the lag
effect of successful election in the UK.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Consequently, inflation dipped further from an
average of 1.0 per cent in March 2020 to an
average of 0.4 per cent in June 2020 (Figure
2.2.1). A steady rise in inflation was noticed in
Nigeria, India, Russia and China, between March
2020 and June 2020 (Table 2.1.1 and Figure
2.2.1).
Figure 2.2. 1: Inflation Rates in Selected
Countries (per cent)
Source: Trading Economics Website


2.3 GLOBAL FINANCIAL MARKETS
Global Financial Conditions
The global financial conditions worsened,
following market participants’ initial reactions
to the COVID-19 pandemic shock, but later
stabilised. In the heat of the COVID-19 pandemic
in April 2020, the sharp dip in Purchasing
Managers’ Index of major economies, altered
investors’ market risk perception of the
precarious condition of the global financial
markets. In a bid to secure liquidity and quality
of investments, most portfolio investors moved
out of emerging economies, culminating in a
decline in government bond yields in major
advanced economies. In March 2020 alone, over
US$80.0 billion was withdrawn from EMDEs, the
largest single-month capital outflow on record.
However, stimulus packages introduced by
governments moderated the impact of the
outflows from the EMDEs. The uncertain market
outlook, in both advanced and emerging
economies, led to a significant drop in stock
prices.
Consequently,
many
international
corporations were confronted with liquidity
shortages, which increased corporations’ debts
and yield premia on risky or toxic corporate
bonds (Figure 2.3.1). However, the stabilisation
packages introduced by governments, relatively
improved
and
eased
market
conditions,
especially in advanced economies.
Figure 2.3. 1: Key Global Stock Indices and
Credit Spreads on Corporate Bond Yields

Figure 2.3. 2: Five-year Government Bond
Yields for Selected Countries
Source: Czech National Bank, Financial Stability Report 2019/2020
Note: US, GE, UK and IT represent United States, Germany,
United Kingdom and Italy, respectively.


20-Mar
20-Jun

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 2.3. 3: Monetary Policy Rates of
Selected Central Banks

Source: Czech National Bank, Financial Stability Report 2019/2020.
Note: US, DE, UK and IT represent United States, Germany, United
Kingdom and Italy respectively.
The initial huge capital outflow exerted pressure
on domestic currencies of EMDEs and induced
sharp depreciations of their currencies, despite
interventions of central banks.
2.4 CENTRAL BANKS’ RESPONSE
Central banks were swift in adopting policy
responses aimed at ensuring liquidity and
restoring financial stability. Many central banks
across the globe quickly adopted monetary
policy easing by cutting policy rates to boost
liquidity, stabilize the financial system and
restore confidence (Figure 2.3.3). The US Fed
adjusted the policy rate to zero, while the ECB
set its policy rate between 0 per cent and
negative 0.5 per cent. The Fed cut the policy rate
to improve banks’ access to dollar liquidity
through swap facilities and granted 14 central
banks currency swap lines across both advanced
and emerging economies.
Additional measures adopted by central banks
included buying of bonds to fund corporate bond
market, relaxing corporate bond eligibility
requirements and launching the Pandemic
Emergency Purchases Programme of EUR1,350
billion by the ECB for private and government
securities. Most central banks also relaxed
regulatory
requirements
for
financial
institutions. These measures partly mitigated the
effect of the COVID-19 shock and reduced the
negative effect on the monetary policy
transmission mechanism on the economy. The
initial tensions in the stock and bond markets
were eased, and the sharp drop of 34.2 per cent
in the MSCI World Index, in the heat of COVID19 pandemic, was largely reversed. However,
elevated risk premia persisted for highly
indebted firms.
2.5 FISCAL MEASURES
Governments across the world introduced fiscal
measures to boost liquidity of firms, and
households’ income and demand. Various
governments in advanced economies, both at
national and sub-national levels, adopted
stabilisation programmes to stem the effect of
COVID-19 pandemic on firms and households.
These included: state guarantee of loan facilities;
tax relief; wage contributions; loan moratoria;
outright transfer of real resources to firms and
households; providing rents and invoices aid;
and social security contribution waivers.
The EMDEs also adopted some of these fiscal
measures with varied degrees of success.
Moreover, some economies with less fiscal
space in EMDEs had little influence on their
economies in the use of fiscal stimulus packages.

3.0 MACROECONOMIC PERFORMANCE


.


❖ Monetary Policy
❖ Real Economy
❖ Fiscal Policy
❖ Financial Sector Developments
❖ Payments System Management
❖ External Sector Developments
Performance of the Nigerian economy in the first half of
2020 across major sectors.

3.1 MONETARY POLICY


Priorities of Monetary Policy
❖
Ensure price stability
❖
Mitigate the downside
risks of COVID-19
❖
Encourage credit flow to
the real sector
Implications
Created considerable stress
in the domestic economy
leading to:
❖
Slowing growth
❖
Capital flow reversals
❖
Decline in external
reserves
❖
Pressure on the
exchange rate and
domestic price level
❖
Inflationary pressure –
12.56% in June 2020,
from 12.13% in January

Major Economic
Development
❖
COVID-19 outbreak
and its containment
measures
❖
Unprecedented
collapse in oil demand
and crude oil prices
❖
Sharp decline in global
trade.
Monetary Policy Environment
Monetary Policy Decisions
Date of
Meeting
Decision

January 23 and 24,

Retained the MPR at 13.50 per cent;
Increased the CRR by 500 basis points from 22.5 to 27.5 per
cent;
Retained the LR at 30.0 per cent; and
Retained the asymmetric corridor at +200/– 500 basis
points around the MPR.

March 23 and 24,

Retained the MPR at 13.50 per cent;
Retained the CRR at 27.5 per cent;
Retained the LR at 30.0 per cent; and
Retained the asymmetric corridor at +200/– 500 basis
points around the MPR.

May 28, 2020
Reduced the MPR by 100 basis points from 13.50 to 12.50
per cent;
Retained the CRR at 27.5 per cent;
Retained the LR at 30.0 per cent; and
Retained the asymmetric corridor at +200/– 500 basis
points around the MPR.


COVID-19 Monetary Policy Measures in Nigeria
❖
Bankrolled targeted stimulus to address the macroeconomic
shocks caused by COVID-19
❖
Sustained implementation of the Loan-to-Deposit Ratio (LDR)
and a suite of development finance initiatives
❖
Reduction of interest rates on all applicable CBN interventions
from 9 to 5 per cent
❖
CBN initiatives
•
N1.0 trillion credit facility for the manufacturing
sector
•
N50.0 billion Targeted Credit Facility (TCF) for
households and micro, small and medium
enterprises (MSMEs)
•
N100.0 billion credit facility for the pharmaceutical
companies
•
Granting of an additional one-year moratorium on
all CBN related intervention programmes
•
Regulatory forbearance to restructure loans in
impacted sectors.
Exchange Rate Policy
❖
The bank re-adjusted the foreign exchange rate with a view to
unifying exchange rates in all segments of the forex market to
close the wide premium in all segments of the market while
enhancing price discovery
❖
Sustained intervention in the foreign exchange market and
retention of the I&E window to attract autonomous inflow of
foreign exchange to stabilise the domestic currency.
Instruments of MP
In the pursuit of its statutory
objective, the Bank during the
review period, deployed an array
of
conventional
and
unconventional monetary policy
instruments.
❖
The CBN Bill remained the
major instrument of
monetary policy,
complemented by:

•
Cash Reserve Ratio (CRR)
•
Standing Facilities
operations
•
Interventions in the
foreign exchange market.
Figure 1: Monetary Policy Rate (per cent)

Source: Central Bank of Nigeria
Note: Data from January to November 2006 represents Minimum Rediscount Rate, MRR.
Implicit Target
A Consumer
Price Index (CPI)
of 6-9%
Primary Objective of
Monetary Policy
Price Stability

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
3.2 THE REAL ECONOMY
a. Output
Domestic output plummeted in the first half of
2020, following the outbreak of the COVID-19
pandemic and the attendant containment
measures; and the collapse of crude oil prices in
the world market.
Economic activities across all sectors of the
economy were significantly impaired on account
of the COVID-19 pandemic. To contain its spread,
the Federal Government, in March 2020,
imposed a lockdown on Lagos and Ogun States
and the Federal Capital Territory (FCT). State
governments followed the initiative with various
forms of restrictions. Consequently, sectors such
as education, transport, aviation, hotel and
tourism, among others, were totally crippled.
However, agriculture, health services, power,
security and other activities considered as
essential, were exempted from the restrictions,
though not completely insulated from the
impact of the pandemic. The supply chain for
agricultural inputs and produce was further
constrained against the backdrop of persisting
security challenges in most food producing areas
of the country.
Industrial activities took a hit with disruptions to
both global and domestic supply chains,
restriction in movement and exchange rate
adjustment. The lacklustre performance of the
sector was reflected in the slump in the
Purchasing
Managers’
Indices
(both
manufacturing and non-manufacturing), from
59.2 points in January to 41.1 points in June
2020.


Figure 3.2. 1: Composite Purchasing Managers’
Indices

Source: Central Bank of Nigeria
Overall, domestic output contracted, markedly,
in the first half of 2020, reversing the fragile
growth since the end of the 2016/17 recession.
Real GDP (2010=100), on a year-on-year basis,
contracted by 2.18 per cent, in contrast to the
modest growth of 2.11 per cent in the first half
of 2019.
Both the Oil and Non-oil sectors performed
poorly on account of the impact of the
pandemic, which resulted in a huge slump in
demand for crude oil, low crude oil prices, global
and
domestic
supply
chain
disruptions,
unemployment and income loss, and ultimately
fall in output. Oil and Non-oil sectors contracted
by 2.31 per cent and 0.80 per cent, respectively,
as against growth rates of 2.05 per cent and 2.68
per cent in the corresponding half of 2019.

Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Manufacturing PMI
Non-Manufacturing PMI
Threshold

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


Box 1: Monetary and Fiscal Measures to Cushion the Impact of the COVID-19 Pandemic

Policy
Measures

Monetary Policy

•
Financial institutions were directed to engage International development partners and negotiate concessions to ease the pains of the
borrowers;
•
The CBN provided credit support for the health industry to meet the potential increase in demand for health services and products;
•
The CBN initiated the Healthcare Sector Research and Development Intervention Scheme (HSRDIS)
•
The CBN coordinated CA-COVID - Private sector intervention scheme - which had mobilized over N32 billion to support the economy, lives
and livelihoods;
•
Provided N1 trillion in loans to boost local manufacturing and production across critical sectors;
•
Took steps to unify the exchange rate;
•
Invoked partial risk guarantees for SMEs;
•
Granted additional moratorium of one year on CBN intervention facilities;
•
Reduced interest rate on intervention facilities from 9.0 per cent to 5.0 per cent;
•
Created N50 billion Target Credit Facility for affected MSMEs;
•
Granted regulatory forbearance to banks to restructure terms of facilities in affected sectors; and
•
Directed oil and oil service companies to sell foreign exchange to the CBN rather than the NNPC to improve foreign exchange supply to the
economy.

Immediate Fiscal
Measures
Unlock available funds in Special Accounts to create a ₦500bn intervention fund;
Specific measures to support the Private Sector:
•
Activate the provisions of the Finance Act 2020 in support of MSMEs;
•
Structure and launch a Tax Resolution and Settlement Unit;
•
Extend deadlines and suspend penalties for filing tax returns;
•
Incentivise employers to retain and recruit staff during economic downturn;

•
Provide targeted tariff reduction and trade finance facilities to support strategic imports and serve as a boost to economic activity; and
•
Support strategic industries affected by the pandemic, such as the aviation, hospitality and road transport sectors.
Measures to support the Health Sector:
•
Convert World Bank REDISSE programme to support COVID-19 interventions in the states;
•
Provide funding to pharmaceutical sector to support the procurement of raw materials and equipment required to boost local drug
production;
•
Provide ₦86bn intervention fund for health infrastructure;
•
Accelerated procurement of medical supplies and equipment; and
•
Develop incentive package for frontline healthcare workers
Accelerate Infrastructure Completion:
•
Expand the scope of the Road Infrastructure Tax Credit Scheme (RITCS)
•
Accelerate the construction of 794.4km of approved roads and bridges under RITCS

Fiscal Measures to
Safeguard Oil
Revenues
•
Deregulate the price of refined petroleum products and establish a sustainable framework for maintaining the national strategic stock;
•
NNPC to ensure 100 per cent remittance of royalty and taxes paid by companies in kind to the Federation Account and periodic reconciliation
with DPR and FIRS;
•
NNPC to continue to rationalise deductions from oil sector revenue in order to maximise payments to the Federation Account;
•
Maintain the practice of NNPC paying commercial value for all its crude oil lifting going forward; and
•
Reduce the average production costs of crude oil by at least 20 per cent in the first instance.

Fiscal Measures to
Mobilise and Preserve
Non-Oil Revenues
•
Implement the VAT reforms in the Finance Act 2020, maintaining the increase in VAT rate from 5 per cent to 7.5 per cent;
•
Develop business continuity plans for tax and customs administration to provide services to citizens, taxpayers, and importers in case of
widespread contagion (or mobility restrictions);
•
Rationalise ineffective tax incentives and exemptions;
•
Increase remittances and recovery of unremitted revenues from GOEs;
•
Sign-off of guidelines of Significant Economic Presence (to capture revenues from cross-border business transactions);
•
Unlock value from FG assets that are lying idle or under-utilised; and
•
Incentivise the use of up to N2 trillion of pension funds for roads and housing development.

Fiscal Measures to
Reduce Non-Essential
Spending
•
Adopt a Financing Plan for the Power Sector Recovery Programme;
•
Eliminate non-critical and administrative capital expenditure;
•
Expand the biometric-based Integrated Personnel & Payroll Information System (IPPIS) to cover all MDAs;
•
Rationalise government agencies.

Measures to Mobilise
External Support and
Funding
•
Engage with multilateral and donor agencies to access additional funding for crisis response, i.e. IMF - $3.4bn; World Bank - $2.5bn; AfDB -
$0.5bn, African Export-Import Bank - $0.5bn, IsDB - $113m;
•
Seek moratorium from official partners on bilateral and multilateral debts; and
•
Support arrangements to secure commercial debt relief.

Measures to
Collaborate with and
support The States
•
Negotiate suspension of payments in respect of ISPO;
•
Provide moratorium on deductions in respect of bailout loans;
•
Develop guidelines to protect inter-state commerce;
•
Encourage States to achieve SIFTAS and other World Bank programme actions in order to access external support;
•
States should consider issuance of promissory notes to pay their construction debts; and
•
Collaborate with State Governments on Affordable Mass Housing, Agriculture and Off-grid Power Projects and other projects in the ESP.
Source: Nigeria Economic Sustainability Plan

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.2.2: Real GDP Growth, 2020H1
(per cent)

Source: National Bureau of Statistics

b. Sectoral Performance
Services and Industrial sectors contracted, while
Agriculture sector expanded.
Services
The services sector contributed the most to the
drop in overall output with a decline of 2.64 per
cent in the first half of 2020.
The dismal performance in sub-sectors such as
trade, accommodation and food services, real
estate,
education,
transportation,
storage,
tourism and recreation was directly related to
restrictions in movement, which pervaded the
later part of the review period.
Significant innovations were witnessed in
business
changing
practices
that
shape
economic activities during and post-COVID-19
era, enabled by ICT.
The need for business continuity, compliance
with social distancing and other COVID-19
protocols, drove innovations which engendered
the growth recorded in financial services,
telecommunications and broadcasting.
Similarly, growth was witnessed in the human
health sub-sector on account of increased
attention by government and development
partners, in response to the pandemic.
Figure 3.2.3: Services Sector Performance,
2020H1 (per cent)

Source: National Bureau of Statistics


Total GDP
Oil GDP
Non-Oil GDP
1st Half 2018
1st Half 2019
1st Half 2020

Services Sector
Trade
Accommodation and Food Services
Transportation and Storage
Information and Communication
Financial and Insurance
Real Estate
Education
Human Health & Social Services

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Source: Central Bank of Nigeria
Box 2: Coping Strategies during the COVID-19 Pandemic
Following the outbreak of the COVID-19 pandemic, in which Nigeria recorded a total of 25,694 confirmed
cases and 590 deaths at end-June 2020, the Federal Government responded with containment measures.
On March 30, 2020, a total lockdown restricting both human and vehicular traffic, closure of airports and
non-essential businesses was imposed in Lagos and Ogun States and the FCT. However, partial activities
in essential sectors such as food and agriculture, power and banking, among others, were allowed. There
were similar measures taken by various state governments. A nationwide lockdown was later
implemented to contain the ravaging plague.
The interventions by the fiscal and monetary authorities, development partners and the private sector to
cushion the impact of the pandemic on vulnerable households, in the face of disruptions in the supply
chain, exacerbated demand pressures.
Innovation became the necessary and sufficient condition for all classes of producers and consumers,
including government, corporates and households, to overcome the harmful effects of the Pandemic. For
instance, to survive the times, without contravening the social distancing protocols, corporates and
individuals had to adapt to changing realities in their business operations and lifestyles by intense use of
ICT devices. Examples included the use of ICT for e-learning in schools, apps for meetings and shopping,
banking and payment channels, streaming channels, and gaming for entertainment. These developments
spurred increase in demand for ICT services, which led to a 12.8 per cent growth rate in telephone
subscription to 196.4 million and 17.2 per cent increase in the number of internet subscriptions to 143.7
million at end-June 2020, compared with the corresponding period of 2019.


Source: Nigerian Communications Commission
Similarly, there was increased use of courier services for supply delivery by businesses and consumers in
need of household purchases.
In summary, ICT assumed prominence in the daily lives of households and productivity for businesses.
The future of the ICT sub-sector is promising with the commencement of the implementation of the
National Broadband Plan (2020-2025), reduced Right-of-Way charges and increased investments.


End-June 2018
End-June. 2019
End-June 2020
Active Mobile Lines, Fixed wired and Teledensity
Fixed (LHS)
Active Mobile Lines (millions) (LHS)
Teledensity (RHS)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Industrial sector contracted by 4.97 per cent,
reversing its previous growth trajectory.
The sector suffered under the COVID-19
containment measures as all sub-sectors
contracted, except motor vehicles & assembly;
water supply, sewage & waste management;
and chemical pharmaceutical products, which
recorded growth.
Figure 3.2.4:: Industry Sector Performance,
First Half 2020 (per cent)

Source: National Bureau of Statistics
The contraction in the industrial sector was
reflected in the index of industrial production,
which declined by 2.4 per cent to 106.5
(2010=100), compared with the level in the
corresponding period of 2019. At 171.9
(2010=100),
the
index
of
manufacturing
production dropped by 6.1 per cent, below the
179.2 points in the corresponding period of
2019. Also, the index of mining production was
77.1 (2010=100) during the period, registering a
decline of 1.0 per cent below the 77.9 points in
the corresponding period of 2019.
Figure 3.2.5: Index of Industrial Production,
First Half 2020 (2010=100)

Source: National Bureau of Statistics and Manufacturing
Association of Nigeria

Electricity
generation
and
consumption
recorded declines.
With most industries shutdown, electricity
consumption declined as demand was mainly for
household consumption. Average electricity
consumed declined by 4.4 per cent to an
estimate of 3,021.0 MW/h, below the level in the
corresponding period of 2019. Similarly, average
electricity generation, estimated at 3,714.8
MW/h declined by 5.8 per cent, in the first half
of 2020, compared with 3,942.7 MW/h in the
first half of 2019. The decrease was attributed to
low load demand by distribution companies
(DISCOs), which affected the generation.
Agriculture
The agricultural sector showed resilience during
the first half of 2020, maintaining its growth
path, albeit, at a slower pace.
The sector recorded a 1.88 per cent growth (yon-y) during the period, compared with the 2.45
per cent growth in the corresponding half of
2019. All the sub-sectors contributed to the
increase in the review period, ranging from 1.43
per cent for livestock to 3.21 per cent for fishing.

Industry Sector
Mining and Quarrying
Manufacturing
Electricity,Gas,Steam & Air
conditioner
Water supply, sewage, waste
Mang.
Construction
Chemical and Pharmaceutical
Products
Motor Vehicles ad Assembly

First Half 2018
First Half 2019
First Half 2020
Manufacturing
Mining
Electricity
Industry

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
This was on account of continued security
challenges to agricultural activities, seasonality
effects and supply shocks following restriction of
movement for most of the period. The resilience
of the sector was due to several reasons,
including the border protection policy of the
Federal Government, exclusion of the sector
from some of the lockdown measures and
increased demand for farm produce used as
palliatives during the lockdown. Others were
stock piling during the second quarter, as well as
the multiplier effect of the various intervention
programmes.
Figure 3.2.6: Agriculture Sector Performance,
First Half 2020 (per cent)

Source: National Bureau of Statistics


Crop
Production
Livestock
Forestry
Fishing
Agricultural
Sector

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


Box 3: Policy Support and Developments in the Real Sector

Sector
Developments

Industrial
Sector

•
The World Bank approved a US$750 million International Development Association (IDA) credit for Nigeria to address the
perennial power supply challenges;
•
The Federal Government and Siemens AG, commenced the implementation of the first phase of the power agreement
signed in 2019, which included pre-engineering and concessionary finance;
•
The Federal Government signed a tripartite memorandum of understanding (MoU) for a facility of US$1.46 billion with the
Russian Government and the Afreximbank to resuscitate the Ajaokuta Steel Rolling Mill;
•
The National Sugar Development Council of Nigeria and the National Sugar Institute of India signed an MoU for the
establishment of a sugar institute in Nigeria; and
•
The Bank of Industry (BOI) secured a US$1.1 billion medium-term syndicated facility from the international capital market
to support micro, small, medium and large enterprises across key sectors of the Nigerian economy.

Oil & Gas
Sector
•
The Federal Ministry of Petroleum Resources issued a second license to the Niger Delta Exploration & Production Plc to
build and operate a refinery in the country;
•
The Petroleum Products Pricing Regulatory Agency (PPPRA), approved the deregulation of PMS, allowing for a marketbased pricing regime; and
•
The Department of Petroleum Resources (DPR) flagged off the 2020 Marginal Fields Bid Round, to grow the country’s
production capacity and increase the reserve base through further exploration and development.

Gas Subsector
•
The Federal Government of Nigeria (FGN) inaugurated the National Gas Expansion Programme Committee to steer the Gas
sub-sector for optimal performance and better utilisation of gas resources;
•
The Ministry of Petroleum Resources, through the DPR, launched the Nigerian Gas Transportation Network Code to boost
gas availability and ensure low-cost gas in the domestic market;
•
The DPR shortlisted 200 companies, out of 800 bidders, for the development of 45 gas flare sites out of 178 sites under the
Nigeria Gas Flare Commercialisation Programme across the country; and
•
The DPR commenced awareness campaign for the usage of compressed natural gas (CNG) as an alternative to PMS in
Nigeria, especially for household consumers.

Solid
Minerals
•
Completion of the Obiafu - Obrikom-Oben (OB3) gas pipeline, a 127-kilometer pipeline, initially scheduled for mid-2020
was extended to the first quarter of 2021 due to the COVID-19 pandemic;
•
The Federal Government began the registration of artisanal miners in Yauri Local Government Area of Kebbi State;
•
Dukia Gold and Precious Metals Refinery Project (DGPMP) and Dukia Heritage Bank Buying Centre, were licensed by the
Federal Government; and
•
The Ministry of Mines and Steel Development is collaborating with the Ministry of Foreign Affairs to sign MoUs with other
countries to confiscate and return any gold from Nigeria that is not certified.

ICT
•
The new National Broadband Plan (NBP) for 2020-2025 was launched with an objective of achieving a 70.0 per cent
broadband penetration by 2025. Similarly, some state governments decreased their Right of Way (RoW) charges to ₦145
per metre from ₦6,000. This was done to significantly cut the price of connecting telecom masts with fibre optic cables
instead of slow microwave technology.

Rail
Transport
•
60 passenger coaches were received during the period: 44 cab cars and 16 trailer cars; and
•
Work continued on the construction of the 27km Blue Line of Lagos rail that would run from Marina to Okokomaiko and a
new line linking the port of Warri with Ajaokuta Steel Mill and Itakpe as well as the completion of the US$1.53 billion track
laying work for the 312km-long double-track standard gauge Lagos-Ibadan railway line project.

Health
•
The CBN announced the N100 Billion credit support intervention fund for the Health and Pharmaceutical Industry. The
Fund was to boost the financial and infrastructural deficit in the health sector and improve the technical capacity of the
industry to tackle pandemics;
•
The CBN also initiated the Healthcare Sector Research and Development Intervention Scheme (HSRDIS) to help strengthen
the public healthcare system with innovative financing of research and development (R&D) in new and improved drugs,
vaccines and diagnostics of infectious diseases in Nigeria;
•
The Federal Government approved a waiver of duty for the importation and clearance of all medical equipment and
supplies imported into the country and granted tax holiday to companies investing in the health and pharmaceutical
industry.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
c. Price Developments
Inflation
Inflationary pressures remained elevated in the
first half of 2020.
The sustained inflationary pressures resulted in
increased headline inflation all through the first
half of the year. Unlike the first half of 2019
when consumer prices trended downwards, in
the first half of 2020, headline inflation (yoy)
trended upwards from 12.13 per cent in January
to 12.26 per cent in March, before peaking at
12.56 per cent in June. The higher headline
inflationary outcome was driven, mainly, by the
persistent food inflation shocks, increase in VAT
rate from 5.0 per cent to 7.5 per cent, exchange,
and disruptions to global and domestic supply
chains.
Figure 3.2.7: Headline Inflation (Per cent)

Source: National Bureau of Statistics


i.
Food Inflation
Food prices (YoY) rose to 15.18 per cent during
the period, compared with 13.56 per cent in the
first half of 2019. The increase was persistent
during the period, from 14.85 per cent in January
to 14.98 per cent in March and 15.18 per cent in
June 2020. The development was attributed to
disruptions in agricultural supply chain, owing to
continued conflicts and instability in most food
producing regions of the country, the continued
implementation of the land border protection
policy, as well as, COVID-19 lockdown measures.
Figure 3.2.8: Food Inflation (per cent)
Source: National Bureau of Statistics

ii.
Core Inflation
Core inflation rose all through the months in the
first half of 2020, although the pace of increase
was lower in the latter part of the period. The
slowdown in the latter period was due largely, to
the gradual re-opening of the economy, coupled
with first-round effect of the reduction in the
pump price of PMS from N145.00 per litre to
N125.00 per litre, during the period.


Year-on-Year (LHS)
Month-on-Month (RHS)
1st Half

2nd Half

1st Half


Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Year-on-Year (LHS)
Month-on-Month (RHS)
1st Half 2019
2nd Half 2019
1st Half 2020

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020

Figure 3.2.9: Core Inflation (per cent)

Source: National Bureau of Statistics

Commodity prices
Prices of most agricultural commodities rose
amid the pandemic.
Despite the lockdown measures to contain the
spread of the COVID-19 pandemic in many
economies, agricultural commodity prices in the
first half of 2020 were, generally, higher relative
to the first half of 2019. At 80.3 points
(2010=100), the All Commodities Price Index (in
dollar terms), increased by 8.2 per cent in the
first half of 2020, compared with price increases
recorded a year ago, with the highest increase
(23.4 per cent) recorded in the price of
groundnut (peanut). The surge in the price of the
commodity was, largely, on account of supply
shocks in major growing countries.


Figure 3.2.10: Prices of World Agricultural
Commodities in 2020 (first half), per cent

Source: Index Mundi

An upward trend was observed in the prices of
six commodities monitored ranging from 1.5 per
cent for soya bean to 15.9 per cent for coffee.
Coffee prices spiked amid supply concerns owing
to supply chain disruptions that accompanied
the pandemic. However, the prices of cotton and
rubber decreased by 14.7 per cent and 14.5 per
cent, respectively.

COVID-19 exacerbated domestic food prices.
The initial announcement of the outbreak of the
disease and the expectation of a lockdown
triggered panic buying of essential commodities,
thereby, putting additional pressure on food
prices. Furthermore, measures to curb the
spread of the pandemic affected the distribution
of farm inputs, thereby putting a strain on
production and supply activities and delayed the
2020 wet season farming activities.
The Pandemic was not without its positive side,
as increases were recorded in the patronage of
locally produced food items by government,
households,
and
non-governmental
organisations as the global lockdown disrupted
imports. Consequently, fifteen out of the
nineteen commodities monitored, indicated

Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Year-on-Year (LHS)
Month-on-Month (RHS)
1st Half 2019
2nd Half 2019
1st Half 2020

2019(1st half)
2020(1st half)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
price increase ranging from 1.9 per cent for
groundnut oil to 26.5 per cent for imported rice,
relative to the corresponding period of 2019.

Source: Central Bank of Nigeria
Crude Oil Prices
Crude oil prices were notably lower in the first
half of 2020.
Against the backdrop of weak demand and rapid
increases in oil inventories for most of the
period, which led to glut in the global market, the
average spot price of Nigeria’s reference crude,
the Bonny Light (37o API), at US$40.60 per barrel,
declined by 40.2 per cent, below its level in the
first half of 2019. Similarly, the average prices of
the West Texas Intermediate, the UK Brent, the
Forcados and the OPEC Basket relative to their
levels in the first half of 2019, fell by 33.9, 39.7,
40.1, and 40.2 per cent to US$36.72, US$39.95,
US$40.85 and US$39.13 per barrel, respectively.
Figure 3.2. 11: Crude Oil Prices (US$/b)

Source: Reuters

World Crude Oil Supply and Demand
Crude oil production declined in the first half of
2020 as oil producing countries complied with
OPEC+ supply cut agreements, in a bid to shore
up plummeting prices.
At an average daily production of 1.80 mbd or
327.6 million barrels (mb), Nigeria’s crude oil
output decreased by 0.06 mbd or 3.23 per cent,
below the level in the corresponding half of
2019. The development was attributed to
production cut in compliance with OPEC+
agreement to stabilise the oil market amidst the
impact of the pandemic on crude prices.
Aggregate crude oil production, including
natural gas liquids (NGLs) and condensates by
the Organisation of Petroleum Exporting
Countries (OPEC) declined by 8.96 per cent to an
average of 32.06 million barrels per day (mbd) in
the first half of 2020, compared with 35.22mbd
in the first half of 2019.
Similar declines were recorded in non-OPEC
crude oil supplies, falling by 1.07 per cent to an
estimated average of 64.47 mbd, compared with

Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
US$/b
Bonny Light
UK Brent
Forcados
WTI-M*
OPEC-Basket
Table 3.2.1: Domestic Prices of Selected
Agricultural Commodities (Naira/kg), First Half

FOOD ITEM

1st Half

1st Half

%
Change
Unit
(1)
(2)
(1) & (2)
Agric eggs(medium size)
1kg
470.2
462.1
-1.7
Beans brown,sold loose
'
367.6
276.9
-24.7
Beans:white black eye. sold
loose
"
329.3
253.1
-23.2
Gari white,sold loose
"

177.2

Gari yellow,sold loose
"
181.1

11.6
Groundnut oil: 1 bottle,
specify bottle
"
577.5
588.5
1.9
Irish potato
"
284.4
298.4
4.9
Maize grain white sold loose
"
150.6
158.4
5.2
Maize grain yellow sold loose
"
153.8
159.4
3.6
Palm oil: 1 bottle,specify
bottle
"
463.1
459.6
-0.8
Rice agric sold loose
"
318.8
384.1
20.5
Rice local sold loose
"
279.3
336.1
20.4
Rice Medium Grained
"
314.5
383.9
22.1
Rice,imported high quality
sold loose
"
360.7
456.4
26.5
Sweet potato
"
138.2
149.1
7.9
Tomato
"
249.2
261.2
4.8
Vegetable oil:1 bottle,specify
bottle
"
504.3
537.9
6.7
Wheat flour: prepacked
(golden penny 2kg)
"
667.6
683.6
2.4
Yam tuber
"
206.5
214.9

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
the level in the corresponding half of 2019. The
lower supply level in the period was attributed,
mainly, to the decision by non-OPEC oil
producing nations to cut supplies in support of
OPEC’s effort at stabilizing the oil market. The
decision was expected to check the global
demand
slump
following
the
COVID-19
pandemic. Consequently, world supply of the
commodity fell by 3.84 per cent, averaging 96.53
mbd during the period, compared with 100.38
mbd in the corresponding period of 2019.
World crude oil demand also fell in the first half
of 2020, following the shutdown of most
economies.
World crude oil demand averaged 89.83 mbd,
compared with 101.72 mbd and 100.38 mbd in
the second half and the corresponding period of
2019, respectively, representing a decrease of
11.69 per cent and 10.55 per cent. When
compared with output level of 96.53 mbd, the
crude oil market resulted in excess supply of 6.70
mbd over the demand level, hence the price
decline. Of the total, demand from the
Organisation for Economic Co-operation and
Development (OECD) countries was 41.5 per
cent, while non-OECD countries accounted for
the balance.
Figure 3.2.12: Crude Oil Production and
Exports

Source: Reuters

1 However, 500,000 Nigerians from Batch A and B
were disengaged.
Aggregate export of crude oil was estimated at
1.35 mbd or 245.7 mb, compared with 1.41 mbd
or 255.2 mb in the corresponding period of 2019.
d. Household Analysis
Notwithstanding the timely intervention of the
Federal Government and CBN to ameliorate the
impact
of
the
COVID-19
pandemic
on
households, significant drops in household
welfare occurred, as unemployment soared.
Unemployment
Unemployment and underemployment rates
continued to soar.
In its efforts to moderate the rate of
unemployment,
the
Federal
Government
intensified its initiatives at job creation during
the period. For instance, the Government
recruited 500,000 Nigerians within the age
bracket of 18-35 under the Batch C N-Power
programme1. The employment was open to both
graduates
and
non-graduates
who
were
unemployed at the time of application.
Furthermore, the Government announced its
planned creation of 774,000 jobs across the
Federation (employment of 1,000 persons from
each local government area) under the Special
Public Works Programme in the Rural Areas. This
was conceived to mitigate the effect of the
COVID-19 Pandemic on the economy.
Despite efforts by government to create jobs
through various intervention programmes,
unemployment rate rose to 27.1 per cent 2 in
2020Q2 from 23.1 per cent in 2018Q3. The high
unemployment rate reflected the increasing
difficulty, over the years, in diversifying the
2 The latest unemployment figure prior to 2020Q2
was in 2018Q3.

First Half 2018
First Half 2019
First Half 2020
Million barrels per day
Output
Exports
Domestic Consumption

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
economy away from oil and gas sector. The
unemployment situation was further worsened
by the number of people who lost on account of
the
lull
in
economic
activities.
Underemployment rates also jumped to 28.6 per
cent in the period under review from 20.1 per
cent in 2018Q3.
Figure 3.2.13: Unemployment rate
2014Q4-2020Q2 (per cent)

Source: National Bureau of Statistics

Household expectations
The expectations of households remained
pessimistic.
Household expectations with respect to their
confidence in the economy were, generally,
negative during the period. The Consumer
Expectations Survey by the CBN for the second
quarter of 2020 indicated that the index of
consumer expectation stood at -29.2 points,
compared to 1.2 point a year ago. This was
attributed to worsening economic conditions
and deteriorating family income. However, their
perception of the outlook for the rest of 2020
was positive at 0.2 and 23.7 points for the third
quarter and next twelve months, respectively,
owing to expectations of improvements in family
financial situation income, savings and overall
economic conditions. This was tied to increased
economic activities, following relaxation of
lockdown measures in the country.
e. Development Financing
The Bank ramped up its development financing
initiatives in response to the COVID-19
pandemic.
In response to the pandemic, the CBN sustained
and initiated new measures pursuant to its
development financing objective. The scope of
the new interventions were extended to cover
the health care sector through the Health Care
Sector Intervention Fund (HSIF) and the Health
Sector Research & Development Intervention
Scheme (HSRDIS), designed to strengthen the
domestic capacity to meet the increasing in
demand for healthcare products and services.
The Bank also responded directly to cushion the
impact of the pandemic on households and small
businesses through the launch of the Targeted
Credit Facility (TCF).
In addition, the Bank introduced the COVID-19
Intervention Facility for the Manufacturing
Sector (CIFMS) as a stimulus policy measure
under the Bank’s Real Sector Support Facility
(RSSF) to strengthen the Nigerian manufacturing
sector. The facility was meant to stimulate
finance to boost local manufacturing and
support mass employment and retention in the
country. The details of these interventions are
provided in Table 3.2.2.


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020

Source: Central Bank of Nigeria


Table 3.2.2: Disbursements on Interventions in the First Half of 2020

Disbursements
Repayments

Amount
(N Billion)
Beneficiaries
Amount
(N Billion)
Agricultural Credit Guarantee Scheme (ACGS)
0.00148
16,922 loans guaranteed
1.347
N200 Billion Commercial Agricultural Credit Scheme
(CACS)
27.09
15 projects
29.04
Micro, Small and Medium Enterprises Development
Fund (MSMEDF)
Nil
Nil
4.97
Anchor Borrowers' Programme
149.01
810,583 farmers
124.9
Accelerated Agriculture Development Scheme (AADS)
6.00
4 State government-sponsored
projects
N/A
Agribusiness/Small
and
Medium
Enterprises
Investment Scheme (AGSMEIS)
26.62
6,727 projects
0.2716
Paddy Aggregation Scheme (PAS)
3.20
3 Projects
Nil
Rice Distribution Fund (RDF)
1.00
6 Projects
Nil
National Food Security Programme (NFSP)
9.00
2 Projects
2.90
RSSF Using Differentiated Cash Reserve Ratio (RSSFDCRR)
137.49
59 Projects
11.65
Non-oil Export Stimulation Facility (NESF)
9.00
2 Projects
2.85
Export Development Facility (EDF)
Nil
Nil
Nil
Creative Industry Financing Initiative (CIFI)
1.10
160 Projects
N/A
Targeted Credit Facility (TCF)
44.28
70,953 projects
N/A
Health Care Sector Intervention Fund (HSIF)
20.96
15 Projects
N/A
COVID-19 Intervention Facility for the Manufacturing
Sector (CIFMS)
N/A
N/A

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
k 3.3 FISCAL DEVELOPMENTS
a. Federation Revenue
The effects of the COVID-19 pandemic on
economic activities and the downturn in global
demand for crude oil, amidst oil glut,
significantly impaired Federation Revenue in
the first half of 2020.
The dip in global crude oil demand due to COVID19 restrictions and the Russia-Saudi trade
impasse, induced oil glut, depressed crude oil
price from US$66.7 per barrel (pb) in January
2020 to US$14.3 pb in April 2020.
Figure 3.3.1: Trends in the Global Demand and
supply of Crude Oil and the Bonny Light Crude

Source: Reuters
To restore crude oil prices, OPEC+ agreed on
supply cuts, that reduced Nigeria’s production
quota from 1.8 million barrels per day (mbpd) to
1.4 mbpd. Also, the average crude oil price in the
first half of 2020 was US$17.0, lower than the
US$57 benchmark in the 2020 annual budget of
the Federal Government.


Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
US$ per barrel
Million barrels per day
Bonny Light
Demand
Supply
In line with the Economic Recovery and Growth Plan (ERGP),
the medium term economic objectives of the government
include:
•Restoring and sustaining economic growth;
• Building a globally competitive economy;
• Increasing social inclusion;
- Enhancing economic growth and ensuring inclusiveness;
- Promoting economic diversification and
- Maintaining macroeconomic stability.
Economic Objectives
• Improving revenue generation
• Ensuring adequate fiscal space for infrastructural
development
• Enhancing quality of spending
• Ensuring sustainable deficit and debt levels.
Fiscal Policy Objectives
• Accelerating Economic Growth and Job Creation
• Industrialisation through Public Private Partnerships
• Energy Sector Policy Initiatives
• Agriculture and Food Security
• Social Investments: Health, Education and Social Welfare
• Gender and Social Inclusion
• Infrastructure
Key Initiatives
The MTEF/FSP sets out the key parameters and
assumptions underlying fiscal policies, as well as
the revenue and expenditure profile of the 2020
federal budget.

Highlights the macroeconomic objectives of the
government between 2020 and 2022, and how it
plans to achieve them.

The broad objectives of the medium-term policy
framework are to accelerate economic growth,
create jobs and promote structural transformation
to reduce poverty and income inequality.
Fiscal Policy
Framework,
Objectives &
Strategies

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Consequently,
provisional
gross
Federally
Collected Revenue3 at N4,662.50 billion (or 6.7
per cent of GDP) in the first half of 2020, shrank
by 8.2 and 0.7 per cent, relative to the
benchmark and the level in the corresponding
period of 2019, respectively. The drop in
Federally Collected Revenue mirrored declining
oil fortunes and low tax returns, attributed to
COVID-19. Oil and non-oil revenues accounted
Source: Central Bank of Nigeria
for 59.9 and 40.1 per cent, respectively, of the
Total
Federally
Collected
Revenue.
The
development resulted in a shortfall of 65.0 per

3Earnings lodged in the Federation Account by virtue of Section 161 of the Federal
Republic of Nigeria Constitution 1999 as amended
cent in the projected Federation Revenue in the
first half of 2020. Hence, public sector fiscal
profile was reviewed at both the national and
sub-national levels. The 2020-2022 MediumTerm
Expenditure
Framework
and
Fiscal
Strategy Paper (MTEF/FSP), as well as the 2020
annual budgets of the Federal and State
governments, were revised downward (see Box
4).
Figure 3.3.2: Structure of Gross Federation
Revenue (Per Cent)

Source: Data from The Office of Accountant General of the
Federation (OAGF) and the Federal Ministry of Finance, Budget,
and National Planning (FMFB&NP).

Table 3.3. 1: Federally Collected Revenue and
Distribution (N' Billion)

Half
Year-19
Half
Year-20
Budget
Federation Revenue
(Gross)
4,694.6
4,662.5
5,132.3
Oil
2,632.9
2,793.8
1,772.3
Crude Oil & Gas Exports
224.1
234.1
328.4
PPT & Royalties
1,635.3
1,628.6
614.7
Domestic Crude Oil/Gas Sales
717.6
873.5
213.3
Others
55.9
57.6
615.9
Non-oil
2,061.7
1,868.7
3,308.7
Corporate Tax
629.8
569.1
899.3
Customs & Excise Duties
405.9
418.2
502.1
Value-Added Tax (VAT)
597.1
637.8
1,095.3
Independent Revenue of Fed.
Govt.
216.0
98.4
466.4
Others*
212.9
145.3
345.5
Total
Deductions/Transfers*
1,157.1
1,343.2
1,360.0
Federally Collected
Revenue
Less Deductions &
Transfers**
3,537.3
3,319.3
3,772.3
Plus:


Additional Revenue
139.5
252.6
0.0
Excess Oil Revenue


Oil Revenue
Non-Oil Revenue
Box 4: Federal Government Revises the 2020 Budget
Sequel to the eroding effect of COVID-19 on government
finances, through its disruptions of economic activities and
depression of international crude oil prices, the Federal Executive
Council (FEC) on May 12, 2020 approved the revision of the
Medium-Term Expenditure Framework and Fiscal Strategy Paper
(MTEF&FSP, 2020-2022) as well as the amendment to the 2020
Appropriation Act.

The FEC approved the downward review of the key assumptions
underpinning the 2020 approved budget, including the reduction
of the crude oil price benchmark from US$57 pb to US$28 pb.
This is in addition to cuts in selected budget heads, including the
capital expenditures of ministries, departments, and agencies
(MDAs), and the inclusion of new spending in relation to tackling
the COVID-19 Pandemic.
Revised Budgetary Parameters
Parameters

Approved
Budget

Revised
Budget
Oil price per barrel
US$57
US$28
Crude oil production
2.18 mbpd
1.80 mbpd
Exchange rate
₦305/$1
₦360/$1
The revision also included the N500 billion COVID-19
Intervention Fund, which would notably be funded from the
following sources; Federal Government Special Accounts
(N263.63 billion), Federation Special Accounts (N186.37 billion),
and grant & donations (₦50.00 billion).

The revised budget also provided for new borrowings to be
financed from both domestic and external sources to the tune of
N1,594.99 billion and N2,578.57 billion, respectively.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Excess Non-Oil Revenue
12.1
11.7
0.0
Exchange Gain
49.3
136.9
0.0
Total Distributed
Balance
3,677.0
3,568.4
3,726.7
Federal Government
1,576.1
1,522.1
1,434.8
State Governments
1,042.4
1,023.4
1,157.9
Local Governments
783.3
768.0
856.7
13% Derivation
275.2
255.0
277.3
Source: Compiled from OAGF figures 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 includes cost of revenue collections and JVC cash calls; while
transfers entails provisions for FGN Independent revenue and other NonFederation revenue.

Drivers of Federally Collected Revenue
i.
Oil Revenue
Despite the plunge in crude oil prices and oil
production cuts, oil revenue in the first half of
2020 increased by 57.6 per cent over its budget
benchmark. This was attributed to the lag effects
of the Nigeria National Petroleum Corporation’s
(NNPC) accrual accounting method, where oil
transaction contracts materialise within 90 days
from the date of initiation, after which the
proceeds are deposited in the Federation
Account. Therefore, oil revenue receipts in the
first quarter of 2020, was inclusive of part of the
transactions in 2019Q4, prior to the plunge in
crude oil prices.
Thus, at N2,793.84 billion (4.0 per cent of GDP)
estimated gross oil revenue 4 was above its
benchmark by 57.6 per cent. The rise was largely
driven by increases in Petroleum Profits Tax &
Royalties.


4 Oil transaction contracts take about 90 days to fully materialize.
Consequently, oil revenue receipts in the current period are reflective of
Figure 3.3.3: Composition of Oil Revenue
(Per Cent)

Source: Data from the OAGF and the FMFB&NP

Figure 3.3. 4: Composition of Non-Oil Revenue
(Per Cent)
Source: OAGF and the FMFB&NP

ii.
Non-oil Revenue
The lull in domestic economic activities and the
disruptions in international trade and logistics,
traceable to the Pandemic, hampered non-oil
receipts. As a result, non-oil revenue, at
N1,868.66 billion (2.7 per cent of GDP), declined
by 43.5 per cent below its budget benchmark.
The fall was attributed to shortfalls in Corporate
Tax, Value Added Tax (VAT), Customs & Excise
Duties and the Independent Revenue of the FGN,
reflecting subdued economic activities due to
the shutdown of businesses occasioned by
COVID-19 containment measures.
Other factors included the Federal Inland
Revenue Service (FIRS) introduction of tax relief
developments in the domestic and global economies, three months
preceding the current period of analysis.

Crude Oil
& Gas Exports
8.3%
PPT &
Royalties
58.3%
Domestic
Crude Oil &
Gas Sales
31.3%
Others
2.1%
Corporate
Tax
30.4%
Customs &
Excise Duties
22.4%
ValueAdded Tax
34.4%
FGN
Independent
Revenue
5.3%
Other
Transfers
7.8%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
measures, including the extension of deadlines
for filing tax returns on businesses that had fallen
due, and the cessation of penalties and fines on
defaulting taxpayers. In addition, COVID-19
lockdown measures lowered revenue collections
from Customs Special Levies, by 52.2 per cent,
relative to half year 2019.
Of the Gross Federally Collected Revenue from
oil and non-oil sources, there were statutory
deductions of N1,099.55 billion with respect to
oil and non-oil revenue earnings. Of this amount,
the sum of N959.77 billion was deducted from oil
revenue, while the balance of N139.78 billion
was deducted from non-oil revenue.
Allocations to the three-tiers
The decline in receipts into the Federation
Account in the first half of 2020 lowered
allocations to the three tiers of government,
with
contractions
in
the
fiscal
space,
particularly at the subnational level. The weak
fiscal positions at the subnational levels were
worsened by lower disbursements from the
Federation Account, and the impairment of
states’ internal revenue generation efforts
owing to the Pandemic.
Towards mitigating the effect of COVID-19 on
the finances of state governments, as well as
fast-tracking economic recovery, a US$750
million World Bank Facility was made available
to state governments, under the States’ Fiscal
Transparency, Accountability and Sustainability
(SFTAS) programme. In addition, some states
legislated cuts in their 2020 annual budgets, to
forestall further deterioration in fiscal balances.
These fiscal supports and adjustments were
expected to enhance fiscal positions.
Figure 3.3.6: Distribution to the Three Tiers of
Government and 13% Derivation Fund
(N’ Billion)

Source: Data from the OAGF and the FMF

FG
SG
LG
13%
Benchmark
Mid-2020
Mid-2019
Figure 3.3.5: Subnational Government
Revenue (N’ Billion)

Half Year 2019
Half Year 2020
Half Year
Benchmark
State Governments
1,042.42
1,023.43
1,157.90
Local Governments
783.33
767.98
856.69
13% Derivation
275.18
254.95
277.30


State Government Allocations
% of Total
Top 3
Delta
8.2
Akwa-Ibom
6.4
Lagos
6.4
Bottom 3
Ebonyi
1.8
Kwara
1.8
Ekiti
1.8

Composition of allocations to State Governments


Local Government Allocations
% of total
Top 3
Lagos
6.8
Kano
5.6
Katsina
4.1
Bottom 3
Ebonyi
1.6
Gombe
1.5
Bayelsa
1.1

Composition of allocations to Local Governments

Federation Acct
70.6%
VAT
23.2%
Excess Oil
Revenue
0.4%
Excess Non-Oil
2.5%
Exchange Gain
3.3%
VAT
27.0%
Exchange Gain
3.3%
Federation
Account
66.6%
Excess
Oil
2.8%
Non-Oil Excess
0.3%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Tax Effort Evaluation
An assessment of tax effort in the first half of
2020, showed that tax revenue, including oil and
non-oil taxes, accounted for 54.4 per cent of the
Federally Collected Revenue (gross), reflecting a
slight decline of 0.8 per cent, relative to the
corresponding period
of
2019.
However,
expressed as a proportion of GDP, the tax-toGDP ratio was 3.6 per cent, which was
significantly lower, compared with the average
of 17.2 per cent in 26 African countries5. This was
indicative of a low tax effort and emphasised the
need to improve the efficiency of tax
administration in Nigeria.
b. Fiscal Operations of the Federal Government
i.
Federal Government Fiscal Balance
The revenue effect of low oil prices and subdued
economic activities, combined with rising
expenditure as a result of the government’s
effort to boost the economy and reduce
poverty, in the face of the COVID-19 challenge,
led to a deterioration in the FGN fiscal balance
in the review period.
The provisional overall deficit of the FGN at
N2,643.66 billion, or 3.8 per cent of GDP, was 5.9
per cent above the budget benchmark of
N2,487.77 billion. However, it was 5.6 per cent
below the level recorded in the first half of 2019.
The deficit was financed mainly from domestic
sources.


Table 3.3.2: Fiscal Balance Half Year 2020
(N' Billion)

Half Year

Half-Year

Benchmark
Retained revenue
2,102.62
1,924.47
2,917.50
Aggregate expenditure
4,901.93
4,568.13
5,405.27
Primary balance
-1,687.04
-1,076.95
-1,011.92
Overall balance
-2,799.31
-2,643.66
-2,487.77
Deficit-to-GDP
-4.2%
-3.8%
-3.6%
Source: CBN Staff Estimates from available data
Note: Figures in 2020 are provisional
The high deficit, relative to the budgeted
amount, reflected the expansionary fiscal stance
of the government and its effort to mitigate the
impact of the Pandemic and support growth.
ii.
Federal Government Retained Revenue
The FGN Retained Revenue was dictated,
largely, by the lower allocations from the
Federation Account owing to the Pandemic.
The provisional Federal Government Retained
Revenue, at N1,924.47 billion or 2.8 per cent of
GDP, in the first half of 2020, dropped by 34.0
per cent and 8.5 per cent, respectively,
compared with its benchmark and receipt in the
corresponding period of 2019. The decline was
attributed to the downturn in oil proceeds and
the effect of COVID-19 containment measures
on economic activities. Significant drops of 54.5
per cent and 8.2 per cent were recorded in the
FGN Independent Revenue and Statutory
(Federation Account allocation) components of
FGN Retained Revenue respectively, relative to
the level in the corresponding period of 2019.


5 OECD: Revenue Statistics in Africa, 2019

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020


Table 3.3.4: Federal Government Retained
Revenue (N Billion)
Half
Year

Half
Year

Benchmark
FGN Retained
Revenue
2,102.62
1,924.49
2,917.50
Federation Account
1425.32
1308.82
1282.60
VAT Pool Account
85.98
88.97
152.20
FGN Independent
Revenue
216.03
98.40
466.42
Excess Oil Revenue
35.79
54.77
0.00
Excess Non-Oil
22.62
5.55
0.00
Exchange Gain
6.40
63.96
0.00
Others*
310.49
304.02
1016.28
Source: Computed from OAGF and the FMFB&NP data
Note: * Includes FGN balance of special accounts, transfers to CRF
and payments to FGN and other statutory benefits.
iii.
Federal Government Expenditure
The level and composition of government
expenditure in the first half of 2020, were
influenced, largely, by the need to support
growth, as well as cushion the effect of the
COVID-19 pandemic on the citizenry. The
accommodation of additional spending in the
containment of the effects of the pandemic
contributed
to
the
provisional aggregate
expenditure of N4,568.13 billion or 6.6 per cent
of GDP, in the first half of 2020. For instance, the
establishment of the N500 billion COVID-19
Crisis Intervention Fund for the purposes of
strengthening the healthcare system and
mitigating the impact of the Pandemic on the
economy, was among other initiatives that
added to the overall government spending in the
period.
Table 3.3.5: Federal Government Expenditure
(N’ Billion)
Half Year

Half Year

Half Year
Benchmark
Aggregate Expenditure
4,901.9

4,568.1

5,405.3

Recurrent
3,548.3

3,843.1

3,947.0

of which:
Personnel Cost
1,123.3

1,426.6

1,523.2

Pension and Gratuitie
147.4

180.2

268.4

Overhead Cost
812.1

558.5

504.5

Interest Payments
1,112.3

1,566.7

1,475.9

Domestic
202.2

251.8

402.7

External
910.1

1,315.0

1,073.1

Special Funds
353.2

111.2

175.0

Capital Expenditure
1,123.5

444.8

1,244.3

Transfers
230.2

280.2

214.0

Source: CBN Staff Estimate

Aggregate expenditure in the period was below
the benchmark and level in the first half of 2019
by 6.8 and 15.5 per cent, respectively. The
reduction followed the adjustment made to the
budget owing to the effects of the pandemic
Non-debt
expenditure
was
below
the
benchmark by 7.9 per cent and constituted 49.8
per cent of total expenditure; while interest
payments amounted to N1,566.72 billion or 81.4
and 34.3 per cent of FGN Retained Revenue and
total expenditure, respectively.

Table 3.3.3: Economic Classification of Government Expenditure
Half Year 2020

Expenditure
(=N=billion)
Percentage share

Administration
Economic
services
Social and
community
services
Transfers
Recurrent

Capital

Transfers

Source: Staff estimates

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.3.7: Composition of Federal
Government Expenditure (Per cent)
Source: Data from the OAGF
Recurrent expenditure, at N3,843.14 billion or
5.5 per cent of GDP, accounted for 84.1 per cent
of total expenditure, while capital expenditure6
and transfers had 9.7 and 6.2 per cent,
respectively. The disproportionate share of
recurrent expenditure in total government
spending was indicative of a switch in
government priority, owing to the COVID-19
pandemic. Interest payments7 represented 40.7
per cent of total recurrent expenditure and grew
by 40.9 per cent above the benchmark of
N1,475.86 billion.
iv.
Public Debt Strategy and Sustainability
Total Public Debt
Total public debt outstanding was driven by
rising fiscal deficits and associated borrowings,
induced by low revenue inflow in the face of
relatively high expenditure.
Total public debt, constituting both the Federal
and State Governments’ external and domestic
debt, in the first half of 2020, stood at
N31,008.64 billion or 22.3 per cent of GDP, a
sizeable increase of 20.6 per cent over its level at
end-June 2019. The increase was attributed to
the receipt of Budget Support Loan from the

6 Represented 23.1 per cent of the FGN retained revenue in the first half of
2020. This was above the West African Monetary Zone’s (WAMZ) minimum
benchmark of 20 per cent.
International Monetary Fund, new domestic
borrowing
to
finance
the
revised

Appropriation Act which included the issuance of
a ₦162.557 billion Sukuk bond, and Promissory
Notes to settle claims of exporters. The Federal
Government owed 81.5 per cent of the total
outstanding debt, while State Governments
accounted for the balance of 18.5 per cent.
Regardless, given that the FGN guarantees
external borrowing by States in line with section
47 (3) of the Fiscal Responsibility Act, 2007, the
latter’s share of external debt (13.5 per cent of
total external debt was a contingent liability to
the FGN.
Table 3.3. 6: Total Public Debt (N’ Billion)
Type
1st Half

1st Half

1st Half

External Debt
6,750.91
8,322.63
11,363.24
Of which:


FGN
5,452.09
7,012.87
9,824.28
States and FCT
1,298.82
1,309.76
1,538.96
Domestic Debt
15,628.76
17,379.02
19,645.40
Of Which:


FGN
12,151.43
13,412.80
15,455.70
States and FCT
3,477.32
3,966.22
4,189.70
Total
22,379.66
25,701.65
31,008.64
Source: Compiled from DMO Data

Federal Government Debt
The 2020-2023 Debt Management Strategy
(DMS) covers the main financial obligations over
which the FG exercises full control, namely, the
FG’s external and domestic debt, and the SGs’
external
debt.
The
DMS
ensures
debt
sustainability by among others, pursuing an
optimal domestic-external debt ratio of 60:40
and a long term-short term domestic debt
portfolio ratio of 75:25.
7Include interest payments on CBN Overdraft.
Recurrent
84.1%
Capital
9.7%
Transfers
6.2%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
The consolidated debt stock of the Federal
Government at end-June 2020, stood at
N26,818.94 billion or 19.3 per cent of GDP which
was below Nigeria’s DMS threshold of 25 per
cent of GDP. This represented an increase of 23.4
per cent over the level at end-June 2019.
Figure 3.3. 8: Composition of FGN Debt Stock

Source: Compiled from DMO data
In the first half of 2020, domestic debt comprised
57.6 per cent of the total, while external debt
accounted for the balance of 42.4 per cent. This
indicated a mix that was close to the 2020-2023
DMS’s 60:40 target. In terms of the domestic
debt portfolio mix, short-term Nigerian Treasury
Bills (NTBs), whose tenor fall between 91 and
364 days, constituted 17.9 per cent of the total,
while 72.7 per cent were medium- and long-term
instruments.
The relatively high composition of domestic debt
increases concerns about the transmission of the
sovereign
default
risk
(associated
with
government borrowing) to domestic creditors,
most of whom were banks.
On the other hand, foreign financing comprised
loans from Commercial (35.5 per cent of total
external debt stock), Multilateral (52.0 per cent)
and Bilateral sources (12.5 per cent). Compared
to the first half of 2019, the proportions showed
the FGN’s increased preference for Multilateral
and Bilateral loans, relative to Commercial loans.
The foreign debt portfolio mix was influenced,
largely, by interest cost, tenor, and adjoining
borrowing terms and conditions.
With a significant reduction in the stock of NTBs
over the 2016-2019 DMS cycle, debt service as a
ratio of non-debt expenditure and revenue,
averaged 31.3 per cent and 45.9 per cent,
respectively, reflecting an upward trend from
26.4 per cent and 39.1 per cent, respectively, in
the first half of 2019. The gains recorded in
reducing the cost of debt service were reversed
by the negative impact of the COVID-19
pandemic on government finances as the same
ratios rose to 38.4 per cent and 59.9 per cent,
respectively in the first half of 2020.


1st Half

1st Half

1st Half

Local Currency Denominated Debt
Foreign Currency Denominated Debt
Total Debt

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.3. 9: Breakdown of Total Debt Service,
First Half 2016 - 2020 (N’ Billion)
Source: Data from the DMO

Figure 3.3. 10: Breakdown of External Debt
Stock, First Half 2016 – First Half 2020
(US$ Billion)

Source: Data from the DMO


At 19.2 per cent, the debt-to-GDP ratio indicated
a solvency position of the government.
However, the rising cost of debt service
underscores a precarious liquidity position that
could impair the government’s fiscal space, as
well as its growth objectives.
Generally, the trajectory of FGN debt further
constrained fiscal policy during the period, as
interest payment obligations amounted to
N1,153.13 billion in the first half of 2020. This
suggested that, despite the subsisting revenue
challenge, which was exacerbated by COVID-19,
the larger proportion of FGN revenue was
devoted to debt service.

1st Half 2016
1st Half 2017
1st Half 2018
1st Half 2019
1st Half 2020
Multilateral
Others
-

1,000
1st Half

1st Half

1st Half

1st Half

1st Half

Domestic Debt (N' Billion)
External ($US Million)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
3.4 FINANCIAL DEVELOPMENTS
a. Monetary and Credit Developments
The effects of COVID-19 pandemic on the
economy were unprecedented and severe
leading to volatility in capital markets, rising
corporate and public debt, capital flow
reversals, and drastic declines in oil prices.
These posed major challenges to monetary
policy in the first half of 2020. In response to
these
challenges,
the
Monetary
Policy
Committee (MPC) in March and May 2020, took
major decisions to support the Federal
Government’s efforts at sustaining lives and
livelihoods affected by the Pandemic.
The
MPC
among
others,
extended
the
moratorium on loans by an additional 1 year to
ease pressure on loan repayments, reduced
interest rates from 9.0 per cent to 5.0 per cent
on
its
existing
intervention
programmes
andcreated a N50.0 billion fund to support
households and Small and Medium Enterprises
(SMEs) affected by the COVID-19 pandemic. The
Bank also, reduced the monetary policy rate
(MPR) by 100 basis points to 12.50 per cent but
retained the cash reserve ratio at 27.50 per cent,
liquidity ratio at 30.00 per cent and the
asymmetric corridor of +200/-500 basis points
around the MPR for the standing lending and
deposit facilities, respectively. The decisions
were to ease tightening financial conditions in
the market and moderate prices through
support for the production of goods and
services.


Broad Money Supply
Growth in monetary aggregates remained
largely below indicative targets for 2020. Broad
money supply (M3) grew by 2.4 per cent to
N35,625.87 billion at end-June 2020, compared
with 5.2 per cent at end-June 2019. The growth
in M3 when annualized stood at 4.9 per cent,
which was below the provisional growth target
of 11.7 per cent for 2020. The modest expansion
in broad money supply reflected decline in
liabilities to non-residents, which resulted in a
30.5 per cent rise in net foreign assets. Claims on
the domestic economy grew by 5.9 per cent
(annualised to 11.7 per cent), a slow growth,
compared with the 14.2 per cent at the end-June
2019 and the benchmark growth of 16.9 per cent
for 2020. The slow growth in domestic claims
was due, largely, to the 6.6 per cent decline in
net claims on the Federal Government in
contrast to the significant growth of 56.9 per
cent at end-June 2019.
The lackluster growth in monetary aggregates
relative to targets provided room for more
monetary accommodation for the expansion of
economic activities. The corresponding growth
in monetary liabilities was due to the 21.9 per
cent and 10.8 per cent surge in transferable
deposits and ‘other deposits’ of the Depository
Corporations (DCs), respectively. The significant
growth of narrow money stock (16.2 per cent)
emanated from the uncertainties surrounding
the COVID-19 pandemic which drove money
demand for precautionary and transactionary
purposes.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Table 3.4. 1: Growth in Monetary Assets and
Liabilities
Source: Central Bank of Nigeria

Drivers of Growth in Monetary Assets
Among the drivers of growth in money supply,
domestic claims contributed the largest share
at 6.1 percentage points, followed by net
foreign claims at 5.1 percentage points. Net
foreign assets of the banking system grew by
30.5 per cent to N7,576.93 billion at the end of
the review period, and contributed 5.1
percentage points to the growth in broad money
supply. Domestic claims grew by 5.9 per cent to
N38,294.23 billion at end-June 2020 and
contributed 6.1 percentage points, compared
with 12.4 percentage points at end-June 2019.
Reduction in holdings of government treasury
bills by Other Depository Corporations (ODCs)
largely accounted for the decline of 6.6 per cent
in net claims on the Central Government.
Accordingly, the contribution of net claims on
central Government to the growth of total
monetary assets was negative 1.8 percentage
points, in contrast to the positive contribution of
8.6 percentage points at end-June 2019.
Claims on other sectors rose by 10.3 per cent to
N29,431.83 billion at end-June 2020, compared
with the 5.3 per cent growth at end-June 2019,
due to the 20.3 per cent and 8.2 per cent growth
in claims on Other Financial Corporations (OFCs)
and claims on private sector, respectively.
Consequently, the contribution of claims on
other sectors to the growth of total monetary
assets was 7.9 percentage points, compared
with the 3.8 percentage points in the first half of
2019.
Source: Central Bank of Nigeria

However, the growth in claims on ‘other sectors’
was due, largely, to OFCs which grew by 20.3 per
cent compared with 7.6 per cent at end-June
2019. Claims on the private sector grew by 8.2

Jun

Jun

Jun

Jun

Jun

Net Foreign
Assets

Net Domestic
Assets

Domestic Claims

Net claims on
Government


Claims on:


Other Sectors

Other financial
corporations

State and local
government

Public nonfinancial
corporations

Private sector

Total Monetary
Assets

Broad money
liabilities

Currency outside
depository
corporations

Transferable
deposits

Other deposits

Securities other
than shares

Table 3.4. 2: Contribution to the Growth in
Monetary Assets

Jun

Jun

Jun

Jun

Jun

Net Foreign
Assets

Domestic Claims

Net Claims on
Central
Government

Claims on:


Central
government

Other sectors

Other financial
corporations

States and local
governments

Public non-
financial
corporations

Private sector


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
per cent, which was an improvement over the
growth of 4.8 per cent at end-June 2019 and
reflected the efforts of the Bank at reviving
private sector growth.
Reserve Money
The accumulation of reserves by other
depository corporations led to a rise in reserve
money in the first half of 2020. The injection of
liquidity in the banking system, arising from
policy response to the COVID-19 pandemic in the
review period led to a significant increase in the
ODCs deposits with the Central Bank of Nigeria.
Consequently, the currency deposit ratio
declined to 21.0 per cent, from 38.9 per cent at
end-June
2019.
Liabilities
to
ODCs,
at
N10,956.20 billion, grew by 76.0 per cent at endJune 2020, from 6.7 per cent at end-June 2019.
Similarly, currency-in-circulation (CIC) rose by
14.2 per cent at end-June 2020. Thus, reserve
money grew by 52.9 per cent to N13,257.04
billion at end-June 2020, compared with 84.5 per
cent at end-June 2019.
Figure 3.4. 1: Reserve Money and its
Components: Sources

Source: Central Bank of Nigeria


Table 3.4.3: Reserve Money (N Billion)

Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Net
foreign
assets

Net
domestic
assets

Net claims
on Central
Government

Net
Claims on
other sector

Claims on
ODCs

Other
assets (net)

Reserve
Money

Currency in
Circulation

Liabilities
to ODCs

Source: Central Bank of Nigeria
Both foreign and domestic assets (net) of the
CBN accounted for the growth in reserve money.
Net foreign assets grew due to the decline in
liabilities to non-residents relative to assets,
while, the growth in net domestic claims was
accounted for mainly by the claims on other
sectors of the economy.
Figure 3.4.2: Reserve Money and its
Components: Uses (N’ Billion)

Source: Central Bank of Nigeria


Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20
N'billion
RM
NFA
NDA
OIN

Dec 16
Jun 17
Dec 17
Jun 18
Dec 18
Jun 19
Dec 19
Jun 20
N'billion
TBR
CIC
RM

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.4.3: Currency-Reserve Deposit Ratio
and Broad Money Multiplier

Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
Ratio
Per cent
Currency Deposit Ratio (lhs)
Broad Money Multiplier(rhs)

Source: Central Bank of Nigeria

Credit Utilisation by Sectors
Industry and services sectors accounted for the
largest share of credit utilised. Of the total credit
to
the
private
sector,
Agricultural
and
construction sectors accounted for 4.8 per cent
and 4.6 per cent in June 2020, respectively,
above their respective shares of 4.1 per cent and
4.0 per cent in the corresponding period of 2019.
Industrial and services sectors accounted for
37.7 per cent and 38.4 per cent of total
allocation, respectively, compared with 37.0 per
cent and 37.7 per cent in June 2019. The
government sector accounted for 8.0 per cent in
June 2020, over the 7.2 per cent in the first half
of 2019, reflecting the general decline in net
claims on the Federal government by the ODCs.
Table 3.4. 4: Sectoral credit allocation

19Jun
19Dec
20Mar
Apr-

20May
20Jun
Agriculture

Industry

Construction

Trade/General
Commerce

Government

Services

Source: Central Bank of Nigeria

Maturity structure of Banks Claims and liabilities
Structure of ODCs’ outstanding loans and
advances showed banks’ preference for shortterm maturities. Bank credit maturing within
one year accounted for 69.4 per cent, compared
with 47.0 per cent at end-June 2019. The
medium-term and long-term maturities stood at
10.4 and 20.2 per cent, respectively, compared
with 18.9 and 34.1 per cent at the end of the
corresponding period of 2019.
Figure 3.4. 4: Distribution of Bank Loans and
Advances by Maturity

Source: Central Bank of Nigeria
Similarly, short-term (of less than one-year
maturity) deposits constituted 87.7 per cent
compared with 89.1 per cent at the end of the
first half of 2019. Further analysis showed that
the medium and long-term deposits constituted
4.2 and 8.1 per cent, respectively, compared
with 3.6 and 7.3 per cent at end-June 2019. The
preponderance of short-term liabilities remains
a major constraint to holding long term assets by
ODCs.


Dec '16
Jun '17
Dec '17
Jun '18
Jun '19
Jun '20
Short-Term

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.4. 5: Maturity Structure of Bank
Deposits (per cent)

Source: Central Bank of Nigeria

Market Structure of the Banking Industry
The structure of the Nigerian banking industry
remained oligopolistic in the first half of 2020,
with the concentration ratios of the largest six
banks (CR6) at 68.1 in deposits and 65.2 in
assets. As in the corresponding half of 2019,
there was no dominance of a single bank, as the
share of the largest bank in deposits and assets
stood at 14.6 per cent and 14.3 per cent,
respectively compared with 14.9 and 13.2 per
cent in the first half of 2019. Fourteen banks had
percentage shares ranging from 0.1 to 5.1 per
cent in deposits and 0.1 to 5.2 per cent in assets,
compared with 0.1 to 4.3 per cent and 0.1 to 4.2
per cent, respectively in the corresponding
period of 2019.


Figure 3.4. 6: Market Concentration Ratios of
Banks (Assets and Deposits)


JUN 16
JUN 17
JUN 18
JUN 19
JUN 20
PER CENT
CR6(Deposits)
CR6(Assets)
CR(Largest-Deposits)
CR (Largest-Assets)

Source: Central Bank of Nigeria

The absence of dominance of any bank in the
industry was further affirmed by the Herfindhal
Hirschman Indices (HHI) of 937.38 (on a scale of
0 to 10,000) in deposits and 880.47 in assets,
compared with 664.1 and 608.6, respectively, in
the first half of 2019.
Figure 3.4.7: Measures of Competition in
Banks: Herfindahl-Hirschman Index


Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
HHI
HHI (Deposits)
HHI (Assets)

Source: Central Bank of Nigeria


Jun '17
Jun' 18
Jun 19
Jun 20
Per cent
Short term
Medium Term(rhs)
Long-Term(rhs)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Consumer Credit
The continued implementation of the LDR policy
led to a significant rise in consumer credit in the
period under review. At N1,127.10 billion,
consumer credit rose by 17.0 per cent at endJune 2020, compared with 10.3 per cent at the
end of the corresponding period of 2019, a
persistent trend since June 2018. At that level,
consumer loans constituted 3.9 per cent of total
credit to other sectors, in the first half of 2020,
compared with 3.3 per cent at the end of the
corresponding half of 2019.
Figure 3.4.8: Consumer Credit and Ratio of
Claims on Other Sectors (₦’ Billion)

Source: Central Bank of Nigeria

b. Financial Soundness
The financial sector remained stable in the
review period as the key financial soundness
indicators remained resilience. This was despite
the continued lull in global financial markets,
adverse shocks to global capital flows and
falling oil prices due to the impact of the COVID19 pandemic.
The banking industry generally enjoyed health in
the review period, as the industry’s capital
adequacy and liquidity ratios were above the
regulatory minimum. However, as a result of the
high increase in risk weighted assets, driven by
the implementation of the policy measures to
increase lending to the real sector, and
corresponding increase in total qualifying
capital, the industry capital adequacy ratio (CAR)
remain relatively stable at 15.0 per cent at the
end of the first half of 2020, compared with 15.3
per cent at end-June 2019.
The industry threshold, however, remained at
15.0 per cent for banks with international
authorisation and 10.0 per cent for banks with
either national or regional authorisation. The
industry liquidity ratio decreased to 65.1 per
cent at the end of the first half of 2020, from 73.0
per cent at end-June 2019, reflecting the
decrease in the stock of liquid assets held by
banks. With the exception of four commercial
banks and one merchant bank, others met the
minimum regulatory liquidity ratios of: 30.0 per
cent, 20.0 per cent and 10.0 per cent for
commercial banks, merchant banks and noninterest banks, respectively in the first half of
2020.
Due to sustained recoveries, write-offs and
disposals of pledged collaterals, the asset quality
of the banking industry, measured by the ratio of
non-performing loans to total loans (NPL ratio),
improved to 6.4 per cent at end-June 2020,
compared with 9.4 per cent at end-June 2019. At
that level, the ratio remained slightly above the
regulatory threshold of 5.0 per cent. Loan loss
provision coverage stood at 93.7 per cent at endJune 2020, compared with 79.8 per cent in the
corresponding period of 2019.
The Joint (CBN/NDIC) Risk Asset Assessment
(Target) examination of 26 banks in the review
period showed that banks’ earnings, compared

-

1,000
1,200
Jun16
Jun 17
Jun 18
Jun 19
Jun-20
Ratio (%)
N' Billion
Consumer Credit
Ratio of claims on other sectors (rhs)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
with the corresponding period of 2019,
improved as a result of higher volume of credit
transactions, enhanced asset quality and high
quality of loans that led to reduction in
impairment charges, among others.
c. Developments in Other Financial Institutions
The OFIs provided financial interventions
geared towards mitigating the effects of
COVID-19 pandemic on the Nigerian economy
and served as channels for delivering some CBN
intervention funds to the agriculture and health
sectors, as well as micro, small- and mediumsize enterprises (MSMEs) during the review
period. There were 6,334 Other Financial
Institutions (OFIs) at end-June 2020, compared
with the 6,183 institutions at end-December
2019, reflecting an increase of 151 OFIs. The
development was attributed to the licensing of
new OFIs, comprising 144 Bureaux de Change
(BDCs), six (6) Finance Companies (FCs) and one
(1) Microfinance Bank (MFB).
Total assets of other financial institutions (OFIs),
excluding the BDCs, rose by 19.4 per cent to
N3,802.58 billion at end-June 2020, relative to
N3,183.50 billion at end-December 2019. The
increase in total assets was attributed, largely, to
increased borrowings and reserves arising from
ploughed back profits, reflected in increased
placements and investments. Banks’ placements
with the sub-sector rose by 43.3 per cent to
N585.11 billion at end-June 2020, compared
with N408.18 billion at end-December 2019,
while investments increased by 55.6 per cent to
N904.13 billion. Similarly, shareholders’ fund
increased by 23.21 per cent to N585.58 billion at
end-June 2020, compared with N475.27 billion

8 Bank of Industry (BOI); Federal Mortgage Bank of Nigeria (FMBN);
Nigerian Export-Import Bank (NEXIM); Bank of Agriculture (BOA);
at
end-December
2019.
Borrowings
also
increased by 221.5 per cent from N547.97 billion
at end-December 2019 to N1,753.98 billion at
end-June 2020.
Development Finance Institutions
The development finance institutions’ assets
increased due to a significant rise in investment
and other assets. Total assets of the seven
development
finance
institutions
(DFIs)

increased by 22.3 per cent to N2,471.00 billion at
end-June 2020, compared with N2,021.18 billion
at end-December 2019. The development was
due largely to increases in reserves, deposits,
borrowings and long-term liabilities, as well as
increases in investments and other assets. The
paid-up capital, however, remained unchanged
at N238.78 billion, while the net loans and
advances decreased by 4.1 per cent to N1,130.89
billion at end-June 2020, compared with
N1,179.28 billion at end-December 2019.
Investments, other assets and fixed assets rose
by 537.7 per cent, 66.9 per cent and 10.1 per
cent, respectively in the review period. The sharp
increase in investments was traced, largely, to
short–term
investments, majorly,
treasury
instruments, following a reduction of funds in
bank placements. Aggregate shareholders’ funds
also increased by 22.3 per cent to N364.10 billion
at end-June 2020, from N297.82 billion at endDecember 2019. The increase was due, mainly,
to accretion to reserves of the BOI, DBN and
NMRC. A disaggregation of the total assets by
institution, indicated that the BOI, DBN, FMB,
NEXIM, NMRC, BOA and TIB accounted for 57.0,
19.3, 14.6, 4.4, 3.0, 1.5 and 0.2 per cent,
respectively. The BOI, FMBN, DBN, NEXIM,
Infrastructure Bank (TIB); Development Bank of Nigeria (DBN); and
Nigeria Mortgage Refinance Company (NMRC)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
NMRC and BOA accounted for 64.1, 21.3, 7.3,
5.4, 1.6 and 0.3 per cent, of total net loans and
advances, respectively.
However, the activities of some of the DFIs were
relatively marred by operational inefficiency and
negative adjusted capital. Some of these
institutions incurred high operating costs,
persistent operating losses and erosion of
capital,
which
adversely
affected
their
performance. Most of the DFIs exhibited weak
board oversight, poor credit appraisal and
administration, inadequate project monitoring,
and low loan recovery efforts, which resulted in
poor asset quality and high loan loss provisions,
negatively affecting earnings and capital.
Necessary statutory corrective measures were
affected by the monetary authorities to
safeguard the system.
Microfinance Banks
Assets of MFBs increased due to retention of
profit, injection of capital and the N50 billion
CBN COVID-19 intervention fund for household
and SMEs channeled through the MFB.
One Microfinance Bank (MFB) was licensed in
the first half of 2020, bringing the number of
licensed MFBs to 912 (10 National, 135 State and
767 Unit MFBs), compared with 911 MFBs (10
National, 135 State and 766 Unit MFBs) at endDecember 2019. Capital injection and accretion
to reserves from ploughed back profits have
bolstered MFBS total assets.
Total assets of the MFBs rose by 28.5 per cent to
N638.67 billion at end-June 2020 from N496.85
billion at end-December 2019. The paid-up
capital and shareholders’ fund increased by 2.7
per cent and 5.2 per cent to N80.89 billion and
N130.95 billion, respectively, compared with
N78.80 billion and N113.67 billion at endDecember 2019.
The CBN channeled intervention funds to the
sub-sector through NIRSAL MFB as palliatives to
cushion the effect of COVID-19 pandemic on
MSMEs and households.
Hence, net loans and advances increased by 28.5
per cent to N328.18 billion at end-June 2020,
from N255.47 billion at end-December 2019
Similarly, deposit liabilities rose by 13.3 per cent
to N283.14 billion at end-June 2020, compared
with N250.00 billion at end-December 2019.
Reserves also increased by 3.6 per cent, to
N50.06 billion at end-June 2020, compared with
N34.87 billion at end-December 2019.
Investible funds available to the MFBs sub-sector
in the review period amounted to N160.04
billion at end-June 2020, compared with N75.70
billion at end-December 2019. The funds were
sourced, mainly, from increase in long-term
loans (N96.93 billion), deposits (N32.97 billion)
and reserves (N15.19 billion). The funds were
used, mainly, to increase net loans and advances
(N72.71 billion), bank placements (N50.82
billion) and bank balances (N18.23 billion).
Finance Companies
Finance companies’ assets increased due
largely, to injection of capital, accretion to
reserves and increased borrowings. Total assets
and liabilities of Finance Companies (FCs) subsector increased by 9.9 per cent to N256.62
billion at end-June 2020, above the N233.42
billion at end-December 2019. Similarly, loans
and advances increased by 16.6 per cent to
N93.44 billion at end-June 2020, compared with
N80.13 billion at end-December 2019. However,
investments fell by 9.2 per cent to N10.57 billion

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
at end-June 2020, from N11.64 billion at endDecember 2019, due to disposal of investment
holdings by the institutions. Shareholders’ funds
increased by 17.7 per cent to N43.88 billion at
end-June 2020, from N37.29 billion at endDecember 2019. This was as a result of injection
of additional capital and increase in ploughed
back profit in the review period.
Borrowings increased by 11.0 per cent to
N170.25 billion at end-June 2020, compared
with N153.40 billion at end-December 2019.
Fixed assets also rose by 9.5 per cent to N50.67
billion at end-June 2020, compared with N46.28
billion
at
end-December
2019.
Similarly,
balances with banks and reserves increased by
47.1 per cent and 31.4 per cent to N17.96 billion
and N21.81 billion, respectively, at end-June
2020 relative to the levels at end-December
2019.
Investible funds available to the sub-sector in the
review period amounted to N29.76 billion,
compared with N65.40 billion at end-December
2019, signifying a lull in financial activities during
the review period. The funds were sourced,
mainly from borrowings (N16.85 billion),
reserves (N5.21 billion) and paid up capital
(N1.38 billion). The funds were utilised, mainly,
for loans and advances (N13.32 billion); bank
balances (N5.31 billion); and placement with
banks (N2.41 billion).
Primary Mortgage Banks
Primary
mortgage
banks’
total
assets
increased, reflecting increases in loans and
advances and placements with banks. Although
the number of licensed Primary Mortgage Banks
(PMBs) at end-June 2020, remained unchanged,
at 35, same as at end-December 2019,
comprising 12 National and 23 State PMBs, total
assets of the PMBs, however, increased
marginally by 1.0 per cent to N436.29 billion at
end-June 2020, over the N432.05 billion at endDecember 2019. Shareholders’ funds also fell by
12.3 per cent to N46.65 billion at end-June 2020,
below the level of N53.17 billion at endDecember 2019. Also, total loans and advances
and investment in quoted shares increased to
N240.45 billion and N12.49 billion, respectively,
at end-June 2019, compared with N238.49
billion and N9.96 billion at end-December 2019.
Similarly, placement with banks increased to
N46.94 billion at end-June 2020, compared with
N40.87 billion at end-December 2019. Noncurrent assets held for sale decreased to N50.02
billion at end-June 2020, relative to N52.59
billion at end-December 2019. Deposit liabilities
and other liabilities rose by 3.1 and 29.7 per cent,
respectively, to N147.98 billion and N206.16
billion at end-June 2020, compared with
N143.56 billion and N158.96 billion at endDecember 2019.
Investible funds available to the sub-sector
amounted to N21.04 billion at end-June 2020,
compared with N46.75 billion at end-December
2019. The fall in investible funds was due to the
lockdown
occasioned
by
the
COVID-19
pandemic. The funds were sourced, mainly,
from: increases in other liabilities (N6.72 billion);
deposits (N4.41billion); and reductions in noncurrent assets held for sale (N2.57 billion). The
funds were utilised, mainly, to shore-up reserves
(N7.63 billion), increase placement with banks
(N6.06 billion) and investment in quoted shares
(N2.53 billion).

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Nigeria Mortgage Refinance Company
Developments
in
the
Nigeria
Mortgage
Refinance Company reflected increases in
borrowings and reserves. Total assets of the
Nigeria Mortgage Refinance Company (NMRC)
stood at N74.71 billion at end-June 2020,
compared with N73.71 billion at end-December
2019.
Refinanced
mortgages,
however,
decreased by N0.85 billion to N17.67 billion at
end-June 2020, below the N18.35 billion in 2019,
occasioned by a decrease in the creation of
additional mortgages. The adjusted capital of
N13.70 billion was higher than the minimum
capital requirement of N5.0 billion for the
Company. Similarly, the capital adequacy ratio
(CAR) at 86.20 per cent, was above both the
regulatory minimum of 10.0 per cent and the
Company’s internal benchmark of 15.0 per cent.
Earnings, Capital and Composite Risk Rating, of
the
Company,
remained
unchanged
at
“Acceptable”,
“Strong”
and
“Moderate”,
respectively. Similarly, the Company’s mortgage
refinance facilities remained “Performing”. The
Company had also maintained its capacity to
generate capital internally, as its earnings
retention rate remained at 100.0 per cent since
its commencement of operations.
Bureaux-De-Change
The number of licensed BDCs increased to 5,300
at end-June 2020, compared with 5,164 at endDecember
2019.
The
increased
licensing
reflected the desire of the Bank to deepen
foreign liquidity, especially in the retail and of
the market.


Examination of Other Financial Institutions
The Bank conducted routine and special
examination of 250 OFIs in the first half of 2020.
The exercise covered Risk-Based Supervision
(RBS) of seven DFIs and forty MFBs, AML/CFT
examination, using the Risk-Based Approach for
114 BDCs, thirty two MFBs and seventeen PMBs,
as well as special examination of forty MFBs.
Highlights of the RBS examination report were
indicated in Table 3.4.9.
Similarly, the ML/FT RBS examination of the
thirty-two MFBs revealed that the overall ML/FT
rating for one MFB was “Low”, one was
“Moderate”, twenty-six “Above Average”, and
four “High”.
The overall ML/FT rating for the PMBs were
“Moderate” for two, “Above Average” for
fourteen, and “High” for one. The overall ML/TF
Risk Assessment of the BDCs showed “Above
Average” for 49 BDCs and “High” for 65
institutions.
Supervisory
Letters were
issued
to
the
institutions with regulatory directives to effect
sound corporate governance, ensure compliance
with extant AML/CFT policies and procedures,
strengthen
internal
controls/audit,
and
monitor/report suspicious transactions as well
as rendition of returns on Politically Exposed
Persons (PEPs) to the CBN. Also, for the PMBs,
Supervisory Letters were issued to each of the
institutions with regulatory directives to appoint
Chief Compliance Officers, include AML/CFT
training in their training plans, ensure risk
profiling of customers and compliance with
regular submission of suspicious transaction
reports (STRs) to the NFIU.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020

Source: Central Bank of Nigeria


Table 3.4. 5: Examination of Other Financial Institutions
OFIs
Composite Risk
Rating (CRR)
NPL
Earnings Rating
Capital Rating
Prudential and Soundness
Analysis
Development
Finance
Institutions

4 = High
1 = Above Average
1 = Moderate
1 = Low.


Two DFIs = zero per cent
NPL,
5 = NPL ratios above the
regulatory maximum of
5.0 per cent.
Average NPL ratio of 28.11
per cent was significantly
higher than the regulatory
maximum of 5.0 per cent
3 =Acceptable
4 = Weak
3 = Strong
4 = Weak
Three DFIs failed the minimum CAR of
10.0 per cent.
Two out of the five retail DFIs met the
minimum regulatory capital of N10.0
billion.
The Wholesale DFI, DBN, and the NMRC
met the regulatory minimum capital of
N100.0 billion and N5.0 billion,
respectively.
Primary
Mortgage
Banks


22 = High
7 = Above Average
5 = Moderate

Average NPL remain
unchanged at 48.94 per
cent in the absence of
more recent RBS
examination due to
lockdown occasioned by
COVID-19 pandemic.
5 = Acceptable,
12 = Needs
Improvement
17 = Weak.
ROE improved to 0.2
per cent from negative
1.3 per cent at endDecember 2019.
Average ROA also
improved from
negative 0.16 per cent
at end-December 2019
to 0.07 per cent.
1 = Strong
11 = Acceptable
9 = Needs Improvement
13 = Weak.
CAR declined to 13.9 per cent compared
with 14.0 per cent at end-December
2019.
With the exclusion of the financial data
of four (4) technically insolvent
institutions, the average CAR for the
other 29 PMBs was 38.9 per cent.
Liquidity ratio was 44.0 per cent
compared with the revised average
liquidity ratio of 85.4 per cent at endDecember 2019.
Four critically illiquid PMBs had
aggregate liquidity ratio of negative 1.6
per cent.
Seven PMBs also failed the minimum
liquidity ratio benchmark of 20.0 per cent
compared with nine PMBs at-endDecember 2019.
Finance
Companies
6 = Moderate,
14 = Above Average,
37 = High.

Average NPL was 43.03
per cent compared with
15.21 per cent at endDecember 2019, due
largely to lull in economic
activities due to the
COVID-19 pandemic.


Average CAR was 68.14 per cent,
compared with 47.30 per cent at endDecember 2019, and both ratios were
higher than the regulatory minimum of
12.50 per cent.
Average ROA and ROE were1.85 per cent
and 11.03 per cent compared with 3.45
per cent and 21.19 per cent respectively,
at end-December 2019.
Microfinance
Banks


1 = Moderate
17 = Above Average
22 = High.

Average PAR decreased to
24.33 per cent compared
with 51.7 per cent at endDecember 2019, due,
largely, to loan recoveries
before the advent of the
COVID-19 pandemic, and
regulatory forbearance for
the restructuring of credit
facilities for institutions
impacted by COVID-19.
8 = Acceptable
21 = Needs
Improvement
11 = Weak
18 = Acceptable,
20 = Needs Improvement
2 = Weak.
Average CAR of the sub-sector fell to
23.02 per cent at end-June 2020,
compared with 24.6 per cent at endDecember 2019.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
d. Financial Markets
Activities in the money market in the first half
of 2020, reflected the trend in liquidity
conditions in the banking system and the
slowdown in economic activities, attributable
to the outbreak of the COVID-19 pandemic.
i.
Money Market Developments
Liquidity in the banking system was influenced,
largely, by fiscal operations of governments,
effects of CRR and settlement for foreign
exchange
intervention.
Others
included
maturity of CBN bills and monetised proceeds
from crude oil sales (distributed at the monthly
Federation Accounts Allocation Committee
(FAAC)) meeting. The withdrawal of liquidity
through the sale of CBN bills was a prominent
factor that influenced the banking system’s net
liquidity level and consequently, the movement
in money market rates.
Open Market Operation
Phased reduction of the number of auctions
conducted during the period, occasioned by the
outbreak
of
the
COVID-19
pandemic,
culminated in low level of activity in OMO. CBN
bills worth N6,387.76 billion were issued in the
first half of 2020 compared with N11,851.66
billion in the corresponding half of 2019. Public
subscription and sale amounted to N8,567.22
billion and N6,453.88 billion, respectively,
compared
with
N13,054.31
billion
and
N11,827.66 billion, subscribed to, and allotted,
in the corresponding half of 2019. Consequently,
the cost of liquidity management, at end-June,
reduced by 48.7 per cent below the level in the
corresponding period of 2019. The tenors of
OMO auction ranged from 64 to 364 days, at
stop rates of 9.12 per cent (±4.17). In the
preceding year, the tenors were between 27 to
364 days, at stop rate of 13.03 per cent (±1.98).
Discount Window Operations
Due to the preference of tenored funds over the
overnight facility, total request for repo
transactions increased slightly in the first half of
2020. Total request for repo transaction rose by
8.1 per cent to N661.03 billion in the first half of
2020, compared with N611.30 billion in the first
half of 2019. Applicable interest rates in the
review period, stood at 18.00 per cent (±1.00) for
the 4- to 90-day tenors. Consequently, total
interest earned on repo was N10.75 billion. In
2019, the interest earned was N19.25 billion at
18.75 per cent (±0.75) for the same tenors. The
high demand in 2020 reflected greater request
for repo, which was attributed to a preference
for tenored funds over overnight facility.
Standing Facilities
Activities were low at the standing facility
window following the slowdown in economic
activities arising from the impact of COVID-19
pandemic.
ODCs patronised the Bank’s standing facility
window to square-up their positions at the end
of each business day. The trend at the window
showed less recourse to the SLF in the first half
of 2020, than in the corresponding period of
2019. The average daily request for SLF was
N34.14 billion in 95 days, out of which ILF
conversion was N12.89 billion, amounting to
37.76 per cent of the total request. The average
daily interest earned was N0.21 billion.
Comparatively, in the first half year of 2019, the
average daily request for SLF was N98.65 billion
in 121 days, out of which ILF conversion was

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
N35.50 billion, while average daily interest
income was N0.67 billion.
Patronage at the SDF window declined to an
average daily amount of N21.87 billion for the
123 days in 2020, from N67.64 billion for the 121
days in 2019. The decline in SDF was partly
attributed to the reduced threshold for daily
deposits per institution from N7.5 billion to N2.0
billion in the quest by the CBN to curtail
unbridled requests by market participants and
encourage lending to the real economy. Average
daily interest payments on the deposits
decreased to N8.21 million in the review period,
from N23.22 million in 2019. The reduced
volume of transactions in the year was also due
to slowdown in economic activities resulting
from the impact of COVID-19 pandemic.
Applicable rates, for the SLF and SDF, anchored
on the MPR were 15.50 per cent and 8.50 per
cent, from January 02 to May 27, 2020,
respectively; and 14.50 per cent and 7.50 per
cent from May 28 to June 30, 2020.
Comparatively, in the first half of 2019, the
applicable rates were 16.00 per cent and 9.00
per cent, from January 02 to March 25, 2019,
respectively, and 15.50 per cent and 8.50 per
cent from March 26 to June 30, 2019.
Inter-bank Transactions
The inter-bank funds market was relatively
active in the first half of 2020 with more
patronage at the secured segment of the
market. The total value of transactions at the
market stood at N1,453.24 billion in the first half
of 2020, an increase of 20.6 per cent, above the
N1,205.09 billion in the corresponding period of
2019. Similarly, there was a large patronage of
Open-buy-back (OBB) transactions, attributed
largely to the greater risk aversion by market
participants relative to the unsecured market
segment. Accordingly, transactions at the OBB
segment, at N1,377.80 billion, accounted for
94.81 per cent, while the unsecured inter-bank
call took up the balance of 5.19 per cent or
N75.44 billion.
Primary Market Activities
Public subscription at the primary market for
NTBs witnessed a decline due to low yields.
Total NTBs issued and allotted amounted to
N1,515.68 billion apiece, indicating an increase
of N41.84 billion or 2.9 per cent above the level
in the corresponding period of 2019. Total public
subscription
stood
at
N2,904.16
billion,
compared with N4,153.63 billion in the
corresponding period of 2019. The decline in
public subscription was traceable to the lower
yield on government securities.
Of the total NTBs allotted, banks, including
foreign investors, took up N978.37 billion or 64.6
per cent, Mandate and Internal fund customers
(including CBN Branches), N498.44 billion or 32.9
per cent and merchant banks N38.88 billion or
2.6 per cent. The successful bid rates in the
market were 2.65 per cent for the 91-day, 3.47
per cent for the 182-day and 5.15 per cent for
the 364-day tenors. The range of successful bid
rates in the corresponding period of 2019 was
higher at 10.30 per cent for the 91-day, 12.69 per
cent for the 182-day and 13.51 per cent for the
364-day tenors. The development was, largely,
on account of the prevailing monetary policy
stance.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Structure of Outstanding holdings of Nigeria
Treasury Bills
Treasury bills outstanding as at end-June 2020,
stood at N2,760.44 billion, compared with
N2,651.51 billion at end-June 2019. Of the total,
banks accounted for 21.1 per cent of the total at
end-June 2020, compared with 41.7 per cent in
the corresponding period of 2019. Mandate
(parastatals) and Internal Funds customers took
up 44.7 per cent, merchant banks 33.7 per cent,
while the CBN held the balance of 0.5 per cent.
Figure 3.4.9: Nigerian Treasury Bills
Outstanding (N’ Billion)

Source: Central Bank of Nigeria

OTC Transactions in NTBs
Reduced
patronage
from
foreign
and
institutional investors reduced over the counter
(OTC) transactions In NTBs. Transaction from
January to June 2020, amounted to N39,728.24
billion, indicating a decline of N5,065.81 billion
or 11.3 per cent below the level of N44,794.05
billion in the first half of 2019.
OTC transactions in FGN Bonds during the first
half of 2020 amounted to N13,249.67 billion,
indicating an increase of N6,196.95 billion or
87.9 per cent over the level of N7,052.72 billion
in the same period of 2019. The trend was traced
to the active participation of both local and
foreign investors at the long tenored debt
market.
Federal Government of Nigeria Bonds
FGN Bonds valued at N615.00 billion, were
offered to the public, while public subscription
and sale stood at N2,449.97 billion and
N1,308.58 billion, respectively. The amount
offered comprised new issues and re-openings
of FGN Bonds. In the same period of 2019, FGN
Bonds issues, subscription and allotment
amounted to N700.00 billion, N1,160.45 billion
and N615.39 billion, respectively. The decline in
issues was attributed to government’s efforts at
rebalancing domestic debt structure in favour of
longer tenored instruments to reduce the
burden of domestic debt service.
Consequently, the total value of FGN Bonds
outstanding at end-June 2020 stood at
N11,673.84 billion, compared with N10,171.29
billion at end-June 2019, indicating an increase
of N1,502.54 billion or 14.8 per cent. The
structure of holdings showed that N5,319.79
billion or 45.6 per cent was held by commercial
banks, N146.64 billion or 1.3 per cent by
merchant banks, and the balance of N6,207.41
billion or 53.1 per cent by non-bank public.
Figure 3.4.10: Distribution of FGN Bonds
(End-June 2020, per cent)

Source: Central Bank of Nigeria


June-16
June-17
June-18
June-19
June-20
N' Billion
DMBs &
Merchant
37.76%
Non-Bank
Public
62.24%
DMBs & Merchant
Non-Bank Public

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
ii.
Interest Rate Developments
Money Market Rates
Money market rates were generally low in the
first half of 2020 owing to higher liquidity in the
banking system. The weighted average monthly
inter-bank call and the OBB rate, for the first half
of 2020, stood at 7.58 per cent and 8.68 per cent,
respectively, compared with 11.74 per cent and
14.00 per cent in the same period in 2019. The
weighted average Nigeria Inter-Bank Offered
Rate (NIBOR) was 9.23 per cent, compared with
11.70 per cent in the corresponding half of 2019.
Table 3.4.6: Money Market Rates, Weighted
Average (per cent)

MPR
Call
Rate
OBB
Rate
NIBOR
30-days
20-Jan

20-Feb

20-Mar

20-Apr

20-May

20-Jun

Half year 2019

Half year 2020

Source: Central Bank of Nigeria

Figure 3.4.11: Money Market Rates (per cent)
Source: Central bank of Nigeria


Deposit and Lending Rates
Deposit and lending rates were generally lower
than their levels in 2019. The average term
deposit rates fell by 2.16 percentage points to
6.18 per cent below its level in the corresponding
half of 2019. Rates on deposits of various
maturities stood at 6.15 per cent (±0.19) in the
first half of 2020, compared with 8.8 per cent
(±0.13) in the corresponding period of 2019.
With the year-on-year inflation rate at 12.56 per
cent in June 2020, all deposit rates were negative
in real terms.
The weighted average prime and maximum
lending rates fell by 0.09 and 0.16 percentage
point each, to 15.00 and 30.65 per cent,
respectively, in the first half of 2020, below 15.59
and 30.81 per cent, in the first half of 2019.
Consequently, the spread between the average
term deposit and maximum lending rates
widened by 2.45 percentage points to 24.47
percentage points.
Table 3.4.7: DMBs Deposits and Lending Rates
(Per cent)
Month
Savings
Average
Term
Deposit
Rates
Prime
Lending
Max.
Lending
Spread
(AVTDMXLR)
20-Jan

20-Feb

20-Mar

20-Apr

20-May

20-Jun

Ave. 2019
First Half

Ave. 2020
First Half

Source: Central bank of Nigeria

1-Jan
1-Feb
1-Mar
1-Apr
1-May
1-Jun
MPR
Call Rate
OBB Rate
NIBOR 30-days

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
iii.
Developments in the Capital
Market
The negative impact of the COVID-19 pandemic,
which included the crash in global crude oil
prices and disruptions in the global supply
chain, posed a major threat to the retention of
portfolio investments during the review period.
These challenges were somewhat mitigated by
the gradual upturn in global crude oil prices and
bargain hunting activities by investors who
sought to take advantage of undervalued stocks.
Furthermore, there was the new listing of 100
million units of 12.5 per cent, Fixed Rate Series 1
Senior Unsecured Bonds, in the debt segment of
the market during the review period. Thus, the
market closed on a mixed note, as the NSE AllShare Index fell, while the aggregate market
capitalisation rose at the end of the first half of
2020.
The aggregate volume and value of traded
securities rose by 7.6 per cent and 7.0 per cent
to 55.42 billion shares and N576.50 billion,
respectively, in 673,517 deals at end-June 2020,
compared with 51.50 billion shares, valued at
N538.67 billion, traded in 462,809 deals in the
corresponding period of 2019. The equities subsector maintained its dominance in the market,
with shares of 89.0 per cent and 98.3 per cent of
the aggregate volume and value of transactions,
respectively, while the debt and Exchange
Traded Fund (ETF) segments accounted for the
balance. Sectoral analysis of the market
indicated that the financial services sector
(measured by volume of transactions), remained
the most active, accounting for 32.59 billion
shares (77.7 per cent), valued at N302.13 billion
(60.0 per cent), in 339,396 deals with 34.98
billion shares (78.5 per cent), valued at N260.20
billion (51.4 per cent) in 270,789 deals in the first
half of 2019. This was followed by the consumer
goods and conglomerates sectors.
Analysis of investors’ activities in the market
showed a decline in participation by foreign
investors, relative to the first half of 2019. The
levels of domestic and foreign investors’
participation were 60.5 per cent and 39.5 per
cent, as against 54.2 per cent and 45.8 per cent,
respectively, in the corresponding half of 2019.

Figure 3.4. 12: Volume and Value of
Transactions at the NSE

Source: Securities and Exchange Commission (SEC)/Nigerian Stock
Exchange (NSE)
NSE All-Share Index
Following renewed selling pressure in some
stocks and widespread profit-taking across all
the sectors in the first half of 2020. The NSE AllShare Index at 24,479.22, nosedived by 8.8 per
cent and 18.3 per cent decline, relative to
26,842.07 and 29,966.87 at end-December 2019
and end-June 2019.


First half 2018
First Half 2019
First Half 2020
Value in Naira (billion)
Volume in Number (Billion)
Volume of traded securities (LHS)
Value of securities (RHS)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Market Capitalisation
Market capitalisation inched higher, due to
bargain hunting, following the release of
financial results by some blue-chip companies,
as well as dividends declared by some
companies in the review period. Consequently,
aggregate market capitalisation of the 307 listed
securities closed at N27.48 trillion, indicating an
increase of 6.1 per cent and 6.8 per cent above
the levels at end-December 2019 and the
corresponding period of 2019, respectively.
Listed equities had a share of 46.5 per cent of the
aggregate market capitalisation, while the debt
and ETF components accounted for the balance
of 53.5 per cent. The top twenty most capitalised
companies on the Exchange accounted for 90.7
per cent (N11.59 trillion) of the total equity
capitalisation and 42.2 per cent of the aggregate
market capitalisation.
The number of banks that made the list of the
top
twenty
most
capitalised
companies
remained eight, as in the corresponding half of
2019. However, they accounted for N2.37 trillion
or 18.5 per cent of the total equity market
capitalisation, compared with 23.3 per cent in
the corresponding period of 2019. As a
percentage of nominal GDP, aggregate market
capitalisation stood at 39.4 per cent at end-June
2020, compared with 38.2 per cent in the
corresponding period of 2019.


Figure 3.4.13: All-Share Index and Market
Capitalisation

Source: Securities and Exchange Commission (SEC)/Nigerian Stock
Exchange (NSE)
iv.
Institutional Savings
Aggregate financial savings rose by 17.3 per cent
to N20,002.24 billion in the first half of 2020,
compared with N17,058.65 billion at the end of
the corresponding period of 2019. The ratio of
financial savings to GDP was 28.4 per cent,
compared with 25.3 per cent recorded at the end
of
the
corresponding
period
of
2019.
Commercial and merchant banks remained the
dominant depository institutions in the financial
system, accounting for 94.1 per cent of total
financial savings, compared with 92.8 per cent in
the
preceding
half
year.
Other
savings
institutions, comprised, PMBs, life insurance
companies, pension fund custodians, the
Nigerian Social Insurance Trust Fund (NSITF), and
MFBs, accounted for the balance of 5.9 per cent.
e. Developments on Financial Stability and
Macroprudential Policy
Governance Structure of Nigerian Financial
System Supervision/Regulation
Nigeria operates a multi-agency regulatory
approach for financial supervision/regulation,
with the CBN playing a central role in ensuring
financial system stability. The institutional
structure for Financial Supervision/Regulation in

June-2018
June-2019
June-2020
Naira (billion)
Index
All-Share Index
Market Capitalisation

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Nigeria is a multi-agency regulatory approach
comprising the Central Bank of Nigeria (CBN),
Nigeria Deposit Insurance Corporation (NDIC),
Securities and Exchange Commission (SEC),
National Insurance Commission (NAICOM) and
National Pension Commission (PenCom). The
CBN, because of its key role in financial
landscape, however, plays a vital role in the
conduct of macroprudential regulation and
oversight.
The
oversight
of
financial
stability/macroprudential issues is performed
both at the Institutional level by the CBN and at
the Committee level, by the Financial Services
Regulatory Coordination Committee (FSRCC) via
its sub-committee (Financial System Stability
Sub-committee). The CBN and the FSRCC ensure
the
operationalisation
of
macroprudential
regulation to perform their role of promoting
financial system stability.

f. Collective Risk to the Nigerian financial
system
The adverse effects of the COVID-19 pandemic
continued to spread across jurisdictions,
including
Nigeria,
heightening
financial
vulnerabilities and risks through various
channels as many businesses and households
remained under total or partial lockdown.
These
developments
resulted
in
slowed
economic activities, low government revenues
and loss of revenue by businesses and
households, which heightened risks to financial
stability in the review period. In view of the need
to stimulate growth, while ensuring financial
stability, the CBN assessed the emerging issues
and took appropriate micro/macroprudential
policy intervention measures.
In mitigating the impact of the COVID-19
pandemic on the economy, the CBN announced
a number of targeted policy measures to support
affected businesses and households.
Solvency Stress Tests and Liquidity Simulations
The banking industry solvency and liquidity
position under mild to moderate scenarios of
sustained economic contraction remained
robust, but maybe vulnerable under severe
scenario of sustained economic contraction.
The CBN sustained the conduct of top-down
solvency and liquidity assessment of the banking
industry in the review period. Consequently, the
Bank conducted top-down banking industry
stress tests on twenty-two commercial and five
merchant banks to assess their resilience to
systemic risks, while the banks conducted
bottom-up solvency and liquidity stress tests, in
line with ICAAP provisions. The stress test was
conducted within the background of a sharp fall
in oil prices, reduced global demand for Nigeria’s
oil products, decline in Government revenue,
unfavourable current account position and a fall
in GDP.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.4.14: Banking Industry Solvency Stress
Testing - Impact on CAR

Source: Central Bank of Nigeria

Figure 3.4.15: Banking Industry Solvency Stress
Testing – Impact on NPLs
Source: Central Bank of Nigeria
The result showed that under the severe
scenario of sustained significant contraction in
GDP of 3.5 per cent in the third quarter of 2020,
negative 4.0 per cent in the fourth quarter of
2020 and negative 4.5 per cent in first quarter of
2021, the banking industry CAR will fall to 11.19
per cent, 9.26 per cent and 8.30 per cent,
respectively. However, the severity of the
simulated GDP contraction may be contained by
a
combination
of
fiscal
and
monetary
interventions.

Figure 3.4.16: Banking Industry Solvency Stress
Testing – Impact of GDP Contraction on CAR


Source: Central Bank of Nigeria


Baseline
2020Q3
2020Q4
2021Q1
Mild
Moderate
Severe

Source: Central Bank of Nigeria
Box 5: Monetary and Financial Measures to COVID-19 Pandemic
The Banking system in Nigeria has remained relatively stable and resilient over the past year and the Central
Bank of Nigeria remains committed to its mandate of maintaining the safety, soundness and stability of the
banking system. With the outbreak of the COVID 19 pandemic that started as a health crisis, various economies
globally, including Nigeria, have been affected.
The pandemic, as well as measures that were put in place to control its spread, pose challenges to the resilience
of banks. To address this challenge, the CBN introduced various mitigating policy measures in response to COVID19 outbreak and spillovers, which include, but are not limited to:
•
Extension of one-year moratorium on all principal repayments on CBN intervention facilities;
•
Reduction of interest rate from 9.0 per cent to 5.0 per cent on applicable CBN intervention facilities;
•
The N50.0 billion Targeted Credit Facility stimulus package disbursed through NIRSAL MFB to support
households and MSMEs that are affected by the coronavirus pandemic;
•
Regulatory forbearances to the banking sector, which allows banks to consider temporary and time-limited
restructuring of the tenor and loan terms for businesses and households most affected by the COVID-19
pandemic;
•
Regulation of the minimum loan-to-deposit ratio policy to maintain the banks’ capacity to direct credit to
households and businesses;
•
Approval of a 12-month extension of the timeframe for MFBs to meet the new minimum regulatory capital
requirements for the various classes of MFB license; and
•
Suspension of the sale of foreign currency to Bureau-De-Change Operators.

The CBN also issued guidelines to encourage restructuring of facilities in the sectors that were most impacted by
COVID-19 pandemic within the available prudential framework. The Guidelines streamline the eligibility criteria
for loan restructuring by providing a basis for negotiating the restructuring between banks and their customers,
defining the moratorium period for the affected facilities and ensuring continuity of viable businesses by
mitigating the burden of debt servicing. Many banks have already taken advantage of these policy initiatives and
obtained CBN’s approval to restructure qualified facilities. 19.

Box 6: Dynamic Macroeconomic and Banking Industry Stress Testing Framework and Models for Nigeria
One of the strategic policy thrusts of the CBN over the next five years (2019-2024) is to preserve financial stability
through enhancement of its on-site and off-site supervision tools and processes. In contributing to the achievement
of this strategic objective, the CBN has finalised the draft review of its framework and Dynamic Macroeconomic,
and Top-down Stress Testing Tools in the review period. The Framework and the models aimed at complementing
the existing Early Warning System Tools and enhancing the Bank’s ability to proactively identify potential risks to
the financial system as well as risks to individual banks.
The Framework has five linked components: Module 1: Scenario Definition, Analysis and Simulation; Module 2:
Macroeconomic Analysis, Modelling and Simulation; Module 3: Macro-financial/Satellite Analysis, Modelling and
Simulation; module 4: Balance Sheet impact Analysis; and module 5: Feedback Mechanism. All the five components
are designed to be model-driven, with modest room for expert judgement. The main econometric technique used
is the Factor-Augmented Vector Autoregression with exogenous variables (FAVAR-X) model and Principal
Component Analysis (PCA), which enable conditional macroeconomic and macro-financial scenario simulations
and forecasts. The Basel II/III requirements are built into modules 3 and 4 in the assessment and treatment of
solvency under stress via net impact on capital and risk-weighted assets (RWAs).
The framework and the models within it are operationalised by first defining and simulating all plausible, scenarios.
All the key elements of the scenarios and conditions are captured and fed into the macroeconomic models, which
in turn generates conditional forecasts of economic and sector specific future macroeconomic behaviour and
outcomes. These forecasts form a spectrum of mild, moderate and severe macroeconomic and financial conditions,
which are inputted into the macro-financial and satellite models. The macro-financial and satellite models then
generate economic-driven/induced forward looking banking industry Financial Soundness Indicators (FSIs) and risk
parameters (general and sector specific NPLs, asset quality and Probability of Default), which feed into the Module
4 (banks’ balance sheet).
The impacts of scenarios and shocks are assessed using a matrix of policy linked indicators and variables - total
Capital Adequacy Ratio (CAR), tier 1 ratio (T1R), common/core Tier 1 ratio (Core T1R), necessary recapitalisation
(in absolute and percentage of GDP), risk drivers (including, Net Profit (before losses), Losses (Credit Risks),
Losses/Gains (Trading & Investment Income), Net income (Profit or Loss) and Risk Weighted Assets and Leverage.
At the end of module 4, the Macroeconomic and Banking Industry Stress Testing first cycle was completed. The
module 5 (Feedback mechanism) commences the second cycle, which is activated by (1) inputting into module 2
the post-shock conditions of the banks (via reduced lending and investment to the economy and/or selected
sectors) and (2) refinement of the initial scenarios, including consideration of regulatory interventions. The
processes continues until another cycle is triggered. After several test runs, the framework has shown that it can
run three complete circles with high degree of credibility.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
A further stress testing of idiosyncratic impact of
COVID-19 on banks’ CAR in respect of defaults in
unstructured 9 portfolios was carried out. The
results revealed that the industry CAR would be
threatened if 35.0 per cent of the unstructured
credit portfolio is classified as “Doubtful”, or 25.0
per cent as “Lost”. At these stages, the industry
NPL ratio would rise to 13.64 per cent and 16.73
per cent, while CAR would fall to 9.84 per cent
and 6.91 per cent, respectively.
Credit Risk Management System (CRMS)
The CBN continued to ensure that banks fully
comply with the redesigned Credit Risk
Management System (CRMS) provisions as
stipulated in the CBN Act 2007 and subsequent
guidelines and circulars issued to strengthen
credit administration in Nigeria.
To further support the resilience of the financial
system and strengthen credit administration, the
Bank sustained the phased deployment of the
redesigned CRMS to the OFIs with a pilot on DFIs.
In addition, an interface was created for the NDIC
to manage credit records in respect of banks-inliquidation. The Bank also commenced the revalidation of all eligible bank assets transferred to
AMCON by banks with a view to adequately
capturing them on the CRMS and granting
AMCON update rights on them.
The CBN’s CRMS database continued to serve as
a veritable source of credit information in the
banking industry. At end-June 2020, the total
number of credit facilities on the CRMS database
stood at 14,509,251, representing an increase of
119.0 per cent over the end-June 2019 position of
6,625,415 on account of increased compliance by
banks. The number comprised 13,846,282

9 Facilities not structured in line with the CBN COVID-19
forbearance guidelines.
individual
borrowers
and
662,969
nonindividuals.
The total number of facilities with outstanding
balances on the CRMS database rose by 24.21 per
cent to 1,987,529 at end-June 2020 from
1,600,072 at end-June 2019, made up of
1,893,452 individuals and 94,077 non-individuals.
The strict enforcement of the CBN Regulatory
Guidelines on CRMS paid off, as reflected in
increased compliance by banks and significant
increase in the CRMS credit records.
Table 3.4.8: Records on Credit Risk
Management System
Description
Jun-19
Jun-20
* Total No. of
Credit/facilities reported
on the CRMS:
6,625,415
14,509,251
Individuals
6,061,303
13,846,282
Non-Individuals
564,112
662,969
* Total No. of
Outstanding Credit
facilities on the CRMS:
1,600,072
1,987,529
Individuals
1,504,782
1,893,452
Non-Individuals
95,290
94,077
Source: Central Bank of Nigeria
Note: These figures are based on submissions of all amounts of
credit, on or before June 30, 2020 by Commercial, Merchant and
Non-Interest Banks. * The figures include borrower(s) with multiple
loans and/or credit lines.

g. Compliance Developments and Consumer
Protection
Financial Sector Surveillance
To ensure the safety and soundness of banking
institutions, the Bank enhanced its supervisory
and surveillance activities in the first half of
2020, with a view to promoting public
confidence in the Nigerian banking system. The
Bank maintained the risk-based supervision (RBS)
approach as the pivot of its supervisory
framework. Activities of the Bank in this regard
included regular off-site appraisal of banks’ and

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
OFIs periodic returns and on-site assessments
(routine monitoring and special investigations),
among others. The Bank relied on the provisions
of the CBN Act 2007, Banks and Other Financial
Institutions Act (BOFIA) 1991 (as amended) and
other policy guidelines, in performing these
functions.
The FRCN in 2018 issued the Nigerian Code of
Corporate Governance as the single code for the
country, which is applicable to all sectors of the
economy. The Nigerian Code of Corporate
Governance replaced all extant codes including
the seven extant CBN Codes for Corporate
Governance for Banks, MFBs, DFIs, FCs, PMBs,
NMRCs and BDCs. However, in furtherance of the
decision of the FRCN that all sector regulators
should develop sector specific guidelines in
Corporate Governance for the institutions under
their
regulatory
purview,
the
Bank
has
commenced developing Guidelines for all its
licensed institutions. This has become necessary
given the peculiarities of the sub-sector, which
can
be
addressed
through
additional
recommended practices. The provisions of the
guidelines would, in some cases, enhance the
Nigerian Code of Corporate Governance principle,
whereas in others, it would introduce stricter
requirements for institutions under the CBN’s
supervisory purview.
Banks’ Compliance with the Code of Corporate
Governance
In line with the CBN’s oversight function, most
banks in Nigeria complied with the CBN Code of
Corporate Governance in the review period. The
Bank concluded the Corporate Governance
Scorecard Assessment on twenty banks, with
fifteen banks rated “Acceptable”, four banks
“Needs Improvement”, and one bank was rated
“Weak”. Consequently, more than 70.0 per cent
of Nigerian banks largely complied with the CBN
Code of Corporate Governance for Banks and the
Guidelines for Whistle Blowing. Furthermore, all
banks complied with the recommendations made
in the preceding year’s scorecard assessment.
Following the outbreak of the COVID-19
pandemic and the subsequent travel restrictions
imposed by the Government, as part of
containment measures the onsite assessment for
the first quarter of 2020 could not be conducted
as scheduled. This was, however, compensated
for by the off-site review of banks’ periodic
submissions of Corporate Governance and
whistle blowing returns.
Financial
Crimes
Surveillance/Anti-
Money
Laundering/Combating
the
Financing
of
Terrorism (AML/CFT)
Nigeria took pragmatic steps to address the risks
of money laundering, terrorism financing and
proliferation of weapons of mass destruction.
These included the establishment of legal,
institutional and regulatory frameworks, as well
as strengthening international cooperation with
countries of strategic interest. The Bank
supervised, monitored and enforced compliance
of banks with the provisions of Nigeria’s Money
Laundering Prohibition Act (MLPA) 2011 (as
amended), the CBN AML/CFT Regulation 2013 (as
amended) and other extant AML/CFT Laws and
Regulations,
including
the
FATF

Recommendations. These responsibilities were
performed by providing off-site surveillance and
on-site examinations of banks with a view to
ensuring that no Nigerian bank was used as a
gateway for Money Laundering, Financing of
Terrorism or any other predicate offence.
In an effort to sustain Nigeria’s good ranking with
the Financial Action Task Force (FATF), and in

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
compliance with the FATF requirements, the
Inter-governmental Action Group against Money
Laundering in West Africa (GIABA), made a follow
up visit to Nigeria. This was to obtain more
information and clarification on some grey areas
identified during the second round of the on-site
visit of Mutual Evaluation Exercise (MEE), carried
out in the last quarter of 2019. The third interim
draft report was released and the CBN has been
collaborating with AML/CFT stakeholder agencies
to address the deficiencies highlighted in the
Report, which would be discussed and adopted at
the next GIABA Plenary.
The COVID-19 pandemic has impacted on the
ability of supervisors to implement the AML/CFT
obligations in the areas of supervision. As such,
AML/CFT on-site examination for the year 2019/
2020, which was earlier scheduled for April 2020
was delayed until the end of the second half of
the year. Despite the challenges, the banks
continued
to
implement
their
AML/CFT
requirements, render periodic returns and
provide information to the CBN.
Consumer Protection
In furtherance of its statutory responsibility to
promote confidence in the financial system, the
Bank continued with the implementation of
measures to ensure consumer protection, mainly
in
the
form
of
customer
complaints
management.
The
Bank
received
2,051
complaints from consumers of financial services
providers in the first half of 2020, compared with
1,528 complaints in the corresponding period of
2019. Of the total 1,167 or 56.9 per cent were
complaints on electronic/card, while 125 or 6.1
per cent were on excess charges. Other
complaints were, mainly, on frauds, dishonoured
guarantees
and
unauthorised
deductions/transfers, among others. A total of
1,519 complaints, including those outstanding
from 2019, were resolved in the review period,
compared with 1,548 in the corresponding period
of 2019.
Total claims in the review period in local currency
and foreign currencies amounted to N4.58 billion
and US$151,647.82, compared with N8.70 billion
and
US$315,475.54,
respectively,
in
the
corresponding period of 2019. Relief was brought
to many of the affected customers as the sums of
N2.67 billion and US$144,176.68 were refunded
in the first half of 2020, compared with the N7.20
billion and US$315,229.02, refunded in the
corresponding period of 2019.
Arrangements were concluded by the CBN to
commence the development of a Consumer
Protection Risk-Based Supervision Framework
(CP-RBSF) in the second half of 2020. Also, a
stakeholder
sensitisation
workshop
was
conducted in Abuja and Lagos from February 24 -
27, 2020 to sensitise regulators, organised
consumer groups and professional bodies on the
provisions of the Consumer Protection Regulation
(CPR) issued in December 2019 with feedback
obtained from stakeholders. The next phase of
the sensitisation was proposed for the various
categories of regulated financial institutions (FIs)
when the lockdown occasioned by the COVID-19
pandemic would have been lifted.
In line with the Bank’s directive, 29 financial
service providers (FSPs), comprising twenty-three
banks and six OFIs submitted their Board
approved Consumer Protection Policies in the
review period. However, three FIs requested for
extension of time which was approved by
Management in view of the COVID-19 lockdown,
to enable their Boards meet and approve the
policies.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
In the first half of 2020, the Bank received the first
set of Root Cause Analysis Report (RCAR) for the
first quarter of 2020. Twenty-four institutions,
comprising twenty-two banks and two non-bank
institutions
submitted
their
reports.

A
preliminary review of the reports indicated that
the most recurring complaints during the quarter
were
electronic
product/channels
related
complaints. The RCAR was used to identify the
underlying cause of recurring complaints and
remedial measures were put in place by the
financial institutions to address them.
Financial Literacy
In preparation for the national roll out of the
National Peer Group Educator Programme
(NAPGEP), the Bank in the Training of Trainers
programme for the zonal Financial Inclusion State
Screening Committee (FISSCOs) across the
country from February 17 - 22, 2020 and February
24 - 29, 2020. The Committee will subsequently
train the volunteer Corps Members (VCMs)
during NYSC orientation programmes.
In the review period, the Bank, in collaboration
with the German Agency for International
Development (GIZ) and other stakeholders,
continued with the implementation of the
financial literacy e-learning portal. The project
was aimed at deploying a fully digital national eLearning platform to provide a knowledge base
and
support
financial
education
trainers/facilitators/multipliers as a collective
effort to grow financial literacy in Nigeria. The
Federal
University
of
Technology,
Minna
(FUTMinna) was selected as vendor consulting
firm to deliver the project. Milestone achieved so
far included pilot testing with selected NYSC
Volunteer
Corps
Members
(VCMs),
who
participated in the March 2020 NYSC orientation
programme across the 37 NYSC orientation
camps.
Activities marking the 2020 Global Money Week
(GMW) scheduled to commence on March 26,
2020 were postponed indefinitely due to the
COVID-19 pandemic. Consequent upon the
impact of the COVID-19 pandemic, and in line
with the requirements of the National Centre for
Disease Control (NCDC), the Bank adjusted to the
new normal, holding mediation meetings,
engagements
with
internal
and
external
stakeholders, and trainings virtually, while
complaints were received electronically by email.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
3.5 PAYMENTS SYSTEM MANAGEMENT
The Bank continued to improve on the credibility,
reliability and efficiency of its payments system
as the measures put in place by the monetary
authority paid off with a seamless payments
system service delivery. The reliability and
efficiency of the payments system was tested as
the COVID-19 pandemic put a strain on economic
and financial transactions. However, the
pandemic created opportunities for increased
transactions in contact-less payments services. It
also enabled transactions in the economy to
continue seamlessly, leading to a surge in the
uptake of non-cash payments options with
positive impact on monetary policy transmission
mechanism as higher proportion of cash resides
in the banking system.
a. Payments System Policies
Historically, the CBN has strongly pursued
policies and initiatives to address the needs of
customers and emerging challenges of the
payments system as they evolve, with the goal of
ensuring households and businesses have access
to safe, reliable and efficient payments options.
The CBN continued to play a veritable role as an
operator (provide payments infrastructure),
catalyst (supports interoperability) and overseer
(guides and regulates payments by developing
and implementing new policies and standards)
that ensures safety and guarantees stability of the
payments infrastructure, in the review period.
i.
Payments System Infrastructure
To ensure secured, robust and accessible
payments infrastructure, the CBN enhanced the
payments infrastructure by implementing some
changes on the operations of Real-Time Gross
Settlement
(RTGS)
System
and
Scripless
Securities Settlement System (S4). The system
upgrade was the restructuring of each of the four
net settlement sessions on RTGS system to
accommodate all schemes and instruments.
Other features included the introduction of a cutoff time for all users in the transmission of net
settlement file to NIBSS Plc for RTGS; and
extension of the cut-off time for external users on
the RTGS and S4 systems. This was with a view to
facilitating faster settlement of clearing positions
of banks and merchant settlements, as well as,
reduction in clearing float and settlement risk.
To enhance the resilience of payments system
infrastructure and expand electronic payments
options, the CBN reduced the chargeback period
for reversing failed transactions and complaints
using the various e-payment channels such as
ATMs, PoS and Internet (web) transactions
within the stipulated timelines. The measure
covers timelines of the finality of resolving failed
transactions, refunds and resolution of disputed
transactions on e-payment channels, as well as
clearing all previous backlogs for the specific
payment options within the stipulated timelines.
This equally engenders integrity and reliability of
the payment’s infrastructure.
In its effort to enhance the safety, reliability and
efficiency of the payments system, the CBN
continued to implement the framework for BVN
operations and watch-list. The BVN registration
was sustained, given its veritable role in
improving credit management due to its
enhanced features in identity management, know
your customer (KYC) and harmonization of
accounts of an individual across the banking
industry and payments system. In the review
period, the number of BVN captured increased by
14.6 per cent to 43.9 million, compared with 38.3
million recorded in the corresponding period of
2019. Of this number, 2,670 were placed under

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
the BVN watchlist. The review of the BVN
framework and watchlist, which is an on-going
exercise, is expected to be completed in the
second half of the year. The essence of the review
is to strengthen the efficiency of BVN operations
and
watchlist
in
the
payments
system
infrastructure.
ii Promoting Interoperability
To achieve uniform customer bank account
numbering structure among all DMBs and OFIs,
the CBN issued the revised standards on Nigeria
Uniform Bank Account Number (NUBAN) for
banks and other financial institutions for the
efficient operations of electronic funds transfer
and cheque clearing operations by DMBs and
OFIs. The revised standards set out the approved
structure of a customer account number in all
deposit-taking
institutions
in
Nigeria.
The
deadline for full compliance by OFIs is slated for
March 15, 2021.
Iii Guiding and Regulating
The CBN continued to conduct its oversight
function of guiding and regulating payments
service providers, as more participants were
issued licences to provide payments services to
households and businesses. The number of
participants issued licences to operate in the
different segments of the payments system
increased to 114, compared with 107 and 96
participants in December 2019 and June 2019,
respectively. In the first half of 2020, a total of
eight licences were issued comprised: two
licences to mobile money operators; four to
payments solution service providers; one each to
a payment terminal service provider and a thirdparty processor.

Table 3.5.1: Licensed Payments System
Participants
License -Type
Number
Jun-

Dec.

Jun-20
Card Schemes

Mobile Money Operators

Payments Solution Service Providers

Payment Terminal Service Providers

Transaction Switching Companies

Third Party Processors

Accredited Cheque Printers

Super Agents

Non-Bank Acquirers

Total

Source: Central Bank of Nigeria
To promote and facilitate the development of
efficient and effective systems for the settlement
of transactions, the CBN issued the revised
Guidelines on Operations of Electronic Payment
Channels. The guidelines cover the operations
and standards of automated teller machine
(ATM), point of sale (POS) card acceptance
services, mobile point of sale (MPOS) acceptance
services and web acceptance services.
As a regulator charged with the responsibility of
setting standards for the effective and efficient
functioning of the payments system, the CBN
continued the implementation of the Nigeria
Cheque Standards (NCS) and Nigeria Cheque
Printers Accreditation Scheme (NICPAS) to
ensure cheque standards as a payment
instrument. The licences of two Accredited
Cheque Printers (ACPs) were extended by twelve
months to ensure that the printing needs of banks
were adequately met. Furthermore, three
Cheque Management Centres (CMCs) were
accredited to carry out personalisation of
cheques in line with the new standard.
To comply with the requirements of the new
cheque standards of the revised NCS/NICPAS for
unhindered operationalisation of Accredited

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Cheque Printers (ACPs) and Cheque Management
Centres (CMCs), an extension was granted to
allow the parallel run of the old and new cheques
from August 1 to December 31, 2020 due to the
COVID-19 pandemic, after which only cheques
with the new standards would be allowed for
clearing.
Payments and settlement systems are potential
sources of systemic risks. Threats to the safety
and efficiency of the payments system may
affect the stability and soundness of financial
institutions and consequently the financial
system stability. The CBN introduced the
payments system risk and information security
management framework to safeguard the
integrity of the payments system and provide a
level playing field for payments service providers.
The essence was to identify and address sources
of systemic risks within the Nigerian payments
system
landscape;
and
establish
sound
governance arrangements to oversee the risk
management framework by ensuring that risks
are identified, monitored and mitigated. Others
were to establish clear and appropriate rules and
procedures to carry out the risk-management
objectives; employ the resources necessary to
achieve the payments system’s risk management
objectives; and integrate risk management into
the decision-making processes of the Scheme
Boards and Working Groups under Payments
System Vision (PSV) 2020.
The CBN continued to provide clarity on pricing
of e-payment services, to ensure a level playing
field for all stakeholders and serve as a guide to
charges by payments system operators. All
switching companies were directed to implement
a proportionate downward review of the
switching charges to banks in line with the revised
guidelines for pricing and charges. The essence is
to provide a standard for the application of
charges using the payments channels, lowered
cost to consumers, as well as, encourage the use
of such channels.
b. Nigeria’s Payments Trends
The Nigerian payments system has undergone
fundamental
transformation
in
the
past
decades, as new payments methods, options and
interfaces are evolving. Transactions in payments
services were buoyed by a range of policies
implemented by the CBN to tackle existing and
evolving shortcomings in the payments system; as
well as, taking advantage of the opportunities
presented by the COVID-19 pandemic that
provided widespread usage of contact-less
payment services by economic agents. Available
data showed that transactions in the payments
system during the first half of 2020 significantly
increased. The volume of electronic retail
payments moved to 4,300.5 million from 1,233.04
million in the corresponding period of 2019, and
the value declined to ₦328,989.60 billion from
₦76,478.35 billion in the same period a year
earlier.
Expansion in the database, to include the
capturing of more important data on intra-bank
and inter-scheme transactions from all licensed
service providers, also played a key role in the
quantum
leap
in
the
payments
system
transactions.
Industry
data
on
electronic
payments was expanded to capture all epayments transactions (Banks, MMOs, NIBSS,
Switches and PSSPs), during the review period.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
i.
Retail Payments System
Transactions
in
e-payments
witnessed
tremendous increase in the first half of 2020 as a
result of the opportunities presented by the
COVID-19 pandemic, which promoted greater
use of e-payments platforms and other contactless options to settle financial transactions. The
number of transactions using the e-payments 10
channels increased by 340.1 per cent to 4,192.6
million from 1,232.9 million in the first half of
2019.
The
corresponding
value
of
the
transactions also rose significantly by 163.7 per
cent to N201,699.9 billion from N76,478.4 billion
in the corresponding period of 2019.

10 E-payments transactions includes all electronic platforms used to
settle financial transactions for households and businesses, such as
ATMs, PoS, MMOs, internet (web), USSD and Mobile Apps.
A breakdown of the volume of transactions using
the e-payment channels showed a tremendous
increase to 834.4 million, 278.3 million, 257.9
million and 2,444.5 million from 424.6 million,
187.7 million, 25.7 million and 47.9 million for
ATMs, PoS, mobile payments and Internet (web),
respectively in the first half of 2019. In the same
vein, the value of transactions using the epayments options showed an increase in value to
N8,610.5 billion, N2,003.2 billion, N4,455.3 billion
and N169,730.9 billion in the first half of 2020
from N3,238.4 billion, N1,383.6 billion, N564.9
billion and N223.9 billion, for ATMs, PoS, mobile
payments and internet (web), respectively, in the

Table 3.5.2: Volume and Value of Electronic Payments
Payment
Channels
Number of
Terminals

Number of Transactions
(million)

Value N’ Billion
19-Jun
20-Jun

19-Jun
19-Dec
20-Jun

19-Jun
19-Dec
20-Jun
ATMs
18,913
19,040

424.6
415.2
834.4

3,238.43
3,274.18
8,610.50
POS
166,078
340,960

187.7
250.9
278.3

1,383.62
1,821.12
2,003.20
Mobile
-
-

25.7
351.6
257.9

564.92
4,516.04
4,455.30
Internet
(Web)
-
-

47.9
55.5
2,444.50

223.9
254.24
169,730.90
NIP
-
-

504.2
641.6
-

49,350.18
55,872.39
-
e-Bills Pay
-
-

0.6
0.48
-

281.56

-
REMITA
-
-

21.6
26.9
-

9,839.29
10,885.34
-
NAPS
-
-

20.6
26.7
-

11,596.45
13,535.50
-
NACS
-
-

-
-
97.8

-
-
127,027.90
RTGS
-
-

-
-
10.1

-
-
261.8
USSD
-
-

-
-
202.9

-
-
2,070.70
Mobile
App
-
-

-
-
173.4

-
-
13,526.30
Direct
Debit
-
-

-
-
1.2

-
-
1,303
Total


1,232.90
1,768.88
4,300.50

76,478.35
90,529.81
328,989.60
Source: Central Bank of Nigeria
Note: NIP and e-Bills Pay which were both NCS products, and web-based, were previously reported inter-scheme only. They are now
appropriately aggregated under the internet/web channel transactions.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
corresponding period of 2019. The other retail
payments channels such as USSD, Mobile Apps
and direct debit, which data capture as electronic
or e-payments options, commenced in the review
period, recorded significant number of payments
transaction. The number of transactions were
202.9 million, 173.4 million and 1.2 million and
the corresponding values were N2,070.7 billion,
N13,526.3
billion,
and
N1,303.0
billion,
respectively, for USSD, Mobile Apps and direct
debits in the first half of 2020.
Analysis of the components of the e-payments
channels showed an incredible increase in the
volume and value of transactions on the internet
(web) channel. It dominated all other channels by
64.1 per cent and 91.5 per cent in volume and
value (Figures 3.5.1 and 3.5.2), respectively. The
significant increase in the internet (web)
payments option was attributable to aggregation
of NIP, eBills, REMITA and NAPS payment
platforms under the internet (web) channel
transactions. The number of transactions by
ATMs and PoS payment channels accounted for
21.9 per cent and 7.3 per cent, but in terms of
value accounted for 4.7 and 1.1 per cent in the
review
period.
Mobile
money
payments
accounted for the least patronized in term of
volume of transactions with 6.7 per cent and 2.4
per cent in share value in the first half of 2020.


Figure 3.5.1: Composition of e-Payments
Transactions, First Half 2020 (per cent)

Source: Central Bank of Nigeria


Figure 3.5.2: Share of e-Payments Transaction
by Value, First Half 2020 (per cent)

Source: Central Bank of Nigeria

Transactions by cheques also increased in the
review period, following its the increased usage
to settle financial transactions, as the volume and
value of cheques increased by 167.6 per cent and
213.8 per cent, to 9.1 million and N7,125.18
billion, from 3.4 million (N2,270.92 billion),
respectively, in the corresponding period of 2019.
The increase was attributed partly to wider
capture of cheques transactions previously
under-reported to include intra-bank rather than
only inter-bank cheques.
ATM
21.9%
PoS
7.3%
Internet
64.1%
Mobile
6.7%
ATM
PoS
Internet
Mobile
ATM
4.7%
PoS
1.1%
Mobile
2.4%
Internet
91.8%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
The NIBSS Automated Clearing System (NACS11)
also witnessed increase in the number and
volume of cheque transactions that were
presented for clearing in the first half of 2020.
The volume of cheque transactions at NACS
increased by 77.2 per cent to 97.8 million from
20.6 million in the first half of 2019. The value
equally increased by 995.4 per cent to
N127,027.90 billion from N11,596.45 billion in the
corresponding period of 2019.
ii.
Wholesale Payments System
Transactions in the wholesale payments (Real
Time Gross Settlement (RTGS) system) witnessed
a decline in the volume of activities in the first
half of 2020. The volume of inter-bank fund
transfers through the CBN RTGS System declined
by 19.9 per cent to 440,561 million from 550,243
million transactions between January and June
2019. However, the value of transactions
increased modestly by 3.73 per cent to
N234,731.91 billion from N226,275.85 billion in
the corresponding period. The decrease in
volume of transactions was attributed to the
strain in economic activities due to the impact of
the Pandemic, as walk-in customers with bigticket transactions were unable to physically give
instructions to activate such transactions, since
banks partially carried out skeletal services to
avoid a complete gridlock.


11 NACS comprises ACH/NAPS/PMS
Figure 3.5.3: Volume of RTGS Transactions
(Million)

Source: Central Bank of Nigeria


Figure 3.5. 4: Value of RTGS Transactions
(N’ Billion)

Source: Central Bank of Nigeria


First Half 2019
Second Half

First Half 2020

First Half 2019
Second Half

First Half 2020
N'BILLION

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
j.
Financial inclusion
The objective of the National Financial Inclusion
Strategy (NFIS), which was launched by the
Central Bank of Nigeria on October 23, 2012, was
to reduce the adult financial exclusion rate in
Nigeria from 46.3 per cent in 2010 to 20.0 per
cent by 2020. It also set ambitious targets with
respect to Payments (70.0 per cent), Savings (60.0
per cent), Credit (40.0 per cent), Insurance (40 per
cent) and Pension (40.0 per cent).
Performance
Progress in financial inclusion as at June 2020,
was influenced by COVID-19 containment
measures, which increased the onboarding and
usage of certain financial products and channels
over others. On the other hand, the pandemic
impeded
the
implementation
of
strategic
programmes targeted at deepening financial
inclusion in Nigeria.
i.
Product Indicators
Financial inclusion indicators measured by the
proportion of adult Nigerians who used financial
products indicated marginal progress in the
percentage of adults with access to e-Payment
products. The rate increased to 40.4 per cent in
June 2020 from 39.5 per cent recorded in
December 2019. Savings also increased to 41.2
per cent in June from 39.5 per cent by end 2019.
The proportion of adults who used credit
products decreased to 5.1 per cent in June from
6.2 per cent, at end-December 2019. Likewise,
the indicators for the use of Insurance and
Pension products fell to 1.0 per cent and 8.6 per
cent in June 2020, from 2.0 per cent and 8.7 per
cent in December 2019, respectively.


Box 7: COVID-19 Pandemic and Nigeria’s
Payments Service
The COVID-19 pandemic has led to significant
changes in Nigeria’s retail payments system in
many ways. First, consumers stepped up the
uptake in use of cards and other non-cash
payments platforms (e.g. web, PoS, ATMs, Mobile
Apps) to avoid contracting the virus through
person-to-person contact.
Second, the containment measures adopted by
government
by
imposing
restrictions
in
movements led to the closure of brick and mortar
stores, consequently elevating the surge in ecommerce activities, thereby promoting cashless
policy.
Third, improvements in infrastructure or upgrade
in payments system infrastructure helped to
engender efficiency, reliability and finality of
transactions.
Fourth, there was increased awareness in the use
of non-cash or contactless payments, which
deepened prospects for scaling-up financial
inclusion.
With
these
developments,
the
regulatory
authorities rose to the challenges of not only
availability of the e-payments channels but also
the integrity. Thus, the number of licences granted
to participants in the retail segment to the
payments service providers maintained an upward
trend to meet the increasing demand. In particular,
there were increases in the number of licenses
granted to payments solution service providers,
payments terminal service providers and mobile
money operators. The monetary authorities
also kept-an-eye on standards to uphold the
soundness of the financial system.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.5. 5: Product Indicators

Source: Central Bank of Nigeria
ii.
Channel Indicators
An assessment of the channels through which
financial services were served showed significant
improvement in the period under review. The
number of agents serving 100,000 adults
increased to 323 in June 2020, from 229 in
December 2019. Also, the number of Micro
Finance Bank (MFB) branches serving 100,000
adults increased from 2.1 in December 2019 to
2.8 in June 2020, from 2.06 in December 2019.
Figure 3.5. 6: Channels Indicators

Source: Central Bank of Nigeria


Key Outcomes
Half-year 2020 National Financial Inclusion Governing
Committee Engagements
I.
Multi-sector responses to COVID-19
Pandemic
This entailed collaboration across banking, insurance,
pension and other sectors. Financial Inclusion initiatives
centered on rapidly expanding digital channels,
leveraging agent networks, supporting resilience for the
vulnerable, extending insurance covers for previous
health exemptions and for essential workers in the
ii.
EFInA Impact Survey of COVID-19 on
Financial Inclusion
The pandemic affected financial inclusion in many ways:
heightened
food
insecurity,
decreased
income,
constrained access to finance, but increased remittances.
The survey results would be adopted to drive targeted
solutions by stakeholders.
iii.
Digital solutions for government social
interventions
Proposal being developed for digitizing humanitarian
payments/social transfers, with pilot testing at the states.
iv.
Financial inclusion of vulnerable segments
Strategic imperatives to drive improved access/usage of
financial services by women developed to close the
gender gap.
v.
Financial literacy and enlightenment
E-learning platform were deployed to support the
Volunteer Corps Members (VCMs) under the National
Peer Group Educator Programme for Financial Inclusion.
VCMs were posted to partners banks in host communities
nationwide. NIBSS also developed a monitoring and
evaluation app for NAPGEP.
1.
62.7 per cent of the respondents were
financially included; out of which:
•
45.2 per cent - banked
•
1.3 per cent - formal other
•
6.2 per cent - Formal only
•
Financially excluded - 37.3 per cent
2.
Account holders that operated their account in
the last 30 days - 60 per cent
3.
Credit
and
Insurance
remain
low
at
approximately 1.5 per cent and 5.6 per cent
respectively.
4.
Most respondents are not aware of Mutual
fund, USSD, Mortgage, Non-interest products
and Credit card products.
5.
Irregular or no income remain the biggest
reason for not having a bank account.
Insights from the CBN Quarterly Household Survey on
Financial Inclusion

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Summarily, the COVID-19 pandemic disrupted the
implementation
of
financial
inclusion
programmes, including the Account Opening
Week and the zonal training for the National Peer
Group
Educator
Programme
for
Financial
Inclusion (NAPGEP). The imperative is to galvanize
efforts and take advantage of the low-hanging
fruits occasioned by the pandemic, to advance
financial services to the unbanked and unreached
(especially women, youth, rural dwellers and
SMEs) in collaboration with key stakeholders.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
3.6 EXTERNAL SECTOR DEVELOPMENT
a. Nigeria’s External Balance
The COVID-19 pandemic weighed negatively on
Nigeria’s external balance due to huge capital
reversals, limited export earnings and a decline in
remittances. The external account recorded a
deficit of US$2.31 billion (1.1 per cent of GDP),
relative to US$6.64 billion (2.6 per cent of GDP) in
the second half of 2019. The deficit in the current
and capital account narrowed to US$8.86 billion
(4.3 per cent of GDP) during the review period,
relative to US$9.66 billion (3.8 per cent of GDP) in
the preceding half of 2019. The moderation was
due to the significant contraction in import of
goods and services, as a result of global supply
chain disruption and lower deficit in the primary
income account. Transactions in the financial
account resulted in a net acquisition of assets of
US$3.87 billion (1.9 per cent of GDP), in contrast
to a net incurrence of liabilities of US$24.73
billion (9.7 per cent of GDP) in the preceding half
of 2019.
The stock of external reserves stood at US$35.78
billion at end-June 2020, indicating a decline from
its post-recession trajectory. However, the level
of the reserves could finance 8.7 months (goods
only) or 5.8 months (goods and services) of
import, compared with 7.2 months or 4.4 months,
respectively, in the second half of 2019. The
slump in crude oil prices as a result of the COVID19 pandemic affected foreign exchange inflow,
which exacerbated demand pressure in the
foreign exchange market. Consequently, the
average exchange rate of the naira at the interbank and BDC segments of the market
depreciated to N337.26/US$ and N401.44/US$,
respectively, while it exchanged at N376.44/US$
at the Investors and Exporters (I&E) window. The
external debt stock increased from its end-March
2020 level of US$27.67 billion or 6.0 per cent of
GDP to US$31.48 billion or 8.1 per cent of GDP,
which was within the sustainable threshold of
40.0 per cent of GDP. These were relative to
N306.94/US$
and
N359.21/US$,
and
N362.49/US$, for interbank, BDC and the I&E
window, respectively, in the second half of 2019.
i.
Current and Capital Account
Developments
The
containment
measures
imposed
by
government to reduce the spread of the COVID19 pandemic moderated the pressure on the
current and capital account in the first half of
2020. These measures limited the importation of
goods to majorly essential and medical supplies,
while services, particularly travels were grounded
for most part of the first half of 2020. Hence, the
deficit narrowed by 8.3 per cent to US$8.86
billion, compared with the US$9.66 billion in the
preceding half of 2019. However, it rose by 20.5
per cent, relative to the corresponding half of
2019, respectively.
Figure 3.6.1: Current and Capital Account
Balance (US$ Billion)

Source: Central Bank of Nigeria


First Half 2019
Second Half

First Half 2020

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Export Performance
Export earnings declined due to the slump in the
price of crude oil and dampened global demand,
that had their origin in the lockdown measures.
At US$19.72 billion or 9.5 per cent of GDP in the
first half of 2020, export earnings were lower than
the US$33.43 billion and US$31.55 billion by 41.0
per cent and 37.5 per cent, in the second and first
halves of 2019, respectively.
A disaggregation showed that value of crude oil
exports declined by 42.7 per cent and 42.2 per
cent to US$13.79 billion (6.6 per cent of GDP) in
the first half of 2020, relative to US$24.07 billion
and US$23.87 billion in the second and first halves
of 2019, respectively. This was attributed to the
slump in crude oil prices, with the average price
of Nigeria’s reference crude, the Bonny Light,
falling to US$39.98 per barrel in the review
period, compared with US$65.69 and US$68.00
per barrel in the preceding and the corresponding
halves of 2019, respectively. Similarly, crude oil
production decreased to 1.80 mbpd, in the review
period, compared with 1.88 mbpd in the
preceding period of 2019, reflecting the
enforcement of the production cap by the OPEC.
Gas export receipts declined by 18.8 per cent and
18.6 per cent to US$2.67 billion in the review
period, relative to US$3.29 billion and US$3.28
billion, in the second and first halves of 2019,
respectively. Crude oil and gas component
remained dominant and accounted for 83.5 per
cent of total export, with crude oil constituting
69.9 per cent, and gas, 13.6 per cent.
Non-oil receipts, which constituted the remaining
16.5 per cent of total exports, also declined
significantly by 46.2 per cent and 25.9 per cent, to
US$3.26 billion in the review period, compared
with the US$6.01 billion and US$4.40 billion in the
second and first halves of 2019, respectively. This
was attributed to the low global demand, arising
from the shutdown of production in major supply
countries such as China and the US, as part of the
breakdown measures of the COVID-19 pandemic.
The main drivers of non-oil exports included
cashew nuts, cocoa beans, and sesame seeds,
with The Netherlands, Ghana, Brazil and the US as
the major destinations. A disaggregation of nonoil exports by products revealed that agricultural,
other
products,
manufactured,
semimanufactured and mineral products accounted
for 69.1 per cent, 11.2 per cent, 9.1 per cent, 7.0
per cent and 3.5 per cent of the total,
respectively.
Export to ECOWAS Sub-Region
The COVID-19 pandemic affected intra-African
trade. Nigeria’s non-oil export to the ECOWAS
sub-region stood at US$111.86 million in the first
half of 2020. Export to Ghana was the highest at
US$43.67 million or 39.0 per cent of the total. This
was followed by: Togo, US$29.10 million (26.0 per
cent); Cote d’Ivoire, US$17.43 million (15.6 per
cent); and Niger, US$6.20 million (5.5 per cent).
Export to Guinea was US$4.50 million (4.0 per
cent); Senegal, US$3.74 million (3.3 per cent); and
Mali, US$2.69 million (2.4 per cent). Other
countries accounted for the balance of 4.0 per
cent. The dominant export commodity to the subregion remained instant noodles, detergents,
tobacco, plastics, dairy products, soya beans
meal, and carbonated soft drink.
Foreign Exchange Earnings by Top 100 Non-oil
Exporters
The ‘great’ lockdown due to the COVID-19
pandemic, disrupted the global supply and
demand chains, lowering non-oil exports.
Consequently, the value of export proceeds of the

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
top one hundred exporters in the first half of 2020
was US$935.85 million, indicating a decline of 4.5
per cent, below the US$976.16 million in the
corresponding period of 2019. Analysis of the
activities of the “Top 100 Non-oil Exporters”
showed that Olam Nigeria Limited topped the list
with a value of US$203.69 million or 21.9 per cent
of the total, from the export of cocoa beans,
cashew nuts, and sesame seeds to Turkey and
China. The second major non-oil exporter was
Indorama Eleme Fertilizer and Chemicals Limited
at US$79.37 million (8.5 per cent), realised from
the export of urea, fertilizers and agronomy
services to Turkey and China. The third major
non-oil exporter was Starlink Global and Ideal
Limited, with a value of US$53.30 million (5.9 per
cent) from the export of cocoa beans to Malaysia.
Wacot Limited followed, with US$51.47 million
(5.5 per cent) from the export of cotton products
to The Netherlands and the US.
In the fifth position was the British-American
Tobacco Nigeria Limited with value of US$44.17
million (4.7 per cent), from the export of
cigarettes to Liberia, Guinea, Ghana, Cameroun,
Cote d’Ivoire and Niger. H.M Agro Commodities
Nigeria Limited, Banarly (Nig.) Limited, Gbemtan
Investment Limited, Huxley Industries Limited,
were at 96th, 97th, 98th, and 99th positions with
export earnings of US$0.72 million, US$0.72
million, US$0.64 million, and US$0.61 million,
respectively. Their major export products were
Buffalo meat, seafood, cocoa products, and
cashew
nuts
to
Vietnam,
Belgium,
The
Netherlands, and Kazakhistan, respectively.
Mozukandj Nigeria Ltd placed 100th position with
export value of US$0.60 million, from cocoa,
cashew and sorghum to The Netherlands and the
US.

Non-Oil Receipts through Banks
Similarly, lockdown of the economy on account
of the COVID-19 pandemic led to the decline in
non-oil export receipts through banks in the first
half of 2020. Non-oil export receipts through
banks fell by 45.7 per cent to US$1.36 billion in
the review period, compared with the level in the
preceding period. A disaggregation showed that
proceeds from industrial products decreased by
14.2 per cent to US$0.81 billion, representing
59.4 per cent of the total receipts, occasioned by
decline in receipts from the export of raw
materials (mainly chemicals).
Receipts from the export of agricultural products
contracted significantly by 62.0 per cent to
US$0.30 billion or 21.9 per cent of total receipts,
due largely to the fall in the export of fertilizer and
animal products. Manufactured products receipt
at US$0.22 billion accounted for 16.1 per cent of
the total, while food products at US$0.03 billion,
accounted for 2.0 per cent. Mineral products
accounted for the balance of 0.7 per cent.
Figure 3.6 2: Non-Oil Export Receipts by Banks
(US$ ’Millions)

Source: Central Bank of Nigeria


-

1,000
1,200
1st Half 2019
2nd Half 2019
1st Half 2020
Minerals
Agricultural
Manufactured
Food
Industrial
Transport

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Merchandise Import
Due to the dampened global demand, aggregate
imports also declined significantly.
At US$24.78 billion (11.9 per cent of GDP),
aggregate imports fell by 22.5 per cent and 17.8
per cent, respectively, compared with US$31.97
billion in the second half of 2019 and US$30.14
billion in first half of 2019. Importation of non-oil
products, which constituted 83.8 per cent of total
import, declined by 22.7 per cent and 14.3 per
cent to US$20.77 billion or 10.0 per cent of GDP,
relative to the US$26.85 billion and US$24.24
billion in the preceding and the corresponding
periods of 2019, respectively. Similarly, the
importation of petroleum products, decreased to
US$4.02
billion
(1.9 per
cent
of
GDP),
representing 16.2 per cent of total imports,
compared with the levels in the preceding half of
2019. The development reflected low demand
during the partial lockdown period.
A breakdown of merchandise imports by sector
indicated
that
industrial
sector
imports
accounted for the largest share of 42.7 per cent,
followed by manufactured products with a share
of 21.6 per cent. Food products accounted for
14.6 per cent; oil sector, 13.4 per cent; transport
sector, 4.9 per cent; agricultural sector, 1.6 per
cent; and minerals sector, 1.3 per cent.
Overall, the goods account registered a trade
deficit of US$5.06 billion (2.4 per cent of GDP) in
the review period, as against surpluses of US$1.46
billion and US$1.41 billion in the preceding and
the corresponding periods of 2019, respectively.


Figure 3.6.3: Export, Import and Trade Balance
(US$ Billion)

Source: Central Bank of Nigeria

Services
The
Services
sector
witnessed significant
reduction in activities as a result of the COVID-19
pandemic. Consequently, the deficit in the
services account narrowed by 41.0 per cent and
34.6 per cent to US$10.47 billion (5.0 per cent of
GDP), from US$17.74 billion and US$16.02 billion,
in the preceding and the corresponding periods of
2019, respectively.
A disaggregation of services revealed that the
value of services imports at US$12.42 billion in
the review period, declined by 38.1 per cent and
33.4 per cent, relative to the US$20.07 billion and
US$18.64 billion in the preceding and the
corresponding periods in 2019, respectively.
A breakdown showed that payments in respect of
other business services, which constituted 40.5
per cent of total payment, declined to US$5.01
billion in the review period, compared with
US$8.14 billion and US$7.82 billion, in the second
and first halves of 2019, respectively. The
development was attributed to the decline in the
payment for professional and management
consulting, as well as, technical, trade-related and
other services.

1st Half 2019
2nd Half 2019
1st Half 2020
US$ billion
Exports
Imports

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Payment for travel services, at US$3.67 billion or
29.5 per cent of the total, also declined as both
personal (particularly education and health
related) and business-related travels declined.
This was due to the grounding of international
travels by most countries during the COVID-19
pandemic induced lockdown. Payments in
respect of transportation services declined to
US$2.79 billion, accounting for 22.4 per cent of
the total, owing to decreased payments for
passenger fares and freight charges. Payments in
respect
of
insurance,
government,
and
communication services, as well as, royalties &
licence fees decreased to US$0.39 billion or 3.2
per cent of the total, US$0.12 billion or 1.0 per
cent of the total, US$0.01 billion or 0.1 per cent of
the total and US$0.13 billion or 1.0 per cent of the
total, respectively, relative to their levels in the
preceding half of 2019. Payment in respect of
other services represented the balance.

Figure 3.6 4: Share of Services Out-Payments
(First Half 2020, Per cent)

Source: Central Bank of Nigeria
Receipts on services revealed that the value of
services exports declined to US$1.94 billion in the
review period, relative to US$2.33 billion and
US$2.62 billion in the second and first halves of
2019, respectively. Of this, receipts in respect of
transportation services decreased to US$1.02
billion, compared with US$1.05 billion in second
half of 2019, occasioned by lower receipts from
freight services (mainly sea transportation) and
other transportation services.
Receipts from travel services also declined to
US$0.17 billion, compared with the US$0.52
billion and US$0.93 billion in the preceding and
corresponding halves of 2019, respectively, as
other personal travels (tourism related) declined
significantly during the review period. Receipt
from
insurance
services,
mainly
non-life,
increased to US$0.18 billion in the first half of
2020, compared with US$0.01 billion and US$0.11
billion in the second and first halves of 2019,
respectively. Communications, financial and
government services receipts declined by 54.8
per cent, 66.5 per cent, and 48.6 per cent to
US$0.09 billion, US$0.23 billion and US$0.23
billion, respectively, in the first half of 2020,
compared with their respective levels in the
corresponding period in 2019.
In terms of percentage share, receipts from
transportation services was dominant with a
share of 52.4 per cent of total receipts. This was
followed by: government services, 11.8 per cent;
financial services, 11.8 per cent; insurance
services, 9.4 per cent; travel receipts, 8.9 per
cent; communication services, 4.5 per cent; and
others, 1.2 per cent.


Transport
22.4%
Travel
29.5%
Government
1.0%
Royalties
1.0%
Other
business
services
40.5%
Insurance
3.1%
Others
2.5%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6.5: Share of Services Receipts (First
Half 2020, Per cent)

Source: Central Bank of Nigeria
Primary Income
The reduction in payments of investment income
to foreign investors resulted in an improvement
in the primary income account. Thus, the deficit
in the primary income sub-account narrowed by
47.8 per cent and 46.1 per cent to US$3.31 billion,
relative to US$6.34 billion and US$6.15 billion in
the preceding and corresponding periods in 2019,
respectively. Dividend payments at US$3.25
billion in the review period, indicated a decline of
35.8 per cent and 38.7 per cent, compared with
the US$5.32 billion and US$5.57 billion in the
second and first halves of 2019, respectively.
Reinvested earnings witnessed a divestment of
US$0.45 billion, in contrast to a reinvestment of
US$0.81 billion apiece, in the preceding and
corresponding halves of 2019. Interest payment
on other investment such as loans increased by
30.0 per cent to US$0.74 billion in the review
period, from US$0.57 billion in the preceding
period.
Interest
payments
on
portfolio
investment also declined by 16.9 and 34.7 per
cent to US$0.47 billion, relative to US$0.56 billion
and
US$0.71
billion
in
preceding
and
corresponding periods in 2019, respectively, on
account of the decline in interest payment on
short-term instruments.
Further analysis revealed that interest earnings
on reserve assets declined by 10.3 per cent and
35.0 per cent to US$0.52 billion, relative to the
US$0.58 billion and US$0.80 billion in the second
and first halves of 2019, respectively. The
compensation of employees sub-account, though
in surplus position, declined by 34.1 per cent and
38.3 per cent to US$0.07 billion, compared with
the US$0.11 billion apiece in the preceding and
corresponding periods of 2019.
Secondary Income
The slowdown in economic activities owing to
the COVID-19 pandemic had an adverse effect on
income of migrants and remittances inflows to
Nigeria. As a result, the surplus in the secondary
income account declined in the review period to
US$10.05 billion or 9.8 per cent of GDP, compared
with the US$12.97 billion and US$13.40 billion in
the second and first halves of 2019, respectively.
This indicated decline of 22.5 per cent and 25.1
per cent, respectively. Inflow of personal
transfers in form of workers’ remittances, which
constituted 87.5 per cent of total inflow, declined
by 23.1 per cent and 23.7 per cent to US$9.02
billion, compared with US$11.73 billion and
US$11.82 billion in the preceding and the
corresponding
halves
of
2019.
General
government transfers, comprising payments to
foreign
embassies
and
international
organisations, recorded a lower surplus of
US$1.27 billion in the first half of 2020, compared
with the US$1.59 billion in the preceding half of
2019, indicating a decline of 20.1 per cent.


Transport
52.4%
Travel
8.9%
Govt
Services
11.8%
Insurance
9.4%Financial
11.8%
Others
5.7%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6.6: Private Home Remittances
(US$ billion)

Source: Central Bank of Nigeria
ii.
Financial Account Developments
During the review period, Nigeria recorded a net
lending
position,
mainly
on
account
of
reductions in both assets and liabilities. The
financial account recorded a net acquisition of
financial assets of US$3.87 billion or 1.9 per cent
of GDP. This was in contrast to the net incurrence
of financial liability of US$24.73 billion in the
second half of 2019 and US$2.96 billion in the first
half of 2019.
Net Liability Incurred
Aggregate foreign liabilities recorded a reduction
of US$7.66 billion, which was higher than the
US$3.27 billion in second half of 2019, due,
largely, to portfolio capital reversal (both equity
and debt securities), repayment of loans by the
banks and the private sector, as well as,
withdrawal of foreign currency placed in Nigerian
banks. This was, however, in contrast to an
incurrence of US$20.99 billion in the first half of
2019.
A breakdown showed that inflows of FDI, at
US$1.17 billion, indicated an increase of 17.8 per
cent, compared with US$0.99 billion in the second
half of 2019. The development was as a result of
inflow of fresh FDI equity and other capital,
despite the global economic challenges of the
COVID-19 pandemic. However, it declined by 49.2
per cent, compared with the level in the first half
of 2019.
Portfolio investment, which comprised equity and
debt securities, recorded a significant capital
reversal of US$8.39 billion, higher by 4.5 per cent,
compared with the US$8.03 billion in the
preceding half of 2019. This was due, largely, to
the sale of both equity and debt securities during
the review period. Equity securities worth
US$1.29 billion was sold, while debt securities
valued at US$7.10 billion were disposed,
consisting of US$6.56 billion short-term and
US$0.54 billion long-term debt securities. Global
financial markets volatility, price readjustments,
liquidity crunch and increased risk aversion
precipitated this huge outflow.
“Other” investment recorded an outflow of
US$0.44 billion in the review period, in contrast to
inflows of US$3.77 billion and US$1.53 billion in
the second and first halves of 2019. The outflow
was as a result of the repayment of loan liabilities
by the banks and the private sector, as well as
withdrawal of foreign currency placed in Nigerian
banks.
Figure 3.6.7: Foreign Capital Inflows
(US$ Billion)

Source: Central Bank of Nigeria

First Half 2019 Second Half

First Half 2020
-15
-10
-5

1st Half 2019
2nd Half 2019
1st Half 2020
US$' billion
FDI Inflows
Portfolio Inflows
Other Investment Inflows

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Net Acquisition of Asset
Aggregate financial assets worth US$3.79 billion
were disposed in the review period, due, largely
to the withdrawal of foreign currency deposits by
banks and the private sector, as well as, the
depletion of external reserves. However, this was
significantly lower than the US$28.00 billion in
the preceding half of 2019. In contrast, an
acquisition of US$18.03 billion was recorded in
the first half of 2019. Further analysis showed
that acquisition of direct investment assets by
residents decreased by 0.5 per cent to US$0.74
billion, compared with US$0.75 billion in the
second half of 2019.
Portfolio investment outflow also fell to US$0.06
billion in the review period, compared with
US$0.12 billion in the preceding half of 2019,
indicating a decrease of 50.3 per cent. This
reflected the lull in activities at the international
capital markets. The “other” investment asset
sub-account registered a disposal of US$2.29
billion, significantly lower than the US$22.23
billion in the corresponding period of 2019,
largely driven by the withdrawal of foreign
currency deposits by banks and the private
sector.
Capital Importation
New capital imported into the economy, as
reported by banks, declined to US$7.15 billion
between January and June 2020, compared with
US$14.31 billion in the first half of 2019, owing to
the risk averseness of investors in periods of
shock. A disaggregation of capital imported by
sectors showed that 43.1 per cent of the total was
invested in banking, while investment in financing
accounted for 23.3 per cent. The purchase of
shares,
servicing,
production/manufacturing,
agriculture, and trading had respective shares of
18.1 per cent, 0.7 per cent, 5.4 per cent, 1.5 per
cent and 2.7 per cent.
Other sectors accounted for the balance. By type
of investment, portfolio investment remained
dominant, 65.7 per cent of the total, followed by
other investments (29.2 per cent) while FDI inflow
accounted for the remaining 5.1 per cent. By
country of origin, the United Kingdom remained
the highest source of inflow, accounting for 53.5
per cent of the total, followed by the Republic of
South Africa with 11.8 per cent. United Arab
Emirates, The Netherlands and the United States
accounted for 9.5 per cent, 8.2 per cent and 7.2
per cent, respectively, while other countries
accounted for the balance.
Capital Outflow
Economic uncertainty in the wake of the twin
shock of drop a crude oil prices and the adverse
effect of COVID-19 have continued to weaken
investors sentiments and to spike capital reversal.
In the first half of 2020, aggregate capital outflow
stood at US$9.70 billion, compared with US$4.07
billion in the first half of 2019. A disaggregation
showed that, outflow in the form of capital
reversal, constituted 76.7 per cent, followed by
repayments of loans, which accounted for 17.8
per cent. Payments of dividends to non-resident
investors represented 5.3 per cent of the total,
while ‘others’ accounted for the balance. In terms
of capital outflow by sectors, financing was 49.0
per cent, followed by the banking sector, which
constituted
31.6
per
cent.
Production/manufacturing, servicing, and oil &
gas sectors accounted for 9.9 per cent, 3.4 per
cent and 3.3 per cent, respectively. Other sectors
accounted for the balance.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
External Debt
On account of dwindling revenues, as crude oil
price plummet and more resources are needed to
contain the COVID-19 pandemic, Nigeria’s
external debt has continued to rise.
Public external debt stock, at US$31.48 billion (8.1
per cent of GDP) as at end-June 2020, increased
by 13.7 per cent and 15.9 per cent, compared
with US$27.68 billion at end-December 2019 and
US$27.16 billion at end-June 2019. The increase
was driven, largely, by the US$3.36 billion IMF
emergency facility to the country. A breakdown
showed that loans from multilateral sources,
mainly, the World Bank and African Development
Bank Groups, was US$16.36 billion, constituting
52.0 per cent of the total. Debt from commercial
sources in the form of Euro and Diaspora Bonds
was US$11.17 billion (35.5 per cent), while
bilateral sources, mainly, the China EXIM Bank
accounted for the remaining US$3.95 billion (12.5
per cent).
International Reserves
The weakly diversified economy, combined with
the slump in crude oil prices and investor apathy,
has continue to hamper the building of external
reserve buffers.
Gross external reserves at end-June 2020 stood at
US$35.77 billion, compared with US$38.09 billion
and US$44.75 billion at end-December 2019 and
end-June 2019, respectively. The decline of 6.1
per cent, when compared with the level at endDecember 2019, was due, largely, to the effect of
the COVID-19 pandemic on crude oil prices, which
affected foreign exchange inflow to the economy.
Other
contributors
to
the
decline
were
interventions at the foreign exchange market,
direct and third-party. A breakdown of the
external reserves by ownership showed that, the
CBN had the largest share of 84.3 per cent,
followed by the Federal Government with 15.5
per cent, while the share of the Federation
accounted for the balance of 0.2 per cent. The
CBN portion of the reserves fell by 19.0 per cent
from its level at end-June 2019, due, largely, to
the Bank’s intervention at the foreign exchange
market. In terms of currency composition, the US
dollar, at US$29.35 billion, constituted 82.0 per
cent of the total; special drawing rights, US$2.07
billion (5.8 per cent); Chinese yuan, US$3.99
billion (11.2 per cent); and other currencies made
the balance of 1.0 per cent.
An assessment of external reserve adequacy
based on the traditional measures showed that
the end-June 2020 level of reserves could finance
5.8 months of import of goods and services or 8.7
months of goods only, higher than the 3.0 months
international benchmark. The ratio of external
reserves to short-term liabilities was also
adequate at 426.3 per cent above the benchmark
of 100.0 per cent short-term debt cover of the
Greenspan-Guidotti measure of external reserves
adequacy. In terms of external reserves to money
supply (M3), the ratio, at 36.5 per cent, indicated
that the level of reserves was inadequate, as it
was above the international benchmark of 20.0
per cent.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6.8: External Reserves Stock and
Months of Import Commitments

Source: Central Bank of Nigeria

iii.
External Asset Management
Programme and Income from
Reserves Management
At end-June 2020, the net asset value of the fixed
income portfolio managed by the six external
asset managers stood at US$7.38 billion,
compared with the US$7.15 billion at end-June
2019. The portfolio recorded an absolute return
of US$0.98 billion since inception to end-June
2020. Overall, the operations of reserve asset
management yielded an aggregate return of
(N142.47 billion) (US$0.39 billion) in the first half
of 2020, representing an increase of N25.31
billion or 21.6 per cent, above the budgeted
amount of N117.16 billion. It was also higher than
the N123.76 billion in the first half of 2019 by
N18.71 billion or 15.1 per cent, due, largely to the
increased income from the additional allocation
to the Internal Renminbi portfolio and the
activities of the External Fund Managers.
Foreign Exchange Flows
The slump in crude oil prices as a result of the
COVID-19 pandemic affected foreign exchange
inflows to the economy in the review period.
Aggregate inflow to the economy in the first half
of 2020 at US$60.13 billion, fell by 17.8 per cent
and 10.7 per cent, relative to US$73.12 billion and
US$67.34 billion in the preceding half year and
first half of 2019, respectively. A breakdown
showed that inflow through autonomous sources
at US$35.29 billion accounted for 58.7 per cent,
while the CBN was US$24.84 billion or 41.3 per
cent.
A disaggregation of inflow through autonomous
sources
showed
that:
invisible
purchases
amounted to US$33.92 billion; non-oil export
receipts, US$1.36 billion; and external account
purchases, US$0.02 billion, indicating a decline of
24.2 per cent, 45.6 per cent and 12.8 per cent,
compared with their respective levels in the
second half of 2019. Of the total invisible
purchases, ordinary domiciliary accounts and
over the counter (OTC) purchase amounted to
US$9.48 billion and US$24.43 billion during the
review period. A disaggregation of the OTC
purchases showed that, capital importation
amounted to US$8.13 billion, while home
remittances was US$0.84 billion. Other OTC
purchases amounted to US$15.46 billion.
Foreign exchange inflows through the CBN
showed that crude oil receipts declined by 16.0
per cent to US$6.62 billion, compared with the
level in the preceding half year. The development
attributed to the drop in crude oil as a result of
weak global demand. Non-oil receipts, on the
other hand, increased by 1.4 per cent to US$8.22
billion, compared with the level in the second half
of 2019. This was due to proceeds from
government debt in the form of emergency
financial assistance of US$3.36 billion, received
from the IMF, under the Rapid Financing
Instrument, to cushion the effect of the COVID-19
pandemic. Other non-oil receipts included: TSA
and third-party receipts, US$3.56 billion; foreign


First Half 2019
Second Half 2019
First Half 2020
US$ billion
External Reserves
Months of Import Commitments (Goods only)
Months of Import Commitments (Goods and Services)
Reserve/M3

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
exchange purchases, US$2.54 billion; returned
payments
(Wired/Cash),
US$0.24
billion;
recovered funds, US$0.31 billion; and DMBs cash
receipts,
US$3.03
billion.
Others
include
Interbank swaps, US$2.18 billion; other official
receipts, US$1.39 billion; unutilised funds from
foreign exchange transactions, US$0.62 billion;
unutilised IMTO receipts, US$0.61 billion; and
interest on reserves and investments, US$0.37
billion.
Aggregate foreign exchange outflows from the
economy declined to US$29.11 billion, relative to
the levels in the preceding six months and first
half of 2019, respectively. Outflow through
autonomous sources at US$1.78 billion, fell by
22.3 per cent and 5.7 per cent, when compared
with the levels in the preceding half year and first
half of 2019, respectively. Outflow through the
CBN was US$27.32 billion, a decrease of 15.4 per
cent and 5.3 per cent, compared with the
respective levels in the preceding six months and
first half of 2019, owing to intervention in the
foreign exchange market.
A disaggregation of outflow through the CBN
showed that interbank utilisation decreased to
US$18.17 billion or 62.4 per cent of the Bank’s
outflow, when compared with the second half of
2019, following the suspension of sales to BDCs.
Other sources of outflow through the bank were:
public sector direct payments, US$5.09 billion;
third party MDAs transfers, US$2.84 billion;
external debt service, US$0.76 billion; and
drawings on L/Cs, US$0.37 billion. Also, foreign
exchange special payments were US$0.07 billion;
and funds returned to remitter registered
US$0.01 billion. Outflow in respect of public
sector direct payments comprised: Joint Venture
Companies (JVC) cash calls, US$1.84 billion;
estacode, US$0.01 billion; and miscellaneous,
US$3.24 billion.
Figure 3.6.9: Foreign Exchange Disbursements
through the CBN (First Half 2020)

Source: Central Bank of Nigeria
Overall, foreign exchange flow through the
economy during the review period resulted in a
net inflow of US$31.02 billion, compared with
US$38.53 billion and US$36.61 billion in the
preceding half year and corresponding half of
2019, respectively. The CBN recorded a net
outflow of US$2.48 billion in the first half of 2020,
compared with US$6.44 billion in the second half
of 2019. This was in contrast to a net inflow of
US$1.97 billion in the corresponding period of
2019. A net inflow of US$33.51 billion was
recorded through autonomous sources in the
review period, compared with US$44.97 billion
and US$34.63 billion in the preceding six months
and corresponding half of 2019, respectively.


Interbank
utilisation
66.7%
Drawings on
L/Cs
1.3%
External Debt
Service
2.8%
Other Official
Payments
18.7%

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6.10: Foreign Exchange Flows through
the CBN (US$’ Billion)

Source: Central Bank of Nigeria
b. Foreign Exchange Market and
Management
Relative stability was maintained in the foreign
exchange market in the first half of 2020,
through
the
Bank’s
sustained
periodic
interventions. The global impact of the COVID-19
pandemic was felt in the foreign exchange market
as crude oil price dipped, thus affecting foreign
exchange inflow to the economy. In a bid to
stabilise the foreign exchange market and achieve
exchange rate convergence at the various
segments of the market, the Bank adjusted the
official naira interbank rate, by 15.0 per cent from
N306/US$ to N360/US$, on March 20, 2020. In
addition, adjustments were made to: I&E rate by
5.0 per cent from N360/US$ to N380/US$; IMTOs
rate to banks, N376/US$; banks rate to CBN,
N377/US$; CBN to BDCs, N378/US$; and BDCs to
end-users, a maximum of N380/US$.
The Bank also implemented other measures to
stabilise the foreign exchange market, which
included: the restriction of foreign exchange for
the importation of milk and dairy products on
February 11, 2020, to boost local production; and
the temporary suspension of foreign exchange
sales to BDCs on March 27, 2020, following the
suspension of international travels.
To meet the country’s balance of payments needs
and cushion the effect of the COVID 19 pandemic,
the Executive Board of the International
Monetary Fund (IMF) approved an emergency
financial assistance of SDR 2,454.5 million (US$3.4
billion), equivalent to 100 per cent of quota to
Nigeria, under the Rapid Financing Instrument
(RFI), on April 28 2020.

i.
Foreign Exchange Sales
The precautious level of economic activities
hampered foreign exchange supply to authorised
dealers. Total foreign exchange supply to
authorised dealers by the Bank stood at US$13.98
billion, indicating a decline of 15.3 per cent each,
below the levels in the preceding half year and
the corresponding half of 2019, respectively. Of
the total, inter-bank sales amounted to US$0.38
billion, compared with US$0.62 billion and
US$0.81 billion in the preceding six months and
the corresponding period of 2019, respectively.
At the BDC segment, total sales declined to
US$3.63 billion in the review period, compared
with US$6.75 billion and US$6.86 billion in the
preceding half year and corresponding period of
2019, respectively, due to the temporary
suspension of sales to the segment as
international travels were grounded. Foreign
exchange sales under the Secondary Market
Intervention Scheme (SMIS) and to Small and
Medium Enterprises (SME) declined by 7.6 per
cent and 31.0 per cent to US$3.16 billion and
US$0.57 billion, respectively, from their levels in
the preceding half year. Sales to the I&E window
rose by 27.6 per cent to US$6.24 billion,
compared with the levels in the preceding six
months and the corresponding period of 2019,
respectively.


1st Half 2019
2nd Half 2019
1st Half 2020
Inflow
Outflow
Netflow

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6. 11: Supply of Foreign Exchange
(US$ Billion)

Source: Central Bank of Nigeria

ii.
Forwards and Swaps Transactions
Increased uncertainty surrounding the naira
exchange rate, as a result of the COVID-19
pandemic, prompted investors to hedge against
currency risks. In the first half of 2020, forwards
contracts disbursed at maturity amounted to
US$2.24 billion. Matured swaps transactions
increased to US$1.95 billion, compared with
US$1.40 billion in the second half of 2019.
Exchange Rate Movements
During the review period, the Bank adjusted the
naira exchange rate in all the segments of the
foreign exchange market, in a bid to converge
and further stabilize the currency, as well as
reduce rent-seeking activities. Consequently, the
naira depreciated against the United States dollar
in all the segments of the market.
Spot Exchange Rate
In the first half of 2020, the average exchange rate
of the naira to the US dollar at the inter-bank
segment depreciated to N337.26/US$, below the
value in second half of 2019, as a result of the
adjustment of the naira exchange rate by 15.0 per
cent. The average exchange rate of the naira at
the BDC segment depreciated by 10.5 per cent to
₦401.44/US$, below the level in the preceding
period of 2019. This was due to the temporary
suspension of foreign exchange sales to the
segment of the market and the CBN adjustment.
Similarly, at the I&E window, the average
exchange rate depreciated by 3.7 per cent to
₦376.44/US$, relative to the level in the
preceding period of 2019. This was occasioned by
the significant drop in foreign exchange sales due
to the lull in economic activities.
Figure 3.6.12: Average Exchange Rate
Movements (N/US$)

Source: Central Bank of Nigeria
Consequently, the premium between the average
interbank and BDC rates widened by 1.9
percentage points to 19.0 per cent, during the
review period, from 17.1 per cent in the
corresponding period of 2019. Similarly, the
premium between the average I&E and the BDC
rates widened to 6.6 per cent in the first half of
2020, compared with 0.9 per cent in the
corresponding period of 2019.

Total Foreign Exchange Supply
2 per. Mov. Avg. (Total Foreign Exchange Supply)

Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Inter-Bank
BDC

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020

Figure 3.6.13: Interbank/Bureau-de-Change
Foreign Exchange (N/US$) Premium (per cent)

Source: Central Bank of Nigeria
The end-period exchange rate of the naira to the
US dollar at the inter-bank segment closed at
N361.00/US$ at the end-June 2020, compared
with N307.00/US$ and N306.90/US$ at the end of
the preceding period and first half of 2019,
respectively. At the BDC segment, the end-period
exchange rate depreciated to N455.00/US$,
compared with respective rates of N362.00/US$
and N360.00/US$ at the end of the preceding six
months and first half of 2019. At the I&E window,
the exchange rate closed at N386.50/US$,
showing a depreciation of 5.7 and 6.7 per cent,
relative to N364.51/US$ and N360.74/US$, at the
end of the preceding half year and first half of
2019, respectively. These depreciations were as a
result of the Bank’s adjustments of rates.


Cross Rates
Average exchange rate of the naira against
selected international currencies in the review
period showed a depreciation of 8.7 per cent, 8.6
per cent and 8.2 per cent, against the British
pound, the Japanese yen and the euro,
respectively, compared with their levels in the
second half of 2019. At the regional level,
however, the naira appreciated against the CFA
francs and WAUA by 1.6 per cent and 0.2 per cent,
respectively, relative to the values in the first half
of 2019.
Emerging Markets Currencies
Most emerging market currencies, including the
naira, witnessed significant pressure, due,
largely to the slump in commodity prices and
trade, in the review period. The South African
rand depreciated by 11.9 per cent, while the
Russian rouble depreciated by 7.9 per cent, and
the Chinese RMB depreciated marginally by 0.04
per cent, against the dollar, in the review period.
This was attributed, largely, to the effect of the
COVID-19 pandemic, which affected commodity
prices, particularly crude oil.


Per cent
Inter-Bank/BDC
5% International Bench Mark

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Table 3.6. 1: EMEs Exchange Rates to the US
dollar
Source: Central Bank of Nigeria

iii.
Sectoral Utilisation of Foreign
Exchange
Aggregate
sectoral
utilisation
of
foreign
exchange in the first half of 2020 was US$17.70
billion, showing a decrease of 30.9 per cent,
when compared with the level in the preceding
period of 2019. However, it increased by 4.2 per
cent, relative to the level in the corresponding
period of 2019. A disaggregation showed that,
32.6 per cent of the foreign exchange was utilised
for visible imports. In value terms, visible import
saccounted for US$5.76 billion, compared with
the levels in the second and first halves of 2019,
respectively. Further analysis indicated that
industrial sector, at US$2.46 billion, decreased by
29.2 per cent and 21.3 per cent compared with
the levels in the preceding six months and
corresponding period of 2019, respectively.
Similarly, the amount utilised for manufactured
products, food products, oil and transportation
sectors declined by 29.2 per cent, 19.2 per cent,
39.3 per cent and 15.4 per cent, to US$1.24
billion, US$0.84 billion, US$0.77 billion and
US$0.28 billion, compared with their respective
levels in the corresponding period of 2019.
Foreign exchange utilisation for agricultural and
mineral sectors fell by 36.8 per cent and 48.8 per
cent to US$0.09 billion and US$0.07 billion,
compared with their respective levels in the
corresponding period of 2019.
Invisible transactions also declined by 31.5 per
cent to US$11.93 billion (67.4 per cent of total),
compared with the level in the second half of
2019, but rose by 18.9 per cent, relative to the
level in the corresponding period of 2019. The fall
in foreign exchange utilisation across major
sectors was attributed to the COVID-19 pandemic
induced supply and demand shocks, which caused
disruptions in global economic activities. A
breakdown showed that the amount utilised for
financial services, and education related services
decreased by 28.6 per cent and 24.4 per cent to
US$11.38 billion and US$0.08 billion, respectively,
compared with the levels in the preceding period
of 2019. This was attributed to the lower demand
during the lockdown period. Similarly, the
amount
utilised
for
business
services,
communication, distribution, construction &
related engineering, as well as, tourism and travel
related services, declined during the review
period. Other services also fell to US$0.04 billion,
below the levels in the preceding half year and
corresponding period of 2019, respectively.
Figure 3.6.14: Sectoral Utilisation of Foreign
Exchange (Visible)

Source: Central Bank of Nigeria

INDUSTRIAL
SECTOR
42.7%
FOOD
PRODUCTS
14.6%
MANUFACTURED
PRODUCTS...
TRANSPORT
SECTOR
4.9%
OIL SECTOR
13.4%
OTHERS
2.9%
Period
Chinese
RMB/US$
Nigerian
Naira/US$
South
African
Rand/US$
Russian
Rouble/US$
2019 H1

2019 H2

2020 H1


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Figure 3.6.15: Sectoral Utilisation of Foreign
Exchange (Invisibles)

Source: Central Bank of Nigeria

i.
Nominal Effective Exchange Rate
(NEER) and Real Effective Exchange
Rate (REER) Indices
The NEER and REER reflect the incipient weakness
in Nigeria’s external competitiveness. Provisional
figure for the average 13-currency Nominal
Effective Exchange Rate (NEER) index in the
review period was 178.92, indicating a 1.1 per
cent increase, but a 0.8 per cent decrease,
relative to the levels in the second and first half of
2019, respectively. The increase relative to the
preceding half year indicated a nominal
appreciation of the naira relative to the
currencies of its trading partners during the
review period. The average Real Effective
Exchange Rate (REER) index, which measures
external competitiveness of a country was 76.22,
representing a decline of 3.8 and 9.7 per cent,
compared with the levels in the preceding six
months and the corresponding period of 2019,
respectively. This development indicated a
depreciation of the naira in real terms, relative to
its trading partners.


Figure 3.6.16: NEER and REER

Source: Central Bank of Nigeria

i.
External Sector Risks
Crude Oil Price Volatility: Volatility in crude oil
prices is expected to persist, as the effect of the
COVID-19 pandemic on the global economy
would take time to wane. The sustenance of the
OPEC+ production cut agreement would help in
stabilising crude oil prices at the international
market.
Exchange Rate Pressure: The effect of the slump
in crude oil prices at the international market and
the decline in capital inflows and remittances,
due to the COVID-19 pandemic, would likely put
more pressure on the naira exchange rate. This
could be compounded as investors’ preference
for safer commodities and currencies continues
with the uncertainty surrounding the pandemic.
Contracting Global Remittance Flows: According
to the World Bank projections, global remittance
flows are expected to decline by about 20.0 per
cent in 2020, due to the COVID-19 pandemic. This
would reflect on remittance inflows to receiving
countries such as Nigeria.
Shrinking Global Capital Flows: Foreign direct
investment inflows are expected to be adversely
affected, as investors prefer to withhold fresh
investments due to uncertainty surrounding
BUSINESS
SERVICES
2.0%
FINANCIAL
SERVICES
95.3%
OTHERS
2.7%

Jan-

Feb-

Mar-

Apr-

May-

Jun-

Jul-19 Aug-

Sep-

Oct-

Nov-

Dec-

Jan-

Feb-

Mar-

Apr-

May-

Jun-

N/US$
Nominal Effective Exchange Rate (NEER)
Real Effective Exchange Rate (REER)

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
global economic developments. Furthermore,
tight financial conditions globally are expected to
reduce portfolio flows to emerging economies
and developing countries, such as Nigeria, as
investors may prefer to channel their resources to
safe havens.
Rising
External
Debt
and
Debt
Service
Obligation: Based on the country’s Debt
Sustainability Analysis (DSA) by the Debt
Management Office, Nigeria is in the region of
moderate risk of debt distress, having exceeded
one of the thresholds of debt service to revenue
ratio of 20.0 per cent. The pandemic induced debt
accumulation, coupled with low foreign exchange
receipts could threaten the viability of the
external sector
External Reserves: Reduced foreign currency
inflow from oil exports and other sources; and
increased demand pressure could lead to deaccumulation of external reserves, thereby
affecting the viability of the external sector.

4.0 OUTLOOK


... Presents the short-to-medium-term direction of the
Nigerian economy, drawing on dynamics in the global
and domestic economy, market sentiments and
forecasts.
Outlook on the:
❖ Global Economy
❖ Real Domestic Economy
❖ Fiscal Policy
❖ Financial Sector, and
❖ External Economy

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
The outlook for Nigeria’s economy for the
second half of 2020 is less optimistic, given the
impact of the shocks of the COVID-19 pandemic
and oil price slump. The resulting public health
measures, implemented to contain the spread of
the virus, constrained economic activities. This
development, coupled with the fall in crude oil
prices in the near-term, would have a significant
negative impact on government revenue, as well
as foreign exchange earnings.
Figure 4.1: Economic Growth
(Actual & Projections)

Source: NBS and CBN Staff Estimates

Thus, the contraction in real GDP growth for the
second half of 2020 could moderate, based on
the assumption that the COVID-19 pandemic
would peter out towards the end of 2020; this is
coupled with subdued crude oil prices.
Specifically, real output, which shrank by 6.1 per
cent in 2020Q2, is projected to contract by 3.91
and 3.52 per cent in 2020Q3 and 2020Q4,
respectively. Furthermore, headline inflation
could remain elevated above the single digit
level given the expansionary monetary policy
and fiscal stimulus aimed at cushioning the
effect of the pandemic, inherent structural
rigidities and security challenges affecting
agricultural activities and food supply.

Source: NBS & Staff Estimates
A rebound in output would depend on the
impact of the various stimulus packages and
intervention
measures
put
in place
by
government to improve productivity, output
growth and improve livelihoods.
The subsisting policy on loan-to-deposit ratio
(LDR), the adjustment of corporate tax rates for
MSMEs under the 2019 Finance Act and
continued intervention in the real sector would
stimulate investment and consumption in the
second half of
2020.
In
addition,
the
development of the Gold Purchase framework
by the CBN under the Presidential Artisanal Gold
Mining Development Initiative (PAGMDI), would
help to diversify the revenue base, improve
foreign exchange earnings and accretion to
foreign reserves.
The outlook for the external sector remains
vulnerable, with an expected deficit in the
current account balance, continued capital
reversals as well as likely decline in remittances.
The pressure in the external sector could be
sustained due to the expected increase in net
imports as a result of the opening up of the
economy. Besides, the depressed global output
would negatively impact remittances inflows.
Furthermore, the tight financial conditions
globally are expected to reduce fresh capital
inflows to emerging economies such as Nigeria
as investors prefer to channel their resources to

2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4
GDP-$35
GDP-$40
GDP-$45
GDP-$50
Table 4.1: Economic Sustainability Plan

Real GDP

$35
$40
$45
$50
2019Q4

2020Q1

2020Q2

2020Q3

2020Q4


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
safer havens. The rate of capital reversal is,
however, expected to abate in the second half of
2020 owing to reduced pressure in the foreign
exchange market and gradual recovery in the
price of crude oil at the international market.
Table 4.2: External Reserves Projections

$30 pb
$35 pb
$40 pb
$45 pb
2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

Source: NBS and CBN Staff Estimates
Note: ‘pb’ means per barrel

Figure 4.2: External Reserves (US$ million)

Source: CBN Staff Estimates

Table 4. 3: Foreign Portfolio Inflows
Projections (US$ Million)

Foreign Portfolio Inflows Projections

$35 pb
$40 pb
$45 pb
$50 pb
2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

Source: CBN & Staff Estimates


Figure 4.3: Foreign Portfolio Investment


Source: CBN Staff Estimates


The COVID-19 pandemic disrupted government
revenue through its effect on global oil demand
and taxable economic activities. However, the
fiscal outlook for the rest of the year is less grim.
The positive outlook is anchored on the prospect
of favourable crude oil prices following OPEC+
agreed cuts in crude oil supply. This is also
attributed to the pickup in domestic and global
economic activities owing to the easing of
COVID-19 restrictions, and the potential positive
effect of the increasing implementation of the
Finance Act 2019, on non-oil revenue.
Also, with several coronavirus vaccines at
advanced levels of trials, there is a strong
possibility of the pandemic fizzling out before
the end of the year, thereby boosting the
prospects of increased economic activities and
rebound in government revenue.
The outlook for financial sector of the Nigerian
economy remains cautiously optimistic, due to
the spillover effects of the COVID-19 pandemic
on global financial institutions and markets.
The policy initiatives of the monetary authority,
through various measures (cutting of interest
rates by central banks, debt forbearance and
debt forgiveness policies as weaken supply of
foreign exchange, among others) would help to
sustain financial sector resilience.

2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4
EXR-$10
EXR-$15
EXR-$20
EXR-$25
EXR-$30
EXR-$35
EXR-$40
EXR-$45


2019Q3
2019Q4
2020Q1
2020Q2
2020Q3
2020Q4
FPI-$35
FPI-$40

5.0. ADDITIONAL INFORMATION


Regional and Global activities and engagements of the
Bank, in the review period
❖International Meetings
• Regional
• Non-Regional

REGIONAL MEETINGS
i.
Extra-Ordinary
Meeting
of
the
Ministers for Finance and Committee
of Governors of the Central Banks of
the Member States of the West
African Monetary Zone (WAMZ).
The Extra-ordinary Meeting of the Ministers for
Finance and the Committee of Governors of the
Central Banks of the Member States of the West
African Monetary Zone (WAMZ), also referred to
as the Convergence Council, was held at the
Central Bank of Nigeria, Abuja, on January 16,
2020. Representatives from all the WAMZ
Member States and the West African Monetary
Institute (WAMI) were present at the Meeting.
The Report of the Extra-ordinary Meeting of the
Technical Committee of the WAMZ, which
preceded the meeting, formed the basis for the
deliberations of the Convergence Council. The
Technical
Committee
had
considered
the
declaration by the Chairman of the Authority of
Heads of State of the West African Economic and
Monetary Union (WAEMU) on December 21,
2019 to change the name of CFA franc to the Eco.
Based on the Technical Committee’s report, the
Convergence Council resolved as follows:
•
Reaffirmed their commitment to the
decisions of the ECOWAS Authority of
Heads of State and Government, relating
to the ECOWAS Monetary Cooperation
Programme, the revised roadmap, and
the
Single-Track
Approach
to
the
ECOWAS Single Currency Programme
2020;
•
Welcomed the achievements under the
revised roadmap, including the adoption
of flexible exchange rates, monetary
policy framework based on inflation
targeting, federal model of common
central bank, name of the common
central bank, name and symbol of the
common currency;

•
Acknowledged
the
policy
reform
measures taken by WAEMU, including
the change in gross external reserves
management as a major first step
towards delinking the CFA franc from the
euro; and urged WAEMU to implement
outstanding programme areas of the
revised roadmap of the single currency
programme; and revert to the SingleTrack Approach in line with ECOWAS
Authority’s decision;

•
Expressed reservations about the action
of WAEMU and the inaction of ECOWAS
Commission in connection with the
unjustifiable and unilateral renaming of
the CFA franc to “Eco” on one hand, and
the adoption of fixed exchange rate
regime on the other, which are not in line
with the ECOWAS Authority’s decision;

•
Underscored the importance of the need
for a tripartite consultative meeting
between the Authorities of ECOWAS
Commission, WAEMU Commission, and
WAMZ with a view to clarifying and
resolving issues and to avoid jeopardising
the achievement of the shared goal of
introducing a single currency in West
Africa.

ii.
2019 End-Year Statutory Meeting of
the West African Monetary Agency
(WAMA)
The 2019 End-of-Year Statutory meeting of the
Economic and Monetary Affairs Committee and
the Operations and Administration Committee of
WAMA took place on February 6 – 13, 2020, at the
International Conference Centre, Freetown,
Sierra Leone. The meeting which deliberated on
the
macroeconomic
developments
in
the
ECOWAS Sub-region, assessed the performance
of member countries in terms of compliance with
the convergence criteria, the 2020 monetary

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
integration
agenda
and
administrative/operational issues of the Agency.
The meeting considered twelve reports, broadly
classified into three sub-groups: (a) Economic and
Monetary Affairs Committee; (b) Operations and
Administration Committee, and; (c) Any Other
Business, as presented by WAMA. The
documents were:
1. Economic and Monetary Affairs Committee
•
Director General’s Progress Report in the
1st half of 2019;
•
Report on the ECOWAS Monetary
Cooperation Programme for first half
2019;
•
Report on Exchange Rate Developments
of ECOWAS Currencies as at end 2019;
•
Proposal for the Creation of a Community
Solidarity and Cooperation Fund;
•
The Charter Establishing the West Africa
Securities
Regulators
Association
(WASRA);
•
West African Capital Markets Integration
(WACMI) Operational Rules; and
•
The Report of the Meeting of Member
States Experts to Validate the WASRA
Charter and WACMI Rules;
2. Operations and Administration Committee
•
2020 WAMA Work Programme;
•
2020 WAMA Draft Budget;
•
Internal Audit Plan 2020;
•
Strengthening the Human Resource
Capacity of WAMA; and
•
Selection of the Seat of the Common
Central Bank
The Technical Committee recommended that
WAMA should consider the deadlines for the
Roadmap activities and expedite implementation
of outstanding activities under the Revised
Roadmap. WAMA was also urged to revise the
Work Programme by prioritising programmes and
activities that are critical for the creation of the
single currency. After the discussions, the
Technical Committee recommended that WAMA
should consider the deadlines slated for the
Roadmap activities and expedite implementation
of outstanding activities under the Revised
Roadmap. The TC also urged WAMA to revise the
Work Programme prioritizing programmes and
activities that are critical for the creation of the
single currency.
Comments:
These recommendations were made at the
Technical Committee wings of the 2019 End-Year
Statutory Meetings held in Free Town, Sierra
Leone from February 6-13, 2020 which preceded
the Committee of Governor’s (COG) Meeting. The
recommendations were subsequently approved
by the COG upon presentation by the Technical
Committee in the same 2019 End-Year Statutory
Meetings in February 2020.
iii.
2019 End-of-Year Statutory Meeting
of The West African Institute for
Financial and Economic Management
(WAIFEM)
The 41st Meeting of the Technical Committee of
the West African Institute for Financial and
Economic Management (WAIFEM) was held in
Freetown, Sierra Leone on February 9, 2020.
The Director-General presented the Progress
Report which summarised developments in the
Institute during the period July to December
2019. The report was presented under six main
headings, namely:
Training and Capacity
Building
Activities;
Research
Department;
Administrative Development; Enhancement of
the
Institute
Infrastructure;
International
Relations; and Outlook for the next six months.
The report indicated that twenty-five capacity
building
programmes
were
successfully
implemented during the second half of 2019. The
major outcomes of the meetings were the
approval of the following:
•
Draft Minutes of the 37th Meeting of the
Board of Governors;

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
•
Progress Report by the Director General;
•
Draft Strategic Plan for Year (2020-2024);
•
Draft Budget for Year 2020; and
•
Draft Proposals for the Engagement of
New External Auditors.

iv.
2019 End-of-Year Statutory Meeting
of the West African Monetary Zone
(WAMZ)
The 2019 End-of-Year Statutory Meetings of the
WAMZ were held from February 10 – 14, 2020 in
Freetown, Sierra Leone. The meetings deliberated
on the macroeconomic developments and
convergence report of the WAMZ as at end-June
2019.
The
meetings
also
considered
administrative and operational issues of the
Institute; and considered the WAMI work
programme and budget for the 2020 financial
year.
The
assessment
of
the
Member
States’
performance on the primary convergence scale
indicated that only The Gambia met all four
criteria. Ghana, Guinea, and Sierra Leone attained
three criteria each. Nigeria satisfied two criteria,
while Liberia satisfied only one criterion. The
Technical Committee emphasized the need for
statistical and policy harmonisation in the Zone as
a critical tool for regional integration.
v.
33rd African Union (AU) Summit
The 33rd Ordinary Session of the Assembly of
Heads of State and Government of the African
Union held from February 9 – 10, 2020 at the AU
Headquarters in Addis Ababa, Ethiopia. The
meeting was held under the year 2020 theme:
“Silencing
the
Guns:
Creating
Conducive
Conditions for Africa’s Development “
In his opening address, the newly elected
Chairperson of the African Union, H.E. President
Cyril Ramaphosa of the Republic of South Africa,
outlined the priorities that would form the focus
of the Union to bolster the progress being made
in driving Africa’s growth trajectory within the
framework of Agenda 2053. These were:
•
Deepening the unity of the continent;
•
Advancing inclusive economic growth
and sustainable development;
•
Ensuring political and economic unity,
good governance and peace;
•
Supporting integration, industrialisation,
economic
development,
trade
and
investment;
•
Development of an appropriate strategy
for the fourth industrial revolution;
•
Economic and financial inclusion for
women and mainstreaming the interests
of women;
•
Conflict resolution; and
•
Championing the position of Africa as a
strong and influential player in the global
arena.

On the African Continental Free Trade Area
(AfCFTA)
which
is
expected
to
become
operational in July 2020, Mr. Ramaphosa noted
that it would be a major driver for reigniting
industrialisation and paving the way for Africa’s
integration into the global economy as a player of
considerable weight. He, however, noted that the
potential of the AfCFTA to boost intra-African
trade should not become a conduit for products
with minimal African content under the guise of
continental integration. He, therefore, reiterated
the need to clearly define standards that would
be applied to define a product that is proudly
made in Africa.
The Bureau of the Assembly of the African Union
for 2020 was announced during the meeting with
South Africa as the Chair and Democratic Republic
of Congo as the Vice Chair. It was also announced
that the Democratic Republic of Congo would be
the Chair of the Union in 2021.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
vi.
African Development Bank (AfDB)
The African Development Bank, in collaboration
with the government of Nigeria, held a
stakeholders meeting in Abuja from February 1718, 2020 to address the categorisation and
location of the Special Agro-Industrial Processing
Zones (SAPZs), which were meant to kickstart the
agricultural
sector/Special
Agro-Industrial
Processing Zones in Nigeria. The workshop was
attended, among others, by Afrexim Bank, the
International Finance Corporation (IFC), the Food
and
Agriculture
Organisation
(FAO),
the
Development Bank of Nigeria and the Small and
Medium Enterprises Development Agency of
Nigeria (SMEDAN). The forum presented all
stakeholders with the opportunity to follow up on
outcomes of previous interventions.
Nigeria’s
strategy
is aimed
at
increasing
agricultural productivity and output by focusing
on developing key value chains and select the
most promising agricultural clusters. Other
elements of the strategy include promotion of
inclusiveness, increasing yields using modern
technologies,
improved
seed,
fertilizers,
mechanisation,
digitisation,
irrigation
and
maximise positive engagement of youth and
women.
vii.
Extra-Ordinary Summit of the
Authority of Heads of State and
Government of the West African
Monetary Zone (WAMZ)
The Extra-Ordinary Summit of the Authority of
Heads of State and Government of the West
African Monetary Zone (WAMZ) was held on
virtually on June 23, 2020. The Summit assessed
developments in the implementation of the
ECOWAS Single Currency Programme 2020,
against the backdrop of the West African
Economic and Monetary Union’s (WAEMU)
adoption of the Eco and implications for the
Member States of the WAMZ.
It would be recalled that on December 21, 2019,
the Chairman of the Heads of State and
Government of the Member States of West
African
Economic
and
Monetary
Union
(WAEMU/UEMOA), President Alassane Ouattara,
announced that:
•
The name of CFA franc currency will be
replaced by Eco in 2020;
•
The Member States of WAEMU/UEMOA
will no longer be required to keep 50.0
percent of their international reserves
with the French Treasury and the
operating account will be closed;
•
The representative of France at all the
WAEMU
decision-making
and
management bodies will be withdrawn;
and
•
The fixed exchange rate regime in the
WAEMU/UEMOA will be maintained.
Following the development, the Convergence
Council of the WAMZ realised that the
announcement by President Ouattara to replace
the CFA Franc with Eco ahead of the rest of
Member States breached the earlier decisions of
the Authority of Heads of State and Government
of ECOWAS. The Authority of the Heads of State
and Government of the WAMZ viewed the
development as indicating lack of trust in the
integration programme and resolved to bring it to
the attention of the Authority of Heads of State
and Government of ECOWAS.

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
GLOBAL ENGAGEMENTS
i.
World Economic Forum
The 2020 World Economic Forum (WEF) was held
at Davos-Klosters, Switzerland from January 21 –
24, 2020 with the theme: ‘’Stakeholders for a
Cohesive and Sustainable World'’. Global leaders
from around the world in business, government,
international organisations, academia and civil
society were in attendance. The annual meeting
included several sessions on issues relating to the
global economy, energy, technology, business,
sustainable growth, health and environment,
among others.
The WEF 2020 Annual Meeting featured
discussions on four important global issues,
bothering on how to:
•
Address
the
urgent
climate
and
environmental
challenges
that
are
harming the ecology and economy;
•
Transform industries to achieve more
sustainable and inclusive business models
as new political, economic and societal
priorities change trade and consumption
patterns;
•
Govern the technologies driving the 4th
Industrial Revolution so they can benefit
business and society while minimising
their risks; and
•
Adapt to the demographic, social and
technological
trends
reshaping
education,
employment
and
entrepreneurship.

ii.
2020 Spring Meetings of the Board of
Governors of the World Bank Group
and the International Monetary Fund
(IMF)
The 2020 Spring Meetings of the Board of
Governors of the World Bank Group (WBG) and
the International Monetary Fund (IMF) were held
virtually from April 14 – 17, 2020. The Nigerian
delegation to the Meetings was led by the
Honorable Minister of Finance, Mrs. Zainab
Ahmed, supported by the Governor, Central Bank
of Nigeria, Mr. Godwin Emefiele (CON). The
sideline meetings of the International Monetary
and
Finance
Committee
(IMFC)
and
the
Development Committee (DC) were also held.

The IMFC:
•
Noted that the global economy will contract
sharply in 2020, reflecting necessary health
measures to contain the Covid-19 pandemic,
disruptions in supply and demand, and
tightening financial conditions;
•
Projected a recovery in 2021, despite high
uncertainty, as all available policy tools are
employed to defeat the pandemic, protect
jobs, and restore growth;
•
Observed that targeted and sizable fiscal
support was critical to provide a safety net for
the most affected households and businesses
and create conditions for a rapid recovery;
•
Welcomed the actions of central banks and
financial authorities to alleviate stressed
global financial conditions and maintain
financial stability;
•
Welcomed the IMF’s crisis response package,
comprising streamlined procedures, rapid
and enhanced access to emergency financing,
including a temporary doubling of the annual
access limits under the Rapid Credit Facility
and Rapid Financing Instrument, liquidity
provision through a new short-term liquidity
line
for
members
with
very
strong
fundamentals and policies, and debt service
relief to the poorest and most vulnerable
countries.
They
called
for
additional
contributions to ensure that the IMF can
support its poorest and most vulnerable
members;
•
Called on the IMF to explore additional tools
that could serve its members’ needs as the
crisis
evolves,
drawing
on
relevant
experiences from previous crises; and

CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
•
Welcomed the coordinated approach agreed
by the G20 and the Paris club, supported by
the IMF and World Bank, toward a timebound suspension by
bilateral
official
creditors of debt service payments for the
poorest countries that request forbearance.
They called on private creditors to participate
in the initiative on comparable terms.

The Development Committee:
•
Noted that the global economy
was
experiencing an exceptional negative shock
as a result of COVID-19, and the attendant
sharp decline in global investor confidence
has severely tightened external financing
conditions for countries across the income
spectrum;
•
Observed that the Pandemic was disrupting
trade, supply chains and investment flows,
leaving financial and human capital idle, while
remittances, transport revenues, and income
from tourism have rapidly diminished; and
the steep drops in commodity prices are also
harming commodity-dependent economies;
•
Welcomed the World Bank Group’s (WBG)
estimated financial support of up to US$150160 billion over the next 15 months, with a
focus on the poorest and vulnerable
countries;
•
Called on the World Bank to further explore
options for the suspension of debt service
payments over the suspension period April
2020 and June 2021, while maintaining
financial capacity, current rating, and low cost
of funding, and to report to its Board in a
timely manner; and
•
Called on the WBG and IMF to review the
debt challenges of middle-income countries,
and to explore expeditiously a range of
solutions to fiscal and debt stress in those
countries on a case-by-case basis.

Selected Macroeconomic and Social Indicators 1/
Indicator
Jun-16
Jun-17
Jun-18
Jun-19 1/
Jun-20 2/
Domestic Output and Prices


GDP @ Current Mkt Prices (₦ billion)

GDP @ Current Mkt Prices (US$ billion)

Nominal GDP per Capita (₦)

Nominal GDP per Capita (US$)

Real GDP per Capita (₦)

Real GDP per Capita (US$)

Real GDP Growth (%) 3/

Oil Sector

Non-oil Sector

Sectoral Classification GDP Growth (%) 3/


Agriculture

Industry

Construction

Services

Trade

Oil Production (mbpd)

Manufacturing Capacity Utilisation (%)

Inflation:


Inflation Rate (%) (Year-over-Year)

Inflation Rate (%) (12-month moving average)

Core Inflation Rate (%) (Year-over-Year) 4/

Core Inflation Rate (%) (12-month moving average) 4/

Food Inflation Rate (%) (Year-over-Year)

Food Inflation Rate (%) (12-month moving average)

Fiscal Indicators


Federal Government Finance (% of GDP) 5/


Retained Revenue

Total Expenditure

Recurrent Expenditure:

Of which: Interest Payments

Foreign

Domestic

Capital Expenditure and Net Lending

Transfers

Current Balance (Deficit (-)/Surplus (+))

Primary Balance (Deficit (-)/Surplus (+))

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

Financing

Foreign

Domestic:

Banking System

Non-Bank Public

Others

Consolidated Government Debt Stock:

External 6/

Domestic


CENTRAL BANK OF NIGERIA
Half Year Economic Report, 2020
Selected Macroeconomic and Social Indicators 1/ . . . Continued
Indicator
Jun-16
Jun-17
Jun-18
Jun-19 1/
Jun-20 2/
Money and Credit (Growth Rate %)


Reserve Money

Narrow Money (M1)

Broad Money (M2)

Broad Money (M3)

Net Foreign Assets

Net Domestic Assets

Domestic Claims

Net Claims on Government

Claims on Other Sectors

of which Claims on Private Sector

Money Multiplier for M3

Income Velocity of M3

Interest Rates (% per annum)


Monetary Policy Rate (MPR) (end period)

Repurchase Rate (Average)


Reverse Repurchase Rate (Average)


Treasury Bill Rate (Average)


91-day

Inter-bank Call Rate (end-period)

Deposit Rates (end-period)


Savings Rate

3-months Fixed

6-months Fixed

12-months Fixed

Prime Lending Rate (end period)

Maximum Lending Rate (end period)

External Sector


Current Account Balance (% of GDP) 5/

Goods Account

Services Account (net)

Income Account (net)

Current Transfers

Capital and Financial Account Balance (% of GDP) 5/

Overall Balance (% of GDP) 5/

External Reserves (US$ million)

Number of Months of Import Equivalent

Debt Service Due (% of Exports of Goods and Services)


Average Crude Oil Price (US$/barrel)

Average Official Rate (₦/US$)

End of Period Official Rate (₦/US$)

Average Bureau de Change Exchange Rate (₦/US$)

End of Period Bureau de Change Exchange Rate (₦/US$)

Capital Market


All Share Value Index (1984=100)

Value of Stocks Traded (₦ billion)

Market Capitalization (₦ Trillion)

Social Indicators


Population (million)

Population Growth Rate (%)

Life Expectancy at Birth (Years)

Adult Literacy Rate (%)

Incidence of Poverty

1/ Revised
2/ Provisional
3/ Based on GDP measured at basic prices.
4/ Core Inflation is measured as the rate of change of all-item Consumer Price Index (CPI) less farm produce.
5/ Computations are based on GDP at Current Market Prices.
6/ Includes debts of states and the Federal Capital Territory.
Sources: Central Bank of Nigeria (CBN), Federal Ministry of Finance (FMF), National Bureau of Statistics (NBS), National Population Commission (NPOPC)
Nigeria National Petroleum Corporation (NNPC), Nigerian Stock Exchange (NSE) and Debt Management Office (DMO).