This document is for CBN internal consumption


CENTRAL BANK OF NIGERIA
ECONOMIC REPORT


Fourth Quarter

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ABOUT THE REPORT

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

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


Contents
1.2. Developments in Advanced Economies (AEs) and the Emerging Market and


iii

Tables
Table 6: Domestic Prices of Selected Agricultural Commodities in the Fourth
Table 7: Cumulative Disbursement and Repayments of CBN Interventions
Table 12: Federal Government Expenditure for Fourth Quarter of 2020 (N’ Billion)

Table 16: International Reserves of Selected Countries in Africa (End-December

Figures
Figure 13: Price Changes (%) of Selected Precious Metals for the Fourth Quarter
Figure 18: Currency outside depository corporations and transferable deposits as


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Figure 24: Foreign Exchange Transactions through the Bank (US$ Billion) in the
Fourth Quarter of 2020

Figure 25: Major Visible Import as Per cent of Total Utilisation of Foreign Exchange
Figure 26: Major Invisible Imports as Per cent of Total Utilisation of Foreign
Figure 27: Foreign Exchange Sales to Authorised Dealers in the Fourth Quarter of
Figure 28: Turnover in the I&E Foreign Exchange Market (December 2019 –

1 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
EXECUTIVE SUMMARY
The recovery of the global economy continued in the fourth quarter of 2020,
amidst the second wave of the COVID-19 pandemic, albeit at a slow pace across
Advanced Economies (AEs) and the Emerging Market and Developing Economies
(EMDEs). The growth outcome was reinforced by stronger financial flows, rising
employment and improved business optimism. Also, the production and
distribution of COVID-19 vaccines boosted investors’ confidence. Business
activity of service providers rose at the fastest pace, with expansion across the
business, consumer and financial services industries. Accordingly, the average
J.P. Morgan Global Composite Purchasing Managers’ Index (PMI) accelerated in
the fourth quarter of 2020, compared with slowed economic activity in the third
quarter of 2020, and the corresponding fourth quarter of 2019. However, the
rate of expansion in manufacturing production eased, as downturn in the
intermediate and investment goods sub-industries offset the growth in the
production of consumer goods. Overall, business outlook remained positive in
the United States, the United Kingdom, Germany, India, United Arab Emirates
and Italy, but was negative for Japan and South Africa.
In the domestic economy, industrial and business activities witnessed slight
improvement over the levels in the preceding quarter, due to increased
consumer demand and business confidence, following the full reopening of most
economies. Preparations towards the end of year festivity also contributed to
the increase in business activities and demand. The average composite
manufacturing Purchasing Managers’ Index (PMI) improved to 49.6 index point,
above the 46.8 index point in the preceding quarter. The increase was driven by
expansion in four sub-sectors, namely: transportation equipment; non-metallic
mineral products; paper products; and food, beverages and tobacco products.
Following the easing of restrictions on travels, delivery time for supplies
improved. Similarly, the average composite non-manufacturing PMI rose to 46.4
index point in the review quarter, compared with the 43.3 index point recorded
in the preceding quarter. Increases were observed in some subsectors,
particularly arts, entertainment & recreation, electricity, gas, steam & air
conditioning supply, water supply and sewage & waste management. However,
despite the relative improvement in both manufacturing and non-manufacturing
PMIs, the indices remained below the 50.0 index point threshold.
Inflationary pressures persisted in the review quarter, amid heightened demand
and supply shocks. This was attributed to the lingering effect of the COVID-19
pandemic containment measures, supply disruptions occasioned by the
‘EndSARS’ protests and exchange rate pass-through effect on domestic prices.
Other factors included increase in the pump price of Petroleum Motor Spirit
(PMS), food supply shortages, due to the persistent insecurity in some parts of
the country and incidences of floods in some food-growing regions.
Consequently, headline inflation, year-on-year, rose to 15.8 per cent in the
fourth quarter of 2020, over the 13.7 per cent and 11.9 per cent in the third
quarter of 2020 and the fourth quarter of 2019, respectively. Similarly, on a
quarter-on-quarter basis, headline inflation rose by 1.6 per cent, above the 1.5
per cent in the preceding quarter.
The prices of most agricultural commodities in the international market
maintained an upward trend in the fourth quarter of 2020, influenced, generally,
by firmer demand. Intervention schemes by the Bank continued to focus on

2 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
enhanced credit delivery to critical sectors, in a bid to boost productivity and
stimulate the real sector of the economy. Crude oil spot prices rose slightly,
following increased demand from Asia, particularly China and India, in addition
to the optimism that the COVID-19 vaccine rollout would revive global fuel
demand. Additionally, the OPEC+ slowed the pace of a planned increase in
supplies by 2021 to support the spot prices.
At N2,208.10 billion, federally collected revenue in the fourth quarter of 2020
fell by 13.1 per cent and 8.3 per cent below the budget benchmark and the level
in the preceding quarter, respectively. It was also 16.8 per cent below collections
in the corresponding period of 2019. Oil receipts accounted for 44.6 per cent of
the total collection, while non-oil constituted the balance of 55.4 per cent. The
relatively low receipts recorded in the review period underscored the lingering
effect of the COVID-19 pandemic on domestic and global economic activities.
Similarly, the retained revenue of the Federal Government of Nigeria (FGN)
stood at N903.52 billion, while provisional aggregate expenditure was N2,
387.46 billion. This resulted in an estimated deficit of N1,483.93 billion. Total
FGN debt outstanding at end-September 2020 stood at N28, 032.58 billion, with
domestic and external components accounting for 56.5 per cent and 43.5 per
cent, respectively. The external debt constituted 7.7 per cent of GDP, which was
within the sustainable threshold of 40.0 per cent of GDP.
The second wave of the COVID-19 pandemic, the ‘EndSARS’ protests and
implementation of curfew in some states, decline in crude oil prices, negative
emerging markets sentiments and slowdown in economic activities were the
major headwinds against monetary policy in the review period. These factors
caused reversals of Foreign Portfolio Investments (FPI) as investors’ confidence
in the domestic economy waned. However, key financial market indicators
remained moderately stable, due to effective liquidity management by the Bank.
Broad money supply (M3) grew by 11.0 per cent to N38,673.64 billion at endDecember 2020, which was below the target of 13.1 per cent for fiscal 2020.
Claims on the domestic economy and narrow money supply (M1) also followed
similar growth trajectory. Monetary policy remained accommodative, during the
period, driven, largely, by the need to improve credit flows to key productive
sectors to bolster growth in the economy. Capital market activities on the
Nigerian Stock Exchange (NSE) were bullish, amidst the good corporate
performance released for the third quarter of 2020, showing the resilience of the
market in the face of the lingering economic downturn and challenges associated
with the COVID-19 pandemic. The market performance was driven by betterthan-expected earnings and investors’ insight on taking position ahead of 2021
corporate actions.
The performance of the external sector improved in the fourth quarter of 2020,
despite the challenging global environment, characterised by less-than-expected
global recovery, weakened demand, amidst the second wave of the COVID-19
pandemic and uncertain political environment in the U.S.A – Nigeria’s major
trading partner. Thus, an estimated overall balance of payments surplus of
US$0.79 billion was recorded in the fourth quarter of 2020, compared with the
US$0.14 billion recorded in the third quarter. The deficit in the current account,
however, widened to US$5.27 billion, compared with US$3.34 billion in the
preceding quarter. A net disposal of US$2.50 billion was recorded in the financial
account, relative to US$2.66 billion in the preceding quarter. The external
reserves at end-December 2020 was US$36.46 billion, compared with US$35.67
billion at end-September 2020. This showed an accretion of US$0.79 billion. At

3 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
this level, the foreign reserves could finance 8.4 months of import of goods or
6.3 months of import of goods and services. The improvement in external
reserves was attributed to the reforms undertaken by the Bank to block leakages
and ensure enhanced inflow of remittances from Nigerians in Diaspora. In the
foreign exchange market, the average naira exchange rate at the I&E and the
BDC windows depreciated to N389.04/US$ and N468.17/US$ in the fourth
quarter of 2020, from N386.60/US$ and N461.94/US$ in the third quarter of
2020, respectively.
Growth prospects for the Nigerian economy remained weak, as the
macroeconomic instability associated with the COVID-19 pandemic and weak
crude oil prices, amidst other structural factors, dampen the near-term outlook.
Staff projections indicated growth of GDP in the fourth quarter of 2020, given
current economic fundamentals. The growth is expected to be more resilient in
the first quarter of 2021, following continuous monetary and fiscal policies,
including the expected roll-out of the COVID-19 vaccine to contain the spread of
the virus.


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ECONOMIC REPORT, FOURTH QUARTER 2020
1.0 GLOBAL ECONOMIC DEVELOPMENTS
1.1. Overview of Global Economic Conditions
The recovery of the global economy continued in the fourth quarter of 2020,
amidst the second wave of the COVID-19 pandemic, albeit at a slow pace across
Advanced Economies (AEs) and the Emerging Market and Developing
Economies (EMDEs). The recovery was reinforced by larger inflows, rising
employment and improved business optimism, as the production and
distributions of the COVID-19 vaccines boosted investors’ confidence. Business
activity of service providers rose at the fastest pace, with expansion across the
business, consumer and financial services industries. Accordingly, the average
J.P. Morgan Global Composite Purchasing Managers’ Index (PMI) accelerated in
the fourth quarter of 2020, compared with the levels in the third quarter of 2020
and the corresponding quarter of 2019 (Table 1). All the activity sectors
contributed to the development. The overall business outlook remained positive
for the United States, United Kingdom, China, Germany, India, United Arab
Emirates and Italy, but negative for Japan, South Africa and Nigeria.
Table 1: Global Purchasing Managers’ Index (PMI)

2019Q4
2020Q3
2020Q4
Composite
51.27
51.83
52.70
Manufacturing
50.07
51.57
53.53
Services (Business Activity)
51.53
51.37
52.20
Employment Level
50.93
49.33
51.40
Sources: JP Morgan, CBN Staff compilation.


Table 2: Quarterly GDP in Selected Countries

4Q 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
US

UK

CHN

IND

GM

IT

JP

SA

na
NG

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


Global
Economic
Conditions

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ECONOMIC REPORT, FOURTH QUARTER 2020
1.2. Developments in Advanced Economies (AEs) and the
Emerging Market and Developing Economies (EMDEs)
Economic activities in Advanced Economies (AEs) continued to experience
gradual recovery in the fourth quarter of 2020, following the discovery of
COVID-19 vaccines, signing of the Brexit deal and other positive policy
measures taken by both the fiscal and monetary authorities. These measures
improved operating conditions of corporates, culminating in the expansion in
factory activities, such as production processes and output. Consequently, the
PMI of the United States, the United Kingdom, Germany and Italy, in the fourth
quarter of 2020, improved. Moreover, the Japanese economy experienced
slower pace of contraction in the fourth quarter of 2020, compared with the level
in the preceding quarter and the corresponding fourth quarter of 2019.
However, Japanese PMI remained below the 50-index point benchmark since the
fourth quarter of 2019 (Figures 1 and 2). This made manufacturing to remain
under pressure, amid the COVID-19 pandemic. Production fell, as new orders
declined. On the price front, input costs rose only marginally, while output
charges fell slightly.
In the Emerging Market and Developing Economies (EMDEs), the momentum
of economic recovery was modest, as the PMI of China, India and South Africa
improved. Factory activities maintained their recovery from the impact of the
COVID-19 pandemic, with new export business expanding at the fastest rate on
the back of the discovery and distribution of the COVID-19 vaccines and easing
of lockdown restrictions in these countries. Looking ahead, the momentum of
the recovery is expected to vary across countries, depending on the quantum
and effectiveness of policy interventions, structural characteristics of the
countries, access to COVID-19 vaccines and their effectiveness to contain the
renewed waves and new variants of the virus.

Figure 1: PMIs of Selected Countries
Sources: Trading Economics/Various Country Websites, CBN Staff compilation.
Note: US, UK, CHN, IND, GM, IT, JP, UEA, SA and NG represent United States, United
Kingdom, China, India, Germany, Italy, Japan, United Arab Emirates, South Africa and
Nigeria, respectively.


US
UK
CHN
IND
GM
IT
JP
UAE
SA
NG
Index Point
2019Q4
2020Q3
2020Q4
50 -Point Threshold
Economic
Activity in
Advanced
Economies
Economic
Activity in
Emerging Market
and Developing
Economies

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ECONOMIC REPORT, FOURTH QUARTER 2020
Figure 2: PMIs of Selected Countries (January - December 2020)

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


1.3. Global Inflation
In the fourth quarter of 2020, consumer prices remained muted and below the
pandemic levels amongst most AEs, while inflationary pressures mounted
unevenly amongst EMDEs. The subdued price level in most AEs was attributed
to dampened aggregate demand emanating from the second wave of COVID-19
lockdown measures. On the other hand, inflationary pressures in several EMDEs,
remained relatively high, compared with AEs counterparts, reflecting higher
food prices, persistence of exchange rate pressures, dwindling capital flows and
weak accretion to reserves, as well as other structural issues.
Specifically, consumer prices in the US remained the same in the third and fourth
quarters of 2020, at an average of 1.2 per cent. However, this was relatively
lower, when compared with 2.0 per cent witnessed in the fourth quarter of 2019,
owing largely to decline in the cost of medical care products, energy prices and
transportation services. Similarly, in the UK, inflation fell to 0.7 per cent from
0.8 per cent and 1.4 per cent in the third quarter of 2020 and the fourth quarter
of 2019, respectively. The marginal decrease was attributed, mainly, to
downward pressures from clothing, furnishing and food prices. Meanwhile, the
fall in food, transport and energy prices in China continued to dampen
inflationary pressures, with average inflation declining to negative 0.5 per cent
in the fourth quarter of 2020, from 2.3 and 4.3 per cent in the preceding quarter
and fourth quarter of 2019, respectively. In contrast, Nigeria and South Africa,
on the average, recorded higher rates of inflation in the fourth quarter of 2020,
due to elevated prices of food and core inflation components in Nigeria, while
higher energy and utility prices accounted for the trend in South Africa (Figure 3,
Table 3).

Index Point
Index Point
IT
UAE
SA
US
UK
CHN
IND
GM
JP
NG
Global
Inflation

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ECONOMIC REPORT, FOURTH QUARTER 2020
Figure 3: Inflation Rates in Selected Countries

Sources: OECD, National Bureau of Statistics (NBS) and Staff Compilation.
Table 3: Summary of Inflation Rates in Selected Countries
Country
2019-Q4
2020-Q1
2020-Q2
2020-Q3
2020-Q4
UK

USA

Canada

Germany

France

Italy

Japan

Mexico

China

India

Indonesia

South Africa

Nigeria

Sources: OECD, National Bureau of Statistics (NBS) and Staff Compilation.

1.4. Global Financial Markets
The outlook for the global financial market appears positive, as the giant stride
around the COVID-19 vaccines continued to spur investors’ confidence. The
global financial market recorded improved investors’ confidence in the review
period, compared with the third quarter of 2020, with several economies
recovering from the depths reached during the COVID-19 shutdown and thus,
engendering improved outlook for corporate earnings, as business activities
across the globe experienced significant normalisation. News of remarkable
strides in the development of vaccines for the COVID-19 also contributed
immensely to the bullish sentiment in the capital market. However, the positive
performance of global financial market could be dampened by extended period
of subdued inflation and interest rates, even as there was sustained interest in
equities over bonds and money market instruments in the short run. Yields on

Per cent
2020-Q4
2020-Q3
2019-Q4
Global Financial
Markets

8 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
fixed income instruments were expected to remain low in the nearest future,
especially in advanced economies, as central banks were not eager to have a
policy shift from their current expansionary stance, especially as the second
wave of the COVID-19 pandemic continues to gain momentum. However, the
financial markets in emerging markets and developing economies could
experience slower recovery, as the pandemic could intensify risks-off sentiments
and reduce the pace of foreign portfolio inflows from the advanced economies
(Figures 4 and 5).

Figure 4: 10-year Bond Yield Curve of Selected Countries

Q1
Q2
Q3
Q4

France
France

Q1
Q2
Q3
Q4

Germany
Germany

Q1
Q2
Q3
Q4

Japan
Japan

Q1
Q2
Q3
Q4

UK
UK

Q1
Q2
Q3
Q4

US
US
Source: Bloomberg
Note: US, UK represent United States and United Kingdom, respectively.

Figure 5: Selected Equity indices around the globe

Q1
Q2
Q3
Q4

CAC 40
CAC 40

Q1
Q2
Q3
Q4

DAX Index
DAX Index

Q1
Q2
Q3
Q4

Dow Jones
Dow Jones

Q1
Q2
Q3
Q4

EURO STOX
EURO STOX

Q1
Q2
Q3
Q4

FTSE 100
FTSE 100

Q1
Q2
Q3
Q4

NASDAQ
NASDAQ

Q1
Q2
Q3
Q4

Nikkei 22
Nikkei 22

Q1
Q2
Q3
Q4

S&P
S&P

Source: Bloomberg


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ECONOMIC REPORT, FOURTH QUARTER 2020
1.5. Global Oil Market
Crude oil prices showed significant improvements in the fourth quarter of 2020
and could maintain an upward trajectory going forward. Crude oil prices
remained elevated above US$40pb through the fourth quarter of 2020, driven
by sustained production cut by OPEC and its allies, modest recovery in
consumption, following the easing of lockdown measures, as well as renewed
optimism on the back of the COVID-19 vaccine distribution (Figure 6). Going
forward, crude oil price was expected to move upwards, due to the producers’
concerted effort, albeit below pre-COVID-19 levels, as the resurgence of the
pandemic continued to threaten global economic activities. On the supply side,
OPEC and its allies have continued to show willingness and capacity to move the
market in the desired direction through production cuts and other agreements
in the face of the second wave of the pandemic.
Figure 6: Global Crude Oil Prices (US$)

M1
M2
M3
M4
M5
M6
M7
M8
M9
M10
M11 M12

Source: Bloomberg

World crude oil supply in the fourth quarter of 2020 increased by 3.6 per cent,
to an average of 94.35 mbpd from the 91.03 mbpd in the preceding quarter.
However, it declined by 7.3 per cent against the 101.73 mbpd in the fourth
quarter of 2019. Of the total world crude oil supply, non-OECD countries
accounted for 63.70 mbpd, while OECD countries accounted for the balance of
30.65 mbpd, indicating higher levels than the 61.33 mbpd and 29.70 mbpd
supplied by non-OECD and OECD countries, respectively, in the third quarter of
2020. The increase in world crude oil supply in the review period was indicative
of a clear drop in world stockpiles in the fourth quarter of 2020.
Similarly, the OPEC’s aggregate supply, including non-crude and other liquids,
increased by 1.4 mbpd (4.9%) to 29.85 mbpd in the fourth quarter of 2020,
compared with the 28.45 mbpd in the third quarter of 2020. The development
was driven, largely, by the increase in Libya’s crude oil production to 1.3 mbpd,
after the lifting of the initial force majeure imposed on its production and export.
The OPEC’s aggregate supply represented 31.6 per cent of the total world supply
in the fourth quarter of 2020.
World crude oil demand increased by 2.75 mbpd (2.9%), to an estimated average
of 97.50 mbpd in the fourth quarter of 2020, compared with the 94.75 mbpd in
Global Oil
Market
World Crude Oil
Supply and
Demand,
Production and
Export

10 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
the preceding quarter. However, it declined by 4.30 mbpd compared with the
101.84 mbpd in the fourth quarter of 2019. The increase relative to the
preceding quarter was driven, largely, by upswing in demand from OECD
countries by 1.64 mbpd from the 43.03 mbpd recorded in the third quarter of
2020. Overall, the global crude oil market recorded an estimated lower deficit of
3.15 mbpd in the fourth quarter of 2020, compared with a deficit of 3.72 mbpd
in the third quarter of 2020.


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ECONOMIC REPORT, FOURTH QUARTER 2020
2.0. DOMESTIC ECONOMIC DEVELOPMENTS
2.1. REAL SECTOR DEVELOPMENTS
2.1.1. Domestic Output and Business Activities
Domestic output returned to growth in 2020Q4, following gradual resumption
of global and domestic economic activities, as well as sustained fiscal and
monetary policy interventions, particularly, in the real sector. The expansion in
output was, largely, driven by the non-oil sector, with strong performances in
the Agriculture and Services sectors, which grew by 3.42 per cent and 1.31 per
cent, respectively. The growth in the agricultural sector was driven by crop
production, which grew by 3.68 per cent; and increased demand for food items
during the end-of-year activities.
Figure 7: Sectoral Growth Rate of real GDP 2020Q1-2020Q4

Source: National Bureau of Statistics

Growth in services was driven, mainly, by the performance of the ICT subsector,
which grew by 17.64 per cent in the review period. ICT performance increased
as a result of productivity gains arising from the adoption of remote work and
virtual engagements, and associated rise in demand for broadband data services
by individuals and businesses. However, industry contracted by 7.30 per cent in
2020Q4, compared with a contraction of 6.12 per cent in 2020Q3. The
contraction was driven by 18.44 per cent decline in mining and quarrying
activities, owing to a large contraction of 19.76 per cent in the crude petroleum
& natural gas subsector; and 1.51 per cent contraction in manufacturing
activities, due to 56.5 per cent reduction in oil refining activities.
Subsequently, real GDP grew by 0.11 per cent in 2020Q4, compared with a
contraction of 3.62 per cent recorded in 2020Q3 and a growth of 2.55 per cent
in the corresponding period of 2019. Consequently, annual GDP for 2020
contracted by 1.92 per cent, compared with the growth of 2.27 per cent
recorded in 2019. Also, oil and non-oil GDP in 2020 contracted by 8.89 per cent
and 1.25 per cent respectively, compared with growths of 4.59 per cent and 2.06
per cent in 2019, respectively.


2020Q1
2020Q2
2020Q3
2020Q4
PER CENT
Agriculture
Industry
Services
Real GDP Growth
Domestic output
and economic
activities

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ECONOMIC REPORT, FOURTH QUARTER 2020
Despite the general rise in the cost of raw materials and shortage of foreign
exchange, industrial and business activities in the fourth quarter of 2020
witnessed slight improvement from the preceding quarter, due to increased
consumer demand and business confidence. The full reopening of the economy
and preparations towards the end of year festivity further increased business
activities and demand. The average composite manufacturing Purchasing
Managers’ Index (PMI) for the fourth quarter of 2020, increased to 49.6 index
point, above the 46.8 index point in the preceding quarter. However, it was
below the 59.4 index point in the fourth quarter of 2019. The rise in the index
was a result of the expansion in the sub-sectors of transportation equipment,
non-metallic mineral products, paper products, and food, beverages and
tobacco products. Also, there was improvement in the delivery time for supplies
occasioned by the easing of restrictions on travels.
Likewise, the average composite non-manufacturing PMI rose to 46.4 index
point in the fourth quarter of 2020, compared with the 43.3 index point in the
preceding quarter, but was below the 60.1 index point in the fourth quarter of
2019. Increases were observed in some subsectors, particularly arts,
entertainment & recreation, electricity, gas, steam & air conditioning supply, and
water supply, sewage & waste management. However, despite the relative
growth in both the manufacturing and non-manufacturing PMIs, the indices
remained below the 50.0 point threshold (Figure 8, Table 4).
Figure 8: Purchasing Managers’ Index (PMI)

Source: Central Bank of Nigeria

Table 4: Purchasing Managers’ Index for the Fourth Quarter of 2020.
COMPONENTS
2019 Q4
2020 Q3
2020Q4
A. Composite Manufacturing PMI
59.4
46.8
49.6
Production level
60.4
47.1
51.1
New orders
59.6
46.2
50.6
Supplier Delivery Time
59.3
54.3
51.7
Employment level
57.5
42.9
46.5
Raw material Inventory
60.5
44.1
47.2
B. Composite Non-manufacturing PMI
60.1
43.3
46.4
Business Activity
60.5
45.7
48.1
New Orders
60.4
42.3
46.9
Employment level
58.8
42.3
44.5
Inventories
61.3
43.0
46.1
Source: Central Bank of Nigeria

2019Q4
2020Q3
2020Q4
CBN PMI (Manufacturing)
CBN PMI ( Non Manufacturing)
PMI Threshold
Purchasing
Managers’ Index

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ECONOMIC REPORT, FOURTH QUARTER 2020

Improvement in business activities, coupled with increased consumers’
demand led to the growth in new orders and production level in the review
period. New orders rose to an average of 50.6 index point and 46.9 index point
for both manufacturing and non-manufacturing PMIs in the fourth quarter of
2020, compared with their respective levels of 46.2 index point and 42.3 index
point in the third quarter of 2020.
The rise in new orders and production level prompted an increase in voluntary
inventories for both manufacturing and non-manufacturing sectors. Raw
material inventories for Manufacturing PMI rose to 47.2 index point and the
inventories for non-manufacturing also increased to 46.1 index point in the
review period from their respective levels of 44.1 index point and 43.0 index
point in the preceding quarter.
Employment rose in the review quarter, following increased production
activities by firms and improved consumers’ confidence in the economy.
Consequently, the employment level for both manufacturing and nonmanufacturing sectors increased to 46.5 index point and 44.5 index point, when
compared with the 42.9 index point and 42.3 index point, respectively, recorded
in the preceding quarter. During the review period, electricity, gas, steam & air
conditioning supply and transportation equipment recorded higher staffing
level.
In the review period, the fall in mining activities, especially the decrease in
crude oil and gas production, led to the decline in the index of industrial
production. The estimated index of industrial production fell to 100.8
(2010=100) in the fourth quarter of 2020, reflecting a 6.0 per cent decrease from
the level in the third quarter of 2020, but an increase of 1.6 per cent when
compared with the level in the fourth quarter of 2019.
Improvement in economic activities and increase in consumer demand, due to
the full reopening of the economy and preparations for the end of year festivity,
contributed to the positive trend in the manufacturing sector during the review
quarter. Thus, the estimated index of manufacturing production grew to 181.1
(2010=100) in the fourth quarter of 2020, indicating an increase of 1.5 per cent,
compared with the level in the third quarter of 2020, but contrasted to the
decline of 1.3 per cent in the fourth quarter of 2019.
Increase in manufacturing activities to meet up with the rising demand, as well
as improvement in the supply chain, led to higher capacity utilisation in the
review period. Consequently, the estimated average capacity utilisation for the
fourth quarter of 2020 was 45.4 per cent, representing 1.6 percentage points
increase, compared with the level in the preceding quarter, but a decrease of
15.3 percentage points against the corresponding quarter of 2019.
Employment
New Orders
Inventories
Industrial
Production
Capacity Utilisation
Manufacturing

14 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Reduction in crude oil production led to the decline in activities in the mining
sector during the review period. The estimated index of mining production in
the fourth quarter of 2020 at 66.3 (2010=100) declined by 12.1 per cent, relative
to the level in the third quarter of 2020. However, it increased by 9.2 per cent,
when compared with the level in the fourth quarter of 2019.
The electricity sector witnessed improvement within the review period, due to
enhanced gas supply to gas-fired power plants and deployment of solar mini
grids to various states in the country. The improvement in gas supply followed
increased interventions by government to expand gas production. In addition,
Service Based Tariff (SBT), which was suspended in September 2020, later took
off in November 2020. Overall, there was improved electricity generation,
transmission, and distribution. Consequently, the average estimated electricity
generation for the fourth quarter of 2020 rose to 3,744.95 MW/h, reflecting an
increase of 6.6 per cent and 6.1 per cent, compared with the levels in the third
quarter of 2020 and fourth quarter of 2019, respectively.

At 3,264.49 MW/h, the average estimated electricity consumption for the review
quarter increased by 1.0 per cent and 5.2 per cent, compared with the levels
recorded in the third quarter of 2020 and fourth quarter of 2019, respectively.

2.1.2. Consumer Prices
Inflationary pressures persisted in the review quarter amid heightened demand
and supply shocks. This was driven, mainly, by the lingering effect of the COVID19 pandemic containment measures, supply disruptions, occasioned by the
‘EndSARS’ protest, and exchange rate pass-through effect on domestic prices.
Other factors included increase in the pump price of PMS, food supply
shortages, due to the persistent insecurity in some parts of the country and
incidences of floods in some food-growing regions.
Headline inflation, year-on-year, rose to 15.8 per cent in the fourth quarter of
2020, from the 13.7 per cent and 11.9 per cent in the third quarter of 2020 and
fourth quarter of 2019, respectively. On a month-on-month basis, headline
inflation, at 1.6 per cent in the fourth quarter of 2020, increased slightly,
compared with the 1.5 per cent recorded in the preceding quarter. The rise in
headline inflation was driven by increases in the indices of all the components of
the headline index (Figure 9).


Headline
Inflation
Electricity
Generation
Mining
Electricity
Consumption

15 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Figure 9: Headline, Food and Core Inflation (Year-on-Year) (Per cent)

Source: National Bureau of Statistics

Food inflation remained the major driver of headline inflation in the country. On
year-on-year basis, food inflation, in the review period, maintained an upward
trend to 19.6 per cent, from the 16.7 per cent in the preceding quarter. Similarly,
on month-on-month basis, it increased by 2.1 per cent, from 1.9 per cent
recorded in the preceding quarter. The rise in the food index was caused by
increase in the prices of bread and cereals, potatoes, yam and other tubers,
meat, fish, fruits, oils and fats, and vegetables.
Core inflation (all items less farm produce) was estimated at 11.4 per cent in the
review period, up from the 10.6 per cent recorded in the preceding quarter. On
month-on-month basis, core inflation also increased, slightly, to 1.1 per cent,
from 0.9 per cent in the preceding quarter. The highest increase in the prices of
the components of core inflation were recorded in passenger transport by air;
hospital services; medical services; pharmaceutical products; maintenance and
repair of personal transport equipment; vehicle spare parts; motor cars;
passenger transport by road, as well as housing utilities (water, electricity and
gas).


19-Q1
19-Q2
19-Q3
19-Q4
20-Q1
20-Q2
20-Q3
20-Q4

Headline
Core
Food
Food Inflation
Core Inflation

16 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Figure 10: Headline, Food and Core Inflation (Month-on-Month) (Per cent)
Source: National Bureau of Statistics

2.1.3 Socio-Economic Development
As the second wave of the COVID-19 pandemic continued to gain momentum,
the total number of confirmed cases in Nigeria rose by 29.7 per cent to 87,607
as at December 31, 2020, from 67,557 cases recorded in November 30, 2020.
Accordingly, the number of active cases increased to 12,516 from 3,102, while
recorded fatalities rose to 1,289 from 1,173 in the same period (Figure 11).
Besides the spike in new cases, there were also growing concerns of new variants
of the virus, which stressed the need for extra caution and stricter surveillance
and enforcement of containment measures. Consequently, some state
governments shut down schools to contain further spread of the virus.
Furthermore, at the national level, new COVID-19 guidelines and restrictions
were announced in December 2020. These included closure of schools, bars,
clubs, and restriction on human capacity at religious and social gatherings and
number of passengers in public transportation systems to only 50.0 per cent.
Figure 11: COVID-19 Statistics1

Source: The Nigeria Centre for Disease Control (NCDC)

1 COVID-19 data as at December 31, 2020

19-Q1
19-Q2
19-Q3
19-Q4
20-Q1
20-Q2
20-Q3
20-Q4

Headline
Core
Food

10,162
25,694 43,151 53,865 59,001 62,964 67,557 87,510

10000
100000
No. of cases
Total Confirmed Cases
Discharged Cases
Death Toll
COVID-19
Update

17 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020

As the effect of the COVID-19 pandemic lingers, effort to sustain the recovery
path of the economy received a boost with the approval of US$1.5 billion
support loan by the World Bank, through a five-year Country Partnership
Framework (CPF). The loan was approved under two projects, namely, the
Nigeria COVID-19 Action Recovery and Economic Stimulus-Programme for
Results (Nigeria CARES) and the State Fiscal Transparency, Accountability, and
Sustainability Program of Results (SFTAS) additional financing. These projects are
expected to support a resilient recovery and enhance access to social transfers
and basic services to the poor and vulnerable households. It would further
strengthen the food supply chain, while enhancing the capabilities of micro,
small and medium enterprises (MSMEs).

In addition, as part of the Federal Government’s efforts to boost economic
recovery, four land borders were re-opened, namely; Seme in South-West, Illela
in the North-West, Maigatari in the North-West and Mfum in the South-South.
This policy was expected to benefit the economy, particularly, in consonance
with the recently ratified African Continental Free Trade Area (AfCFTA), as well
as contribute to driving down food prices and, consequently, headline inflation.
The transportation sector witnessed increased activities in the review period, as
skeletal operations commenced on the Lagos-Ibadan rail line. The rail line was
expected to provide an alternative means of transportation in the covered areas,
boost commercial activities, as well as reduce road congestion. Similarly, the
Federal Executive Council (FEC) approved roads and aviation contracts worth
N59.35 billion across the country to improve the quality of transport facilities
and services, which would bolster economic activities.
The aviation sector also witnessed a boost in international operations, following
the removal of all reciprocity fees imposed on visa applications for Nigerians by
the United States, as well as the launch of flight operations to Johannesburg,
South Africa by Air Peace. These are expected to increase the level of economic
ties between Nigeria and South Africa and improve revenue to the aviation
sector, while improving the global competitiveness of local carriers. However,
some operators in the sector suffered from slow recovery, leading to constrained
ability to complete maintenance requirements and return to full operations,
thereby limiting their revenue against increasing operational costs.
Consequently, Arik air laid off 300 staff over redundancy, following the airline’s
inability to cover its operational costs.
The Federal Government sustained its efforts in supporting the recovery of
businesses, SMEs, as well as individual households during the review quarter.
This included the launch of a Transport Track Fund of N30,000 grant to each
commercial driver including bus and taxi drivers, motorcycle riders and
operators of ride-hailing cabs such as Bolt and Uber. The initiative was a
component of the Survival Fund, under the Federal Government’s Economic
Building
Resilience
Transportation
Social
Interventions

18 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Sustainability Plan (ESP), put in place to support small businesses and cushion
the effect of the COVID-19 pandemic.
Similarly, efforts were made to reduce the level of poverty and bolster household
welfare in the country through the modification of certain key government socioeconomic initiatives. Thus, the number of N-Power beneficiaries was expanded
from 500,000 to 1,000,000, the number of Government Enterprise and
Empowerment Programme (GEEP) beneficiaries was increased by 1,000,000,
while the number of beneficiaries of the Home-Grown School Feeding
Programme was raised to 5,000,000. The Federal Government also unveiled a
portal for the exited N-Power Volunteers to access CBN Empowerment options.
Furthermore, the portal for the Social Housing Scheme, under the Federal
Government’s Economic Sustainability Plan (ESP), was launched in the review
period. The Scheme, which aimed at providing 300,000 low-income houses to
the most vulnerable households, was expected to create about 1.8 million jobs
in the process. The portal was also intended to support the transparent housing
allocation to registered individuals. Furthermore, it was also expected to provide
an opportunity for young professionals with qualifications, skills, or experience
in building and construction to participate as SME Partners, as well as provide
market opportunities for local manufacturers of building materials through
participation in bulk supply into the Project.
2.1.4 Commodity Market Developments
Prices of most agricultural export commodities maintained an upward trend in
the fourth quarter of 2020, influenced generally by surge in demand.
Provisional data showed that prices in the international market of majority of
the agricultural commodities monitored increased, compared with the level in
the previous quarter. The price increases ranged from 1.2 per cent for cocoa to
34.7 per cent for rubber. The increase in the price of rubber reflected increased
demand from the automobile industry as economic activities picked-up, as well
as low supply from rubber-producing countries, such as Thailand, due to
drought. In addition, the prices of soya beans, palm oil, wheat and cotton
increased, during the review quarter, by 22.3 per cent, 18.0 per cent, 15.6 per
cent and 10.0 per cent, respectively. The increases were due to the surge in
demand resulting from improved economic activities globally. However, the
prices of groundnut and coffee decreased by 16.6 per cent and 0.1 per cent,
respectively, due to increased involuntary inventories (Table 5).


Agricultural
Commodity
Prices

19 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020

Table 5: Prices of Agricultural Export Commodities for the
Fourth Quarter of 2020
Indices of Average World Prices of Nigeria's Major Agricultural Export
Commodities for 2020Q4 (in dollars; 2010 = 100)
Commodity
19-Q4
20-Q3
20-Q4
%
Change
(1) & (3)
%
Change
(2) & (3)


Cocoa

Cotton

Coffee

Wheat

Rubber

Groundnut

Palm Oil

Soya Bean

Source: Staff Estimates based on data from Index Mundi and the World Bank Pink Sheet


On the domestic front, steeper growth in food prices were recorded in the
fourth quarter of 2020. Prices of the selected food crops monitored increased,
significantly, in the review quarter, compared with prices in the preceding
quarter and the corresponding quarter of 2019. The highest increases were
recorded for onion bulbs and beans (white) whose prices rose by 41.9 per cent
and 10.8 per cent, respectively. The supply of onion bulbs was subdued by
flooding and the purple blotch disease, which affected some onion producing
states, such as Kebbi, Sokoto, and Gombe. In addition, the prices of beans
(brown), rice and palm oil increased during the review quarter by 8.5 per cent,
7.2 per cent, and 7.4 per cent, respectively. This development was attributed to
the supply and demand shocks occasioned by the ‘EndSARS’ protest, flooding, as
well as the land border protection policy. On the other hand, prices of sweet
potato and yam tubers decreased in the review quarter by 5.9 per cent and 5.6
per cent, respectively. The price decrease was attributed, largely, to increased
supply associated with the harvesting season of the products (Table 6).


20 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Table 6: Domestic Prices of Selected Agricultural Commodities in the Fourth
Quarter of 2020
Food Items
Unit
2019Q4
2020Q3
2020Q4
%
Change
%
Change
(1)
(2)
(3)
(1) & (3)
(2) & (3)
Agric eggs medium size
1kg

Beans: brown, sold loose
"

Beans: white black eye, sold
loose
"

Gari white, sold loose
"

Gari yellow, sold loose
"

Groundnut oil: 1 bottle, specify
bottle
"

Irish potato
"

Maize grain white, sold loose
"

Maize grain yellow, sold loose
"

Onion bulbs
"

Palm oil: 1 bottle, specify bottle
"

Rice agric, sold loose
"

Rice local, sold loose
"

Rice, medium-grained
"

Rice, imported high quality, sold
loose
"

Sweet potato
"

Tomato
"

Vegetable oil: 1 bottle, specify
bottle
"

Wheat flour: prepackaged
(Golden Penny)
2kg

Yam tuber
1kg

Source: National Bureau of Statistics (NBS)
2.1.5. Development Financing
Intervention schemes by the Bank continued to focus on enhanced credit
delivery to critical sectors, in a bid to enhance productivity and stimulate the
real sector of the economy. In a bit to further strengthen its intervention into
the agricultural sector, the CBN, amended the Agricultural Credit Guarantee
Scheme Fund (ACGSF). The amendment allowed for increase in the share capital
of the Fund from N3.0 billion to N50.0 billion, as well as increase the maximum
amount granted to both collateralised and non-collateralised loans under the
scheme. The amendment also allowed the scheme to finance all aspects of the
agricultural value chain.
Similarly, to further increase agricultural productivity and ensure sustained
income for farmers, the Nigeria Incentive-Based Risk Sharing System for
Agricultural Lending (NIRSAL Plc), in collaboration with the Royal Exchange
General Insurance Company (REGIC), developed a Hybrid Multi-Peril Crop
Indemnity-Index Insurance (HM-II). The new product, which was an outcome of
NIRSAL’s long-term commitment to the development of innovative agricultural
insurance products and expanding coverage for agricultural lending across the
entire agricultural value chain, was designed to protect farmers from losses
during planting season caused by bad weather, pest outbreak, disease outbreak,
fire outbreak and permanent disability or death of farmers.
Development
Financing

21 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
The improved credit delivery and intervention programmes are expected to
stimulate output, thereby easing inflationary pressure, particularly, food
inflation. The intervention effort by the Bank is crucial and commendable, given
the prevailing macro-economic development and is capable of further sustaining
the goal of the Bank towards ensuring price stability from the supply side of the
economy (Table 7).
Table 7: Cumulative Disbursement and Repayments of CBN
Interventions Schemes from Inception to November 2020
Intervention/Initiative
Cumulative
projects
Disbursements
(N billion)
Repayments
(N billion)
Commercial Agricultural Credit Scheme
(CACS)

672.9
443.9
Paddy Aggregation Facility (PAS)

95.5
93.5
Rice Distribution Facility (RDF)

Anchor Borrowers' Programme (ABP)
2,504,690
497.2
118.70
Accelerated Agricultural Development
Scheme (AADS)
9,983
14.9
0.00
Micro, Small and Medium Enterprises
Development Fund (MSMEDF)
216,704
83.9
34.70
Shared Agents Network Expansion Facility
(SANEF)

5.5
0.64
SME/Rediscount & Refinancing Facility
(SMERRF)

300.9
151.10
Real Sector Support Facility (RSSF)

166.2
22.50
Covid-19 Intervention for the Manufacturing
Sector (CIMS)

228.2
0.00
Textile Sector Intervention Facility (TSIF)

3.10
CBN-BOI Industrial Facility (CBIF)

0.00
Power and Airline Intervention Fund (PAIF)

311.2
194.60
Nigerian Electricity Market Stabilization
Facility (NEMSF)

189.2
70.30
Nigerian Bulk Electricity Trading-Payment
Programme (NBET-PAF)

0.00
National Food Security Programme (NFSP)

59.1
11.40
Presidential Fertilizer Initiative (PFI)

10.80
Non-Oil Export Stimulation Facility (NESF)

12.00
Export Development Fund (EDF)

0.00
Agribusiness/SME Investment Scheme
(AGSMEIS)
22,057
83.5
0.21
Targeted Credit Facility (TCF)
317,949
149.2
0.00
Maize Aggregation Scheme (MAS)

6.00
Healthcare Sector Intervention Facility
(HSIF)

60.7
0.78
Youth Entrepreneurship Development
Programme (YEDP)

173.4
0.51
Source: Development Finance Department, Central Bank of Nigeria

Crude oil spot prices rose slightly in the fourth quarter of 2020, following
increased demand from Asia, particularly, China and India, coupled with the
optimism that the COVID-19 vaccine rollout would revive global fuel demand.
Additionally, the OPEC+ slowed the pace of a planned increase in supplies by
2021 to support the spot prices. The average spot price of Nigeria’s reference
crude oil, the Bonny Light (32.9° API) rose by 2.1 per cent, quarter-on-quarter, to
US$44.19 pb in the fourth quarter of 2020, compared with the US$43.29 pb in
the third quarter of 2020. However, compared with the level in the fourth
quarter of 2019, at US$65.72 pb, the price declined by 32.8 per cent. The
Crude Oil Spot
Market

22 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Forcados at US$44.23pb, WTI at US$43.01 pb, UK Brent at US$43.94 pb and
OPEC Basket of thirteen selected crude streams at US$44.03 pb, all exhibited
similar upward trend as the Bonny Light (Figure 12).
Figure 12: Trends in Crude Oil Prices

Source: Refinitiv (Thomson Reuters)

The increase in crude oil spot prices was driven largely by investors’ optimism on
the rollout of the COVID-19 vaccine, which was expected to ease travel
restrictions and revive global fuel demand, coupled with reports of increased
refining demand in China and India. The scenario was also supported by the
decision of OPEC+ to slow the pace of a planned increase (2mbpd) in supplies in
2021. OPEC+ agreed to increase supplies by 0.5 mbpd in January 2021 (from a
production cut of 7.7 mbpd to 7.2 mbpd), in a first step towards the gradual
return of 2.0 mbpd agreed in the Declaration of Cooperation (DoC) by
participating countries on April 12, 2020.
Available data from Refinitiv (Thompson Reuters) indicated that significant
increases were recorded in the prices of silver, platinum and palladium, while
gold recorded a decline in the fourth quarter of 2020. Average spot price of gold
in the review quarter declined by 1.9 per cent to US$1,875.03 per oz, compared
with the US$1,911.01 per oz in the third quarter of 2020. However, when
compared to the fourth quarter of 2019, the price of gold rose by 26.5 per cent,
compared with US$1,482.77 per oz (Figure 13).
Figure 13: Price Changes (%) of Selected Precious Metals for the Fourth
Quarter of 2020
Source: Refinitiv (Thomson Reuters)

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
US$ Per Barrel
BRENT
BONNY
FORCADOS
OPEC B
WTI

Gold
Silver
Platinum
Palladium
with preceding quarter
with corresponding quarter
Prices of Other
Mineral and
Other
Commodities

23 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
The decline in the prices of gold was due to investors’ optimism amid news of
the rollout of the COVID-19 vaccines and its success rate, as well as the rising US
treasury real yields, which provoked more risk taking in financial markets and
portfolio diversification. This optimism, however, proved detrimental to some
safe-haven assets.
Unlike gold, the average spot prices of silver, platinum and palladium recorded
respective gains of 0.3 per cent, 4.2 per cent and 8.2 per cent to US$24.46 per
oz, US$939.09 per oz and US$2,342.70 per oz in the fourth quarter of 2020
compared to the US$24.38 per oz, US$901.02 per oz and US$2,165.85 per oz in
the third quarter of 2020. Additionally, when compared with the levels in the
fourth quarter of 2019, the average prices of the three metals represented
increase of 41.2 per cent, 3.4 per cent and 30.3 per cent at US$17.32 per oz,
US$908.32 per oz and US$1,798.33, respectively. A major factor that supported
the prices of platinum and palladium was the increase in Chinese demand for
these industrial metals, amid the shutdown of mines in South Africa. Both metals
are used in automobiles, batteries, electronics and solar panel industries, thus,
benefiting from the renewed economic optimism. The increase in the price of
silver was as a result of an increase in the US Mints. The sharp rebound in China’s
economy underpinned much of the rally in the prices of industrial metals.
Domestic crude oil production and export recorded a slight decrease in the
fourth quarter of 2020, as the OPEC+ sustained its agreed production cuts with
improved compliance from Nigeria and other countries participating in the
Declaration of Cooperation (DoC). Nigeria’s crude oil production, including
Agbami, recorded an estimated decline of 0.01 million barrels per day (mbpd) or
0.7 per cent, to an average of 1.52 mbpd in the fourth quarter of 2020, compared
with the 1.53 mbpd produced in the third quarter of 2020. Also, Nigeria’s crude
oil production declined by 19.6 per cent, when compared with the 1.89 mbpd in
the fourth quarter of 2019. Of the 1.52 mbpd produced in the fourth quarter of
2020, an average of 1.07 mbpd was exported, while the balance was allocated
for domestic consumption. The decline in production was as a result of Nigeria’s
commitment to the OPEC+ production cuts agreement aimed at supporting the
rebalancing of the crude oil market and hence prices. However, Nigeria’s
production was expected to increase from January 2021, as OPEC+ agreed to
increase total production by 0.50 mbpd by January 2021, until it gradually
reaches its 2.00 mbpd target agreed at the DoC.
2.1.6. Economic Outlook for the Real Sector
Growth prospect is weak as the macroeconomic instability associated with the
COVID-19 pandemic and weak crude oil prices, amidst other structural factors,
continue to dampen the near-term outlook for the Nigerian economy. The
performance of the economy continued to be weighed down largely by the
headwinds associated with the resurgence in COVID-19 pandemic and weak
crude oil prices. Consequently, growth is expected to remain subdued as
economic activities remain tepid and lingering structural challenges continue to
accentuate the impact of the COVID-19 pandemic. Staff estimates showed that
Domestic
Economic
Outlook
Domestic Crude
Oil Production
and Export

24 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
real GDP would record higher growth in the first quarter of 2021, given current
economic fundamentals. However, by the first quarter of 2021, the economy is
expected to be more resilient, following continuous monetary and fiscal policies
interventions, including the judicious execution of the stimulus package of N2.3
trillion and the likely roll-out of the COVID-19 vaccine. These, coupled with
possible rebound in crude oil prices and improved consumer demand, are
expected to moderate the rate of contraction in the near-term and speed up
recovery in 2021.
Inflation is expected to maintain its upward trajectory, despite a relatively low
interest rate environment. Inflationary pressure is expected to linger due to food
supply shortages, arising from heightened level of insecurity, persisting supply
and demand shocks, exacerbated by the second wave of the COVID-19
pandemic, the adjustment in electricity tariffs and PMS prices. Consequently,
headline inflation is expected to rise marginally in January 2021. However, the
reopening of the land borders is expected to enhance food supply and dampen
the pressures from food price inflation in the coming months.
The Prospects for a crude oil price rally in the near term remains subdued, due
mainly to concerns around a second wave of the COVID-19 pandemic and its
anticipated containment measures, despite expected production cuts by OPEC+
in February 2021.


25 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
2.2 FISCAL SECTOR DEVELOPMENTS
2.2.1 Federation Operations
At N2,208.10 billion, federally collected revenue in the fourth quarter of 2020
fell by 13.1 per cent and 8.3 per cent below the budget benchmark and the level
in the preceding quarter, respectively, and was also 16.8 per cent below the
collections in the corresponding period of 2019. Oil receipts accounted for 44.6
per cent of the total collection, while non-oil constituted the balance of 55.4 per
cent. The relatively low receipts recorded in the review period underscored the
lingering effect of the COVID-19 pandemic on domestic and global economic
activities. Similarly, the retained revenue of the Federal Government of Nigeria
(FGN), at N903.52 billion, fell by 38.1 per cent and 39.0 per cent below its
quarterly benchmark and collections in the fourth quarter of 2019, respectively.
Also, the provisional aggregate expenditure of the FGN declined from N2,541.97
billion in the third quarter of 2020 to N2,387.46 billion in the review period,
reflecting decreases in government spending, in the light of the current revenue
challenge. Consequently, the fiscal operations of the FGN resulted in an
estimated deficit of N1,483.93 billion. Total FGN debt outstanding2 at endSeptember 2020 stood at N28,032.58 billion3, with domestic and external
components accounting for 56.5 per cent and 43.5 per cent, respectively, of the
total debt stock.
Shortfalls in oil receipts, due to the subsisting OPEC+ agreed oil production cut
and decline in global crude oil demand, following the resurgence of the COVID19 pandemic in Europe and the Americas, led to the decline in federally
collected revenue in the fourth quarter of 2020. Federally collected revenue
amounted to N2,208.10 billion, with oil and non-oil revenue sources contributing
44.6 per cent and 55.4 per cent, respectively. The collection was 13.1 per cent,
8.3 per cent and 16.8 per cent below the budget benchmark, and the levels in
the third quarter of 2020 and the fourth quarter of 2019, respectively. Of the
total receipts N2,208.10 billion, the sum of N756.86 billion was deducted as
statutory and non-federation transfers, leaving a net balance of N1,451.24
billion. An additional revenue of N264.80 billion was realised from Excess Oil
revenue, Non-Oil Excess revenue, and Exchange Gain, bringing the total
distributable balance to N1,716.04 billion. Consequently, the total sum of
N1,716.04 billion was disbursed among the three tiers of government. The
disbursement was 13.1 per cent lower than that of the corresponding period of
2019 and 7.9 per cent below the quarterly benchmark. The decline in
disbursements, exacerbated fiscal burden, particularly at the subnational level,
owing to sub-national government expenditures dependence on central
allocations (Table 8). Notably, allocations to the lower tiers of government (state
and local governments) have steadily declined since the fourth quarter of 2019,
as a result of the crippling effect of the COVID-19 pandemic on federation
revenue (Table 9).

2 This includes the external debt of states and the FCT guaranteed by the FGN, which constitutes
about 6.7 per cent of the total.
3 Pending update from the Debt Management Office (DMO)
Summary
Federation Account
Operations

26 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Table 8: Federally Collected Revenue and Distribution (N’ Billion)

2019Q4
2020Q3
2020Q4
Budget
Federation Revenue (Gross)

Oil

Crude Oil & Gas Exports

PPT & Royalties

Domestic Crude Oil/Gas Sales

Others

Non-oil

Corporate Tax

Customs & Excise Duties

Value-Added Tax (VAT)

Independent Revenue of Fed. Govt.

Others*

Total Deductions/Transfers*

Federally Collected Revenue
Less Deductions & Transfers**

plus:


Additional Revenue

Balance in Special Account from 2019

Excess Crude Revenue

Non-oil Excess

Exchange Gain

Total Distributed Balance

Federal Government

State Government

Local Government

13% Derivation

Source: Compiled from Office of the Accountant-General of the Federation (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 Non-Federation revenue.


Table 9: Allocations to Subnational Governments

State Government

Local Government

Statutory
VAT
Total

Statutory
VAT
Total
2019Q4
563.69
138.22
701.90

319.07
96.75
415.82
2020Q3
471.71
191.43
663.14

284.86
134.00
418.86
2020Q4
425.79
197.68
623.46

247.45
138.37
385.82
Benchmark
463.93
253.67
717.60

250.77
177.57
428.35
Source: Compiled from OAGF figures

The dynamics in the federally collected revenue in the fourth quarter of 2020
was dictated, largely, by developments in crude oil revenue. Oil revenue, at
N985.57 billion, accounted for 44.6 per cent of the total federation receipt and
fell below receipts in the fourth quarter of 2019 by 37.0 per cent. The low
contribution was attributed to weakening global crude oil demand, due to the
COVID-19 pandemic, and low domestic crude oil production, sequel to the
subsisting OPEC+ production cut agreement. Although crude oil price remained
on a path of recovery, with the Bonny Light rallying from an average of US$40.80
per barrel in September 2020, to US$51.70 per barrel as at December 23, 2020,
Drivers of Federation
Revenue

27 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
the revenue effect of the price increase was overwhelmed by reductions in
production and export.
Furthermore, receipt from crude oil and gas sales, at N43.10 billion, was 73.8 per
cent and 63.3 per cent below its benchmark and earnings in the corresponding
quarter of 2019. Contrarywise, domestic crude oil and gas sales, at N401.62
billion, accounted for 52.2 per cent of oil revenue in the review period, and more
than doubled the budget benchmark. The significant contribution of domestic
crude oil sales, compared with oil export, reflected the disproportionate impact
of the COVID-19 pandemic on global and domestic crude oil demand. On the
other hand, receipts from Petroleum Profit Tax (PPT) was above the revised
budget benchmark but lower than the proceeds in the preceding quarter and the
corresponding period of 2019, an indication of low crude oil production activity.
The contribution of non-oil revenue to the federation revenue was relatively low,
owing to the lull in economic activity, following the gradual extension of the
COVID-19 pandemic mitigating measures. At N1,222.53 billion, non-oil revenue
constituted 55.4 per cent of the gross federation revenue in the fourth quarter
of 2020. Although the receipt was 26.1 per cent and 16.0 per cent below the
budget benchmark and collections in the third quarter of 2020, respectively, it
was 12.0 per cent above the receipt in the corresponding period of 2019. A
disaggregation of non-oil revenue revealed that Value-Added Tax (VAT), at
N425.11 billion, accounted for 34.8 per cent of the total non-oil revenue, while
Corporate Tax, Customs & Excise Duties, FGN Independent Revenue and Others,
accounted for 23.4 per cent, 20.6 per cent, 16.4 per cent and 4.8 per cent,
respectively. VAT returns exceeded its quarterly benchmark and receipt in the
fourth quarter of 2019, by 47.6 per cent and 28.8 per cent, respectively. The
high VAT collection, relative to comparable periods, was attributed to the
increased implementation of the Finance Act 2019, that raised the VAT rate from
5.0 per cent to 7.5 per cent. This was in addition to the effect of the December
31st deadline issued by the Federal Inland Revenue Service (FIRS) to defaulting
taxpayers, to settle outstanding tax liabilities, after which interests and
penalties, would apply.
2.2.2. Fiscal Operations of the Federal Government
Against the backdrop of declining government revenue vis-à-vis a sticky
downward expenditure, exacerbated by the COVID-19 pandemic emergency
spending, the fiscal deficit of the FGN expanded in the fourth quarter of 2020.
At N1,483.93 billion, the provisional overall fiscal deficit of the FGN grew by 19.3
per cent and 29.7 per cent, relative to the quarterly budget benchmark and the
level in the fourth quarter of 2019, but contracted by 3.9 per cent, relative to the
level in the preceding quarter. Given the imperative of fiscal consolidation, in the
light of the adverse economic conditions created by the COVID-19 pandemic,
aggregate expenditure in the fourth quarter of 2020 fell by 11.7 percent, 9.1 per
cent and 6.1 per cent, relative to the budget benchmark, the levels in the
preceding quarter and the corresponding period of 2019, respectively. However,
Fiscal Balance

28 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
the decline in expenditure could not compensate for the significant drop in
revenue, thus resulting in fiscal deficit expansion in the review period (Table 10).
Table 10: Fiscal Balance for Fourth Quarter of 2020 (N' Billion)

2019Q4
2020Q3
2020Q4
Benchmark
Retained revenue

Aggregate expenditure

Primary balance

Overall balance

Source: Compiled from Office of the Accountant General of the Federation (OAGF) figures and Central
Bank of Nigeria Staff Estimates
Note: The figures in third and fourth quarters of 2020 are provisional.

The perennial revenue challenge of the FGN lingered in the review period, as
the estimated retained revenue of the Federal Government, at N903.52 billion,
fell by 38.1 per cent below the budget benchmark of N1,458.75 billion. The
shortfall in the retained revenue of the FGN was attributed, largely, to the
decline in allocation from the federation account, which fell by 26.9 per cent,
from N707.88 billion in the third quarter of 2020 to N517.45 billion in the review
period. Receipts from the VAT Pool Account and the FGN Independent Revenue,
were marginally above their levels in the preceding quarter, but remained
considerably below their quarterly budget estimates, by 22.1 per cent and 13.9
per cent, respectively. Also, the projected receipts of N508.14 billion from
‘Other’ sources, including revenues from Special Account and Special Levies,
were not realised in the review period (Table 11).

Table 11: FGN Retained Revenue for Fourth Quarter of 2020 (N’ Billion)

2019Q4
2020Q3
2020Q4
Benchmark
FGN Retained Revenue

Federation Account

VAT Pool Account

FGN Independent Revenue

Excess Oil Revenue

Excess Non-Oil

Exchange Gain

Others*

Source: Compiled from the Office of the Accountant General of the Federation (OAGF) figures
Note: * Others include revenue from Special Accounts and Special Levies
The figures for 2020 are provisional.

Amidst the declining revenue and deteriorating fiscal balance, the provisional
aggregate expenditure of the FGN, at N2,387.46 billion, declined by 11.7 per
cent, in the review period, relative to the budget benchmark. Also, the level
was 6.1 per cent and 9.1 per cent lower than the levels recorded in the third
quarter of 2020 and the fourth quarter of 2019, respectively. The decline in
aggregate expenditure in the review period, reflected the need to consolidate
Federal
Government
Retained Revenue
Federal
Government
Expenditure

29 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
the country’s fiscal policy in the face of a rising fiscal burden, worsened by the
COVID-19 pandemic.
A breakdown of the aggregate expenditure of the FGN in the fourth quarter of
2020, revealed that recurrent expenditure maintained its dominance,
accounting for 72.0 per cent of the total, out of which 39.1 per cent, 36.4 per
cent, 21.9 per cent, and 2.6 per cent, were expended on interest payments,
personnel cost, overhead cost and special transfers to the FCT, respectively. As
a share of the provisional aggregate expenditure, capital expenditure accounted
for 22.1 per cent, while transfers made up the balance of 5.9 per cent (Figure 14,
Table 12).
Figure 14: Federal Government Expenditure (N Billion)
Fourth Quarter 2020


Source: Central Bank of Nigeria Staff Estimates and compilation from Office of the Accountant
General of the Federation (OAGF) data

Table 12: Federal Government Expenditure for Fourth Quarter of 2020 (N’ Billion)

2019Q4
2020Q3*
2020Q4*
Benchmark
Aggregate Expenditure

Recurrent

of which:


Personnel Cost

Pension and Gratuities

Overhead Cost

Interest Payments

Domestic

External

Special Funds & others

Capital Expenditure

Transfers

Source: Central Bank of Nigeria Staff Estimate


Note: * Aggregate expenditure in 2020Q3 and 2020Q4 are provisional


Q4-19
Q3-20
Q4-20
Benchmark
Billion Naira
Aggregate Expenditure
Recurrent
Capital Expenditure
Transfers

30 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020

The exclusion of the subnational government’s external debt component from
the consolidated debt liability of the FGN led to a marginal increase in FGN
debt, relative to the level in the preceding quarter. At N28,032.58 billion4, the
total debt stock of the FGN as at end-September 2020 rose by 4.5 per cent and
26.4 per cent, relative to the N26,818.95 billion and N22,172.59 billion at endJune 2020 and corresponding period of 2019, respectively. Domestic and
external debts accounted for 56.5 per cent and 43.5 per cent of the total debt
stock, respectively, as against the target of 70:30 ratio, projected in the 20202023 Debt Management Strategy (DMS) of the FGN (Figure 15).
FGN bond issues dominated domestic debt instruments and accounted for 73.5
per cent of the total domestic debt, while Treasury bills, Promissory Notes, FGN
Sukuk and Others5, accounted for 17.2 per cent, 6.1 per cent, 2.3 per cent, and
0.9 per cent, respectively. The dominance of FGN bond in the domestic debt mix,
reflected government’s preference for long-term debts. External debt comprised
Multilateral (52.0 per cent), Bilateral (12.5 per cent) and Commercial (35.5 per
cent) (Figures 16 and 17).
Interest payment obligations in the reporting period, amounted to N797.41
billion, compared with N416.43 billion and N752.37 billion in the second quarter
of 2020 and third quarter of 2019, respectively. The increase in interest payment
was due, largely, to the maturity of FGN bonds, Eurobonds, and loans from
Export-Import (EXIM) Bank of China. The adjustment in the naira/dollar
exchange rate, which depreciated the domestic currency, increased debt service
obligations on the external portion of the debt stock (Eurobonds and loans from
the EXIM Bank of China).
Figure 15: FGN External and Domestic Debt Composition (N’ Trillion)

Source: Compiled from DMO figures


4 In the review period, States and FCT external debt guaranteed by the FGN was zero.
5 Includes Treasury Bond, 0.6 per cent; Green Bond, 0.2 per cent; and Special FGN Savings Bond, 0.1
per cent.

2019Q1
2019Q2
2019Q3
2019Q4
2020Q1
2020Q2
2020Q3
Domestic debt
External debt
Total debt Outstanding
Federal
Government
Debt

31 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020


Figure 16: Composition of Domestic Debt Stock by Instrument

Source: Compiled from Debt Management Office (DMO) figures

Figure 17: Composition of External Debt Stock by Holders

Source: Compiled from Debt Management Office (DMO) figures

2.2.3. Fiscal Outlook
In the near-to-medium-term the fiscal sector performance, is expected to be
moderate, on account of the rebound in crude oil prices, owing to gradual
recovery in global demand and the decision of OPEC+ to raise production by
500,000 barrels per day. In addition, the release and the increase in the
distribution of the COVID-19 vaccines, and the introduction of less restrictive
measures, to mitigate the COVID-19 pandemic, are expected to support
sustained rebound in economic activities, and ease fiscal challenges. However,
the incidence of a second wave and the emergence of variants of the
coronavirus, heightens global uncertainty and exacerbates fiscal risks.


17.2%
73.5%
9.3%
Treasury Bills
FGN Bonds
Others
52.3%
12.7%
34.9%
Multilateral
Bilateral
Commercial
Fiscal
Outlook

32 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020

2.3. MONETARY AND FINANCIAL DEVELOPMENTS
Monetary policy was beset with a lot of headwinds, which moderated the
growth of monetary aggregates during the fourth quarter of 2020. Major
amongst them included the second wave of the COVID-19 pandemic, ‘EndSARS’
protests and implementation of curfews in some states, coupled with the
decline on crude oil prices, negative emerging markets sentiments and
economic recession. These factors caused reversals of foreign portfolio
investments (FPI), as investors’ confidence waned. However, key financial
market indicators remained moderately stable due to effective liquidity
management by the Bank. Monetary policy remained accommodative during
the period, driven, largely, by the need to improve credit flow to key productive
sectors that would bolster growth in the economy. Broad money supply (M3)
stood at N38,673.64 billion at end-December 2020, representing a growth rate
of 11.0 per cent, slightly below the target of 13.1 per cent for 2020 fiscal year.
The development was due to the 40.2 per cent rise in net foreign assets (NFA),
following significant decline in liabilities to non-residents and the strong growth
in claims by the banking system. Net foreign assets of the CBN grew by 22.4 per
cent from the 6.6 per cent increase in claims on non-residents, relative to the
decline of 11.6 per cent in liabilities. CBN’s claims reflected, largely, the 9.1 per
cent rise in official reserve assets, partially monetary gold, which grew by 12.5
per cent at end-December 2020. The decline in liabilities was due to significant
reduction in short term foreign liabilities and holdings of CBN bills. Similarly, net
foreign assets of other depository corporations (ODCs) stood at 34.8 per cent
and reflected the 52.9 per cent growth in assets, which was more than off-set
the 19.8 per cent growth in liabilities. At that level, the contribution of NFA of
depository corporations (DCs) to the growth in broad money supply stood at 6.9
percentage points, compared with the contribution of 4.7 percentage points at
the end of the preceding quarter.
Claims on the domestic economy grew by 13.4 per cent at the end of the review
period, compared with 7.4 per cent at end-September 2020. This reflected the
13.6 per cent rise in net claims on the Federal Government, and the 13.3 per cent
growth in claims on other sectors, particularly, the productive (private) sector,
which grew by 15.4 per cent. Narrow money supply (M1), driven solely by the
increase in transferable deposits, reflected economic agents’ increased demand
for transactions balances (Figure 18, Table 13).


Growth in Monetary
Aggregates

33 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020

Figure 18: Currency outside depository corporations and transferable
deposits as shares of narrow money (M1)

Q4 18
Q1 19
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
Q3 20
Q4 20
Per cent
Per cent
CODC/M1 (rhs)
TD/M1
Source: Central Bank of Nigeria
Table 13: Money and Credit Aggregates (Growth Rates %)

19-Dec
20-Sep
20-Dec 1/
Net Foreign Assets
-49.79
27.5
40.2
Claims On Nonresidents
-14.72
0.3
14.68
Liabilities To Nonresidents
32.59
-13.6
1.64
Domestic Claims
29.04
7.39
13.4
Net Claims On Central Government
105.38
-4.1
13.58
Claims On Central Government
33.24
13.7
20.88
Liabilities To Central Government
-3.17
40.79
31.99
Claims On Other Sectors
13.09
11.76
13.34
Claims On Other Financial Corporations
-1.02
10.46
11.08
Claims On State And Local Government
7.07
5.8
10.64
Claims On Public Nonfinancial Corporations
1.81
-5.48
0.24
Claims On Private Sector
22.85
13.88
15.35
Broad Money Assets
6.45
3.28
10.97
Currency Outside Depository Corporations
6.04
-0.21
23.37
Transferable Deposits
1.54
33.75
55.68
Other Deposits
13.56
17.45
20.87
Securities Other Than Shares
-4.95
-82.76
-88.01
Deposits Excluded From Broad Money
31.24
112.36
147.08
Securities Other Than Shares Excluded From Broad
Money
-9.98
1.13
1.38
Loans
33.84
-2.3
-1.05
Financial Derivatives
-3.14
310.36
252.82
Insurance Technical Reserves


Shares And Other Equity
30.4
18.06
41.27
Other Items (Net)
-38.23
118.33
70.52
Total Monetary Liability (M3)
6.45
3.28
10.97
Source: Central Bank of Nigeria
1/ Provisional


34 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Growth in credit to the private sector reflected the loan-to-deposit ratio (LDR)
policy and other policies to increase private sector credit. Congruent with the
13.4 per cent growth in domestic claims, net claims on the Federal Government
grew by 13.6 per cent, in contrast to a decline of 4.1 per cent at the end of the
preceding quarter. This reflected direct loans to the Federal Government by the
CBN. Similarly, credit to other sectors grew by 13.3 per cent to N30,167.1 billion
at end-December 2020, compared with 11.8 per cent at the end of the preceding
quarter. The sector’s positive performance was dominated by the (productive)
private sector with growth rate of 15.4 per cent to N18,744.6 billion, compared
with 13.9 per cent at end-September 2020. The development was due to an
uptick in economic activities, following the Bank’s support to boost economic
growth in the wake of the second wave of the COVID-19 pandemic, the impact
of ‘EndSARS’ protest and economic recession.
Sectoral credit utilisation by ‘other’ sectors of the economy grew by 16.5 per
cent to N20,373.45 billion at end-December 2020, compared with 10.7 per cent
at end-September 2020. A breakdown of the credit showed that the industrial
and services sectors contributed 37.2 per cent and 37.6 per cent, respectively,
compared with 37.2 per cent and 38.4 per cent in September 2020. The
agricultural and government sectors accounted for 5.2 per cent and 8.7 per cent,
respectively, at end-December 2020, compared with their respective levels of
4.8 per cent and 8.3 per cent at end-September 2020 (Table 14).
Table 14: Sectoral Credit Utilisation (per cent)

19-Dec
20-Sep
20-Dec
Agriculture
4.6
4.82
5.15
Industry
37.3
37.18
37.19
Construction
4.1
4.86
4.74
Trade/General
Commerce
7.2
6.53
6.59
Government
8.8
8.25
8.71
Services
37.9
38.37
37.62
Source: Central Bank of Nigeria

Consumer credit outstanding, at ₦1,663.07 billion at end-December 2020, rose
by 9.9 per cent and 17.7 per cent above the levels at the end of the preceding
quarter and the corresponding period of 2019, respectively. Also, consumer
credit as a percentage of private sector credit increased to 8.9 per cent at endDecember 2020 from 8.1 per cent at end-September 2020. The growth in
consumer credit reflected the expansionary monetary policy stance of the Bank,
as well as the effectiveness of the loan-to-deposit ratio policy, aimed at reflating
the economy. A breakdown of consumer loans showed that retail loans rose by
1.8 percentage points, over the level at the end of the preceding quarter, while
personal loans dipped by 1.8 percentage points.
Economic agents continued to express confidence in the banking system in the
fourth quarter of 2020, as shown by demand for bank deposits. There was a 10.7
per cent growth in broad monetary liabilities, accounted for by the significant
Consumer Credit

Sectoral Utilisation of
Credit


35 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
growth in quasi money, currency outside depository corporations and
transferable deposits. Aggregate savings grew by 57.0 per cent, slightly below
the 59.5 per cent observed in the preceding quarter. This was accounted for,
largely, by foreign currency deposits at commercial and merchant banks, which
rose by 52.7 per cent, compared with 59.5 per cent at end-September 2020,
while the significant growth in currency outside depository corporations and
transferable deposits reflected seasonal factors. Consequently, a slight decline
in intermediation efficacy was observed with the ratio of currency outside
depository corporations to broad money at 6.5 per cent, a 0.8 percentage point
decline from the 5.8 per cent observed in the preceding quarter.

Reserve money grew in the fourth quarter of 2020 due to ample liquidity in the
banking system. It grew by 50.9 per cent to N13,103.1 billion at end-December
2020, compared with the growth of 56.4 per cent at the end of preceding
quarter. This was accounted for by liabilities to Other Depository Corporations,
which grew by 63.4 per cent to N10,194.6 billion, compared with 78.7 per cent
at end-September 2020. Currency-in-circulation rose by 19.1 per cent to
N2,908.5 billion at the end of the review period, in contrast to 0.6 per cent
decline at end-September 2020.
2.3.1 Financial Developments
2.3.1.1 Financial Soundness Indicators
Global financial markets remained volatile amidst the lingering COVID-19
pandemic. Although financial markets have shown signs of moderate recovery,
financial conditions were still relatively tight, as investors remained cautious
of a possible second round of lockdown. However, the financial sector
remained stable in the review period, as key financial soundness indicators
improved. The industry Capital Adequacy Ratio (CAR) fell marginally to 15.1 per
cent at end-December 2020, relative to the 15.4 per cent level at end-September
2020. The ratio, however, exceeded the regulatory benchmark of 10.0 per cent
by 5.1 percentage points. The health of banks was generally sound, although
their assets quality, measured by the ratio of Non-Performing Loans (NPLs) to
industry total outstanding loans, stood at 6.1 per cent at end-December 2020,
compared with 6.06 per cent at end-December 2019 and above the 5.0 per cent
prudential requirement.
The moderation in GDP growth, due to the second wave of the COVID-19
pandemic and diminished positive prospects of near-term oil price rally are
possible headwinds to the positive outlook on the NPLs of the banking system.
However, the stimuli packages by both the monetary and fiscal authorities,
aimed at cushioning the impact of the COVID-19 pandemic on businesses and
households, and the expected production cuts by OPEC+ in February 2021 to
boost crude oil price, could bolster the economy and moderate the
vulnerabilities and credit risks to the banking system.
Reserve
Money

36 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
2.3.2 Money Market Developments
The banking system maintained adequate liquidity level in the fourth quarter,
sufficient to keep rates generally low. Liquidity was buoyed by the repayment
of matured financial instruments, including CBN bills, Federal Government (FGN)
Bonds and Nigerian Treasury Bills (NTBs); and fiscal disbursements to the three
tiers of government. It was, however, moderated by provisioning and
settlement of foreign exchange purchases, auctioning of CBN bills, FGN Bonds
and NTBs. The industry opening liquidity position in the period ranged from a
low of ₦100.66 billion on October 26, 2020 to a high of ₦1,360.92 billion on
December 23, 2020.
The Bank conducted OMO and discount window activities to moderate liquidity
in the review period. Open Market Operations (OMO) was conducted in the
period under review using CBN bills of tenors ranging from 96 days to 362 days
in the period October 2 - December 24, 2020. Total amount offered, subscribed
and allotted were ₦900.00 billion, ₦3,990.55 billion and ₦890.90 billion,
respectively. Range of bid rates was from 1.35 per cent to 9.25 per cent, while
the stop rates were from 1.61 per cent to 8.50 per cent. Matured CBN bills repaid
amounted ₦3,608.54 billion, translating to a net injection of ₦2,717.64 billion
through this medium.
The Bank’s discount window was open to banks to enable them square up their
positions at the end of each business day. However, the requests for deposit
placements were more predominant than lending, due to the liquidity surfeit in
banks. In addition, Intraday Liquidity Facility (ILF) was accessible as a temporary
credit, granted to deposit money banks to meet their funding needs during the
operating hours of the CBN Inter-bank Funds Transfer System (CIFTS). Total
standing deposit facility (SDF) and standing lending facility (SLF) stood at
₦2,143.80 billion and ₦136.13 billion, respectively, in the fourth quarter of 2020
in comparison with ₦1,884.92 billion and ₦1,700.46 billion in the third quarter.

At the fixed income market, the Federal Government of Nigeria (FGN) short- and
long-term debt instruments, NTBs and FGN Bonds, were issued at the primary
market. NTBs of 91-, 182- and 364-day tenors, amounting to ₦655.60 billion,
₦2,713.14 billion and ₦655.60 billion, were offered, subscribed and allotted
respectively, during the fourth quarter of 2020. At the 91-day auction, total
subscription and allotment were ₦341.42 billion and ₦66.32 billion, respectively,
with bid rates ranging from 0.00 per cent to 2.22 per cent, while the stop rates
ranged from 0.02 per cent to 1.00 per cent. For the 182-day auction, total
subscription and allotment were ₦255.75 billion and ₦49.18 billion, respectively.
The bid rates ranged from 0.01 per cent to 2.98 per cent, while the stop rates
ranged from 0.09 per cent to 1.00 per cent. At the 364-day tenor, total
subscription and allotment were ₦2,115.97 billion and ₦540.10 billion,
respectively, with bid rates from 0.29 per cent to 25.00 per cent, while stop rates
were from 0.15 to 3.20 per cent. Altogether, the stop rates ranged from 0.02 per
cent to 3.20 per cent.
NTBs of 91-day, 182-day and 364-day tenors amounting to ₦1,003.05 billion,
₦1,794.78 billion and ₦1,003.05 billion, respectively, were offered, subscribed
and allotted, respectively, at the auctions held in the fourth quarter of 2020 on
behalf of the Debt Management Office. At the 91-day auction, total subscription
Standing
Facilities
Window
Operations
Liquidity Flows
Open Market
Operations
Primary
Market

37 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
and allotment were ₦221.46 billion and ₦115.25 billion, respectively, with bid
rates ranging from 1.00 per cent to 9.00 per cent, while the stop rates ranged
from 1.09 to 1.79 per cent. For the 182-day auction, total subscription and
allotment were ₦406.54 billion and ₦189.43 billion, respectively. The bid rates
ranged from 0.01 to 4.21 per cent, while the stop rates ranged from 1.39 per
cent to 1.91 per cent. At the 364-day auction, total subscription and allotment
were ₦1,166.79 billion and ₦698.37 billion, with bid rates from 2.99 per cent to
12.80 per cent, while stop rates were from 3.05 per cent to 3.39 per cent.
Altogether, the stop rates ranged from 1.09 per cent to 3.39 per cent.
FGN Bonds of 15- and 25-year tranches were offered for sale during the quarter
under review. The term-to-maturity of the bonds ranged from 14 years 3months
to 24 years 9months. Total amount offered, subscribed and allotted were
₦170.00 billion, ₦554.67 billion, and ₦150.00 billion, respectively. The amount
allotted on non-competitive basis was ₦5.00 billion. The bid rates on all tenors
ranged from 3.15 per cent to 13.00 per cent, while the marginal rates were from
4.97 per cent to 7.00 per cent.
In the previous quarter, tranches of the 5-, 15-, 25- and 30-year bonds were
offered for sale. The term to maturity of the bonds ranged from 5 years 4months
to 29 years 8months. Total amount offered, subscribed and allotted were
₦425.00 billion, ₦1,072.58 billion, and ₦397.46 billion, respectively. Allotment
on non-competitive basis was ₦13.36 billion. The bid rates on all tenors ranged
from 4.00 per cent to 13.25 per cent, while the marginal rates were from 6.00
per cent to 9.95 per cent.
Key interest rates, prime and maximum lending rates, declined at endDecember 2020, following ample liquidity levels in banks. Daily interbank call
and OBB rate ranged from 1.00 per cent to 1.75 per cent and 0.37 per cent to
8.42 per cent, respectively. There was no transaction recorded for interbank call
in October 2020, while the average for November and December were 1.75 per
cent and 1.25 per cent, respectively. Average OBB rates for October, November
and December were 1.88 per cent, 1.12 per cent and 1.09 per cent, respectively,
while 30-day NIBOR traded at averages of 1.83 per cent, 0.64 per cent and 0.57
per cent in October, November, and December, respectively.
From their levels in the preceding quarter, average prime and maximum lending
rates fell by 0.99 percentage point and 0.88 percentage point to 11.78 per cent
and 28.48 per cent, respectively, in the fourth quarter of 2020. Average termdeposit rate also fell by 0.72 percentage point to 3.70 per cent. The spread
between the average term-deposit and average maximum lending rates
narrowed by 0.16 percentage point to 24.77 percentage point in the quarter
under review. With inflation at 15.75 per cent at end-December 2020, this
signified negative real rates for deposits and prime lending rates, but positive
real rate for maximum lending rate (Figure 19).


Interest Rate
Developments

38 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Figure 19: Interest Rates

Source: Central Bank of Nigeria (CBN)
Note: Avt – Average term deposit; Mxlr – Maximum lending rate; Plr – Prime lending
rate; Sprd – Spread.


Capital market activities on the Nigerian Stock Exchange (NSE) were bullish in
the fourth quarter of 2020, amidst the good corporate performance results
released for the third quarter, which showed resilience of the market in the
face of the lingering economic downturn and the challenges associated with
the COVID-19 pandemic. Also, the market performance was driven by better
than expected earnings and investors’ insight on taking position ahead of
2021 corporate actions. The All Share Index (ASI) and aggregate market
capitalisation rose in the review quarter. Similarly, the volume and value of
traded securities on the Exchange rose by 145.7 per cent and 134.9 per cent, to
38.92 billion shares and N363.97 billion, respectively, in 351,998 deals,
compared with the 15.84 billion shares worth N154.95 billion, in 236,526 deals,
at the end of the third quarter (Figure 20). There were ten (10)
new/supplementary listings in the review period (Table 15).

Figure 20: Volume and Value of Traded Securities
Source: Nigeria Stock Exchange (NSE)

Q1 19
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
Q3 20
Q4 20
Avtd
Mxlr
Plr
Sprd (mxlr-Avtd) (rhs)

Q2-18
Q3-18
Q4-18
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Value (N billion)
Volume (Billion)
Volume of traded securities (LHS)
Value of securities (RHS)
Capital Market
Developments


39 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Table 15: New/Supplementary Listings on the Nigerian Stock Exchange at
end-December 2020
Company
Additional
Shares (Units)
Reasons
Listing
3.501% FGS SEP 2022
91,619 Ordinary
Shares
New Issue
New Listing
4.501% FGS SEP 2023
202,665 Ordinary
Shares
New Issue
New Listing
FGN Savings Bond
October 2020
Issues
Rights Issue
New Listing
NEWGOLD ETF
687,142 Units
Rights Issue
Supplementary
Listing
12.50% FGN MAR 2035
Bonds
384,580,778 Units
Rights Issue
Supplementary
Listing
9.8% FGN JUL 2045 Bonds
125,401,697 Units
Rights Issue
Supplementary
Listing
1.759% FGS NOV 2022
Bonds
27,920 Units
Rights Issue
New Listing
2.759% FGS NOV 2023
Bonds
295,632 Units
Rights Issue
New Listing
AIICO Insurance Plc
4.36 Billion
Ordinary Shares
Rights Issue
Supplementary
Listing
Prestige Insurance Plc
6.89 Billion
Ordinary Shares
Rights Issue
Supplementary
Listing
Source: Nigeria Stock Exchange (NSE)

Increased patronage of domestic investors in the equities market caused the
market capitalisation to appreciate in the fourth quarter 2020. Thus,
aggregate market capitalisation rose by 26.4 per cent to N38.59 trillion at endDecember 2020, compared with the N30.53 trillion recorded at end-September
2020. The equities market capitalisation also rose by 50.1 per cent to N21.06
trillion and constituted 54.6 per cent of the aggregate market capitalisation,
compared with the N14.04 trillion (46.0 per cent of aggregate market
capitalisation) at end-September 2020.

The return to normalcy in economic activities and increased domestic
investors’ confidence in the equities market were the main drivers of the ASI
growth in the fourth quarter of 2020. Consequently, the ASI, which opened at
26,985.77 at the beginning of the review quarter, rose by 49.2 per cent to
40,270.72 at end-December 2020.

All the sectoral indices trended upward in the review period. The NSE-Industrial,
NSE-Lotus, NSE-Premium, NSE-Insurance, NSE-Pension, NSE-Banking, NSEConsumer Goods, NSE-Oil and Gas and NSE-ASeM indices rose by 71.9 per cent,
47.2 per cent, 46.4 per cent, 36.5 per cent, 32.1 per cent, 26.6 per cent, 26.3
per cent, 15.9 per cent and 0.2 per cent to 2,052.33, 2,846.19, 3,470.77, 189.5,
1,388.64, 393.02, 573.35, 226.2 and 729.87, respectively, at end-December
2020 (Figure 21).

Market
Capitalisation
NSE All-Share
Index

40 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020

Figure 21: Market Capitalisation and All-Share Index
Source: Nigeria Stock Exchange (NSE)


Q2-18
Q3-18
Q4-18
Q1-19
Q2-19
Q3-19
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Index
N billion
Market Capitalization (LHS)
All-Share Index (RHS)

41 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
2.4. EXTERNAL SECTOR DEVELOPMENTS
2.4.1. External Balance
The performance of the external sector improved in the review quarter, despite
the challenges of sluggish global recovery, weakened global demand, soaring
second wave of the COVID-19 pandemic and tense political environment in the
U.S.A. Thus, an estimated overall balance of payments surplus of US$0.79 billion
was recorded in the fourth quarter of 2020, from the US$0.14 billion recorded in
the third quarter of 2020. The deficit in the current account widened to US$5.27
billion in the review period, compared with US$3.34 billion in the previous
quarter. A net disposal of US$2.50 billion was recorded in the financial account,
relative to US$2.66 billion in the preceding quarter. The external reserves at endDecember 2020 was US$36.46 billion, compared with US$35.67 billion at endSeptember 2020, indicating an accretion of US$0.79 billion. This could finance
8.4 months of import of goods or 6.3 months of import of goods and services.
The improvement in external reserves stock was attributed, mainly, to foreign
exchange reforms undertaken by the Bank to block leakages and ensure
enhanced inflow of remittances from Nigerians in Diaspora. Public external debt
stock stood at US$31.99 billion or 7.7 per cent of GDP at end-September 2020,
which was within the sustainable threshold of 40.0 per cent of GDP. In the
Foreign exchange market, the average naira exchange rate at the I&E and the
BDC windows depreciated to N389.04/US$ and N468.17/US$, in the fourth
quarter of 2020, from N386.60/US$ and N461.94/US$ in the third quarter of
2020, respectively.
2.4.2. Current and Capital Account
In the review period, the partial return to normalcy and gradual pick up in
domestic economic activities exerted pressure on the current account, as
demand for import of services inched up, thus, a relatively higher deficit in the
current and capital accounts was recorded. The estimated deficit in the current
account widened by 57.9 per cent to US$5.27 billion (5.1% of GDP), compared
with US$3.34 billion (3.2% of GDP) in the previous quarter, owing largely to
higher services import bills. The goods account witnessed a higher deficit of
US$5.26 billion, resulting from increased import of both petroleum product and
non-oil import. The deficit in the services account also increased significantly to
US$3.49 billion (3.3% of GDP), occasioned by higher payments for transportation
and travels as economic activities gradually improved during the review period
(Figure 22).

Current and
Capital Account
Developments
Nigeria’s
External Balance

42 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Figure 22: Current Account Balance (Percentage of GDP)

Source: Central Bank of Nigeria

Export performance in the fourth quarter of 2020 was dampened by the
resurgence of the COVID-19 pandemic towards the end of 2020, in the face of
the sustained OPEC cap on crude oil production and export in member
countries. Aggregate export earnings declined by 2.9 per cent decline to US$7.78
billion in the fourth quarter of 2020, from US$8.01 billion in the third quarter of
2020. Similarly, a decrease of 45.3 per cent was recorded when compared with
the US$13.33 billion earning in the corresponding quarter of 2019. Further
disaggregation showed that crude oil and gas exports decreased by 2.2 per cent
to US$7.20 billion, from US$7.36 billion in the preceding quarter. This was
attributed, mainly, to the marginal decline in gas exports during the review
period, though, crude oil exports receipts increased marginally, as a result of the
improvement in the average price of Nigeria’s reference crude, the Bonny Light,
to US$44.19 per barrel in the fourth quarter of 2020, compared with US$43.29
per barrel in the previous quarter. Non-oil export receipts also declined by 11.4
per cent to US$0.58 billion, relative to the US$0.65 billion in the third quarter of
2020, owing, largely, to downswing in re-export and other non-oil export during
the review period. This was also below the US$2.14 billion in the corresponding
quarter of 2019. Crude oil and gas exports accounted for 92.6 per cent, while
non-oil export accounted for the balance of 7.4 per cent of total export.

Aggregate imports increased marginally by 0.9 per cent during the review
period, as non-oil import increased by 1.4 per cent. The value of merchandise
import increased by 0.9 per cent to US$13.04 billion in the fourth quarter of
2020, relative to US$12.92 billion in the third quarter. This was attributed,
largely, to the 1.4 per cent growth in non-oil imports that brought its value to
US$11.52 billion in the review period, from US$11.36 billion in the preceding
quarter. Import of petroleum products, on the other hand, declined by 2.8 per
cent to US$1.52 billion, below US$1.56 billion in the preceding quarter. When
compared with US$2.23 billion in the corresponding quarter of 2019, it indicated
a decline of 18.4 per cent. Non-oil imports remained dominant, accounting for
88.3 per cent of the total import, while petroleum products accounted for the

Q2 2020
Q3 2020
Q4 2020
-3.8
-3.2
-3.7
Merchandise
Import
Export
Performance

43 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
balance of 11.7 per cent.
A breakdown of non-oil imports by sector revealed that importation of raw
materials and machinery for industrial use accounted for the highest share of
45.5 per cent, followed by manufactured products at 21.0 per cent and food
products and petroleum products, at 16.1 per cent and 10.5 per cent,
respectively. Others included transport, agricultural and mineral sectors with 4.0
per cent, 1.7 per cent and 1.3 per cent, respectively.
The resumption of activities in Nigeria’s airspace during the quarter induced
increased inward services particularly transportation, travels, and other
business services. Consequently, the deficit in services sub-account widened
significantly by 92.0 per cent to US$3.49 billion in the fourth quarter of 2020,
from US$1.82 billion in the preceding quarter. Payments for these services
constituted 88.7 per cent of the total in the review period.
Repatriation of dividends and interest by non-resident investors on account of
economic uncertainty, insecurity and ‘EndSARS’ protest, dipped the primary
income sub-account into a higher deficit. The deficit in the primary income subaccount widened by 36.7 per cent or US$0.35 to US$1.32 billion in the fourth
quarter of 2020, from US$0.97 billion in the third quarter. The development
reflected increase in payment of dividends by 39.1 per cent to US$1.70 billion.

Inflow of personal transfers, including workers’ remittances, increased the
surplus in the secondary income sub-account in the review period. The
secondary income account recorded a higher surplus of US$4.80 billion,
compared with US$4.35 billion in the third quarter. Inflow of personal transfers
in the form of workers’ remittances increased by 10.6 per cent to US$4.31 billion,
relative to US$3.89 billion in the third quarter of 2020. This reflected improved
economic conditions in the host economies of migrant workers. General
government receipts increased marginally by 0.7 per cent to US$0.63 billion in
the review period.
2.4.3. Financial Account
The financial account recorded a net disposal of financial assets during the
review period, driven, largely, by a drawdown of foreign currency by the
private sector. A lower disposal of US$2.50 billion (2.4 per cent of GDP) was
recorded, compared with US$2.66 billion (2.0 per cent of GDP) in the third
quarter of 2020.
Foreign capital inflow improved during the review period, driven, largely by
inflow for the purchase of money market instruments, signifying renewed
confidence in Nigeria’s money market. As a result of this development, the net
liability incurred during the review period increased to US$1.78 billion, relative
to US$0.33 billion in the third quarter of 2020. This was a result of the boost in
portfolio inflow, particularly for the purchase of short-term money market
instruments. Foreign direct investment inflow declined to US$0.65 billion,
Financial Account
Developments
Primary
Income
Services
Secondary
Income
Net Incurrence of
Liability

44 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
relative to US$0.78 billion in the previous quarter, as both equity and reinvested
earnings declined during the review period, occasioned by the lingering
insecurity challenges and uncertainty surrounding the second wave of the
COVID-19 pandemic. Other investment liabilities recorded an outflow of US$0.61
billion, due, mainly, to the repayment of loans by banks and the private sector
during the review period.
The estimated aggregate financial assets showed lower reduction of US$0.72
billion during the review period, compared with US$2.23 billion in the
preceding quarter. A further disaggregation showed that external reserves asset
increased by US$0.79 billion in the review period, higher than the accretion of
US$0.14 billion in the third quarter of 2020. FDI in foreign entities increased by
13.6 per cent to US$0.35 billion, relative to third quarter of 2020. However,
portfolio investment asset decreased to US$0.04 billion in the review period,
compared with US$0.07 billion in the preceding quarter. Other investments
registered further disposal of US$1.91 billion in the review quarter, lower than
the US$2.86 billion in the third quarter of 2020, due, largely, to the drawdown
of foreign currency holdings of the private sector in the review period.
2.4.4. External Debt
Nigeria’s public sector external debt stock remained at US$31.99 billion (7.7%
of GDP) by end-September 2020. A breakdown showed that loan from
multilateral sources, mainly the World Bank, IMF and African Development Bank
Groups, was US$16.74 billion, constituting 52.3 per cent of the total. Loan from
commercial sources, in the form of Euro and Diaspora Bonds, was US$11.17
billion (34.9 per cent), while that from bilateral sources, mainly the China EXIM
Bank, accounted for the balance of US$4.08 billion (12.8 per cent).

2.4.5. International Investment Position (IIP)
At end-December 2020, Nigeria’s International Investment Position (IIP) posted
a higher net financial liability of US$76.22 billion, compared with US$74.83
billion in the preceding period and US$69.21 billion in the corresponding period
of 2019. This was due, largely, to the reduction in the stock of the country’s
foreign currency deposits of the private sector. The country’s stock of financial
assets increased by 0.4 per cent to US$100.25 billion at end-December 2020,
from US$99.90 billion at end-September 2020. This was due, mainly, to the
decline in the stock of other investments during the review period by 3.7 per
cent, though an increase of 1.4 per cent was posted in the stock of external
reserves asset. This indicated a reduction in claims on the rest of the world, as
the effect of the COVID-19 pandemic continued to weigh on the country’s
financial position. The stock of financial liabilities, representing claims of foreign
investors on the domestic economy, increased by 1.0 per cent to US$176.51
billion at end-December 2020, compared with US$174.73 billion at endSeptember 2020. The development reflected an increase in the stock of money
market instrument held by foreign investors, thereby leading to an increase in
the stock of portfolio investment liabilities to US$30.40 billion, from US$28.66
Net Acquisition of
Asset
Public Sector
External Debt
International
Investment
Position

45 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
billion at end-September 2020. This reflected renewed investors’ confidence in
the domestic economy, following improved performance of the domestic stock
market. The stock of FDI liabilities also increased by 0.7 per cent, to US$101.21
billion, compared with US$100.56 billion at end-September 2020. The stock of
other investment liabilities, however, declined by 1.3 per cent to US$44.86
billion, relative to US$45.47 billion at end-September 2020, as a result of the
repayment of loans by banks and the private sector during the review period.

2.4.6. International Reserves
As a result of the gradual return of economic activities to normalcy after the
COVID-19 pandemic lockdown, as well as, the Bank’s policy to encourage
diaspora remittance flows to the economy, foreign exchange inflows improved,
leading to a marginal increase in external reserves during the review quarter.
Consequently, Nigeria’s international reserve increased to US$36.46 billion at
end-December 2020, from US$35.67 billion at end-September 2020. At this
level, the external reserves position could cover 6.3 months of import for goods
and services and 8.4 months of import for goods only (Figure 23).
Figure 23: External Reserves and Months of Import Cover

Sources: Central Bank of Nigeria & Reuters

A comparative analysis showed that Nigeria’s reserves per capita was US$176.9
in December 2020, compared with US$927.6, US$391.5 and US$395.9 for South
Africa, Egypt and Angola, respectively (Table 16).
Table 16: International Reserves of Selected Countries in Africa (End-December 2020)

Sources: Central Bank of Nigeria (CBN) and Reuters


34.5

35.5

36.5

Apr-20 May-20 Jun-20
Jul-20
Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Months
US$ Billion
External Reserves - LHS
Months of Import (Goods only)
Months of Import (Goods and Services)


Reserve
(US$bn)
Reserve/
Capita
(US$)
Reserve
(US$bn)
Reserve/
Capita
(US$)
Nigeria

South
Africa

Egypt

Angola

International
Reserves
International
Reserves

46 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
A breakdown of the external reserves by ownership showed that, the CBN had
the largest share of US$30.95 billion (84.9 per cent), followed by the Federal
Government with US$5.44 billion (14.9 per cent). The Federation share
accounted for the balance of US$0.07 billion (0.2 per cent). In terms of currency
composition, the US dollar, at US$29.70 billion, was 81.5 per cent; Chinese yuan,
US$4.23 billion (11.6 per cent); special drawing rights, US$2.12 billion (5.8 per
cent); GB Pounds, US$0.24 billion (0.6 per cent); Euro US$0.16 billion (0.4 per
cent); Japanese Yen, US$0.01 billion (0.03 per cent) and other currencies
accounted for the balance of 0.07 per cent.
2.4.7 Foreign Exchange Flows through the Economy
Though there was an increase in foreign exchange flows through the economy
in the review quarter compared with the preceding quarter due to the
reopening of most economies including Nigeria, the second wave of COVID-19,
hampered a return to the levels experienced in the corresponding quarter of
2019. Consequently, aggregate foreign exchange inflow in the fourth quarter of
2020 was US$23.60 billion, compared with US$21.46 billion and US$36.32 billion
in the third quarter of 2020 and corresponding quarter of 2019, respectively. This
indicated an increase of 10.0 per cent over the previous quarter, but a decline of
35.0 per cent below the level in the corresponding quarter.
Similarly, foreign exchange outflow through the economy rose by 13.1 per cent
above the third quarter of 2020 to US$8.38 billion in the review period but
declined by 51.5 per cent below the level in the corresponding quarter of 2019.
Accordingly, foreign exchange flow through the economy resulted in a net inflow
of US$15.22 billion in Q42020, compared with the net inflow of US$14.05 billion
and US$19.05 billion in the preceding quarter and corresponding quarter of
2019, respectively.
2.4.8 Foreign Exchange Flows through the Central Bank of Nigeria
Foreign exchange inflow through the CBN increased in the fourth quarter of
2020 due, largely, to an increase in global demand, on account of gradual
recovery of economic activities from the effect of the COVID-19 pandemic. In
the review period, foreign exchange inflow through the CBN was US$8.17 billion,
an increase of 17.2 per cent above the level in the third quarter of 2020, but a
decline of 39.4 per cent below the corresponding quarter of 2019. The
development, compared with the level in the preceding quarter of 2020, was
attributed to a rise of 48.3 per cent in non-oil receipts.
A disaggregation of inflow through the Bank indicated that oil and non-oil
receipts were US$1.32 billion and US$6.85 billion, respectively. Further analysis
of non-oil receipts showed that foreign exchange purchases, Treasury Single
Account (TSA) & third-party receipts and DMBs cash receipts increased by 121.8
per cent, 11.1 per cent, and 165.5 per cent to US$1.25 billion, USS$1.06 billion,
and US$0.28 billion, respectively, over the levels in the preceding quarter.
Interbank Swaps, and other official receipts, however, declined by 21.9 per cent
and 32.7 per cent, to US$1.25 billion, and US$0.67 billion, respectively, below
the levels in the preceding quarter. Similarly, unutilised International Money
Transfer Operator (IMTO) funds, unutilised funds from FX transactions, and
interest on reserves & investments fell to US$0.09 billion, US$0.06 billion and
US$0.04 billion, respectively, compared with the levels in the preceding quarter.
Proceeds from securities lending cash collateral and Returned payments were
US$2.00 billion and US$0.16 billion, respectively, during the fourth quarter of
2020.
Currency
Composition
Foreign Exchange
Flows through
the CBN
Foreign Exchange
Flows through the
Economy

47 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
The aggregate foreign exchange outflow through the Bank increased by 13.9 per
cent to US$7.92 billion in the fourth quarter of 2020, from US$6.95 billion in the
third quarter. A breakdown of the outflow through the Bank during the review
period showed that: interbank utilisation was US$5.62 billion, third party MDA
transfers (US$0.86 billion), public sector/direct payments (US$0.77 billion),
external debt service (US$0.29 billion), funds returned to remitter (US$0.15
billion), drawings on L/Cs (US$0.15 billion), forex special payment (US$0.04
billion) Bank & SDR charges/fees (US$0.04 million) and national priority projects
(US$0.004 billion).
The interbank utilisation, which constituted 71.0 per cent of outflow through the
Bank, rose by 28.7 per cent to US$5.62 billion in the fourth quarter of 2020. The
increase was due to sustained interventions by the Bank, aimed at reducing
demand pressure and stabilising exchange rates in the foreign exchange market,
particularly at the I&E and BDC markets. Further disaggregation showed that
SME intervention and interbank sales rose by 3.1 per cent and 12.2 per cent to
US$0.31 billion and US$0.16 billion, respectively, from the levels in the preceding
quarter. Foreign exchange cash sales to I&E window and BDCs were US$1.62
billion and US$1.36 billion, respectively, in the review quarter. However,
matured swap transactions and Secondary Market Intervention Sales (SMIS)
interventions fell by 62.9 per cent and 12.8 per cent to US$0.46 billion and
US$1.71 billion, relative to the respective levels in the preceding quarter.
Overall, foreign exchange flow through the Bank during the review period
resulted in a net inflow of US$0.25 billion, higher than the net inflow of US$0.02
billion in the preceding quarter of 2020. This, however, contrasted the net
outflow of US$2.60 billion in the corresponding quarter of 2019 (Figure 24).
Figure 24: Foreign Exchange Transactions through the Bank (US$ Billion) in
the Fourth Quarter of 2020
Source: Reserves Management Department, CBN.
Q4 2019
Q3 2020
Q4 2020
Inflow
13,494.34
6,971.01
8,171.83
Outflow
16,097.19
6,954.18
7,918.35
Netflow


48 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
2.4.9 Foreign Exchange Flow through Autonomous Sources
The rise in invisibles purchases in the fourth quarter of 2020 impacted positively
on the foreign exchange flows through autonomous sources. The development
was due to the rise in repatriation of export and investment proceeds, despite
the resurgence of the COVID-19 pandemic and partial lockdown of some
economies, especially, the U.S.A and Europe.
Aggregate inflow through autonomous sources amounted to US$15.43 billion,
which accounted for 65.4 per cent of the total inflow through the economy. This
represented an increase of 6.5 per cent above the level in the preceding quarter
of 2020 but declined by 32.4 per cent, compared with that of the corresponding
quarter of 2019. The increase in inflow was due to 8.7 per cent rise in proceeds
from invisible purchases to US$14.79 billion, relative to the preceding quarter.
Invisible purchases comprised total over-the-counter (OTC) purchases and
ordinary domiciliary account valued at US$10.61 billion and US$4.19 billion,
respectively. Total OTC purchases comprised capital importation (US$1.05
billion) and home remittances (US$0.11 billion), which decreased below the
levels in the preceding quarter by 28.5 per cent and 55.7 per cent, respectively.
The decline in capital importation indicated the loss of investment appetite by
non-resident investors on account of uncertainty around the resurgence of
COVID-19 pandemic. Due to the decline in home remittances, the Bank issued a
policy directive to encourage the flow of diaspora remittances on November 30,
2020. Consequently, remittances inflow slightly improved in December 2020.
Other OTC purchases (US$9.45 billion) increased by 16.5 per cent, compared
with the level in the preceding quarter. The inflow through ordinary domiciliary
accounts, increased by 10.8 per cent to US$4.19 billion, due to rise in repatriation
of export and investment proceeds. Non-oil export inflow to banks amounted to
US$0.61 billion, indicating a decline of 29.8 per cent compared with US$0.87
billion in the preceding quarter. However, external account purchases increased
from US$0.01 billion in the third quarter of 2020 to US$0.02 billion in the fourth
quarter of 2020.
Outflow through autonomous sources at US$0.46 billion rose by 1.5 per cent
over the level in the preceding quarter of 2020 but declined by 60.8 per cent
below the level in the corresponding quarter of 2019. The positive development
was due to an increase of 13.5 per cent in invisible imports to US$0.40 billion
from US$0.35 billion in the preceding quarter. However, the visible imports fell
by 40.9 per cent to US$0.06 billion from US$0.10 billion in the preceding quarter.
Overall, a net inflow of US$14.97 billion was recorded in the review quarter,
compared with US$14.03 billion and US$21.65 billion in the preceding quarter
and the corresponding quarter of 2019, respectively.
2.4.10 Sectoral Utilisation of Foreign Exchange
The Federal Government, through the Bank, continued its COVID-19 induced
interventions in the real sector to boost non-oil activities and earnings, and
thus cushion the negative impact of the pandemic. This was reflected in the
increase in sectoral utilization of foreign exchange during the review quarter.
In addition, the re-opening of the air and land borders and the return to
normalcy of economic activities boosted foreign exchange utilization during
the review period. Provisional data on the sectoral foreign exchange utilisation
in the fourth quarter of 2020 showed an increase of 74.6 per cent above the level
in the preceding quarter to US$6.68 billion. Of this, visible and invisible imports
rose by 68.8 and 82.8 per cent to US$3.75 billion and US$2.93 billion,
Sectoral
Utilisation of
Foreign Exchange
Foreign
Exchange Flow
through
Autonomous
Sources
Visible
Transactions

49 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
constituting 56.1 and 43.9 per cent of the total foreign exchange utilisation,
respectively.
A disaggregation of foreign exchange utilisation for visible transactions showed
that the amount utilised for industrial sector, manufactured products, food
products, oil, transport, agricultural and mineral sub-sectors were US$1.72
billion, US$0.80 billion, US$0.67 billion, US$0.31 billion, US$0.13 billion, US$0.07
billion and US$0.04 billion, respectively (Figure 25).
Further analysis of the foreign exchange utilisation under the invisibles
component showed that financial services was US$2.52 billion (37.8 per cent of
the total); business services, US$0.17 billion (2.5 per cent); educational services,
US$0.09 billion (1.4 per cent); other services not included elsewhere, US$0.05
billion (0.8 per cent); and transport services, US$0.04 billion (0.7 per cent).
Furthermore, communication services was US$45.80 million (0.7 per cent), while
health related and social services gulped US$0.32 million (0.01 per cent) (Figure
26).
Figure 25: Major Visible Import as Per cent of Total Utilisation of Foreign
Exchange in the Fourth Quarter of 2020.

Source: Central Bank Nigeria (CBN)

Figure 26: Major Invisible Imports as Per cent of Total Utilisation of
Foreign Exchange in the Fourth Quarter of 2020.

Source: Central Bank of Nigeria (CBN)

Q4 19
Q3 20
Q4 20
INDUSTRIAL SECTOR
FOOD PRODUCTS
MANUFACTURED PRODUCTS

Q4 19
Q3 20
Q4 20
BUSINESS SERVICES
COMMUNICATION SERVICES
EDUCATIONAL SERVICES
FINANCIAL SERVICES
TRANSPORT SERVICES
Invisible
Transactions

50 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
2.4.11 Foreign Exchange Market Developments
Foreign exchange inflow into the economy improved, following the Bank’s
policy directive of November 30, 2020, instructing banks to transfer all diaspora
remittances to the domiciliary accounts of the beneficiaries or pay the
customers in foreign currency, as well as the closure of all Naira ledger accounts
opened specifically for the purpose of receiving IMTO (foreign transfers from
diaspora Nigerians) with immediate effect.
2.4.12 Transactions in the Foreign Exchange Market
The Bank maintained its periodic interventions in the foreign exchange market
to boost liquidity, enhance access to foreign exchange, curb unbridled demand
and ensure stable exchange rate. During the fourth quarter of 2020, total
foreign exchange sales to authorised dealers by the Bank stood at US$5.62
billion, an increase of 28.7 per cent above the level in the preceding quarter. This
was attributed, largely, to the increased interventions in the BDC and I&E
windows during the quarter. The total foreign exchange sales, however, saw a
decrease of 46.1 per cent below the level in the corresponding quarter of 2019.
Further disaggregation showed that BDC sales and I&E sales rose to US$1.36
billion and US$1.62 billion from US$0.34 billion and US$0.39 billion, respectively,
in the preceding quarter. Similarly, Interbank sales and SME intervention
increased by 12.2 per cent and 3.1 per cent to US$0.16 billion and US$0.31
billion, respectively, from the levels in the preceding quarter. The Secondary
market Intervention Sales (SMIS) and matured swap transactions, however, fell
by 12.8 per cent and 62.9 per cent to US$1.71 billion and US$0.46 billion, relative
to the levels in the preceding quarter (Figure 27).

Figure 27: Foreign Exchange Sales to Authorised Dealers in the Fourth Quarter
of 2020 (US$ billion)

Source: Central Bank of Nigeria (CBN)

2.4.13 Exchange Rate Movement
The average exchange rate of the naira depreciated at the interbank, BDC and
I&E windows, due to increased demand pressure in the foreign exchange
market during the quarter. Accordingly, the average exchange rate of the naira,
against the US dollar, at the interbank segment was N381.00/US$, a depreciation
of 0.3 per cent and 19.4 per cent, relative to N379.73/US$ and N306.96/US$ in
the preceding quarter and corresponding quarter of 2019, respectively. At the

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
US$ billion
Average
Exchange
Rate
Spot
Transactions
Foreign Exchange
Market
Developments

51 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
BDC segment, the average exchange rate depreciated by 0.7 per cent and 23.2
per cent to ₦467.80/US$, against the levels in the preceding quarter and
corresponding quarter of 2019, respectively. It is expected that the CBN policy
directives on International Money Transfer Operations during the quarter would
improve liquidity in the foreign exchange market and stabilise the exchange rate.
Similarly, at the I&E window, the average exchange rate depreciated by 0.7 per
cent and 6.8 per cent to ₦389.24/US, compared with the respective levels in
third quarter of 2020 and fourth quarter of 2019. The development was
attributed to increased demand pressure in the foreign exchange market, as a
result of dwindling resources from crude oil receipts and capital inflow.
Consequently, the premium between the average interbank/BDC rates, widened
from 22.3 per cent in the preceding quarter to 22.8 per cent in the fourth quarter
of 2020.
The average turnover at the Investors and Exporters’ (I&E) segment increased by
104.1 per cent to $0.12 billion during the review quarter, from $0.06 billion in
the third quarter of 2020. This, however, indicated a decrease of 54.2 per cent
below the level in the corresponding quarter of 2019 (Figure 28).
Figure 28: Turnover in the I&E Foreign Exchange Market (December 2019 –
December 2020)

Source: Central Bank of Nigeria (CBN)
The end-period exchange rate of the naira to the US dollar at the interbank
segment in the review quarter remained the same as in the preceding quarter at
₦381.00/US$. However, at the BDC segment, the end-period exchange rate
depreciated by 0.4 per cent to ₦465.00/US$ compared with ₦463.00/US$ at the
end of third quarter of 2020. Consequently, the end-period premium between
the interbank/BDC rates, widened to 22.0 per cent in the review quarter from
21.5 per cent in the preceding quarter. Similarly, the rate at the I&E window
depreciated by 5.9 per cent to ₦410.25/US$, compared with ₦386.00/US$ at the
end of the preceding quarter. The development was a result of increased
demand pressure as economic activities began to rebound.
-100
-50

-

Per cent
US $ (M)
Average Turnover
Rate of Turnover
End-Period
Exchange Rate

52 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
Analysis of the average exchange rate of the naira against selected major
international currencies, in the review period, indicated that the naira
depreciated by 2.3 per cent, 2.2 per cent and 1.9 per cent against the British
pound sterling, the euro and the Japanese yen, respectively. At the regional level,
the naira also depreciated against the CFA franc and WAUA by 8.8 per cent and
8.9 per cent, respectively, relative to the levels in the third quarter of 2020.

Analysis of emerging markets’ currencies in the fourth quarter of 2020 showed
a sustained momentum of recovery, which could be attributed to the release of
COVID-19 vaccines and the result of the US election, which boosted emerging
markets’ currencies. Also, the emerging markets gained from the weakening
dollar, as a result of the disruptive impact of hurricane on Shale oil production in
the USA, during the quarter.
However, the emerging markets could be affected by the second wave of the
COVID-19 pandemic, which led to border closure and partial economic lockdown
in Europe. Consequently, the South African rand strengthened further by 1.8
percentage point, from a 6.3 per cent appreciation in the preceding quarter to
8.1 per cent against the US Dollar in the quarter under review. Similarly, the
Chinese RMB appreciated by 3.8 per cent in the quarter under review. However,
the Russian rouble depreciated by 1.4 per cent in the review quarter (Figure 29,
Table 17).
Figure 29: EMEs Currencies’ Values to the US dollar

Sources: Central Bank Nigeria & Reuters

Table 17: EMEs Currencies’ Rates to the US dollar
Period
Chinese
RMB
Nigerian
Naira
South
African
Rand
Russian Rouble
Q4 2019

Q3 2020

Q4 2020

Sources: Central Bank of Nigeria & Reuters

Chinese RMB
Nigerian Naira
South African
Rand
Russian Rouble
Depreciation/Appreciation
Q4 2019
Q3 2020
Q4 2020
Naira against
Selected
International
Currencies
Emerging Market
Currencies

53 | P a g e Central Bank of Nigeria Economic Report Fourth Quarter 2020
ECONOMIC REPORT, FOURTH QUARTER 2020
2.4.14 External Sector Outlook
The outlook for the external sector position is expected to remain stable for
the foreseeable period, although highly susceptible to further external shocks.
Despite the commencement of COVID-19 vaccine trial and administration during
the fourth quarter of 2020, the emergence of a second wave of the COVID-19
infection and the discovery of new strains could likely threaten the demand for
crude oil and full return of economic activities globally.
The headwinds associated with the second wave of the COVID-19 pandemic led
to net capital outflow as a result of investors’ flight to safety investments. This
could lead to increased pressure on the foreign exchange market with the
consequence of further depreciation of the domestic currency. The depreciation
of the currency could lead to increased foreign currency liability of both the
private and public sector debt. These developments, along with foreign
exchange challenges, may constitute threats to the sustainability of Nigeria’s
external debt, especially if oil prices remain lower-than-expected.
According to a World Bank report, global trade growth could be more negative
in 2021 than predicted. It is expected that weak economic and financial
fundamentals, prior to the COVID-19 crisis, would lead to declines in foreign
exchange reserves, as central banks try to stabilise their currencies. Thus, the
conditions in the oil market, exchange rate pressure, the Bank’s intervention in
the foreign exchange market, as well as state of international financial market
and productivity of the economy are factors that will continue to determine
external reserve accumulation.


External Reserves
Accumulation
COVID- 19
Crisis
Foreign Exchange
Pressure and
Exposure
Risks to the
External Sector