This document is for CBN internal consumption


CENTRAL BANK OF NIGERIA
ECONOMIC REPORT


Second Quarter

i


ABOUT THE REPORT

The Central Bank of Nigeria (CBN) Economic Report is a compilation and
analysis of economic developments in Nigeria within the review period.
The Report, which is published monthly and quarterly, analyses current
developments in the real, fiscal, financial, and external sectors of the
Nigerian economy and the global economic developments. It also reflects
the policy initiatives of the Bank within the period.
The Report is targeted at a wide range of readers, including economists,
policymakers, financial analysts in the government and private sectors,
and the public. Free copies of the Report, both current and past issues, can
be obtained from the CBN website: www.cbn.gov.ng. All inquiries
concerning the report should be directed to the Director, Research
Department, Central Bank of Nigeria, P.M.B. 187, Garki, Abuja, Nigeria.


Contents


iii


3.1
3.2
Tables
Table 3: Indices of Average World Prices of Nigeria's Major Agricultural Export
Commodities for the Second Quarter of 2022 (in US$; Dec. 2010=100) 15
Table 6: Federally-Collected Revenue and Distribution to the Three-Tiers of

Figures
Figure 7: Advanced Economies Credit Spreads, 2021Q2, 2022Q1 and 2022Q2 .. 10
Figure 14: Top 15 Subsectors with largest Contribution to GDP Growth and their
Figure 15: Subsectors with Least Contribution to GDP Growth and their Growth
Figure 18: Federal Government Expenditure (N Billion), Second Quarter 2022 ... 28


iv


Figure 36: Foreign Exchange Transactions through the Economy (US$ Million) in

1 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

EXECUTIVE SUMMARY
G lobal economic activity in the second quarter of 2022 was affected by a
combination of factors, including accelerated energy and commodity prices,
further supply chain disruptions, declining business and consumer sentiments
and the re-imposition of COVID-19 containment measures in China. In some
Advanced Economies (AEs), economic activities, though moderated, were
above threshold levels, while there was a contraction in most Emerging
Markets and Developing Economies (EMDEs) due to weak consumer demand
and rising inflation, occasioned by the lingering supply chain disruptions.
Accordingly, the average J. P. Morgan Global Composite Purchasing Manager’s
Index (PMI) reflected a slower pace of economic expansion as it marginally fell
by 0.50 index points to 52.00 index points in the second quarter of 2022.
However, the employment level rose to 53.23 index points from 52.00 index
points in the preceding quarter, due to increased backlogs of work, especially
among the largest industrial economies.
Despite the effects of the growth-sapping legacy COVID-19 pandemic that
lingered since 2020, the domestic economy recorded growth for the seventh
consecutive quarter in 2022Q2, supported by favourable fiscal and monetary
conditions. Real GDP grew by 3.54 per cent (year-on-year), driven mainly by the
non-oil sector, which expanded by 4.77 per cent. The growth in the non-oil
sector reflected, mainly, the strong growth in the ICT sub-sector, following new
investments and demand for ICT services. However, the oil sector contracted
by 11.77 per cent owing to subdued investments in the sector and operational
challenges, thus weakening the growth outcome.
Inflationary pressures remained elevated in the second quarter of 2022, driven
by domestic and global supply chain disruptions and rising transportation and
production costs. Headline inflation (year-on-year) rose to 18.60 per cent in
2022Q2, compared with 15.92 per cent, in the previous quarter. The major
contributors to the uptick in prices were the cost of processed food, imported
food items; energy; clothing and footwear; housing; water; health; and
education.
A verage world prices of Nigeria's major agricultural export commodities were
mixed in the second quarter of 2022, despite the rise in the all-commodities
price index by 7.3 per cent, above the previous quarter. The development was
due to India’s announcement of a wheat export ban amid global supply
concerns. The Bank continued to support the Real sector of the economy
towards sustaining the recovery of output growth and addressing the downside
risks of external and domestic shocks to the economy. Crude oil spot prices rose
in 2022Q2, due to heightened supply concerns because of supply disruptions in
Libya and the European Union’s decision to ban Russian crude oil imports.
Fiscal conditions in 2022Q2 improved, relative to the preceding quarter,
following enhanced oil and non-oil receipts, although revenue targets fell short
of their respective quarterly benchmarks. Provisional gross federation receipts

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in 2022Q2, at N3,204.17 billion, exceeded the level in 2022Q1 by 40.8 per cent,
but fell below the benchmark by 30.3 per cent. Non-oil revenue continued its
dominance, constituting 59.5 per cent, while oil revenue accounted for the
balance of 40.5 per cent. The higher revenue outcome was attributed to higher
receipts from Petroleum Profit Tax (PPT) and Royalties, sustained rise in crude
oil prices and the seasonal impact of corporate income tax receipts. However,
the positive impact of the higher oil revenue on the allocations to the three tiers
of government was subdued by rising deductions for Value Shortfall Recovery
(VSR) for PMS by the NNPC. Despite improvement in the statutory receipts and
the FGN Independent Revenue, the provisional retained revenue of the FGN
declined by 2.7 per cent to N1,052.42 billion, while its provisional aggregate
expenditure fell by 17.1 per cent to N3,792.91 billion, relative to the preceding
quarter. This resulted in a contraction of the provisional fiscal deficit by 21.5
per cent, relative to the preceding quarter. At end-June 2022, the total public
debt remained elevated but within the sustainable level, at N42, 845.8 billion
or 23.7 per cent of GDP.
T hough geopolitical tensions and hawkish monetary policy stance from central
banks threatened global financial conditions, the banking system remained
resilient in the second quarter of 2022 but witnessed a tighter level of liquidity,
compared with the preceding quarter. Broad money supply (M3) grew
significantly by 11.5 per cent to N48,865.82 billion in the second quarter of
2022, compared to the provisional benchmark of 14.9 per cent, owing to the
effects of net domestic assets, which outweighed the decline in net foreign
assets, leading to credit expansion to the crucial sectors of the economy. Claims
on the domestic economy and narrow money supply (M1) also followed a
similar growth trajectory. The increase in the Monetary Policy Rate (MPR) to
rein-in inflationary pressures, coupled with the low level of liquidity in the
banking system, resulted to a mixed trend in key short-term interest rates,
which were generally below the MPR. Activities on the Nigerian Exchange
(NGX) Limited sustained a bullish run in 2022Q2, owing to gains by Blue-chip
corporates, as aggregate market capitalisation appreciated by 7.3 per cent to
N50,172.09 billion, relative to the N46,746.70 billion in 2022Q1.
T he performance of the external sector in the second quarter of 2022 improved
in the face of soaring commodity prices resulting from the lingering supply
chain disruptions, occasioned by the Russia-Ukraine conflict. At an estimated
surplus of US$6.61 billion (6.1 per cent of GDP), relative to US$2.58 billion (2.4
per cent of GDP) in the preceding quarter, the current account recorded an
improvement owing to sustained high crude oil prices and lower import bills for
goods, which improved the trade surplus and narrowed the deficit in the
primary income account. Emanating from higher foreign currency holdings of
the private sector, the financial account recorded a net acquisition of financial
assets of US$1.32 billion (1.2 per cent of GDP), compared with US$1.67 billion
(0.7 per cent of GDP) in the preceding quarter. The external reserves remained
above the standard benchmark of 3.0 months of import cover and could finance
7.2 months of import for goods and services or 9.1 months of import for goods

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only. In the foreign exchange market, the exchange rate of the naira was
relatively stable. The average exchange rate of the naira per US dollar at the
I&E window, appreciated by 0.2 per cent to ₦415.71/US$, compared with
₦416.34/US$, in the first quarter of 2022.
G rowth outlook remains positive as the economy is projected to grow by 3.51
per cent in 2022Q3 (year-on-year). The positive outlook is predicated on the
assumption that the current trend in crude oil prices will be sustained. It is also
founded on the effective implementation of the Medium-Term National
Development Plan (MTNDP), and the positive impact of CBN interventions on
growth-enhancing sectors, among others. However, persistent security
challenges, as well as infrastructural deficit continue to cloud growth
prospects. Inflationary pressures are expected to remain uptick in the near
term, due to rising energy and food prices. The headline inflation rate is
expected to maintain the upward trend of 19.21 per cent in July 2022. This
outlook is driven further by an increase in production costs associated with the
disruptions to the supply of electricity and petroleum products, coupled with
security challenges in some parts of the country and the possible consequence
of the Russia-Ukraine war.
F iscal outlook in the near-term appears moderately optimistic, despite the
increase in oil and non-oil revenue, amid the lingering Russia-Ukraine war that
triggered global commodity price shocks. Gains from crude oil price increases
are expected to be eroded by the huge subsidy payments on Premium Motor
Spirit (PMS). Due to rising energy costs, the decrease in households’ purchasing
power and business profits may likely reduce tax revenue. Also, with rising
public debt-to-GDP ratios exceeding pre-pandemic levels, borrowing costs
continue to mount and keep fiscal costs elevated amid higher domestic and
global interest rates. However, the continuous implementation of the Finance
Act and other programmes under the Strategic Revenue Growth Initiatives
(SRGIs) of the FGN, is expected to mitigate the associated fiscal risks. On the
external front, Nigeria's external reserves are projected to hover around
US$39.2 billion in the near-term. This upward movement is predicated on crude
oil prices above US$100 per barrel. However, the payment of subsidies on
petroleum, rising import bills, and increased external debt servicing remain
possible impediments to reserves accretion.


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1.0
GLOBAL ECONOMIC DEVELOPMENTS
1.1
Global Economic Activities
Supply chain disruptions emanating from the Russia-Ukraine war and
China's re-imposition of COVID-19 containment measures weighed on
global economic activity in the second quarter of 2022. The average J.
P. Morgan Global Composite Purchasing Manager’s Index (PMI)
reflected a slower pace of economic expansion as it marginally fell by
0.50 index points to 52.00 index points in the second quarter of 2022.
Also, the services PMI index fell to 52.67 index points from 52.90 index
points in the preceding quarter. However, the employment level rose
to 53.23 index points from 52.00 index points in the preceding quarter,
due to increased backlogs of work, especially among the largest
industrial economies.

Table 1: Global Purchasing Managers' Index (PMI)

2021Q4
2022Q1
2022Q2
Composite
54.53
52.50
52.00
Manufacturing
54.23
53.27
53.33
Services (Business Activity)
55.27
52.90
52.67
Employment Level
52.57
52.00
53.23
Source: JP Morgan, IHS Markit, CBN Staff Compilation.
Note: 50-point threshold was adopted for the analysis

Though moderated, economic activities in some Advanced Economies
(AEs) were above threshold levels. In Japan, the PMI rose to 52.57 index
points, from 48.30 index points in the preceding quarter, due to
increased ease of movement restrictions that buoyed activities in
manufacturing and services sectors. Similarly, Italy's stronger domestic
and foreign demand for services resulted in economic expansion, as the
PMI increased to 53.27 index points from 51.93 index points in the
preceding quarter. However, economic expansion in the UK slowed in
the second quarter of 2022, as the PMI fell to 55.30 index points from
58.33 index points in the preceding quarter, due mainly to the
prevailing geopolitical uncertainty and rising inflationary pressures. In
the same vein, the weak demand and supply shortages waned business
confidence in Germany and the US, as their respective PMI indices
moderated to 53.90 and 54.03 from 55.35 and 54.90, respectively.


Economic Activity in
Advanced Economies
Global Economic
Conditions

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Figure 1: Selected Advanced Economies’ PMIs
Source: Trading Economics/Various Countries’ websites, Staff Compilation.
Note: 50-point threshold was adopted for the analysis. US and UK indicate United States
and the United Kingdom respectively.

Economic activities in most Emerging Markets and Developing
Economies (EMDEs) trended southward, due to supply chain
disruptions, weak consumer demand and rising inflation. In China,
economic activities contracted in the second quarter of 2022, relative
to the preceding quarter, as the PMI fell to 44.37 index points, from
48.03 index points. This deceleration in economic activity was due to
weak consumer demand occasioned by renewed movement
restrictions in major economic cities, reacting to the new waves of
COVID-19. Also, PMI in Turkey declined to 48.83 index points, from
50.10 index points in the preceding quarter. The development was due
to a reduction in purchasing power, in the wake of rising energy and
materials costs, and the lira's continuous depreciation. However, India
recorded improvements in economic activity in the second quarter of
2022, as the PMI index rose to 58.57 index points from 53.60 index
points in the preceding quarter. This was due to increased employment
in the service and manufacturing sectors, and stable input prices. In
South Africa, improved job creation and increased demand spurred an
expansion in economic activity, as the PMI rose marginally to 51.17
index points from 51.07 index points in the previous quarter.


US
UK
GERMANY
ITALY
JAPAN
2021Q4
2022Q1
2022Q2
50-point Threshold
Economic Activity in
Emerging Markets
and Developing
Economies (EMDEs)

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Figure 2: PMI in Selected EMDEs
Source: Trading Economics/Various Countries’ websites, Staff Compilation.
Note: 50-point threshold was adopted for the analysis.
1.2
Global Inflation
Inflation remained elevated in the second quarter of 2022 on account
of rising energy costs and persisting supply chain disruptions. In several
advanced economies, inflation pushed higher in the second quarter of
2022, reflecting the sustained increase in prices of food, energy, and
other commodities, due to the persisting supply chain disruptions.
Specifically, in the US, the inflation rate rose to 8.64 per cent, from 7.95
per cent in the first quarter of 2022, mainly driven by surging energy
prices, particularly gasoline. In Germany, inflation rose to 7.64 per cent,
from 5.77 per cent in the preceding period, due to an increase in the
prices of heating oil, motor fuels and natural gas, and some food
products. However, for the first time in five months, consumer prices
were subdued as the fuel discount had a slight downward effect on the
overall inflation rate in the last month of the quarter. Likewise, prices
in the United Kingdom surged to 7.90 per cent, from the 6.23 per cent
in the preceding quarter of the year, stemming from the high cost of
motor fuels and food prices. In Japan, consumer prices rose amid
surging fuel and food costs, coupled with a sharp weakening of the yen.
Consequently, the average inflation rate rose to 2.47 per cent from 0.87
per cent in the first quarter of 2022.


CHINA
INDIA
TURKEY
SOUTH AFRICA
NIGERIA
2021Q4
2022Q1
2022Q2
50-point Threshold
Global Inflation

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Figure 3: Inflation Rates in Selected Advanced Economies, Average (Per cent)

Source: Organisation for Economic Co-operation and Development (OECD).
Note: US = United States of America, UK = United Kingdom, JP = Japan,
CND = Canada, GM = Germany, FRN = France, and IT = Italy

Increasing energy and food costs exert significant pressure on prices in
Emerging Markets and Developing Economies (EMDEs). China’s
inflation rate rose to 2.26 per cent, from 1.10 per cent in the preceding
quarter, driven by rising food prices, as consumption strengthened
further, following reduced COVID-19 incidences. In India, headline
inflation rose slightly to 6.48 per cent in the second quarter of 2022
from 6.34 per cent in the preceding quarter, driven mainly by rising
prices of essential food items. Prices continued to surge in South Africa,
as consumer prices rose to 6.68 per cent, from 5.77 per in the first
quarter of 2022. The uptick in inflation was driven mainly by increased
transportation costs, resulting from rising prices of fuels, and food &
non-alcoholic beverages. Inflationary pressures in Turkey intensified as
the inflation rate in Turkey rose to a record high of 74.07 per cent,
compared with the 54.76 per cent recorded in the preceding quarter of
the year, due to a weaker lira and rising energy prices.


US
UK
JP
CND
GM
FRN
IT
Q2-2021
Q1-2022
Q2-2022

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Figure 4: Inflation Rates in Selected EMDEs, Average (Per cent)
Source: Organisation for Economic Co-operation and Development (OECD).

1.3
Global Financial Markets
Financial market activities in the second quarter of 2022 were
influenced by sentiments arising from subdued growth prospects,
elevated prices, and rising interest rates. Equity shares were under
pressure as investors' confidence waned due to rising interest rates and
the increased risk of recession. In the US, the NASDAQ, S&P500 and
Dow Jones stocks declined by 12.73 per cent, 8.08 per cent and 5.79
per cent, respectively, because of heightened inflation and a hike in the
policy rate by the Federal Reserve (Fed). Similarly, the NIKKEI 225
declined by 1.40 per cent in the second quarter of 2022, as the yen
weakened sharply against the US dollar, over the concern of weakened
growth in the US. Likewise, across Europe, the stock market
performance fell as concerns mounted over higher inflation, the RussiaUkraine conflict and gas shortages. The EURO STOXX50 dipped by 8.23
per cent, while in the UK, the FTSE 100 index, fell by 0.10 per cent.
Similarly, Egypt’s EGX30 declined by 17.91 per cent in the second
quarter of 2022, as the US dollar strengthened.


China
India
Indonesia
Mexico
Turkey
South Africa
Nigeria
Percentage
Q2-2021
Q1-2022
Q2-2022
Global Financial
Markets

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Figure 5: Global Stock Market Equity Indices
Source: Bloomberg.
Government bond yields rose markedly amid elevated inflation, hawkish
central banks’ stance, rising interest rates and growth concerns. The
Euro area 10-year government bond yields rallied into quarter-end,
reflecting a slight reversal from the negative returns recorded at the
end of the preceding quarter. European yields were the most affected,
following the announcement of the ECB to end asset purchases early in
the third quarter of 2022 and likely hike of the policy rate.
Consequently, the Euro Area 10-year government bond yield rose to
1.10 per cent in the second quarter of 2022 from 0.16 per cent in the
preceding period. In the UK, the Bank of England (BoE) implemented
further rate hikes, resulting in a subsequent increase in the UK 10-year
yield from 1.38 per cent to 2.03 per cent in the second quarter of 2022.
In the emerging markets, however, bond yields suffered significant
declines, as EM currencies weakened against the US dollar.


2021Q2
2022Q1
2022Q2

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Figure 6: 10-Year Government Bond Yields, 2021Q2, 2022Q1 and 2022Q2
Source: Bloomberg.
During the quarter, credit spreads widened, as the effects of the RussiaUkraine war on global credit conditions became more pronounced,
suggesting increased investors' risk-aversion. Furthermore, rising
inflation, lower growth prospects, and central bank policy tightening,
led to wider spreads, particularly in more vulnerable commodityimporting countries. Defaults might rise from historically low levels, as
these dynamics are expected to have adverse effects, particularly in
countries with high-debt profiles. Spreads in the US, UK, and Canada
widened to 1.52 per cent, 1.34 per cent and 1.99 per cent, respectively,
from 0.52 per cent, 0.78 per cent and 0.86 per cent in the first quarter
of 2022.
Figure 7: Advanced Economies Credit Spreads, 2021Q2, 2022Q1 and 2022Q2
Source: Bloomberg.
-2

US
CANADA GERMANY
EURO
AREA
UK
FRANCE
JAPAN
CHINA
BRAZIL
NIGERIA
Per cent (%)
2021Q2
2022Q1
2022Q2

United
States
Euro Area
Japan
United
Kingdom
France
Canada
Australia
New Zealand
Per cent (%)
2021Q2
2022Q1
2022Q2

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Against a challenging macroeconomic backdrop of high inflation and
low growth, most major currencies weakened against the dollar amid
high uncertainty from geo-political tensions. Several analysts have
concluded that the USD has reached a record level of overvaluation, as
the Fed aggressively combats inflation. The Canadian Dollar and
Mexican Peso closed at CAD1.29/US$ and MEX$20.11/US$, at end-June
2022, from CAD1.25/US$ and MEX$19.87/US$, at end-March 2022,
representing a 3.10 and 1.19 per cent depreciation, respectively. The
Euro and British Pound also weakened against the Dollar, as both
currencies depreciated by 7.32 per cent and 5.26 per cent, respectively,
in the review period. The Egyptian Pound experienced a slight
depreciation of 3.03 per cent against the dollar, in the second quarter
of 2022.

Figure 8: Foreign Exchange Market, end-2022Q1 and end-2022Q2

Source: Bloomberg.

1.4
Central Banks’ Policy Rates
The monetary policy environment sustained its hawkish stance during
the second quarter of 2022, to tame rising inflationary pressures. Most
central banks continued to tighten their monetary policy to rein in inflationary
pressures. In advanced economies, the US Fed raised its policy rate by a
cumulative 125 basis points (bps), to 1.75 per cent between the first and
second quarter of 2022. Similarly, the Bank of England raised its policy rate by
50 bps in 2022Q2 to 1.25 per cent, while the Bank of Canada raised its policy
rate to 1.50 per cent.

Japan (YEN)
Canada (CAD)
Mexico (PESO)
Brazil (REAL)
UK (POUND)
Euro area (EURO)
China (RENMINBI)
India (RUPEE)
Egypt (POUND)
US$
2022Q2
2022Q1

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Several central banks in EMDEs tightened monetary policy to contain rising
prices and remain competitive with foreign portfolio investors. Bank of Mexico
increased its repo rate by 125bps, cumulatively, to 7.75 per cent between
March and June 2022. Other emerging market central banks, such as South
Africa, and Ghana, also raised their policy rates in 2022Q2. Conversely, China
continued a dovish monetary stance, bringing down the rates to 2.85 per cent,
from 3.75 per cent in the previous quarter.
Table 2: Central Bank Policy Rates (Per cent)
Country
2021Q2
2022Q1
2022Q2
United States
0.25
0.50
1.75
United Kingdom
0.10
0.75
1.25
Japan
-0.10
-0.10
-0.10
Canada
0.25
0.25
1.5
Euro Area

China
3.85
3.75
2.85
India
4.00
4.00
4.90
Mexico
4.25
6.50
7.75
Indonesia
3.50
3.75
3.50
Turkey
19.00
14.00
14.00
South Africa
3.50
4.25
4.70
Ghana
13.50
17.00
19.00
Nigeria
11.50
11.50
13.00
Source: Various Central Banks’ websites.

1.5
Global Oil Market
Crude oil spot prices rose in the second quarter of 2022, due to
heightened supply disruptions in Libya, and the EU decision to ban
Russian crude imports. The average spot price of Nigeria’s reference
crude oil, the Bonny Light (34.9° API), rose by 14.0 per cent to
US$118.34 per barrel (pb) in 2022Q2, compared with US$103.81 pb in
the preceding quarter. The prices of Brent, at US$115.91 pb, Forcados
at US$119.60 pb, WTI at US$109.73 pb and OPEC Reference Basket
(ORB) at US$112.50 pb, also exhibited a similar trend.
The rise in crude oil prices was largely attributed to heightened
concerns about future supply availability following the European
Union’s (EU) decision to ban 90 per cent of crude oil imports from
Russia by the end of the year. In addition, supply disruptions occasioned
by political unrest in Libya, contributed to higher crude oil prices.
Crude Oil Prices

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Figure 9: Trends in Crude Oil Prices (US$ per barrel)
Source: Refinitiv Eikon (Thomson Reuters), CBN Staff Compilation.

Total world crude oil supply increased in the second quarter of 2022, as
OPEC+ supply rose in line with the continued implementation of the
current production agreement. Total world crude oil supply increased
by 1.0 per cent to 99.21 million barrels per day (mbpd) in 2022Q2,
compared with 98.27 mbpd in 2022Q1. The rise was largely driven by
increased supply from OECD-producing countries, following the
agreement by the International Energy Agency (IEA) member countries
to release 120 million barrels of crude oil from their strategic reserves
for six months, beginning in April 2022. This was in addition to the US
scheduled release of 180 million barrels of crude oil from its Strategic
Petroleum Reserve over six months, starting from March 2022. OPEC’s
crude oil supply rose by 1.2 per cent to 28.56 mbpd in the second
quarter of 2022, from 28.21 mbpd in the first quarter of 2022. The rise
was mainly driven by increased supply from Saudi Arabia, Iraq, United
Arab Emirates (UAE) and Iran.
On the demand side, total world demand declined by 0.2 per cent to
98.77 mbpd in the second quarter of 2022, compared with 98.92 mbpd
in the preceding quarter. The decline in demand was due majorly to the
imposition of COVID-19 lockdown restrictions in parts of China, which
significantly reduced economic activity in the country.
Average spot prices of gold, silver, platinum, and palladium decreased in
the second quarter of 2022, as investors’ switch to more attractive
interest-bearing investments. The average spot prices of gold and silver
declined by 0.3 per cent and 5.9 per cent, quarter-on-quarter, to sell at
US$1,872.98 per ounce and US$22.61 per ounce, compared with

Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Bonny Light
Brent
Forcados
WTI
Opec Basket
World Crude Supply
and Demand
Other Mineral
Commodities

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ECONOMIC REPORT, SECOND QUARTER 2022

US$1,878.12 per ounce and US$24.02 per ounce, respectively, recorded
in the preceding quarter. The price development was due to lower
demand for the precious metals as haven assets, occasioned by higher
yields on US treasury bonds following the Federal Reserve hike in
interest rates to curtail surging inflation.
Similarly, the prices of platinum and palladium declined by 6.8 per cent
and 10.2 per cent to sell at US$957.26 per ounce and US$2,088.12 per
ounce in the second quarter of 2022, compared with US$1,026.61 per
ounce and US$2,325.43 per ounce, respectively, in the preceding
quarter. The prices of industrial metals declined in response to
pessimism about future demand as major central banks raised interest
rates to tame inflation, which could slow global economic activity.
Figure 10: Price Changes in Selected Metals (Per cent) for 2022Q2

Source: Refinitiv Eikon IV (Reuters).
1.6
Global Commodity Market Developments
The indices of the average world prices of Nigeria's major agricultural
export commodities recorded mixed developments in the second
quarter of 2022. Nevertheless, the all-commodities price index edged
up, fuelled by stronger wheat and cotton prices. The average price
index for all the monitored commodities at 108.2 (2010=100) rose by
7.3 per cent, above the level in the previous quarter. Prices of wheat,
cotton, palm oil and soya bean rose by 24.3 per cent, 20.2 per cent, 9.2
per cent and 9.1 per cent, respectively. The development was due to
India’s announcement on the ban of wheat export, amid global supply
concerns, fuelled by declining 2022 production prospects and
disruptions to shipments owing to the war in Ukraine. Factors

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

15 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

influencing the price increase included higher input costs, labour
shortages, and unfavourable weather conditions.
In contrast, the prices of rubber (8.1 per cent), cocoa and coffee (4.2
per cent apiece) and groundnut (1.6 per cent) declined compared with
the previous quarter, largely, on the back of improved exports from key
suppliers.
Table 3: Indices of Average World Prices of Nigeria's Major Agricultural
Export Commodities for the Second Quarter of 2022 (in US$; Dec. 2010=100)
COMMODITY
2021Q2
2022Q1
2022Q2
% Change


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

All Commodities

Cocoa

Cotton

Coffee

Wheat

Rubber

Groundnut

Palm Oil

Soya Beans

Source: (1 & 2) World Bank Pink Sheet (3) Staff Estimates

The performance of emerging market currencies against the US dollar
was mixed during the review period. The South African Rand and
Chinese RMB depreciated by 2.2 per cent and 4.0 per cent, respectively,
relative to the levels in the preceding quarter. However, the Russian
Ruble appreciated against the dollar by 31.4 per cent, in the second
quarter of 2022.
Selected Emerging
Market Currencies

16 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 11: EMEs Currency Values to the US dollar

Source: Central Bank of Nigeria & Reuters
Table 4: EMEs Currency Rates to the US dollar
Source: Central Bank of Nigeria & Reuters


Chinese RMB
Nigerian Naira South African
Rand
Russian Ruble
Depreciation/Appreciation
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Period
Chinese
RMB
Nigerian
Naira
South
African
Rand
Russian
Ruble
2021 Q2

2021 Q1

2022 Q2


17 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

2.0
DOMESTIC ECONOMIC DEVELOPMENTS
2.1
REAL SECTOR DEVELOPMENTS
2.1.1
Domestic Output and Business Activities
In the second quarter of 2022, the economy recorded growth, for the
seventh consecutive quarter, supported by favourable fiscal and
monetary conditions. At N17,285.88 billion, real GDP grew by 3.54 per
cent in the second quarter of 2022 (year-on-year), compared with 3.11
per cent and 5.01 per cent in first quarter of 2022 and the
corresponding quarter of 2021, respectively. The growth in real GDP
was driven mainly by the non-oil sector. However, compared with the
preceding quarter, real GDP contracted by 0.37 per cent.
The non-oil sector grew by 4.77 per cent and contributed 4.28
percentage points to real GDP growth. The improvement largely
reflected the strong growth in the ICT sub-sector, following new
investments and demand for ICT services. In addition, the optimism
surrounding the sustained administration of the COVID-19 vaccine
boosted business sentiments. However, the growth outcome was
significantly weakened by the lower-than-expected performance of the
oil sector which contracted by 11.77 per cent and contributed -0.87
percentage point to the overall growth during the period. Subdued
investments in the sector coupled with operational challenges were
responsible for the poor performance.
Figure 12: Real GDP Growth Rate, 2020Q2-2022Q2

Source: National Bureau of Statistics (NBS)


2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2
Per cent
Oil GDP
Non-oil GDP
Total GDP
Domestic Output
and Economic
Activities

18 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Sectoral Performance
In real terms, the Services and Agriculture sectors grew in the second
quarter of 2022, while the industry sector continued to contract. The
Services sector continued its impressive performance, growing by 6.70
per cent in 2022Q2, compared with 7.45 per cent and 9.27 per cent in
2022Q1 and the corresponding period of 2021, respectively. The sector
contributed the most to GDP growth by 3.73 percentage points.
Figure 13: Sectoral Growth Rate of Real GDP, 2020Q2-2022Q2

Source: National Bureau of Statistics (NBS)
ICT, Trade, Financial & Insurance and Transport sectors drove overall
growth within the Services sector, contributing 1.17, 0.75, 0.69 and
0.65 percentage points, respectively. The subsectors grew by 6.55 per
cent, 4.51 per cent, 18.48 per cent and 51.66 per cent, respectively,
compared with the second quarter of 2021.
The agriculture sector, at 1.20 per cent, sustained its recent growth
trajectory, though at a slower pace, and contributed 0.29 percentage
points to GDP growth. Security challenges and higher input costs
continue to constrain the realisation of potential output in the sector.
Sub-sectoral analysis shows that crop, forestry, and fishery production
grew by 1.54 per cent, 1.29 per cent and 0.89 per cent, respectively,
compared to 2.97 per cent, 1.37 per cent and 3.14 per cent,
respectively, in 2022Q1. However, livestock production contracted by
2.87 per cent, against the growth of 5.55 per cent in 2022Q1 and 0.13
per cent a year ago.
The industry sector contracted by 2.30 per cent in the second quarter
of 2022, an improvement from 6.81 per cent contraction in the first
quarter of 2022. The sector’s performance was due to the decline in

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

19 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Metal Ores and Crude Petroleum & Natural Gas production by 25.48
per cent and 11.77 per cent, respectively. Specifically, crude oil
production decreased to 1.28 mbpd from 1.45 mbpd and 1.46 mbpd
produced in the first quarter of 2022 and the corresponding quarter of
2021, respectively. The development was attributed to the persisting
damages to some key pipelines and terminals, the frequent shut-in, and
the force majeure declared on Bonny and Brass terminals over
increased cases of pipeline vandalism.
Figure 14: Top 15 Subsectors with largest Contribution to GDP Growth and
their Growth Rates in 2022Q2 (Per cent)

Source: National Bureau of Statistics (NBS)

Figure 15: Subsectors with Least Contribution to GDP Growth and their
Growth Rates in 2022Q2 (Per cent)

Source: National Bureau of Statistics (NBS)
2.1.2.
Index of Industrial Production
The not-too-impressive performance of the industry sector was further
corroborated by the Index of Industrial Production at 94.9 (2010=100),
as it declined by 7.2 per cent, attributed to declining crude oil and
natural gas production and manufacturing activities.

(3.03%) Accommodation and Food...
(1.16%) Education
(2.23%) Human Health & Social Services
(2.01%) Public Administration
(1.96%) Professional, Scientific &...
(23.73%) Water supply, sewage,...
(3.05%) Other Services
(4.02%) Construction
(4.42%) Real Estate
(3.0%) Manufacturing
(1.54%) Crop Production
(51.66%) Transportation and Storage
(18.48%) Financial and Insurance
(4.51%) Trade
(6.55%) Information and...
-0.05
-0.09
-0.84
Livestock (-2.87%)
Electricity,Gas,Steam & Air conditioner (-
11.48%)
Mining and Quarrying (-11.09%)
Industrial
Production

20 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Similarly, the manufacturing and mining production index fell by 16.0
per cent and 4.8 per cent to 169.8 (2010) and 56.4 (2010=100),
respectively, from their levels a quarter ago. The contraction witnessed
in the manufacturing sector, impacted the capacity in the sector as the
estimated average capacity utilisation declined by 1.6 percentage
points to 51.3 (2010=100). The contraction arose from supply-side
constraints that included persisting foreign exchange shortage which
impacted imported raw materials, and the rising cost of local input as
the price of diesel continued to increase.
2.1.3
Energy Sector
The energy sector suffered from incessant national grid collapse
resulting from limited gas supply, the low water level at the generating
plants, and the breakdown of the transmission network. The lowerthan-expected supply of electricity was one of the factors that
constrained industrial output. Consequently, the average electricity
generation in the second quarter of 2022 declined by 13.1 per cent to
3,535.77 MW/h from 4,068.00 MW/h in the preceding quarter. Equally,
the average electricity consumption for the second quarter of 2022 at
3,050.31 MW/h, fell by 15.6 per cent, compared with 3,615.82 MW/h
in the preceding quarter.
2.1.4
Consumer Prices
Headline Inflation remained elevated in the second quarter of 2022,
driven by domestic and global supply chain disruptions, heightening
transportation, and production costs. Headline inflation (year-on-year)
rose to 18.60 per cent in the second quarter of 2022, compared with
15.92 per cent, in the previous quarter. The cost of clothing and
footwear; housing, water, energy; health; education; processed food;
and imported food items were the major contributors to the increase
in prices.
Electricity
Generation &
Consumption
Manufacturing
Headline
Inflation

21 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 16: Headline, Food and Core Inflation (Year-on-Year)

Source: National Bureau of Statistics (NBS) & Staff Estimates

Core inflation rose to 15.75 per cent in the second quarter of 2022,
compared with 13.91 per cent in the previous quarter. The increase in
core inflation was attributed to the rising cost of imported goods due
to the global supply chain disruption occasioned by the Russia-Ukraine
war. Also, the increase in the cost of processed food, clothing and
footwear, health and transportation contributed to the uptick in core
inflation.
Food inflation also rose to 20.60 per cent (year-on-year) in the second
quarter of 2022, compared with 17.20 per cent in the first quarter of
2022. The rise in food inflation was attributed to demand outweighing
supply as the planting season kicked in during the quarter. Hence, the
increase in the prices of potatoes, yam & other tubers in addition to
those of other staples.

Per cent (%)
Headline
Core
Food
Core Inflation
Food Inflation

22 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022


2.1.5
Socio-Economic Developments
The increase in confirmed cases slowed following sustained surveillance
and response activities by relevant health authorities. Data from the
National Centre for Disease Control (NCDC) showed that at end-June
2022, the rate of confirmed cases slowed to 0.85 per cent, compared
with 5.4 per cent in the first quarter of 2022. However, the rate of active
cases increased by 54.9 per cent, while discharged cases decreased by
0.1 per cent. During the second quarter 2 deaths were reported, as
against 111 deaths reported in the first quarter of 2022.
Box Information 1☹)
The prices of major domestic food commodities increased in 2022Q2, compared with the previous
quarter. The increase ranged from 0.4 per cent for garri (yellow) to 13.0 per cent for tomato. The
development was attributed to below-average market availabilities resulting partly from the
persisting security challenges, which hindered farm output and strong market demand. Increased
transportation costs, driven by high diesel price added pressure on domestic food prices.
DOMESTIC PRICES OF SELECTED AGRICULTURAL COMMODITY PRICES SECOND
QUARTER 2022


2021Q2
2022Q1
2022Q2
%
Change
%
Change

UNIT

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

Beans: brown, sold loose
"

Beans: white black eye, sold loose
"

Gari white, sold loose
"

Gari yellow, sold loose
"

Groundnut oil: 1 bottle, specify bottle
"

Irish potato
"

Maize grain white, sold loose
"

Maize grain yellow, sold loose
"

Onion bulb
"

Palm oil: 1 bottle, specify bottle
"

Rice agric, sold 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

Sources: National Bureau of Statistics

Health/ COVID-19
Update

23 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Available data from the National Primary Health Care Development
Agency (NPHCDA) showed that 20.9 per cent of the target population
had been fully vaccinated as at end-June 2022, compared with 11.2 per
cent in the previous quarter, while 10.7 per cent had been partially
vaccinated against COVID-19 infection.

Figure 17: COVID-19 Statistics1

Source: National Centre for Disease Control (NCDC)
2.1.6
Domestic Crude Oil Market Developments
Domestic crude oil production and export declined in the second quarter
2022, due to cases of pipeline vandalism and oil theft in the Niger-Delta
region. Nigeria’s average crude oil production and export declined by
11.7 per cent and 17.0 per cent to 1.28 mbpd and 0.83 mbpd in
2022Q2, respectively. Nigeria’s production level fell short of its OPEC
quota of 1.75 mbpd, by 470,000 bpd in the second quarter of 2022. The
decline in crude oil production and export was due to Nembe Creek
Trunk and the Trans-Niger pipeline vandalism and oil theft.
Furthermore, the force majeures declared on Bonny and Brass crude
streams in April 2022, also negatively impacted production levels in the
se cond quarter of 2022.


1 Covid-19 data as at end-June, 2022.


2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2
Per cent (%)
Total Confirmed Cases
Discharged Cases
Death Toll
Crude Oil Production
& Export

24 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

2.1.7
Development Financing
The Bank’s support to the growth-enhancing sectors of the economy has
continued to sustain the recovery of output growth towards its prerecession and COVID-19 trajectory. A total of N139.46 billion was
disbursed in the second quarter of 2022 to the industries,
energy/manufacturing, MSMEs, Agriculture, and health sectors. Of the
total disbursements, the industrial sector accounted for the highest
share of 64.80 per cent, owing to improved activities under the RSSFDCRR window for 11 projects aimed at stimulating output growth,
enhancing value addition, and engendering productivity in the
economy. This was followed by MSMEs (17.93 per cent), infrastructure
(15.21 per cent), health (1.43 per cent), and agriculture (0.07 per cent).
Table 5: Intervention Funds, as of 24 June 2022
Sector
24-JUN

Cumulative
Disburs
(N'bn)
Share
(%)
Benefici
aries

Disburs.
(N'bn)
Share
(%)
Repayments
(N'bn)
Beneficiaries
Agriculture
0.87
0.63


1,750.3

31.18


Anchor Borrowers'
Programme
0.10
0.07

Smallhold
er farmers

1,006.0

17.92
-
4,209,622 farmers
N1,006.03 billion
Commercial
Agricultural Credit
Scheme (CACS)
0.77
0.55

Rice mill
project

744.32
13.26
-
678 projects
Energy/Infrastructu
re
21.21
15.21


1,619.6

28.85
-

Nigeria Electricity
Market
Stabilization Facility
2 (NEMSF 2)
1.21
0.87
-

254.46
4.53
-
10 projects
Nigeria Bulk
Electricity TradingPayment Assurance
Facility (NBET-PAF)
5.00
3.59
-

1,300.0

23.15
-
-
Infrastructure
facility for National
Gas Expansion
Programme
(IFNGEP)
15.00
10.76

projects

65.20
1.16
-
15 projects
MSMEs
25.00
17.93


415.74
7.41
-

Tertiary Institutions
Entrepreneurship
Scheme (TIES)
N/A
N/A
N/A

0.29
0.01

Targeted Credit
Facility (TCF)
25.00
17.93
48,485
Househo
lds &
SMEs


Industries
90.38
64.80


1,694.4

30.18
-
403 Projects
100 for 100 PPP
7.32
5.24

Projects

133.42
1.10
-

RSSF Using
Differentiated Cash
Reserve Ratio
(RSSF-DCRR)
83.06
59.56

Projects

1,632.7

29.09
-
403 projects
Health
2.00
1.43


133.42
2.38

Health Care Sector
Intervention Fund
(HSIF)
2.00
1.43

healthcar
e project

130.49
2.38

128 healthcare
projects
Total
139.46

5,613.6

Source: Central Bank of Nigeria.


Development
Financing

25 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

2.2
FISCAL SECTOR DEVELOPMENTS
The fiscal operations of the Federal Government of Nigeria (FGN) in the
second quarter of 2022 remained aligned with the extant fiscal
frameworks2, which seek to achieve macroeconomic stability, improve
revenue generation, and create fiscal space to boost infrastructural
development, among other objectives. Fiscal conditions in the second
quarter of 2022 improved, relative to the preceding quarter, following
enhanced oil and non-oil receipts. However, revenue targets fell short of
the benchmarks. The increased earnings moderated the shortfall in FGN
retained revenue from the target by 2.7 per cent, compared to a 17.1
per cent decline in FGN expenditure. Consequently, the provisional fiscal
deficit contracted by 21.5 per cent, relative to the preceding quarter.
Total public debt remained elevated but within the sustainable level, at
N42,845.88 billion or 23.7 per cent of GDP, at end-June 2022.
2.2.1 Federation Account Operations
Receipts into the Federation Account improved in the second quarter of
2022, following a boost in oil and non-oil revenue outcomes. Gross
federation receipts in the second quarter of 2022, at N3, 204.17 billion,
exceeded the level in the first quarter of 2022, by 40.8 per cent, but fell
below the benchmark of N4,598.25 billion by 30.3 per cent. The higher
revenue outcome was attributed to the sustained rise in crude oil prices
and the seasonality effect on the corporate income tax receipt.
However, the revenue performance remained subdued by rising
petroleum (PMS) subsidy payments. In terms of contribution to total
government revenue, non-oil revenue continued its dominance,
constituting 59.5 per cent, while oil revenue accounted for the balance
of 40.5 per cent.

Oil revenue, at N1,296.24 billion, outperformed receipts in the
preceding quarter by 62.2 per cent. The improved performance was
driven by the 79.5 per cent rise in collections from Petroleum Profit Tax
and Royalties. However, it was below the quarterly target of N2,375.11
billion by 45.4 per cent.
Similarly, at N1, 907.93 billion, non-oil receipts, exceeded collections in
the preceding quarter by 29.3 per cent, but fell short of the quarterly
target by 14.2 per cent. The increased earnings relative to the first
quarter of 2022Q1, was ascribed, largely, to the significant rise in
receipts from corporate income tax, as the reporting period coincided

2 The 2022 Appropriation Act, the 2022-2024 Medium-Term Expenditure
Framework and the Fiscal Strategy Papers (MTEF&FSP 2022-2024).
Summary
Drivers of Federation
Revenue

26 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

with the end-June cut-off date for filing tax returns by registered
companies in Nigeria.
Source: OAGF and CBN Staff Estimates
Table 6: Federally-Collected Revenue and Distribution to the Three-Tiers of
Government (N Billion)

2021Q2
2022Q1
2022-Q2
1/
Budget
Federation Revenue (Gross)

Oil

Crude Oil & Gas Exports

PPT & Royalties

Domestic Crude Oil/Gas Sales

Others

Non-oil

Corporate Tax

Customs & Excise Duties

Value-Added Tax (VAT)

Independent Revenue of Fed. Govt.

Others*

Total Deductions/Transfers**

Federally-Collected Revenue
Less Deductions & Transfers

plus:


Additional Revenue

Balance in Special Account from


Excess Crude Revenue

Non-oil Excess Revenue

Exchange Gain

Total Distributed Balance

Federal Government

Statutory

VAT

State Government

Statutory

VAT

13% Derivation

Local Government

Statutory

VAT

Source: OAGF and CBN Staff Estimates
Note: * Includes Education Tax, Customs Special Levies (Federation Account), National
Technology Development, Customs Special Levies, Solid Mineral & Other Mining revenue, and
other Non-regular earnings; ** Deductions include cost of revenue collections and JVC cash calls;
while transfers entail provisions for FGN Independent revenue and other Non-Federation revenue.

A net distributable balance of N2,042.96 billion was disbursed to the
three tiers of government, after accounting for statutory deductions,
transfers, and additional inflow from Non-oil Excess revenue. Of this

27 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

amount, the Federal Government received N753.74 billion, while State
and Local governments received N664.94 billion and N488.98 billion,
respectively. The balance of N135.30 billion was distributed to the oilproducing states as 13.0% derivation fund. Disbursement in 2022Q2
was 9.5 per cent above the preceding quarter, and 43.3 per cent, below
the target.
2.2.2 Fiscal Operations of the Federal Government
Despite the rise in the FGN Independent Revenue, the retained revenue
of the FGN declined, due to shortfalls in the non-stable components of
the FGN revenue3. At N1, 052.42 billion, the estimated retained
revenue of the FGN was below receipts in the preceding quarter and
the budget by 2.7 per cent and 60.8 per cent, respectively.
Table 7:FGN Retained Revenue (N Billion), Second Quarter 2022

2021Q2
2022Q1
2022Q2
Budget
FGN Retained Revenue

Federation Account

VAT Pool Account

FGN Independent Revenue

Excess Oil Revenue

Excess Non-Oil

Exchange Gain

Others*

Source: Compiled from OAGF figures
Note: * Others include revenue from Special Accounts, Special Levies and share of dividend.
Note: The Budget figures are provisional.

Driven by a reduction in capital spending, the provisional aggregate
expenditure of the FGN fell by 17.1 per cent and 11.4 per cent, relative
to the level in the first quarter of 2022 and the quarterly target,
respectively. The provisional aggregate expenditure of the FGN
amounted to N3,792.91 billion in the review period. A breakdown
revealed that recurrent expenditure, capital expenditure, and transfers
accounted for 81.0 per cent, 13.3 per cent and 5.7 per cent of total
expenditure, respectively.


3 Including Excess oil, Excess Non-oil, Exchange gain and Others.
Federal
Government
Retained Revenue
Federal Government
Expenditure

28 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 18: Federal Government Expenditure (N Billion), Second Quarter 2022

Source: CBN Staff Estimates and Compilation from OAGF data

The drop in FGN expenditure, compared with the decline in FGN
retained revenue, induced a contraction in fiscal deficits in the second
quarter of 2022. At N2,740.49 billion, the provisional fiscal deficit of the
FGN was 21.5 per cent below the level in the preceding quarter.
However, fiscal deficits expanded by 71.7 per cent, when compared
with the quarterly budget of N1,596.52 billion.
Table 8: Fiscal Balance (N Billion), Second Quarter 2022

2021Q2
2022Q1
2022Q2
Budget
Retained revenue

Aggregate expenditure

Recurrent

Non-debt

Debt Service

Transfers

Capital

Primary balance

Overall balance

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

Although public borrowing was in tandem with the Medium-Term Debt
Strategy (2020-2023) of the FGN, debt levels remained sustainable in
the review period. At N42,845.88 billion at end-June 2022, the total
public debt outstanding rose by 3.0 per cent relative to the level at endMarch 2022. Domestic debt accounted for 61.2 per cent of total debt,
while external debt constituted 38.8 per cent. Of the consolidated
public debt outstanding, FGN (including State governments’ external


Q2-21
Q1-22
Q2-22
Budget
Aggregate
Recurrent
Capital
Transfers

Overall Fiscal
Balance
Federal
Government Debt

29 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

debt, which forms part of the FGN’s contingent liability) accounted for
N37,564.60 billion (87.7 per cent), while the State governments’
domestic debt stock accounted for the balance of N5,281.28 billion
(12.3 per cent).
Further analysis shows that FGN domestic debt stood at N20,948.94
billion (55.8 per cent), compared with N16,615.66 billion (44.2 per cent)
in external debt. FGN bond issues maintained its dominance,
accounting for 72.5 per cent of the total domestic debt, followed by
Treasury Bills (21.5 per cent), FGN Sukuk (2.9 per cent), Promissory
Notes (2.5 per cent), and others4 (0.6 per cent). Regarding holders of
Nigeria’s external debt, Multilateral, Commercial and Bilateral loans
accounted for 47.8 per cent, 39.0 per cent and 11.7 per cent,
respectively, while ‘other’ loans constituted 1.5 per cent.
Debt service obligations in 2022Q2, amounted to N912.71 billion,
compared with N897.17 billion in 2022Q1. The rise was attributed to
the principal repayments and redemption of matured debt obligations.

Figure 19: FGN External and Domestic Debt Composition (N Billion)

Source: Compiled from Debt Management Office (DMO) figures.


4 This includes Treasury bonds (0.4 per cent), Green bond (0.1 per cent) and
Special FGN Savings bond (0.1 per cent).

2021 Q1
2021 Q2
2021 Q3
2021 Q4
2022 Q1
External Debt
Domestic Debt
Total Debt

30 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 20: Composition of Domestic Debt Stock by Instrument

Source: Compiled from Debt Management Office (DMO) figures.

Figure 21: Composition of External Debt Stock by Holders

Source: Compiled from Debt Management Office (DMO) figures.


FGN Bonds,
72.5%
Treasury
Bills, 21.5%
Promissory
Notes, 2.5%
FGN Sukuk,
2.9%
Others, 0.6%
Multilateral
47.8%
Commercial
39.0%
Bilateral
11.7%
Others
1.5%

31 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

2.3
MONETARY AND FINANCIAL DEVELOPMENTS
Monetary aggregates grew in the second quarter of 2022 owing to
credit expansion to the critical sectors of the economy. Despite
increased credit, activities from open market operations and primary
market sales subdued the level of banking system liquidity in the review
quarter. The low level of liquidity, coupled with the increase in MPR,
resulted in a mixed trend in key short-term interest rates. The financial
sector remained stable, as the key financial soundness indicators were
within regulatory thresholds. Activities on the Nigerian Exchange (NGX)
Limited sustained bullish performance, owing to gains by Blue-chip
corporates.
.
2.3.1 Monetary Developments
Reserve money grew in the second quarter of 2022, owing to the
increase in liability to other depository corporations (ODCs). Higher
deposits and penal debits on banks that defaulted on the minimum
Loan-to-Deposit Ratio requirement, revved-up required reserves of
ODCs in the review period, which, majorly, triggered a significant
growth of 13.5 per cent in liabilities to the ODCs. The growth in reserve
money was however, moderated by the slight decline in currency in
circulation to N3,259.27 billion. Consequently, reserve money grew by
9.7 per cent to N14,579.57 billion at the end of the review quarter. With
the money multiplier at 3.4, the pace of growth in the broad money
supply continued in the second quarter of 2022.
Table 9: Components of Reserve Money (N Billion)

2021Q2
2021Q4
2022Q1
2022Q2
Monetary Base

Currency-in-Circulation
Naira and coins
eNaira


2,741.26
2,741.26
-

3,325.16
3,324.22
0.94


3,245.59
3,244.59
1.00

3,259.27
3,257.91
1.36
Liabilities to ODCs
9,592.59
9,969.99

11,056.17
11,320.30
Money Multiplier (M3)

Source: Central Bank of Nigeria

Broad money (M3) grew significantly in the second quarter of 2022,
owing to the effects of net domestic assets, which outweighed the
decline in net foreign assets. The net domestic assets (NDA), grew by
21.8 per cent, mirroring the 18.0 per cent growth in domestic claims.
The upward movement in domestic claims was hinged on the 10.7 and
9.3 percentage points contributions from net claims on central
government and claims on other sectors, respectively.
Summary
Broad money
Supply
Reserve Money
Summary

32 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Net claims on the central government grew considerably by 35.0 per
cent, due to the increase in loans to the central government. The rise
in claims on other sectors largely reflected the 11.8 per cent increase
in claims on private sector, which contributed 6.5 percentage points to
the growth in M3.
The growth in NDA pushed the broad money supply (M3) northward by
11.5 per cent (annualised at 23.0 per cent) to N48,865.82 billion at endJune 2022, compared to the provisional benchmark of 14.9 per cent.
Conversely, the net foreign assets (NFA) of depository corporations
declined by 29.2 per cent due to the rise in liabilities to non-residents,
occasioned by increased deposits and foreign loans.

Table 10: Money and Credit Growth over preceding December (Per cent)
Source: Central Bank of Nigeria


Contributio
n to M3
growth
(June-22)
Jun-

Mar-

Jun-

Annualised
rate

Bench
mark
Net Foreign Assets
-5.87
-
18.7


Claims on Non-residents

Liabilities to Non-residents
6.30


Net Domestic Assets

Domestic Claims

Net Claims on
Central Government

Claims on Central
Government

Liabilities to Central
Government
2.06
14.7


Claims on Other
Sectors

Claims on Other Financial
Corporations

0.52


Claims on State and Local
Government

Claims on Public
Nonfinancial Corporations

Claims on Private Sector

Total Monetary
Assets (M3)

Currency Outside
Depository Corporations

Transferable Deposits

Narrow Money (M1)

Other Deposits
6.29
20.6


Broad Money (M2)

Total Monetary
Liabilities(M3)


23.04

14.92

33 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

The growth in total monetary liabilities was due to the rise in
transferable deposits and other deposits by 16.0 and 10.8 per cent,
respectively. In terms of relative contribution, other deposits at 6.3
percentage points contributed the most to the growth in total
monetary liabilities, followed by transferable deposits with 5.6
percentage points. On the other hand, currency outside depository
corporations declined by 7.3 per cent and contributed -0.5 percentage
points to the growth in total monetary liabilities.
2.3.2 Credit Utilisation
Softening financial conditions, driven by the sustained LDR policy and
developmental initiatives, spurred growth in sectoral credit and
continued to aid productivity and output in the economy. Total credit
utilisation by sectors grew by 6.2 per cent to N26,846.40 billion in
2022Q2, from N25,282.72 billion in 2022Q1. By disaggregation, credit
to the agriculture, industry and services sectors increased to N1,630.38
billion, N 10,591.87 billion and N 14,624.15 billion, respectively, relative
to N1,604.72 billion, N10,016.88 billion and N13,660.76 billion,
respectively, in the preceding quarter. An analysis of the relative share
of the sectors in total credit revealed that, services and industry sectors
sustained ascendancy with 54.5 and 39.5 per cent, respectively, while
agriculture accounted for the balance.
Table 11: Relative Share in Total Sectoral Credit (Per cent)

2021Q2
2022Q1
2022Q2
Agriculture
5.27
6.35
6.07
Industry
42.36
39.62
39.45
Of which; Construction
5.00
4.27
4.39
Services
52.37
54.03
54.47
Of which; Trade/General
Commerce
6.29
7.05
7.13
Source: Central Bank of Nigeria
Despite the softening financial conditions, consumer credit extended by
the ODCs contracted below its level in the preceding quarter. Consumer
credit outstanding declined by 15.2 per cent to ₦1,933.14 billion at
end-June 2022, from ₦2,279.45 billion at the end-March 2022. The
decline was partly due to decreased banking system liquidity and the
ripple effect of the increase in the Monetary Policy Rate (MPR) to 13.0
per cent by the Monetary Policy Committee (MPC) of the CBN in its May
2022 meeting. The share of consumer credit in total private sector
credit shrank by 2.1 percentage points to 7.2 per cent, from 9.4 per cent
in the preceding quarter.
Consumer Credit
Sectoral Utilisation
of Credit

34 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 22: Consumer Credit Outstanding

Source: Central Bank of Nigeria

A disaggregation of consumer loans revealed that Personal loans,
maintained dominance, accounting for 73.5 per cent of total loans,
while retail loans accounted for the remaining 26.5 per cent.
Figure 23: Composition of Consumer Credit (Per cent)

Source: Central Bank of Nigeria
2.3.3 Money Market Developments
Activities in open market operations and primary market sales subdued
the level of banking system liquidity in the review quarter. OMO
auctions of ₦190.00 billion and primary market sales of ₦1,241.69
billion, culminated in a withdrawal of ₦1,431.69 billion from the
banking system, which exceeded the injection of ₦1,037.45 billion from
matured securities, resulting in a net withdrawal from the banking

2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2
Per cent (%)
N' Million
Consumer Credit (LHS)
Consumer Credit as a Share of Private Sector Credit (RHS)


Q1

Q2

Q3

Q4

Q1

Q2
Personal

Retail

PER CENT (%)
Liquidity
Management

35 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

system. Consequently, the average banking system liquidity position
declined by 25.3 per cent to ₦186.77 billion, from ₦250.15 billion in
the preceding quarter.
The Bank carried out direct OMO auctions with maturities of 103 to 362
days in the review quarter. Total amount offered, subscribed and
allotted dropped to ₦140.00 billion, ₦983.59 billion and ₦140.00
billion, respectively, from ₦570.00 billion, ₦3,333.67 billion and
₦548.12 billion in the preceding quarter.
Figure 24:Open Market Operation, Second Quarter

Source: Central Bank of Nigeria
Activities at the standing facilities during the review quarter reflected
the low level of liquidity in the banking system. Despite the increase in
MPR by 150 basis points to 13.0 per cent, which propelled a hike in
applicable rate for the Standing Lending Facility (SLF) to 14.0 per cent,
total SLF rose significantly by 103.2 per cent to ₦3,619.12 billion, with
a daily average of ₦77.00 billion, compared with ₦902.17 billion and a
daily average of ₦26.53 billion in the preceding quarter. Other
depository corporations resorted to this window to square up their
customers’ demands. Expectantly, transactions at the Standing Deposit
Facility (SDF) window showed a reverse trend, with a decline of 34.4
per cent to ₦894.88 billion relative to ₦1,363.87 billion in the
preceding quarter.
Investments in the Nigerian Treasury Bills (NTBs) decreased, while that
of the FGN Bonds increased in the review quarter. Notwithstanding the
increase in the NTB stop rate to 4.09 (±2.35) per cent, from 3.63 (±1.88)
per cent in the preceding quarter, total subscriptions in NTBs declined
by 24.94 per cent to ₦1,992.80 billion, from ₦2,654.78 billion, in the

2021Q2
(N'Billion)
2022Q1
(N'Billion)
2022Q2
(N'Billion)
Offer
420.00
570.00
140.00
Subscription
575.01
3,333.67
983.59
Allotment
195.43
548.12
140.00
Repayment
595.46
1,248.85
215.01
N' Billion
Primary Market
Open Market
Operations
Standing Facilities

36 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

preceding quarter. Subscriptions for the Bills signified investors’
preference for the 364-day tenored instruments, which accounted for
₦1,866.30 billion or 93.7 per cent of total subscriptions.
Figure 25:Primary Market NTBs, Second Quarter 2022
Source: Central Bank of Nigeria
Subscriptions for the FGN Bonds increased by 3.8 per cent to N1,
537.40 billion, compared with, ₦1,481.38 billion in the preceding
quarter,
reflecting
investors’
preference
for
longer-tenored
instruments.
Key short-term interest rates exhibited mixed developments and were
generally below the Bank’s monetary policy rate. Average daily interbank call and Open-Buy-Back rates were 9.25 (±4.75) per cent and 9.24
(±4.69) per cent, respectively, compared with 10.25 (±5.75) per cent
and 7.93 (±7.36) per cent in the preceding quarter. Other rates such as
the 30-day and 90-day NIBOR traded at averages of 8.74 and 9.61 per
cent compared with 8.77 and 10.2 per cent in the preceding quarter,
respectively.

2021Q2
(N'Billion)
2022Q1
(N'Billion)
2022Q2
(N'Billion)
Offer
540.56
715.72
918.92
Subsription
1,839.03
2,654.78
1,992.80
Allotment
927.62
1,337.60
1,015.56
Repayment
540.56
715.57
918.92
N' Billion

37 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 26: Developments in Short-term Interest Rates
Source: Central Bank of Nigeria
Lending rates were relatively stable during the review quarter, though,
trended upwards slightly, in response to an increase in the MPR. The
average prime and maximum lending rate increased marginally by 0.5
and 1.0 percentage points to 12.3 per cent and 27.6 per cent in the
review quarter, from 11.8 per cent and 26.6 per cent in the preceding
quarter, respectively.
Likewise, the average term-deposit rate increased by 0.2 percentage
points to 3.5 per cent, from 3.3 per cent in the preceding quarter,
widening the spread between the average term deposit and maximum
lending rates to 25.3 percentage points, from 24.4 percentage points in
the preceding quarter.


2021Q2
(%)
2021Q3
(%)
2021Q4
(%)
2022Q1
(%)
2022Q2
(%)
Interbank Call Rate

OBB

NIBOR 30-day

NIBOR 90-day

MPR


Per cent (%)

38 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 27: Trend in Average Deposit and Lending Rates

Source: Central Bank of Nigeria; Note: PLR = Prime lending rate, MXLR = Maximum
lending rate, AVTD = Average term deposit rate, SPRD = Spread between AVTD and
MXLR.

2.3.4
Capital Market Developments
Activities on the Nigerian Exchange (NGX) Limited sustained a bullish
run in 2022Q2, owing to gains by Blue-chip corporates. The aggregate
market capitalisation appreciated by 7.3 per cent to N50,172.09 billion,
relative to N46,746.70 billion in 2022Q1. A breakdown of the aggregate
shows that equities, debt and ETF, constituted 55.68 per cent, 44.31
per cent, 0.01 per cent, respectively. In the equities segment, market
capitalisation rose by 10.4 per cent to N27,935.36 billion from
N25,311.83 billion in the preceding quarter. Similarly, debt and ETF
ended higher by 3.7 per cent and 5.8 per cent to 22,218.51 billion and
7.44 billion, respectively, from the previous level in the preceding
quarter.
The All-Share Index (ASI), which opened at 46,842.86 at the beginning
of the quarter, closed at 51,817.59 at the end of the quarter, reflecting
an increase of 10.3 per cent. The increase was attributed to gains by
Blue-chip companies such as Guaranty Trust Holding Company Plc,
Caverton Offshore Support Group Plc and United Bank for Africa Plc.

2021Q1
2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
Percentage Points
Per cent (%)
PLR
MXLR
AVTD
SPRD (RHS)
Market
Capitalisation
NGX All Share
Index

39 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 28: Aggregate Market Capitalisation and All-Share Index
Figure 5: Market Capitalization and Value Index
Market Cap All-Share Index (RHS)
Q3-18
22.30
32,766.37

Q4-18
21.90
31,430.50

Q1-19
22.30
31,041.42

Q2-19
25.70
29,966.87

Q3-19
26.29
27,630.56

Q4-19
25.89
26,842.07

Q1-20
27.48
21,300.47

Q2-20
24.51
24,479.22

Q3-20
30.53
26,831.76


Index
N' Billion
Market Capitalization (LHS)
All-Share Index (RHS)

Source: Nigeria Exchange (NGX) Limited.

In the review quarter, thirteen (13) sectoral indices trended upward,
four (4) trended downward, and one (1) remained flat relative to their
levels in the preceding quarter.

Table 12:Nigeria Exchange (NGX) Limited Sectoral Indices
NGX Indices
2022Q1
2022Q2 Changes (%)
NGX -OIL/GAS
440.44
545.34
23.8
NGX -MERI GROWTH
2,045.57
2,364.94
15.6
NGX -MAIN BOARD
1,973.01
2,274.79
15.3
NGX-CONSUMER
GOODS
554.16
623.99
12.6
NGX -PREMIUM
4,494.12
4,924.13
9.6
NGX -AFR Div Yield
2,965.93
3,191.06
7.6
NGX -PENSION
1,704.43
1,823.58
7.0
NGX 30- INDEX
1,791.07
1,887.62
5.4
NGX -LOTUS
3,092.84
3,251.25
5.1
NGX-CG
1,276.56
1,319.70
3.4
NGX Growth Index
1,446.50
1,487.20
2.8
NGX- MERI VALUE
2,127.56
2,167.09
1.9
NGX -INDUSTRIAL
2,116.51
2,152.24
1.7
NGX -Asem
658.99
658.99
0.0
NGX Sovereign
858.28
854.22
-0.5
NGX -BANKING
409.28
397.79
-2.8
NGX -INSURANCE
186.16
178.33
-4.2
NGX
-AFR
BANK
VALUE
968.26
925.95
-4.4
Source: Nigeria Exchange (NGX) Limited

The total turnover volume and value of the traded securities on the
Exchange, rose by 144.0 per cent and 40.2 per cent, respectively, to
54.27 billion shares, and N485.41 billion, in 320,759 deals, relative to

40 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

the 22.24 billion shares worth N346.24 billion, in 290,238 deals, at the
end of 2022Q1.
Figure 29:Volume and Value of Traded Securities
Figure 4: Volume and Value of Traded Securities
period Volume of trValue of tradVolume of trVolume of t
Q4-18
16.60
211.20
Q1-19
20.70
208.70
Q2-19
25.50
303.00
Q3-19
16.30
187.70
Q4-19
18.70
232.41
Q1-20
23.56
289.62
Q2-20
17.15
181.52
Q3-20
15.84
154.95
Q4-20
38.92
363.97
Q1-21
28.35
303.95
Q2-21
13.90
164.88
Q3-21
15.70
145.24
Q4-21

Volume (Billion)
Volume of traded securities (LHS)
Value of traded securitie

Source: Nigeria Exchange (NGX) Limited.

There were three (3) new listings, eight (8) supplementary listings on
the Exchange in 2022Q2.
Table 13: Listings on the Nigerian Exchange Limited in 2022Q2
Company/ Security
Shares Units
Remarks
Listing
NGX30 INDEX Future
Contract

Derivatives
New
NGX PENSION INDEX
Future Contract

Derivatives
New
12.50% FGN APR 2032
155,917,447
Bond
New
ABC Transport Plc
1,127,236,000
Ordinary
Shares of 50
Kobo Each at
N0.35
Right Issue
Supplementary
NPF Microfinance Bank Plc
3,107,001,335
Right issue
Supplementary
9.47% FGS MAR 2024
626,544
Bond
Supplementary
10.47% FGS MAR 2025
1,527,278
Bond
Supplementary
13.53% FGN MAR 2025
163,201,376

Bond
Supplementary
13.00% FGN JAN 2026
127,635,000
Bond
Supplementary
12.50% FGN APR 2032
118,494,199
Bond
Supplementary
13.00% FGN JAN 2042
458,753,401
Bond
Supplementary

41 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Source: Nigeria Exchange (NGX) Limited.
Notes: FGN=Federal Government of Nigeria, FGS=Federal Government of Nigeria
Savings Bond.

2.3.5
Financial Soundness Indicators
The financial sector remained stable, as the key financial soundness
indicators were within regulatory thresholds. The Industry Capital
Adequacy Ratio (CAR) fell by 0.5 percentage points to 14.1 per cent
from 14.6 per cent in the preceding quarter. The decline was attributed
to the increase in banks' risk-weighted assets, which offset the increase
in their total qualifying capital. However, the ratio remained above the
minimum threshold of 10 per cent.
Similarly, the non-performing loan ratio fell by 0.08 percentage point to
5.0 per cent, relative to the level in the preceding quarter, owing to
banks' increase in loan recoveries. Similarly, the Industry Liquidity Ratio
(LR) decreased by 1.6 percentage points to 54.2 per cent, from 55.8 per
cent, reflecting a decrease in the stock of liquid assets held by banks,
compared with 55.8 per cent recorded in the preceding quarter.
However, the LR was above the regulatory benchmark of 30.0 per cent.


42 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

2.4.
EXTERNAL SECTOR DEVELOPMENTS
2.4.1
External Balance
Soaring commodity prices resulting from the lingering supply chain
disruptions, occasioned by the Russia-Ukraine conflict, improved export
proceeds, and the surplus in the current account in 2022Q2. The
financial account recorded a net acquisition of financial assets of
US$1.32 billion, relative to US$1.67 billion in the preceding quarter.
However, an estimated overall balance of payments deficit position of
US$0.30 billion was recorded in the external account, relative to
US$0.88 billion in the first quarter of 2022. The external reserves at endJune 2022 declined to US$39.22 billion, compared with US$39.52 billion
at end-March 2022. The level could finance 9.1 months of goods only or
7.2 months of goods and services import. Public external debt at endMarch 2022 stood at US$39.97 billion, compared with US$38.39 billion
at end-December 2021. Following the Bank’s sustained intervention in
the foreign exchange market, the average exchange rate of the naira
per US dollar at the I&E window, appreciated by 0.2 per cent to
₦415.71/US$, compared with ₦416.34/US$, in the first quarter of
2022.
2.4.2
Current & Capital Account Developments
The current account posted a higher surplus owing to sustained high
crude oil prices, which improved the trade surplus and narrowed the
deficit in the primary income account. The estimated current account
recorded a surplus of US$6.61 billion (6.1 per cent of GDP), relative to
US$2.58 billion (2.4 per cent of GDP) in the preceding quarter. The
improvement was due to an increase in export earnings, lower import
bills for goods, a narrower primary income account deficit on account
of reduced repatriation of dividends, and the sustained surplus in the
secondary income account.


Summary
Current and
Capital Account
Developments

43 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 30: Current Account Balance

Source: Central Bank of Nigeria
Aggregate export earnings were boosted by further commodity price
improvement in the review period. Export earnings rose by 11.5 per cent
to US$19.30 billion in the second quarter of 2022, compared with
US$17.30 billion in the preceding period. A breakdown shows that
crude oil and gas exports increased by 11.1 per cent to US$17.06 billion,
relative to US$15.36 billion in the preceding quarter. The development
was driven, majorly, by the increase in the average price of Nigeria’s
reference crude, the Bonny Light, to US$118.34 per barrel, relative to
US$103.81 in the preceding quarter. Similarly, non-oil and electricity
export receipts increased by 15.0 per cent to US$2.24 billion, from
US$1.95 billion in the preceding quarter. In terms of share of total
exports, crude oil and gas export receipts remained dominant,
accounting for 88.4 per cent, while non-oil export accounted for the
balance.
The challenges in global supply chains, arising from the lockdown in
China and the Russia-Ukraine crisis, subdued merchandise import in the
review period. Provisional data shows that merchandise import fell by
5.2 per cent to US$12.95 billion in the second quarter of 2022, relative
to US$13.66 billion in the preceding quarter. This was occasioned
majorly, by the decline in the importation of non-oil products by 10.6
per cent to US$8.45 billion, from US$9.45 billion in the preceding
quarter. However, the import of petroleum products increased by 6.9
per cent to US$4.50 billion, from US$4.21 billion in the preceding
quarter, to bridge the persisting supply gap in the economy. The share
of non-oil import remained dominant, accounting for 65.3 per cent of

Q42021
Q1 2022
Q2 2022
0.01
2.58
6.04
US$ Billion
Export
Performance
Merchandise
Import

44 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

total import, while petroleum products represented the balance of 34.7
per cent.
A breakdown of non-oil import by sector revealed that import of raw
materials and machinery for industrial use accounted for the largest
share of 50.3 per cent, reflecting the optimism of improved domestic
business sentiments. Other sectoral import shares were: manufactured
products, 20.8 per cent; food products, 13.2 per cent; oil, 7.3 per cent;
transport, 3.6 per cent; mineral, 3.5 per cent; and agricultural products,
1.2 per cent.
The deficit in the services account widened as the demand for services
increased, driven majorly by the payment for insurance & pension, and
financial services during the review period. Payment for services
amounted to US$3.50 billion, while services receipts was US$0.64
billion, resulting in an increased deficit by 1.0 per cent to US$2.86 billion
in the second quarter of 2022, relative to the preceding quarter. The
higher deficit was on account of the 5.3 per cent and 59.2 per cent
increase in payments for insurance & pension and financial services,
respectively.
Analysis by shares shows that payment for transportation and travel
services stood at US$1.39 billion and US$0.95 billion, respectively,
accounting for 39.7 per cent and 27.1 per cent of total services
payment. Other business services at US$0.65 billion accounted for 18.7
per cent of the total. Payment for insurance and pension service was
US$0.17 billion constituting 4.9 per cent of the total, while payment for
telecommunication services, financial services, government goods and
services, and charges for the use of intellectual properties were
Services

45 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

US$0.12 billion or 3.3 per cent, US$0.09 billion or 2.6 per cent, US$0.07
or 1.9 per cent, 0.06 or 1.8 per cent of the total, respectively.

Figure 31: Share of Service Out-Payments (Per cent)

Source: Central Bank of Nigeria
Service receipts showed a substantial decrease of 32.8 per cent to
US$0.64 billion, compared with the US$0.96 billion in the preceding
quarter as transportation services fell considerably by 56.4 per cent. In
terms of shares, receipts from transportation, financial and
government services at US$0.20 billion, US$0.14 billion, and US$0.12
billion, accounted for 31.6 per cent, 22.4 per cent and 17.9 per cent,
respectively. Receipts from travels and telecommunications services at
US$0.09 billion and US$0.05 billion, represented 14.4 per cent and 7.2
per cent of the total, respectively.
Transport
39.7%
Travel
27.1%
Insurance and pension
services
4.9%
Government
services
1.9%
Financial services
2.6%
charges for the use
of intellectual
property n.i.e
1.8%
Telecommunications,
computer, and
information services
3.3%
Other business
services
18.7%

46 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 32: Share of Services Receipts (Per cent)

Source: Central Bank of Nigeria
The deficit in the primary income account narrowed as the repatriation
of dividends by non-resident investors declined in the review period. The
estimated deficit in the primary income account narrowed by 35.7 per
cent to US$2.49 billion in the second quarter of 2022, compared with
the US$3.87 billion in the preceding quarter. This reflected lower
repatriation of dividends and profits, coupled with reduced interest
payments on loans. The surplus in the compensation of employees subaccount decreased by 1.8 per cent to US$0.05 billion in the review
period, compared with the level in the preceding quarter.

Figure 33: Primary Income Balance

Source: Central Bank of Nigeria.
Transport
31.6%
Travel
14.4%
Insurance and
pension services
6.0%
Government
services
17.9%
Financial services
22.4%
Telecommunications,
computer, and
information services
7.2%
Other business
services

2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
US$billion
Primary Income

47 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
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The impact of the unrest in Eastern Europe and the lingering effects of
the COVID-19 pandemic negatively impacted the inflow of remittances.
The surplus in the secondary income account decreased to US$5.60
billion in the review period, relative to US$5.63 billion in the preceding
quarter. The development was due to the decline in the inflow of
remittances to US$4.88 billion from US$5.16 billion in the preceding
quarter. However, general government transfers in the form of aids and
grants rose by 31.2 per cent to US$0.73 billion in the second quarter of
2022, compared with US$0.56 billion in the first quarter of 2022.
Figure 34: Secondary Income Balance and Remittances Inflow (US$ Billion)
Source: Central Bank of Nigeria
2.4.3
Financial Account
The financial account maintained a net acquisition of financial assets,
emanating from higher foreign currency holdings of the private sector.
The financial account recorded a net acquisition of financial assets of
US$1.32 billion (1.2 per cent of GDP), compared with US$1.67 billion
(0.7 per cent of GDP) in the preceding quarter.
An iinflow of US$3.86 billion was recorded in the second quarter of
2022, relative to US$5.18 billion in the preceding quarter. The
development was due largely to a lower inflow of portfolio capital, and
reduced placement of currency and deposits in Nigerian banks. FDI
inflow stood at US$0.63 billion, against divestment of US$0.18 billion in
the preceding quarter, resulting from higher investments in equity
worth US$0.47 billion and debt instruments amounting to US$0.16
billion in the review period. Portfolio investment inflow declined
marginally by 0.9 per cent to US$1.53 billion, following a 74.5 per cent
reduction in investment in equities by non-resident investors. Similarly,
“Other investment” inflow declined to US$1.71 billion, from US$1.97

2021Q2
2021Q3
2021Q4
2022Q1
2022Q2
Secondary Income Balance
Workers' Remittances
Secondary Income
Financial Account
Developments
Net Incurrence
of Liability

48 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

billion in the preceding period, due to a reduction in the placement of
currency and deposits in Nigerian banks.
Aggregate financial asset was US$4.88 billion in the second quarter of
2022, compared with US$4.99 billion in the preceding quarter, driven
by the reduction in other investment assets, owing to a decline in
foreign currency holdings and deposits in foreign banks by domestic
investors. Foreign direct investments increased significantly to US$0.35
billion, relative to the disposal of US$0.05 billion in the preceding
quarter, reflecting higher yields in the international financial market as
countries continue to hike policy rates. Similarly, investments in
portfolio assets increased to US$0.02 billion, relative to the disposal of
US$0.09 billion in the preceding quarter. The rate hike boosted
investors’ confidence in the international debt market, leading to
increased purchases of debt securities by resident non-financial
corporations and households. However, “Other investment” assets fell
to US$4.51 billion, relative to US$5.13 billion in the preceding quarter,
owing to a significant decline in trade credits. Furthermore, reserve
assets recorded a depletion of US$0.30 billion, lower than the US$0.88
billion in the preceding quarter.
2.4.4
External Debt
Nigeria's public external debt surged in the review period, owing to new
borrowings. Nigeria’s public sector external debt stock and external
debt service payment at end-June 2022 stood at US$40.06 billion (9.2
per cent of GDP) and US$0.60 billion, respectively. A breakdown
showed that the multilateral loans, from the World Bank, International
Monetary Fund, and African Development Bank Groups, amounted to
US$19.16 billion, accounting for 47.8 per cent of the total. A total of
US$15.62 billion or 40.0 per cent of the total was borrowed from
commercial sources in the form of Euro and Diaspora Bonds. Loans
from bilateral sources was US$4.70 billion, or 11.7 per cent of the total,
while promissory notes were US$0.59 billion, or 1.5 per cent of the total
debt stock.

The external debt service payment stood at US$0.60 billion at end-June
2022, relative to US$0.69 billion in the preceding quarter. A breakdown
showed that the principal repayment was US$0.38 billion, accounting
for 55.1 per cent of the entire payment. Interest payment totalled
US$0.20 billion, or 29.0 per cent of the total, while other payments
made up the balance. An analysis of interest payments showed that
interest payment on commercial borrowings accounted for 80.0 per
Net Acquisition
of Asset
Public Sector
External Debt

49 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

cent of the total at US$0.16 billion, while multilateral institutions
accounted for 10.0 per cent of the total or US$0.02 billion. Interest
payments on bilateral loans accounted for the balance.

2.4.5
International Investment Position (IIP)
Nigeria's International Investment Position (IIP) recorded a net financial
liability of US$74.09 billion at end-June 2022. The stock of financial
assets increased by 0.9 per cent to US$108.34 billion at end-June 2022,
compared with US$107.36 billion at end-March 2022. This was due
largely to increase in the stock of financial derivatives by 52.2 per cent
to US$3.21 billion. Similarly, portfolio investment assets increased by
13.3 per cent to US$3.32 billion. Direct investment, however,
decreased by 1.8 per cent to US$13.30 billion, driven by divestment of
assets non-resident investors. Other investment also decreased by 0.3
per cent to US$49.35 billion in the review period, compared to the
US$49.49 billion in the first quarter of 2022.

The stock of financial liabilities representing foreign investors' claims on
the economy increased by 2.3 per cent to US$182.43 billion at end-June
2022, compared with US$178.31 billion at end-March 2022. The
development reflected an increase in the stock of portfolio, financial
derivatives, and other investment liabilities, relative to the levels at
end-March 2021. The stock of direct investment liabilities, however,
decreased by 1.6 per cent to US$87.28 billion, compared with US$88.71
billion at end-March 2022.

2.4.6
International Reserves
The international reserves remained above the benchmark of 3.0
months of import cover. The international reserves were US$39.22
billion at end-June, 2022, relative to US$39.28 billion at end -March
2022. The external reserves could cover 7.2 months of import for goods
and services or 9.1 months of import for goods only.


International
Investment Position
International
Reserves

50 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

Figure 35: External Reserves and Months of Import Cover

Source: Central Bank of Nigeria
A breakdown of the external reserves by ownership shows that, the
share of CBN was US$37.98 billion (96.85 per cent); Federal
Government, US$1.20 billion (3.06 per cent); while the Federation
accounted for the balance of US$0.04 billion (0.09 per cent). In terms
of currency composition, the US dollar was US$30.06 billion, (76.6 per
cent); Special Drawing Rights US$5.05 billion (12.9 per cent); Chinese
Yuan US$3.65 billion (9.3 per cent); GB Pounds, US$0.22 billion (0.6 per
cent); Euro US$0.25 billion (0.6 per cent); and other currencies
accounted for the balance.
2.4.7
Foreign Exchange Flows through the Economy
The economy recorded a rise in the net foreign exchange inflow on
account of increased receipts from crude oil, non-oil sources and
invisible purchases. Foreign exchange inflow into the economy
increased by 12.7 per cent to US$19.86 billion, compared with
US$17.62 billion in the preceding quarter. The development was driven
by the 14.9 per cent and 11.1 per cent increased inflow through the
CBN and the autonomous sources, respectively. Foreign exchange
inflow through the Bank at US$8.77 billion, rose above the US$7.63
billion in the preceding quarter. Disaggregation shows that receipts
from oil-related sources increased by 70.3 per cent to US$2.50 billion,
relative to the value in the first quarter. Similarly, receipts from non-oil
sources rose to US$6.27 billion, compared with US$6.16 billion in the
preceding quarter. Foreign exchange inflow through autonomous
sources also increased to US$11.09 billion from US$9.99 billion in the
preceding period, driven mainly by the rise in non-oil export receipts
and Invisibles purchases.

Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22
Months
US$ Billion
External Reserves - LHS
Months of Import (Goods only)
Months of Import (Goods and Services)
Foreign Exchange
Flows through the
Economy

51 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
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Foreign exchange outflow through the economy increased by 5.6 per
cent to US$11.59 billion, relative to the level in the first quarter.
Outflow through the Bank at US$8.45 billion, increased by 0.2 per cent,
relative to US$8.43 billion in the preceding quarter, attributed largely
to increases in the public sector/direct payment and third-party MDA
transfers. Similarly, autonomous outflow rose by 23.2 per cent to
US$3.14 billion, on account of an increase in invisible imports.
Consequently, the economy recorded a net inflow of US$8.27 billion in
the second quarter 2022, compared with US$6.64 billion in the
preceding quarter. Similarly, a net inflow of US$0.32 billion was
recorded through the Bank, in contrast to a net outflow of US$0.80
billion in the preceding quarter. Autonomous sources recorded a net
inflow of US$7.95 billion in the review period, compared with US$7.44
billion in the first quarter.
Figure 36: Foreign Exchange Transactions through the Economy (US$ Million)
in the Second Quarter of 2022

Source: Central Bank of Nigeria
2.4.8
Developments in the Foreign Exchange Market
The Bank continued to strengthen its foreign exchange management
regime by implementing the RT200 programme as a strategy to create
an enabling environment for a stable exchange rate.
2.4.9
Transactions in the Foreign Exchange Market
Total foreign exchange sales to authorised dealers by the Bank at
US$4.81 billion, decreased by 0.9 per cent, compared with the level in
the preceding quarter. Disaggregation shows that SME interventions
and sales at the investors & exporters window declined by 8.6 per cent
Q2 2021
Q1 2022
Q2 2022
Inflow
18,302.56
17,619.48
20,077.11
Outflow
9,771.26
10,983.64
10,825.30
Netflow

Inflow
Outflow
Netflow
Foreign Exchange
Market
Developments
Spot Transactions

52 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

and 41.3 per cent to US$0.34 billion and US$0.83 billion, respectively,
relative to the preceding quarter. However, interbank/invisibles and
SMIS windows, increased by 5.3 per cent and 14.7 per cent to US$0.48
billion and US$2.05 billion, compared with the amounts in the
preceding quarter. Similarly, matured swap contracts rose by 34.6 per
cent to US$1.11 billion, relative to the previous quarter's level.
Figure 37:Foreign Exchange Sales to Authorised Dealers (US$ billion)

Source: Central Bank of Nigeria
The average turnover at the Investors and Exporters’ (I&E) segment
increased by 16.4 per cent to US$0.14 billion, relative to the level in the
preceding quarter of 2022, reflecting increased liquidity in the window.
Figure 38: Turnover in the I&E Foreign Exchange Market

Source: Central Bank of Nigeria.

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

US$Bn


Q 2
2 0 2 0
Q 3
2 0 2 0
Q 4
2 0 2 0
Q 1
2 0 2 1
Q 2
2 0 2 1
Q 3
2 0 2 1
Q 4
2 0 2 1
Q 1
2 0 2 2
Q 2
2 0 2 2
Per cent
US$ Million
Average Turnover
Rate of Turnover

53 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
ECONOMIC REPORT, SECOND QUARTER 2022

2.4.10 Exchange Rate Movement
The exchange rate of the naira at the I&E window, was relatively stable
in the second quarter 2022. The average exchange rate of the naira
per US dollar at the I&E window, appreciated by 0.2 per cent to
₦415.71/US$, compared with ₦416.34/US$, in the first quarter
of 2022.


Average Exchange
Rate

54 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
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3.0
ECONOMIC OUTLOOK
3.1
Global Outlook
According to the IMF's revised outlook, the growth rate of the global
economy is expected to fall to 3.2 per cent in 2022, from an estimated
6.1 per cent in 2021, reflecting a 0.4 percentage points decline from the
previous IMF forecast. Advanced Economies (AEs) growth is predicted
to slow to 2.5 per cent in 2022, from 5.2 per cent in 2021 while
Emerging Market and Developing Economies (EMDEs) growth is
projected to slow to 3.6 per cent from 6.8 per cent in 2021. The 0.2
percentage point downward revision from the previous IMF forecast is
expected on account of the ongoing war in Ukraine, and the attendant
sanctions imposed on Russia, which are expected to have a direct
negative impact on both countries, with international spillovers. In
addition, increased fiscal withdrawals, pandemic-induced supply
disruptions, monetary tightening, and financial market volatility, are all
expected to slow output growth. Furthermore, China's deceleration
growth, due to the rigorous zero-COVID policy, is expected to dampen
growth prospects across the world via trade contagion.
Global inflation is expected to remain high in the near term, rising to 6.6
per cent in advanced economies, and 9.5 per cent in emerging markets
and developing nations, in 2022. According to the World Economic
Outlook for July 2022, inflation persistence in the near term is hinged
on the surge in commodity prices, heightened by the war in Ukraine,
amid the escalation of the pre-existing supply disruptions. Robust
demand for products and a tight labour market are also expected to
induce inflationary pressures. While energy is expected to be the main
driver of the price increases in advanced economies, rising food prices
would also play a significant role in most emerging markets and
developing economies, where food constitutes a larger share of
consumption.
3.2
Domestic Outlook
The Nigerian economy is projected to grow by 3.51 per cent in 2022Q3
(year-on-year). The positive outlook is predicated on the assumption
that the current trend in crude oil prices will be sustained. It is also
founded on the effective implementation of the Medium-Term
National Development Plan (MTNDP), and the positive impact of CBN
interventions on growth-enhancing sectors, among others. However,
persistent security challenges, as well as infrastructural deficits remain
as headwinds to growth.
Economic Outlook
Economic Outlook
for the Third
Quarter

55 | P a g e Central Bank of Nigeria Economic Report SECOND QUARTER 2022
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Due to rising energy and food prices, inflationary pressures are expected
to remain elevated in the near term. This outlook is driven further by an
increase in production costs associated with the disruptions to the
supply of electricity and petroleum products, coupled with security
challenges in some parts of the country and the possible consequence
of the Russia-Ukraine war. Also, food prices are projected to rise
marginally, before moderating during the upcoming harvest season.
The fiscal outlook in the near term appears moderately optimistic,
despite the increase in both oil and non-oil revenue, amidst the lingering
Russia-Ukraine war that triggered global commodity price shocks. Gains
from the crude oil price increase is expected to be eroded by the huge
subsidy payments on Premium Motor Spirit (PMS). Due to rising energy
costs, the decrease in households’ purchasing power and businesses’
profits may likely reduce tax revenue. However, the continuous
implementation of the Finance Act and other programmes under the
Strategic Revenue Growth Initiatives (SRGIs) of the FGN, is expected to
mitigate the associated fiscal risks.
Nigeria's external reserves are projected to hover around US$39.2
billion in the near term. This upward movement is predicated on oil
prices above US$100 per barrel. However, the payment of subsidies on
petroleum, rising import bills, and increased external debt servicing
remain possible impediments to reserves accretion.