ECONOMIC REPORT
SECOND QUARTER 2014


CENTRAL BANK OF NIGERIA


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

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

Contents


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Economic Report Second Quarter


Text Tables


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Economic Report Second Quarter

Appendix Tables
Figures


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Economic Report Second Quarter

1.0 Summary
Provisional data indicated that growth in key monetary aggregate
was sluggish in the second quarter of 2014. Over the level at the end
of the preceding quarter, broad money supply, (M2), grew by 1.5 per
cent, compared with 0.2 per cent at the end of the preceding
quarter. The development reflected, largely, the 1.1 and 4.5 per
cent increase in foreign assets (net) and other assets (net) of the
banking system, respectively, during the review quarter.
Available data indicated mixed developemnts in banks’ deposit
and lending rates in the second quarter of 2014. The spread
between the weighted average term deposit and maximum lending
rates widened by 0.05 percentage point to 17.22 per cent in the
review quarter. The margin between the average savings deposit
and the maximum lending rates, however, narowed by 0.01
percentage point to 22.40 per cent. The weighted average interbank call rate rose by 0.26 percentage point to 10.59 per cent in the
second quarter of 2014, reflecting the liquidity condition in the interbank funds market.
Provisional data indicated that the value of money market assets
outstanding at the end of the second quarter of 2014 increased by
3.4 per cent to N7,144.49 billion, compared with the increase of 1.1
per cent at the end of the preceding qaurter. The development was
attributed, laregely, to the 5.8 per cent increase in FGN Bonds
outstanding. Available data indicated that developments in the
Nigerian Stock Exchange (NSE) were mixed during the second
quarter of 2014.
Total federally-collected revenue
stood at
N2,601.98 billion,
representing an increase of 4.3 per cent above the receipts in the
first quarter of 2014, but was a decline of 4.3 per cent below the
proportionate quarterly budgeted estimate. At N1,795.53 billion, oil
receipts, which constituted 69.0 per cent of the total, exceeded the
proportionate budget estimate marginally by 0.2 per cent, but fell by
0.7 per cent below the receipts in the preceding quarter. The
increase in oil receipts relative to the proportionate budget estimate
was attributed, largely, to the rise in the other oil revenues during the
review period.
Non-oil receipts, at N806.45 billion, was below the budget estimate
by 13.1 per cent, but was 17.4 per cent above the receipts in the
preceding quarter. Federal Government retained revenue was
N864.15 billion, while total expenditure was N1,193.52 billion. Thus, the
fiscal operations of the Federal Government resulted in an estimated


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Economic Report Second Quarter

deficit of N329.37 billion in the second quarter of 2014, compared
with the quarterly budget and the preceding qaurter’s deficit of
N241.1 billion and N202.7 billion, respectively.
Activities in the agricultural sector improved slightly in the second
quarter as a result of well distributed rainfall in most parts of the
country. Nigeria’s crude oil production, including condensates and
natural gas liquids, was estimated at an average of 1.91 million
barrels per day (mbd) or 173.81 million barrels for the quarter. Crude
oil export stood at 1.46 mbd or 131.4 million barrels for the quarter,
while deliveries to the refineries for domestic consumption remained
at 0.45 mbd or 40.95 million barrels. The average price of Nigeria’s
reference crude, the Bonny Light (370 API), rose by 1.7 per cent
above the level in the first quarter of 2014.
The end-period headline inflation rate (year-on-year) was 8.2 per
cent, compared with the 7.8 and 8.4 per cent recorded at the end
of the preceding quarter and the corresponding quarter of 2013,
respectively. Inflation rate on a twelve-month moving average basis
was 8.0 per cent, compared with 8.2 and 10.4 per cent in the
preceding quarter and the corresponding quarter of 2013,
respectively.
Provisional data indicated that foreign exchange inflow and outflow
through the Central Bank of Nigeria (CBN) amounted to US$12.67
billion and US$12.81 billion, respectively, resulting in a net outflow of
US$0.14 billion during the review quarter. Foreign exchange sales by
the CBN to the authorized dealers amounted to US$10.79 billion,
compared with US$14.40 billion in the first quarter of 2014. The
average exchange rate of the naira vis-à-vis the US dollar at the
rDAS window was N157.29 per US dollar, indicating a marginal
appreciation over its levels in the preceding quarter and the
corresponding quarter of 2013. Similarly, relative to their respective
levels in the first quarter of 2014, the naira appreciated by 1.6 and
0.3 per cent at both the bureau-de-change and inter-bank
segments of the market.
Available data from the latest World Economic Outlook (WEO)
indicated that global growth in 2014 was projected at 3.7 per cent,
following increased global activity recorded in the second half of
2013. The development was attributed to expected increase in
aggregate demand in the advanced economies and rebound in
exports in emerging economies, even as domestic demand
remained weaker than expected in many countries.
World crude oil demand in the second quarter of 2014 increased by
0.8 per cent above the level recorded in the first quarter of 2014.


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Economic Report Second Quarter

Similarly, world crude oil output also increased by 0.3 per cent over
the level recorded in the preceding quarter. The OPEC reference
basket price of eleven selected crude streams increased by 1.0 and
4.8 per cent above its levels in the preceding qaurter and the
corresponding quarter of 2013, respectively. The prices of the UK
Brent, the WTI and the Forcados exhibited similar trend.
Other major international economic developments and meetings of
importance to the domestic economy during the review quarter
included: the 46th Ordinary Meeting of the Committee of Governors
of Central Banks of ECOWAS Member States held in Dakar, Senegal
on June 30, 2014: the 49th Annual Meetings of the Board of
Governors of the African Development Bank and the 40th Annual
Meeting of African Development Fund held in Kigali, Rwanda from
May 19 – 23, 2014; the World Economic Forum on Africa was held in
Abuja, Nigeria from May 7- 9, 2014; and the 2014 Spring Meetings of
the Board of the World Bank Group and the International Monetary
Fund held at Washington D.C. USA from April 7- 13, 2014. Finally, the
Institute of International Finance (IIF) Outreach Event was held on
June 10, 2014 in Lagos, Nigeria.


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Economic Report Second Quarter

2.0 Financial Sector Developments
2.1 Monetary and Credit Developments
Provisional data indicated that growth in the key monetary
aggregate was sluggish at the end of the second quarter of 2014.
Developments in banks’ deposit and lending rates were mixed
during the review quarter. The value of money market assets
outstanding increased, due largely, to the rise in FGN Bonds.
Developments in the Nigerian Stock Exchange (NSE) were mixed.
Provisional data indicated that growth in the key monetary
aggregate was sluggish at the end of the second quarter of
2014. Relative to the level at the end of the first quarter of
2014, broad money supply, (M2), grew by 1.5 per cent to
N15,928.4 billion, compared with the 0.2 per cent at the end of
the preceding quarter, but contrasted with the 0.5 per cent
decline at the end of the corresponding quarter of 2013. The
development relative to the preceding quarter reflected,
largely, the respective growth of 1.1 and 4.5 per cent in
foreign assets (net) and other assets (net) of the banking
system, which more than offset the effects of the 1.1 per cent
decline in net domestic credit.
Narrow money supply (M1), at N6,587.3 billion, fell by 4.4 per
cent, compared with the decline of 1.7 per cent at the end
of the first quarter of 2014. This, however, contrast with the
marginal growth of 0.01 per cent at the end of the
corresponding quarter of 2013. The development, relative to
the preceding quarter, was attributed to the respective
decline of 5.2 and 4.2 per cent in its currency and demand
deposit components.
Quasi-money grew by 6.1 per cent to N9,341.1 billion at the
end of the second quarter 2014, compared with the growth of
1.8 per cent at end-March 2014, but contrasted with the 0.9
per cent decline in the corresponding period of 2013 (Fig. 1,
Table 1).
Growth in key
monetary
aggregate was
sluggish during
Q2 2014.


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Economic Report Second Quarter

Figure 1: Growth Rate of Narrow Money (M1) and Broad Money (M2)1
-15
-10
-5

-10
-5

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Quarterly (%)
Cumulative (%)
QM1 (RHS)
QM2 (RHS)
CM1 (LHS)
CM2 (LHS)

At N15,173.6 billion, aggregate banking system’s credit (net)
to the domestic economy fell by 1.1 per cent at the end of
the second quarter of 2014, in contrast to the growth of 2.1
and 3.2 per cent at the end of the preceding quarter and the
corresponding period of 2013, respectively. The development
relative to the level at end of the first quarter of 2014 reflected,
largely, the decline in net claims on the Federal Government.
Banking system’s credit (net) to the Federal Government, at
the end of the review quarter, fell by 24.8 per cent to negative
N1,790.2 billion, compared with the decline of 0.9 per cent at
the end of the corresponding period of 2013. This, however,
contrasted with the growth of 2.4 per cent at the end of the
preceding quarter. The development relative to the level at
the end of the preceding quarter was attributed to the
decline
in
the
banking
system’s
holding
of
Federal
Government treasury securities, especially treasury bills.
At the end of the second quarter of 2014, banking system’s
credit to the private sector grew by 1.1 per cent to N16,963.8
billion, compared with the growth of 1.7 and 2.8 per cent at

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

Banking system
credit to the
Federal
Government fell by
24.8 per cent at
the end of the
second quarter of
2014.


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Economic Report Second Quarter

end-March 2014 and the corresponding quarter of 2013,
respectively. The development relative to the preceding
quarter reflected the growth of 1.3 per cent in claims on the
core private sector (Fig. 2, Table 1).
Figure 2: Growth Rate of Aggregate Domestic Credit to the Economy2


Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Quarterly (%)
Cumulative (%)
QCP (RHS)
QCG (RHS)
QAC (RHS)
CCP (LHS)
CCG (LHS)
CAC (LHS)

At N7,693.3 billion, foreign assets (net) of the banking system
showed an increase of 1.1 per cent at the end of the second
quarter of 2014, as against the decline of 10.6 and 5.4 per
cent at the end of the preceding quarter and the
corresponding period of 2013, respectively. The development
relative to the preceding quarter was attributed, wholly, to the
increase in the foreign assets holdings of the CBN.
Other assets (net) of the banking system rose by 4.5 per cent
to negative N6,938.5 billion, compared with the increase of
7.9 and 0.6 per cent at the end of the preceding quarter and
the
corresponding
period
of
2013,
respectively.
The
development relative to the level in the preceding quarter,
reflected, largely, the rise in unclassified assets of both the
CBN and the banks during the review period.


2 QCP, QCG and QAC represent quarter-on-quarter changes in credit to private sector, credit to
government (net) and aggregate credit (net) to the domestic economy, respectively, while CCP,
CCG and CAC, represent the cumulative changes (year-to-date).
Foreign assets
(net) of the
banking system
increased at the
end of the review
quarter.


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Economic Report Second Quarter

Table 1: Growth in Monetary and Credit Aggregates (Per cent) Over
Preceding Quarter
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Foreign Assets (Net)

Other Assets (Net)

Broad Money Supply (M2)

Quasi-Money

Narrow Money Supply (M1)

Memorandum Items:
Reserve Money (RM)


2.2
Currency-in-circulation (CIC) and Deposits at
the CBN
At N1,497.1 billion, currency-in-circulation fell by 4.9 per cent
at the end of the second quarter of 2014, compared with the
decline of 11.4 and 5.5 per cent at the end of the preceding
quarter and the corresponding quarter of 2013, respectively.
The development relative to the preceding quarter was
attributed, largely, to the 3.7 per cent fall in vault cash.

Total deposits at the CBN increased marginally by 1.0 per
cent to N6,885.9 billion, in contrast to the decline of 3.0 per
cent at the end of the first quarter of 2014. The development
reflected, largely, the
22.0 per cent rise
in
Federal
Government deposits, which more than offset the 6.8 and 50.9
per cent fall in the deposits of banks and “Others”,
respectively. Of the total deposits, the shares of the Federal
Government, banks and ‘’Others’’ were N3,371.3 billion (49.0
per cent), N3,225.9 billion (46.8 per cent) and N288.7 billion
(4.2 per cent), respectively.
Reserve money (RM), at N4,723.1 billion, fell by 6.2 per cent,
compared with the 9.4 per cent decline recorded at the end
of the preceding quarter. The development, relative to the
level at the end of the preceding quarter, was attributed to
the respective decline of 4.9 and 6.9 per cent in its currency
and demand deposit components.

Reserve money
(RM) fell at the
end of the second
quarter of 2014.


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Economic Report Second Quarter

2.3
Money Market Developments
Money market rates remained relatively stable in the second
quarter of 2014. The development was influenced by the
liquidity condition in the banking system. Monetary Policy
remained, largely, restrictive in the second quarter of 2014. The
Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR) on
both public and private sector deposits were maintained at
12.0, 75.0 and 15.0 per cent, respectively. The Liquidity Ratio
(L/R) and Net Open Position were also retained at their
preceding quarter’s levels. Patronage at the Bank’s deposit
facility window was consistently high, while request for the
Standing Lending Facility (SLF) was minimal.
Provisional data indicated that the value of money market
assets outstanding at the end of the second quarter of 2014
stood at N7,144.49 billion, showing an increase of 3.4 per
cent, compared with the increase of 1.1 per cent at the end
of the preceding quarter. The development was attributed
largely, to the 5.8 per cent increase in FGN Bonds outstanding
.

2.3.1
Interest Rate Developments
Available data indicated mixed developments in banks’
deposit and lending rates during the second quarter of 2014.
With the exception of the 3 months deposit rate, which
declined by 0.04 percentage point to 9.37 percent, all other
rates on deposits of various maturities rose from a range of
3.30 – 9.92 per cent in the first quarter of 2014 to a range of
3.42 – 10.06 per cent in the second quarter. Similarly, at 8.60
per cent, the average term deposit rate rose by 0.05
percentage point above its level in the preceding quarter.
The maximum lending rate also increased by 0.10 percentage
point to 25.82 per cent, while the prime lending rate fell by
0.29 percentage point below the 16.86 per cent recorded in
the preceding quarter. Consequently, the spread between
the weighted average term deposit and maximum lending
rates widened by 0.05 percentage point to 17.22 per cent
from 17.17 per cent in the preceding quarter. The margin
between the average savings deposit and the maximum
lending rates, however, narrowed by 0.01 percentage point to
22.40 per cent from 22.41 per cent in the preceeding quarter.
With the headline inflation rate at 8.2 per cent at end-June
Money market
rates were
relatively stable
during the review
period.
The spread
between the
weighted – average
term deposit and
maximum lending
rates widened
during the review
period.


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Economic Report Second Quarter

2014, all deposit and lending rates, with the exception of the
average savings and 7-day deposit, were positive in real
terms.
At the interbank funds segment, the weighted average interbank call rate, which stood at 10.33 per cent at the end of the
preceding quarter, rose by 0.26 percentage point to 10.59 per
cent in the second quarter of 2014, reflecting the liquidity
condition in the banking system. Similarly, the weighted
average rate at the Open-Buy-Back (OBB) segment fell by
0.80 percentage point to 10.53 per cent in the review quarter,
from 11.33 per cent in the preceding quarter. The Nigeria
Inter-bank Offered Rate (NIBOR) for the 7-day and 30-day
tenors, fell to 10.91 and 12.14 per cent from 11.88 and 12.22
per cent, respectively, in the second quarter of 2014 (Fig. 3,
Table 2).
Figure 3: Selected DMBs Interest Rates (Average)

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Percent per Annum
Percent per Annum
Prime
Interbank
Maximum
Average Term Deposits (RHS)

Table 2: Selected Interest Rates (Percent, Averages)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Average Term Deposits

Prime Lending

Interbank

Maximum Lending


Interbank call rate
rose in Q2 2014.


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Economic Report Second Quarter

2.3.2
Commercial Paper (CP)
Commercial Paper (CP) outstanding held by banks fell by 1.2
per cent to N10.63 billion at the end of the second quarter of
2014, compared with the value of N10.76 billion at the end
of the preceding quarter. The development was attributed to
the fall in investment in CP by the commercial banks during
the review quarter. Thus, CP constituted 0.15 per cent of the
total value of money market assets outstanding, at the end of
the review period, compared with 0.16 per cent at the end of
the preceding quarter.
2.3.3
Bankers’ Acceptances (BAs)
At the end of the review quarter, BAs decreased by 8.2 per
cent to N28.15 billion, compared with N30.66 billion at the end
of the preceding quarter. The development was attributed to
the
decrease
in
investment
in
BAs
by
the
banks.
Consequently, BAs accounted for 0.39 per cent of the total
value of money market assets outstanding at the end of the
second quarter of 2014, compared with 0.44 per cent at the
end of the preceding quarter.
2.3.4 Open Market Operations
Open Market Operations (OMO) bills with maturities ranging
from 77-134 days were used for liquidity management in the
second quarter of 2014. Total sales amounted to N2,281.4
billion, while subscription was N 3,159.77 billion. The bid rates
ranged from 9.95 –13.4 per cent, while the stop rates were
between 10.75 –13.10 per cent.
Trading in OMO bills in the review quarter indicated that
allotment was higher by 7.95 per cent, while subscription was
lower by 4.24 per cent, when compared with their levels in the
preceding quarter for tenors ranging from 28-153 days with
stop rates ranging between 11.20 –13.10 per cent. Matured
bills amounting to N588.5 billion were repaid, translating to a
net withdrawal of N1,692.9 billion in the review period.
2.3.5
Primary Market
At the primary market segment, NTBs of 91- 182- and 364-day
tenors worth N1,053.49 billion, N3,569.9 billion and N1,053.49
billion were offered, subscribed to and allotted, respectively,
in the review quarter. At the 91-day auction, total subscription
and allotment were N441.2 billion and N223.53 billion,
Investment in
CP by banks fell
in the second
quarter of 2014.
Banks’ holdings
of BAs
decreased
during Q2 of
2014.


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Economic Report Second Quarter

respectively, with bid rates ranging from 8.50 to 15.00 per cent,
while the stop rates were from 9.95–11.71 per cent. For the
182-day auction, total subscription and allotment were
N774.26 billion and N240.36 billion, respectively. The bid rates
ranged from 9.20 -13.69 per cent, while the stop rates ranged
between 10.02–12.84 per cent. At the 364-day segment, total
subscription and allotment were N2,354.42 billion and N889.60
billion with bid rates between 9.00–15.00 per cent, while stop
rates ranged from 10.12 –13.04 per cent. The high bid-to-cover
ratio (above 2.0) for all the tenors indicated investors’
preference for the issues.
The lower yield could be attributable to the continued
patronage of government securities, reduction in the Bank’s
intervention through the sale of CBN bills and the need for
financial
institutions
to
meet
their
statutory
liquidity
requirements.
2.3.6
Bonds Market
FGN Bonds of 3- and 10-year tenors were reopened during the
review period. Total amount offered, subscribed to and
allotted were N190.00 billion, N626.63 billion and N200.0 billion,
respectively. In addition, N5.17 billion of the 10- year bond and
N82.80 billion of the 3-year bond were allotted on noncompetitive basis. The marginal rates for the 3-, and 10-year
bonds ranged from 11.36 –13.15 per cent, compared with
13.10 – 14.10 per cent recorded in the preceding quarter for
similar tenors, indicating a decrease in yield in the review
period. In the first quarter of 2014, FGN Bonds offered,
subscribed to and allotted were N270.00 billion, N544.89 billion
and N265.00 billion, respectively, at a range of 13.10 -14.2 per
cent for all the tenors.
2.3.7
CBN Standing Facilities
Total request for the standing lending facility (SLF) was N197.81
billion with a daily average of N3.35 billion for the 59 working
days in the second quarter of 2014, compared with N3,169.26
billion in the preceding quarter. The SLF request in the review
period was N2,971.45 billion lower than the value in the
preceding quarter. The total interest earned on SLF in the
quarter stood at N93.46 million, compared with N1.70 billion in
the preceding quarter.
Subscription for FGN
Bonds of various
maturities increased
during the second
quarter of 2014.


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Economic Report Second Quarter

Total standing deposit facility (SDF) granted during the review
period was N21,756.73 billion with daily average of N368.76
billion in the review quarter, compared with N24,037.26 billion
granted in the preceding quarter. The cost incurred on SDF in
the quarter stood at N9.01 billion, compared with N9.42 billion
in the preceding quarter.
2.4
Deposit Money Banks’ Activities
Available data indicated that the total assets and liabilities of
the DMBs stood at N25,101.0 billion at the end of the second
quarter of 2014, representing an increase of 1.9 per cent over
the level at the end of the preceding quarter. Funds were
sourced largely from increased mobilization of time, savings
and foreign currency deposits; sale of bonds; and increased
central government and demand deposits were used mainly,
for the extension of credit to the private sector, central
government and acquisition of unclassified assets.
At N13,219.8 billion, banks’ credit to the domestic economy,
rose by 5.4 per cent above the level in the preceding quarter.
The development was attributed to the 41.8 and 3.4 per cent
increase in claims on the private sector and Federal
Government, respectively, in the review period.
Central Bank’s credit to the banks fell by 1.4 per cent to
N268.0 billion at the end of the review quarter, reflecting the
decrease in CBN loans and advances, and overdrafts to
banks. Total specified liquid assets of the banks stood at
N5,983.9 billion, representing 35.5 per cent of their total current
liabilities. At that level, the liquidity ratio fell by 1.0 percentage
point below the level in the preceding quarter, and was 5.5
percentage points above the stipulated minimum ratio of 30.0
per cent. The loans-to-deposit ratio, at 56.8 per cent, was 1.0
percentage point above the level at the end of the
preceding quarter, but was 23.2 percentage points below the
prescribed maximum ratio of 80.0 per cent.
2.5
Discount Houses’ Activities
Total assets/liabilities of the discount houses stood at N173.2
billion at the end of the second quarter of 2014, indicating an
increase of 24.0 per cent, compared with the level at the end
of the preceding quarter, but was a decline of 49.7 per cent
below the level at the end of the corresponding quarter of
At 42.0 per cent,
liquidity ratio in Q2
2014 was 12.0
percentage points
above the stipulated
minimum ratio, while
the Loan-to-deposit
ratio fell below the
prescribed maximum
of 80 per cent.


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Economic Report Second Quarter

2013. The increase in assets relative to the preceding quarter
was accounted for by the rise in claims on banks and others,
which more than offset the effect of the decline in claims on
the Federal Government and Other assets. Correspondingly,
the increase in total liabilities was attributed to the rise in all
the components of total liabilities.
Discount houses’ investment in Federal Government securities
of less than 91-day maturity rose by 3.4 per cent to N63.9
billion and represented 50.2 per cent of their total deposit
liabilities. At this level, discount houses’ investment was 9.8
percentage points below the prescribed minimum level of
60.0 per cent for fiscal year 2014. Total borrowing by the
discount houses was N67.3 billion, while their capital and
reserves stood at N31.9 billion. This resulted in a gearing ratio of
2.1:1, compared with the stipulated maximum of 50:1 for the
fiscal year.
2.6
Capital Market Developments
2.6.1
Secondary Market
Available data indicated that developments in the Nigerian
Stock Exchange (NSE) were mixed during the second quarter
of 2014. Total volume of traded securities declined by 15.1 per
cent to 24.0 billion shares, while the value of traded securities
rose by 8.9 per cent to N298.19 billion in 298,869 deals in the
review period, compared with 28.3 billion shares, valued at
N273.9 billion in 315,512 deals recorded in the preceding
quarter. The Financial Services Industry (measured by volume)
led the activity chart with 15.5 billion shares valued at N149.6
billion, traded in 148,745 deals. Thus, contributing 64.4 and 50.2
per cent to the total equity turnover volume and value,
respectively, compared with 21.9 billion shares, valued at
N159.3 billion in 172,108 deals recorded in the preceeding
quarter. The Banking subsector of the Financial Services sector
was the most active subsector during the review quarter.


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Economic Report Second Quarter

Figure 4: Volume and Value of Traded Securities

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Value (N billion)
Volume (Billion)
Volume of traded securities (LHS)
Value of securities (RHS)

Table 3: Traded Securities on the Nigerian Stock Exchange (NSE)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Volume (Billion)

Value (N Billion)


2.6.3
New Issues Market
There were two (2) new and three (3) supplementary listings in
the review quarter (see table 4 below).

Table 4: New and Supplementary Listings on the Nigeria Stock Exchange
S/N Company
Additional Shares (Units)
Reasons
Listing

Nigerian Aviation Handling Company Plc.
2.05 Billion Fixed Rate Bond
N5 Billion Debt Issuance
New

Caverton Offshore Support Group Plc.
3.3 Billion Shares
New Issuance
New

Seplat Petroleum Development Co Plc
10.02 Million Shares
Outstanding Shares
Supplementary

UACN Property Development Co Plc
343.75 Million Shares
Bonus Issue
Supplementary

Julius Berger Nig Plc
12.0 Million Shares
Outstanding Shares
Supplementary

2.6.4
Market Capitalization
Aggregate market capitalization for all listed securities
(equities and bonds) stood at N19.1 trillion at the end of the
review quarter, indicating an increase of 14.2 per cent above
the level at the end of the preceeding quarter. Similarly,
market capitalization for the listed equities rose by 12.7 per
cent above the level at the end of the preceding quarter to
Total market
capitalization and
All-Share Index
rose during Q2
2014.


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

Economic Report Second Quarter

close at N14.0 trillion at the end of the review quarter. Listed
equities accounted for 73.5 per cent of the aggregate market
capitalization in the review quarter.
2.6.5 NSE All-Share Index
The All-Share Index, which opened at 38,748.01 at the
beginning of the quarter, closed at 42,482.48, representing an
increase of 9.6 per cent above the level at the end of the
preceding quarter. At end-June 2014, with the exception of
the NSE ASeM index, which declined to 950.94 from 952.39 at
the end of preceding quarter, all the other six sectoral indices
rose above their levels in the preceding quarter. The NSE
Banking, NSE Insurances, NSE Consumer goods, NSE Oil/Gas,
NSE Lotus Islamic and NSE Industrial indices rose by 15.9, 8.3,
9.4, 62.5, 4.1, and 3.1 per cent, to close at 432.87, 146.83,
1,058.24, 468.24, 2,874.67 and 2,666.72, respectively, at the
end of the review period.
Figure 5: Market Capitalization and All-Share Index


Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Index
N billion
Market Capitalization (LHS)
All-Share Index (RHS)


Table 5: Market Capitalization and All Share Index (NSE)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Market Capitalization (N trillion)

All-Share Index (Equities)
21,599.60

26,022.60

28,078.80

33,536.25

36,164.31

36,585.08

41,329.19

38,748.01

42,482.48


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

Economic Report Second Quarter

3.0
Fiscal Operations
3.1
Federation Account Operations
Available data showed that total federally-collected revenue
during the second quarter of 2014 stood at N2,601.98 billion,
an increase of 4.3 per cent above the level in the preceding
quarter. It, however, declined by the same margin when
compared with the proportionate quarterly budget estimate.
The development relative to the quarterly budget estimate
was attributed to the fall in non-oil revenue (Fig. 6, Table 6).
Figure 6: Components of Gross Federally Collected Revenue

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Oil Revenue Gross
Non-Oil Revenue

Table 6: Gross Federation Account Revenue (N billion)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Federally-collected revenue (Gross)

Oil Revenue

Non-Oil Revenue


At N1,795.53 billion, gross oil receipts, which constituted 69.0
per cent of the total, fell by 0.7 per cent below the receipts in
the preceding quarter, but rose marginally by 0.2 per cent
above the proportionate budget estimate. The development
relative to the budget estimate was attributed, largely, to the
increase in other oil revenue during the review quarter (Fig. 7,
Table 7).

Gross federally -
collected
revenue rose by
4.3 per cent
above the level
in the first
quarter of 2014.


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

Economic Report Second Quarter

Figure 7: Gross Oil Revenue and Its Components
-


Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
N billion
Others
PPT/Royalties
Crude oil/Gas Sales

Table 7: Components of Gross Oil Revenue (N billion)


Non-oil receipts (gross), at N806.45 billion (31.0 per cent of the
total), fell below the proportionate budget estimate by 13.1
per cent, but rose above the level in the first quarter of 2014
by 17.4 per cent. The decline in non-oil revenue relative to the
proportionate budget estimate was, due largely, to the
decline in receipts from Education Tax and FGN Independent
revenue3 (Fig. 8, Table 8).


3 Education Tax and FGN Independent revenue are components of other non-oil revenue
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Oil Revenue

Crude oil/Gas Sales

PPT/Royalties

Others


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

Economic Report Second Quarter

Figure 8: Gross Non-Oil Revenue and its Components
-

1,000
1,200
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
N billion
Others
Customs & Excise Duties
Companies Income Tax & Other Taxes
Value-Added Tax (VAT)

Table 8 Components of Gross Non-Oil Revenue (N billion)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Non-Oil Revenue

Value-Added Tax (VAT)

Companies Income Tax & Other Taxes

Customs & Excise Duties

Others

1/ Include FGN Independent Revenue, Education Tax, NITDF & Customs Federation/Non-Federation
Account Levies (Port, Sugar, ETLS, Steel, CISS & Cement Levies)
Of the gross federally-collected revenue during the review
quarter, the sum of N1,625.88 billion (net deductions and
transfers) was transferred to the Federation Account for
distribution among the three tiers of government and the
13.0% Derivation Fund. The Federal Government received
N769.48 billion, while the state and local governments
received N390.29 billion and N300.90 billion, respectively. The
balance of N165.20 billion went to the 13.0% Derivation Fund
for distribution among the oil-producing states. Also, the
Federal Government received N27.96 billion from the VAT Pool
Account, while the state and local governments received
N93.19 billion and N65.23 billion, respectively.
The sum of N106.65 billion was also distributed as Subsidy ReInvestment and Empowerment Programme (SURE-P) among
the three tiers of government and the 13% Derivation Fund as
follows:
Federal
Government
(N48.88
billion),
State
Governments (N24.79 billion), Local Governments (N19.11
The
sum
of
N1,625.88 billion
out
of
the
federally collected
revenue
was
distributed among
the three tiers of
government
and
13.0% Derivation
Fund
for
oil
producing states.


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

Economic Report Second Quarter

billion) and 13% Derivation Fund (N13.86 billion).
In addition, the sum of N7.62 billion, being the last installment
of NNPC refund to the sub-national governments, was paid
and shared in April 2014 and 13% Derivation Fund as follows:
State Governments (N3.74 billion), Local Governments (N2.88
billion) and 13% Derivation Fund (N0.99 billion). Thus, the total
allocation to the three tiers of government in the second
quarter of 2014 amounted to N1,926.53 billion, compared with
N1,827.74 billion and N2,095.20 billion in the preceding quarter
and
the
proportionate
quarterly
budget
estimate,
respectively.
3.2
The Fiscal Operations of the Three Tiers of
Government

3.2.1
The Federal Government

At N864.15 billion, the Federal Government retained revenue
for the second quarter of 2014 was lower than both the
proportionate budget estimate and the receipts in the
preceding quarter by 19.0 and 5.3 per cent, respectively. Of
this amount, the Federal Government’s share from the
Federation Account, Sure-P, VAT and FGN Independent
Revenue were N769.48 billion, N48.88 billion, N27.96 billion, and
N17.83 billion, respectively (Fig. 9, Table 9).
Figure 9: Federal Government Retained Revenue
Federation Account (89.0%)
VAT Pool
Account (3.2)
Others(5.7%)
FGN Independent
Revenue (2.1)


Federal government
estimated retained
revenue was lower
than the receipts in
the preceding
quarter.


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

Economic Report Second Quarter

Table 9: Federal Government Fiscal Operations (N billion)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Retained Revenue

Expenditure

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


Total estimated expenditure for the second quarter of 2014
stood at N1,193.52 billion, indicating a decline of 8.8 per cent
below the quarterly budget estimate, but was 7.1 per cent,
above the level in the preceding quarter. The development
relative to the proportionate quarterly budget estimate was
attributed to the decline in the capital component during the
review period. A breakdown of the total expenditure showed
that the recurrent component accounted for 68.8 per cent,
while capital and statutory transfers segments accounted for
23.8 and 7.4 per cent, repectively (Fig. 10). A further
breakdown of the recurrent expenditure showed that the nondebt component accounted for 66.6 per cent, while debt
service payments component accounted for the balance of
33.4 per cent.
Thus, the fiscal operations of the Federal Government resulted
in an estimated deficit of N329.37 billion, compared with
N202.70 billion and N241.05 billion in the preceding quarter
and proportionate quarterly budget estimate, respectively.
Figure10: Federal Government Expenditure
Recurrent
Capital
Transfers
Capital
(23.8%)
Transfers
(7.4%)
Recurrent
(68.8%)

The fiscal
operations of
the FG resulted
in an estimated
deficit of
N329.37 billion
in Q2 2014.


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

Economic Report Second Quarter

3.2.2
Statutory Allocations to State Governments

Total
allocation
to
state
governments
(including
the
Federation Account, 13.0% Derivation Fund and VAT) stood at
N692.08 billion during the review quarter. This was 3.4 per cent
higher than the level in the preceding quarter, but was 4.8 per
cent lower than the proportionate quarterly budget estimate.
Further breakdown showed that receipts from the Federation
Account accounted for N598.89 billion (86.5 per cent), while
VAT contributed N93.19 billion (13.5 per cent). The share of
Federation Account was 5.6 per cent above the level in the
preceding quarter of 2014, but fell below the proportionate
quarterly budget estimate by 4.3 per cent. Receipts from the
VAT Pool Account fell below the level in the preceding quarter
and the proportionate quarterly budget estimate by 9.2 and
8.1 per cent, respectively.
3.2.3
Statutory Allocations to Local Government Councils

Total receipts by the local governments from the Federation
and VAT Pool Accounts during the second quarter of 2014,
stood at N388.13 billion. This was above the level in the
preceding quarter by 3.6 per cent, but fell below the
proportionate quarterly budget estimate by 9.3 per cent. Of
the total amount, allocation from the Federation Account was
N322.90 billion (83.2 per cent), while VAT Pool Account
accounted for the balance of N65.23 billion (17.8 per cent).


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

Economic Report Second Quarter

4.0
Domestic Economic Conditions
Agricultural activities witnessed improvement in the second quarter
of 2014 as a result of widespread rainfall in most parts of the country.
Crude oil production was estimated at 1.91 million barrels per day
(mbd) or 173.81 million barrels for the quarter. The end-period
inflation rate for the second quarter of 2014, on year-on-year basis,
was 8.2 per cent, compared with 7.8 and 8.4 per cent at the end of
the preceding quarter and the corresponding quarter of 2013,
respectively. The inflation rate on a 12-month moving average basis
was 8.0 per cent, compared with 8.2 and 10.4 per cent in the
preceding quarter and the corresponding qaurter of 2013,
respectively.
4.1
Agricultural Sector
Available data indicated that agricultural activities improved
in the second quarter of 2014 as a result of widespread rainfall
witnessed in most parts of the country. Major agricultural
activities in the Southern states were harvesting of maize and
yam, while planting, off-season harvesting and livestock
grazing dominated activities in the Northern states. However,
high incidence of cattle rustling, Fulani herdsmen/farmers’
clashes and insurgency attacks impacted negatively on
agricultural output of the affected states during the quarter.
A total of N3,312.2 million was guaranteed to 18,346 farmers
under the Agricultural Credit Guarantee Scheme (ACGS) in
the second quarter of 2014. This represented an increase of
26.6 and 255.2 per cent above the levels in the preceding
quarter and the corresponding period of 2013, respectively.
A Sub-sectoral analysis showed that food crops had the
largest share of N1, 877.6 million (67.0 per cent) guaranteed to
11,112 beneficiaries. This was followed by livestock, N664.7
million (16.9 per cent) guaranteed to 2,042 beneficiaries;
fisheries, N103.9 million (5.0 per cent) guaranteed to 683
beneficiaries; and cash crops, N148.3 million (2.9 per cent)
guaranteed to 1,473 beneficiaries. Mixed crops received
N340.1 million (5.3 per cent) guaranteed to 2,585 beneficiaries
and “Others” had N177.7 million (2.9 per cent) guaranteed to
451 beneficiaries. Analysis by state showed that all the 36
states of the federation and the Federal Capital Territory
benefited from the Scheme in the second quarter with the


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

Economic Report Second Quarter

highest and lowest sums of N342.4 million (10.3 per cent) and
N0.9 million (0.03 per cent) guaranteed to Kebbi and Borno
states, respectively.
At end-June 2014, the total amount released by the CBN
under the Commercial Agriculture Credit Scheme (CACS) to
the participating banks for disbursement stood at N234.3
billion for 307 (three hundred and seven) projects (Table 10).
The beneficiaries included thirty state governments.


4.3
Industrial Production


4.2
Industrial Production
Industrial activities rose marginally during the second quarter
of 2014 relative to the level in the preceding quarter. At 138.99
(1990=100), the estimated index of industrial production rose
by 0.1 and 0.2 per cent, compared with the levels in the
preceding quarter and the corresponding quarter of 2013,
respectively. The development relative to the preceding
quarter
was
attributed
to
improved
activities
in
the
manufacturing, mining and power sectors.
Industrial activities
rose in the review
quarter due to
improved activities
of manufacturing,
mining and power
sub-sectors during
Q2 2014.
Table 10: Disbursement of Credit Under the Commercial Agriculture Credit Scheme (CACS)
S/N
Participating Banks
Amount Disbursed (N billion) mber of Projects/State Governme

United Bank for Africa (UBA) Plc
41.8

Zenith Bank
38.1

First Bank of Nigeria Plc
26.8

Unity Bank Plc
22.3

Union Bank Nigeria PLC
18.2

Stanbic IBTC Bank
13.9

Access Bank Plc
12.6

Skye Bank Plc
9.6

Fidelity Bank Plc
10.9

Sterling Bank Plc
12.3

GTBank Plc
5.8

FCMB Plc.
5.4

ECOBANK
4.5

Diamond Bank Plc
3.0

Mainstreet Bank Plc
2.0

Citibank Plc
3.0

Wema Bank Plc
1.1

Enterprise Bank PLC
0.5

Keystone Bank Plc
2.1

Heritage Bank Plc
0.5

TOTAL
234.3

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

Economic Report Second Quarter

The estimated index of manufacturing production, at 108.45
(1990=100), rose by 0.2 per cent compared with the level in
the preceding quarter, but recorded 1.9 per cent fall when
compared with the level in the corresponding period of 2013.
Estimated capacity utilization also rose marginally by 0.2
percentage point to 60.0 per cent during the review period.
The
development
was
attributed
to
the
increase
in
manufacturing activities in the cement sub-sector(Fig.11).
Figure 11: Capacity Utilization Rate

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Percent

At 147.44 (1990=100), the index of mining production rose by
1.4 and 0.5 per cent relative to the levels attained in the
preceding qaurter and the corresponding period of 2013,
respectively. The increase in mining production during the
review quarter was accounted for by a marginal increase in
other mining activities despite the slight fall in crude oil and
gas production during the review period.
At 3,250 MW/h, estimated average electricity generation rose
by 1.6 per cent, compared with the level attained in the first
quarter of 2014. The development was attributed to increased
generation from the hydro stations across the country.
At 3,045 MW/h, estimated average electricity consumption
rose by 2.6 per cent, compared with the level attained in the
first quarter of 2014. The development was attributed to the
increase in power supply, transmission and distribution (Fig. 12,
Table 11).
Actual industrial
capacity utilization
rose marginally by
0.2 percentage
point during the
review quarter.
Average electricity
generation and
consumption rose
during the review
quarter.


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

Economic Report Second Quarter

Figure 12: Index of Industrial Production (1990=100)

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Index
Mining
Electricity
All Sectors
Manufacturing

Table 11: Index of Industrial Production and Manufacturing Capacity Utilization Rate
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
All Sectors (1990=100)

Manufacturing

Mining


146.98
147.23
147.44
Capacity Utilization (%)


4.3
Petroleum Sector
Nigeria’s crude oil production, including condensates and
natural gas liquids, averaged 1.91 mbd or 173.81 million barrels
(mb) in the review quarter, same level as in the preceding
quarter. It, however, fell by 1.0 per cent, compared with the
level in the corresponding period of 2013. Crude oil export was
estimated at 1.46 mbd or (131.4 million barrels) in the review
quarter, same as the estimated level in the preceding quarter.
Despite the government efforts to curb incessant crude oil
theft in the Niger Delta region, the menace has continued to
dampen crude oil production. Allocation of crude oil for
domestic consumption was 0.45 mbd or 40.95 million barrels
during the review quarter.

Crude oil and natural
gas production was
same as the level
recorded in the
previous quarter.
Crude oil export was
same as the
estimated level in
Q1 2014.


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

Economic Report Second Quarter

At an estimated average of US$112.23 per barrel, the price of
Nigeria’s reference crude, the Bonny Light (37o API), rose by
1.7 per cent above the level in the first quarter of 2014. The
average prices of other competing crudes, namely the U.K
Brent, the West Texas Intermediate and the Forcados also rose
to US$110.08, US$98.74 and US$113.07 per barrel, compared
with
US$108.67,
US$96.10
and
US$111.44
per
barrel,
respectively, in the preceding quarter. At US$105.74 per
barrel, the average price of OPEC’s basket of eleven crude
streams rose by 1.0 and 4.8 per cent, above the average of
US$104.73/b and US$100.90/b recorded in the preceding
quarter and the corresponding period of 2013, respectively.
Improvement in world demand and escalating violence in
Ukraine, which aggravated supply concerns, accounted for
the increase in prices (Fig. 13, Table 12).
Figure13: Trends in Crude Oil Prices

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
US$ per barrel
Bonny Light
OPEC Basket

Table 12: Average Crude Oil Prices in the International Oil Market
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Bonny Light

OPEC Basket


Average crude oil
prices, including
Nigeria’s Bony Light
(37o API),rose in the
international crude
oil market in Q2
2014.


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

Economic Report Second Quarter

4.4
Consumer Prices4
Available
data
showed
that
the
all-items
composite
Consumer Price Index (CPI) at the end of the second quarter
of 2014 was 158.6 (November 2009=100), representing an
increase of 2.2 and 8.2 per cent over the levels in the
preceding
and
the
corresponding
quarters
of
2013,
respectively. The development was attributed to the increase
in the relative contributions of food and non-alcoholic
beverages; housing; water; electricity; gas and other fuel.
The urban all-items CPI at the end of the second quarter of
2014 was 157.6 (November 2009=100), indicating an increase
of 2.2 and 8.3 per cent over the levels in the preceding
quarter and the corresponding period of 2013, respectively.
Similarly, the rural all-items CPI, at 159.7 (November 2009=100),
representing an increase of 2.1 and 7.9 per cent over the
levels in the preceding quarter and the corresponding period
of 2013, respectively (Fig. 14, Table 13).
Figure14: Consumer Price Index

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Index
Composite
Urban
Rural

Table 13: Consumer Price Index (November 2009=100)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Composite
135.3

141.1


Urban
134.1


Rural
136.5

142.1
145.3
147.9

153.3
156.4
159.7


3 New CPI with November 2009 = 100 as base and new weight based on the 2003/2004 Nigeria Living Standard Survey
(NLSS) was released by the National Bureau of Statistics (NBS) on 18th October 2010.
The general
price level rose
in Q2 2014 on
account of the
increase in the
prices of food
items.


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

Economic Report Second Quarter

The end-period inflation rate for the second quarter of 2014,
on a year-on-year basis, stood at 8.2 per cent, compared with
7.8 per cent in the first quarter of 2013. This indicated a 0.4
percentage point increase above the level in the preceding
quarter, but showed a 0.4 percentage point decline below
the level in the corresponding period of 2013. The inflation rate
on a twelve-month moving average basis was 8.0 per cent,
compared with 8.2 and 10.4 per cent in the preceding quarter
and the corresponding period of 2013, respectively (Fig. 15,
Table 14).
Figure 15: Inflation Rate

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Percent
12-Month Average
Year-on-Year

Table 14: Headline Inflation Rate (%)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
12-Month Moving Average

Year-on-Year


The headline
inflation (y-o-y)
stood at 8.2 per
cent in Q2 2014.


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

Economic Report Second Quarter

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

Economic Report Second Quarter

5.0
External Sector Developments
Provisional data indicated that foreign exchange inflow through the
CBN in the second quarter of 2014 rose by 23.9 and 34.1 per cent
above the levels in the preceding quarter and the corresponding
quarter of 2013, respectively. Outflow through the Bank declined by
18.4 per cent below the level in the preceding quarter, but showed
an increase of 2.1 per cent above the level in the corresponding
quarter of 2013. Total non-oil export receipts by banks rose
significantly by 127.7 and 223.4 per cent above the levels in the
preceding quarter and the corresponding quarter of 2013,
respectively. Relative to the preceding quarter, the average Naira
exchange rate at the rDAS vis-à-vis the US dollar, appreciated
marginally by 0.01 per cent to N157.29 per dollar. At the BDC
segment of the market, the average naira exchange rate, at
N168.08 vis-à-vis the dollar, appreciated by 1.6 per cent, relative to
the level in the preceding quarter. Similarly, at the interbank
segment, the average naira exchange rate, relative to the
preceding quarter, appreciated to N162.29 per dollar. The gross
external reserves fell by 0.1 per cent to US$37.33 billion, compared
with its level at the end of the preceding quarter.
5.1
Foreign Exchange Flows
Provisional data indicated that foreign exchange inflow
through the CBN in the second quarter of 2014 amounted to
US$12.67 billion, representing an increase of 23.9 and 34.1 per
cent above the levels in the preceding quarter and the
corresponding quarter of 2013, respectively. The development
relative to the preceding quarter was attributed to the 14.1
per cent increase in receipts from crude oil exports. Outflow
amounted to US$12.81 billion, showing a decline of 18.4 per
cent below the level in the first quarter of 2014, but indicated
an increase of 2.1 per cent above the level in the
corresponding quarter of 2013. The fall in outflow, relative to
the preceding quarter, was attributed to the decline in rDAS
utilization
and
external
debt
service
payments.
The
development resulted in a net outflow of US$0.14 billion,
compared with US$5.47 billion and $3.10 billion recorded in the
preceding quarter and the corresponding quarter of 2013,
repsetcively (Fig.16, Table 15).


Foreign exchange
inflow through
the CBN rose by
23.9 per cent but
outflow declined
by18.4 per cent,
resulting in a net
outflow of
US$0.14 billion
during Q2 of
2014.


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Figure 16: Foreign Exchange Flows Through the CBN


Table 15: Foreign Exchange Flows Through the CBN (US$ million)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Inflow
10,050.94

13,444.07

11,168.38

10,304.46

9,442.91

11,857.35

9,465.52

10,221.43

12,667.31

Outflow
10,118.35

8,668.74

7,817.12

6,313.04

12,542.53

12,667.33

10,789.61

15,695.66

12,806.25

Netflow
(67.41)

4,775.33

3,351.26

3,991.42

(3,099.62)

(809.98)

(1,324.09)

(5,474.23)

(138.94)


Provisonal data on aggregate foreign exchange flows
through the economy indicated that total inflow amounted to
US$39.46 billion, representing an increase of 8.1 and 6.0 per
cent above the levels in the preceding quarter and the
corresponding quarter of 2013, respectively. The development
was attributed to the increase in receipts from crude oil export
and non-oil export receipts through autonomous sources. Oil
sector receipts, which accounted for 28.4 per cent of the
total, stood at US$11.21 billion, compared with the US$9.82
billion and US$9.20 billion recorded in the first quarter of 2014
and the corresponding quarter of 2013, respectively.
Non-oil public sector inflow, at US$1.46 billion (3.7 per cent of
the total) rose by 264.2 and 504.6 per cent above the levels in
the precedeing quarter and the corresponding quarter of
2013, respectively. Autonomous inflow, which accounted for
67.9 per cent of the total, rose by 1.9 per cent above the level
in the first quarter of 2014.
Autonomous inflows
into the economy
rose by 1.9 per cent
in Q2 2014 .
-10,000
-5,000


Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
US$ million
Inflow
Outflow
Netflow


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Economic Report Second Quarter

At US$13.06 billion, aggregate foreign exchange outflow from
the economy, declined by 18.5 per cent below the level in the
preceding quarter, but indicated an increase of 3.3 per cent
above the level in the corresponding quarter of 2013. The
decline, relative to the preceding quarter, was accounted for,
mainly, by lower demand at the retail Dutch auction segment
(rDAS). Overall, a net inflow of US$26.39 billion was recorded in
the second quarter of 2014, compared with US$20.48 billion
and US$24.57 billion in the preceding quarter and the
corresponding quarter of 2013, respectively.
5.2
Non-Oil Export Earnings by Exporters
Total non-oil export earnings by Nigerian exporters during the
second quarter of 2014 stood at US$2.54 billion, indicating an
increase of 127.7 and 223.4 per cent above the the levels in
the preceding quarter and the corresponding quarter of 2013,
respectively. The development, relative to the preceding
quarter, was attributed, largely, to the increase in foreign
exchange receipts from all the sectors. A breakdown of the
proceeds showed that manufactured products, agricultural
products, industrial sector, minerals, and food products
earned US$1.03 billion, US$0.56 billion, US$0.51, US$0.40 billion,
and US$0.04 billion, respectively.
The shares of manufactured products, agricultural products,
industrial sector, minerals and food products in non-oil export
proceeds were 40.4, 22.0, 20.2, 15.9 and 1.5 per cent,
respectively.
5.3
Sectoral Utilisation of Foreign Exchange

Available data indicated that the invisible sector accounted
for the bulk (49.3 per cent) of total foreign exchange
disbursed in the second quarter of 2014, followed by mineral
and oil sector (16.4 per cent). Other beneficiary sectors, in a
descending order included: industrial sector (14.2 per cent),
manufactured products (8.5 per cent), food products (8.0 per
cent), transport sector (2.9 per cent) and agricultural products
(0.7 per cent) (Fig.18).
.
The invisible
sector accounted
for the bulk of the
total foreign
exchange
disbursed during
Q2 2014.
Total non-oil
export earnings by
exporters rose
during the second
quarter of 2014.


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Economic Report Second Quarter

Figure17: Sectoral Utilisation of Foreign Exchange


Percent of Total
Q4-13
Q1-14
Q2-14

5.4
Foreign Exchange Market Developments
Foreign exchange demand by the authorized dealers for the
review quarter was estimated at US$11.17 billion, indicating a
decline of 33.7 per cent below the level in the preceding
quarter, but showed an increase of 37.3 per cent above the
level in the corresponding quarter of 2013. The development,
relative to the preceding quarter was due to increased
capital importations and the supply of foreign exchange by
major oil companies at the interbank market, which
dampened demand at the official window. The sum of
US$10.79 was sold by the CBN during the review quarter,
indicating a decline of 25.0 per cent below the level in the
preceding quarter, but an increase of 0.1 per cent above the
level in the corresponding quarter of 2013 (Fig. 19, Table 17).
Figure 18: Demand for and Supply of Foreign Exchange

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
US$ billion
Forex Sales at rDAS
Forex Demand at rDAS
Supply of Forex to BDC
Total Forex Supply


Demand and supply
of foreign exchange
by authorized dealers
fell during Q2 2014.


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Table 16: Demand for and Supply of Foreign Exchange (US$ billion)
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Forex Sales at RDAS

Forex Demand at RDAS

Supply of Forex to BDC

Total Forex Supply(BDC and RDAS)


Under the rDAS, the average exchange rate of the naira vis-àvis the US dollar, was N157.29 per US dollar, indicating a
marginal appreciation of 0.01 per cent relative to the
respective
levels
in
the
preceding
quarter
and
the
corresponding quarter of 2013. At the bureau-de-change
segment of the market, the naira traded at an average of
N168.08 per US dollar, indicating an appreciation of 1.6 per
cent above the level in the first quarter, but a depreciation of
4.7 per cent below the level in the corresponding quarter of
2013. Similarly, at the interbank segment, the naira exchanged
at an average of N162.29 to the US dollar, indicating an
appreciation of 0.3 per cent above the level in the preceding
quarter, but depreciated by 2.2 per cent below the level in
the corresponding quarter of 2013 (Fig. 20, Table 18).
The premium between the rDAS and the bureau-de-change
rates narrowed to 6.9 per cent from 8.6 per cent in the first
quarter of 2014. Simialrly, the premium between the rDAS and
inter-bank also narrowed to 3.2 from 3.5 per cent in the first
quarter of 2014 (Fig. 19, Table 17).
The average naira
exchange rate visà-vis the US dollar
appreciated at the
three segments of
the foreign
exchange market
in Q2 2014.
The premium
between both the
rDAS and the BDC
rates, and the rDAS
and the interbank
rates narrowed in the
review quarter.


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Economic Report Second Quarter

Figure 19: Average Exchange Rate Movements

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
N/US $
Average WDAS/RDAS
Average BDC
Average Interbank

Table 17: Exchange Rate Movements and Exchange Rate Premium
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Average Exchange Rate (N/US$)
rDAS

BDC

Interbank

Premium (%)
rDAS/BDC

RDAS/Interbank


Figure 20: Exchange Rate Premium

Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Percent
WDAS/BDC
WDAS/Interbank


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Economic Report Second Quarter

5.5
Gross External Reserves
Gross external reserves at the end of the second quarter of
2014 stood at US$37.33 billion, indicating a marginal decline of
0.1 per cent, compared with the level recorded at the end of
the first quarter of 2014. A breakdown of the reserves showed
that CBN reserves stood at US$29.87 billion (80.0 per cent),
Federation reserves, US$3.80 billion (10.2 per cent) and the
Federal Government reserves, US$3.66 billion (9.8 per cent)
(Fig. 22, Table 18).
Figure 21: Gross External Reserves


Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
US$ million


Table 18: Gross External Reserves (US$ million)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
External Reserves
35,412.5

40,636.8

43,830.4

47,884.1

44,957.0

44,108.5

42,847.3

37,376.4

37,330.0


Gross external
reserves declined
marginally during
the second
quarter 2014.


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6.0 Global Economic Conditions
6.1 Global Output
The World Economic Outlook (WEO) released in April, 2014 by
the International Monetary Fund (IMF) indicated that global
growth, having been weak in 2013, was expected to
accelerate in 2014. The IMF forecast global growth to average
3.7 per cent in 2014, up from 3.0 per cent in 2013, and growth
for 2015 was projected at 3.9 per cent.
The report, in its annual assessment of the US economy, cut
the growth forecast to 2.0 per cent in May 2014, down from its
April 2014 forecast of 2.8 per cent, and urged policy makers to
keep interest rates low and raise the minimum wage to
strengthen its recovery. Growth in the euro area was
projected to strengthen to 1.0 per cent in 2014 and 1.4 per
cent in 2015, up from a dip of 0.4 per cent in 2013, though the
recovery will be uneven.
In Asia, the Japanese economy advanced by 1.6 per cent,
quarter-on-quarter, in the first three months of 2014. China’s
economic growth declined by 7.4 per cent in the first quarter
of 2014, slowing from a 7.7 per cent expansion in the
preceding period.
Positive economic prospects were reaffirmed in the World
Bank’s Middle East and North Africa (MENA) Regional
Economic Update released this year. For the MENA, the World
Bank expect 3.3 per cent growth in 2014 and 4.8 per cent in
2015, to be led led by oil-exporting countries.
Growth in emerging market and developing economies was
expected to increase to 5.1 per cent in 2014 and to 5.4 per
cent in 2015, up from the 4.7 per cent in 2013. Africa’s
economies continued to demonstrate resilience in 2014, with
average GDP projected at 3.9 per cent. Africa’s future
remained promising, despite headwinds from the global
economy. Growth in the Sub-Saharan Africa (SSA) was
projected at 6.1 per cent for 2014 and 5.8 per cent in 2015.
6.2 Global Inflation
Global inflation was projected at 2.71 per cent in 2014,
representing an increase of about 40 basis points in relation to


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Economic Report Second Quarter

the estimate for 2013. The upward trend continued at the
beginning of the second quarter and was evident in majority
of the advanced and emerging market economies, with the
most notable exception being China. It, however, remained
low compared with historical averages reflecting muted
energy price developments and abundant global spare
capacity.
Annual inflation in the USA rose to 2.10 per cent in May 2014,
up from 2.0 per cent in April 2014, due mainly to a surge in
energy prices and a sustained increase in food prices. Annual
inflation excluding food and energy rose to 1.8 per cent in
April, from 1.7 per cent in March 2014.
6.3 Global Commodity Demand and Prices
World crude oil demand was estimated at 91.28 mbd in the
second quarter of 2014, representing an increase of 0.8 per
cent above the 90.58 per cent recorded in the first quarter of
2014. World crude oil supply was estimated at an average of
92.23 mbd, representing an increase of 0.3 per cent above
the level recorded in the first quarter of 2014. China and the
Middle East accounted for more than 50.0 per cent of the
growth in oil demand.
The OPEC Reference Basket price of eleven selected crude
streams stood at $105.74 per barrel in the second quarter of
2014, compared with $104.73/b and US$100.90/b recorded in
the preceding quarter and the corresponding quarter of 2013,
respectively. The development was attributed to improvement
in world demand and escalating geo-political crises in Ukraine
and Middle East, all of which have aggravated supply
concerns.
The prices of the UK Brent, the West Texas Intermediate and
the Forcados, also increased to close at US$110.08, US$98.74
and US$113.07 per barrel, respectively.
6.4
International Financial Markets
Developments across global financial markets were, largely,
impressive during the second quarter of 2014, as major indices
in both developed and emerging economies ended the
period on a positive note.


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Economic Report Second Quarter

Increases in stock prices in the U.S. were, due largely, to
improved corporate deals and faster-than-expected rise in
industrial output. In Europe, the Russia’s MICEX, Germany’s
DAX, UK’s FTSE 100 and France’s CAC 40 indices increased by
7.8, 2.9, 2.2 and 0.7 per cent, respectively.
In Asia, India’s BSE Sensex, Japan’s Nikkei 225 and China’s
Shanghai Stock Exchange-A indices increased by 13.5, 2.3
and 0.7 per cent, respectively.
Growth in the Asian and European stock markets were
attributed to surge in Purchasing Managers’ Indices, although
at a slower pace in the euro area. Also, Chinese Government
reduced some lenders’ reserve requirement ratios to support
growth in the economy.
In North America, the S&P/TSX Composite, Mexico Bolsa and
S&P 500 indices increased by 5.7, 5.6 and 4.7 per cent,
respectively. In South America, the Argentine Merval and
Brazilian Bovespa indices increased by 27.3 and 5.5 per cent,
respectively, while the Columbian IGBC General index data
were not available.
In Africa, the Nigerian All-Share Index, South African JSE AS
and Egyptian EGX CSE 30 indices increased by 9.6, 6.6 and 4.6
per cent, respectively, while the Kenyan Nairobi NSE 20 and
Ghanaian GSE All-Share indices decreased by 1.2 and 0.6 per
cent, respectively.
In Nigeria, the rise in share prices was attributed to the firstquarter improved performance of quoted companies and
bargain hunting activities of investors.

6.5 Other International Economic Developments
and Meetings
Other major international economic developments and
meetings of importance to the domestic economy during the
review quarter included: the 46th Ordinary Meeting of the
Committee of Governors of Central Banks of ECOWAS
Member States held in Dakar, Senegal on June 30, 2014.
Major decisions taken by the Committee included, among
others, recommendations to Member States:


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Economic Report Second Quarter

Review the Roadmap on the ECOWAS Monetary
Cooperation Programme and consolidate efforts to
resolve the security concerns in the region in order to
enhance economic activities;
Strengthen the modernization of revenue collection
mechanism and improve the governance structures of
tax administration to minimize incidence of tax
leakages through wider use of improved technology
and automation; and
Rationalize public expenditure, especially wage bill,
transfers, interest payments and subsidies to help
contain the increasing budget deficits.
Similarly, the 49th Annual Meetings of the Board of Governors
of the AfDB and the 40th Annual Meeting of the African
Development Fund was held in Kigali, Rwanda from May 19 –
23, 2014. With the theme “The Next 50 Years – The Africa We
want”. The Meeting discussed several issues, reports and
made recommendations accordingly. Some of the issues
discussed
included:
Accountability,
transparency
and
facilitating Africa’s trade among others.

Condieration and adoption of India’s model of PrivatePublic Partnership (PPP) model for replication in Africa;
and

Consideration
of
Report
of
Memorandum
of
Understanding (MoU) signed between the Government
of India and the African Development Bank Group to
share the model and legal documents associated with
PPPs to facilitate implementation of the model in
African countries.
Furthermore, the World Economic Forum on Africa was held in
Abuja, Nigeria from May 7 – 9, 2014. The theme of the Forum
was “Forging Inclusive Growth, Creating Jobs”. The Forum
discussed innovative structural reforms and investments that
could sustain the continent’s growth while creating jobs and
prosperity for all its citizens. About 40 sessions were held during
the Forum covering such issues as Private Sector, Public Works;
Engaging in Energy; Africa’s Growth Outlook; Industries for
Impact;
Africa
Rising;
Unlocking
Job-Creating
Growth;
Sustaining Business in Africa; amongst others. At the conclusion


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of the Forum, it was revealed that Africa’s economic
resurgence was further boosted by over US$68 billion in
investment commitment. The funds could come in the form of
Foreign Direct Investments (FDI) and public and private
investments across countries on the continent. Agriculture also
featured prominently at the Forum.
The 2014 Spring Meetings of the Board of Governors of the
World Bank Group and the International Monetary Fund (IMF)
was held in Washington D.C., USA from April 7 – 13, 2014. Other
Meetings, Seminars, Conferences and Events were also held
on the fringes of the Spring Meetings. The Ministers of the Intergovernmental Group of 24, the International Monetary and
Finance Committee (IMFC) and the Development Committee
held their respective meetings. The G-24 Ministers observed
the strengthening recovery in major advanced economies
(AEs), but noted that growth remained tepid and subject to
considerable risk.
Finally, the Institute of International Finance’s (IIF) Outreach
Event was held on June 10, 2014 in Lagos, Nigeria. The Event,
which brought together senior-level bank executives, experts
from DMBs and other financial institutions and the Central
Bank of Nigeria, covered topics that relate to IIFs activities
globally and at regional level in Africa. Participants were
acquainted with the offerings of IIF and how to harness it’s
expertise towards moving their institutions forward.


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APPENDIX TABLES


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Economic Report Second Quarter

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Economic Report Second Quarter

Table A1: Money and Credit Aggregates

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

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


Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Domestic Credit (Net)

Claims on Federal Government (Net)

Central Bank (Net)

Banks

Claims on Private Sector

Central Bank

Banks

Claims on Other Private Sector

Central Bank

Banks

Claims on State and Local Government

Central Bank

DMBs

Claims on Non-financial Public Enterprises

Central Bank

DMBs and Non Interest Banks

Foreign Assets (Net)

Central Bank

DMBs and Non Interest Banks

Other Assets (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

Banks' Deposit with CBN

N billion


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Table A2: Money and Credit Aggregates (Growth Rates)
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Claims on State and Local Government

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

Other Assets (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

DMBs Demand Deposit with CBN

Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Claims on State and Local Governments

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

Other Asset (Net)


Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

DMBs Demand Deposit with CBN

Percentage Change Over Preceding Quarter
Percentage Change Over Preceding December

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


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Table A3: Federal Government Fiscal Operations (N billion)
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Retained Revenue

Federation Account

VAT Pool Account

FGN Independent Revenue

Excess Crude

Others/SURE-P

Expenditure

Recurrent

Capital

Transfers

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


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