ECONOMIC REPORT
SECOND QUARTER 2016


CENTRAL BANK OF NIGERIA


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


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


Text Tables

Appendix Tables


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Economic Report Second Quarter

Figures


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Economic Report Second Quarter

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Economic Report Second Quarter

1.0 Summary
On quarter-on-quarter basis, growth in the key monetary aggregates
accelerated in the second quarter of 2016. Over the level at the end
of the preceding quarter, broad money supply, (M2), grew by 5.9
per cent. The development reflected the increase in net foreign
assets, domestic credit (net) and other assets (net) of the banking
system, respectively. Similarly, narrow money (M1), grew by 0.9 per
cent over the level at the end of the preceding quarter.
Developments in banks’ deposit and lending rates were mixed
during the second quarter of 2016. The spread between the
weighted average term deposit and maximum lending rates
widened to 21.43 percentage points at the end of the second
quarter of 2016. Similarly, the margin between the average savings
deposit and the maximum lending rates widened to 24.10
percentage points. At the inter-bank funds segment, the weighted
average inter-bank call rate rose by 12.55 percentage points to
15.56 per cent in the second quarter of 2016, reflecting the liquidity
condition in the banking system.
The total value of money market assets outstanding at the end of
the second quarter of 2016, stood at N10,460.66 billion, showing an
increase of 6.7 per cent, compared with the level at the end of the
first quarter of 2016. The development reflected the 8.09 and 2.73
per cent increase in FGN bonds and treasury bills, respectively.
Developments on the Nigerian Stock Exchange (NSE) were mixed in
the review quarter.
At N1,159.05 billion, total federally-collected revenue was 51.3 and
8.6 per cent lower than the quarterly budget estimate and the
preceding quarter’s receipts, respectively. At N537.19 billion or 46.3
per cent of the total, gross oil receipt was lower than both the
provisional quarterly budget and the receipts in the preceding
quarter. The development was attributed to the continued fall in
receipts from crude oil/gas exports arising from persistent low price
of crude oil and incidences of shut-ins and shut-downs at some
NNPC terminals, owing to pipeline vandalism. Non-oil receipts, at
N621.86 billion or 53.7 per cent of the total, was above the level in
the preceding quarter by 3.2 per cent, but was significantly lower
than the proportionate quarterly budget. Federal Government
retained revenue was N677.88 billion, while total expenditure was
N1,768.85 billion, resulting in an estimated deficit of N1,090.96 billion
in the second quarter of 2016, compared with the proportionate
quarterly budget deficit of N555.49 billion.
Agrcultural sector activities increased due to well distributed rainfall
in most parts of the country. Major activity in the South was


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

Economic Report Second Quarter

harvesting of maize and yam, while planting and off-season
harvesting dominated in the North. In the livestock sub-sector,
farmers engaged in the breeding of poultry and migration of cattle
from North to South in search of green pastures. The end-period
inflation rate on year-on-year and 12-month moving average basis
for the second quarter of 2016, was 16.5 per cent and 11.4 per cent,
respectively.
World crude oil demand and supply were estimated at 93.25 mbd
and 94.34 mbd, respectively, in the second quarter of 2016. Nigeria’s
crude oil production, including condensates and natural gas liquids,
was estimated at an average of 1.54 million barrels per day (mbd) or
141.68 million barrels (mb) for the second quarter of 2016. Crude oil
export was estimated at 1.09 mbd or 100.28 million barrels, while
deliveries to the refineries for domestic consumption remained at
0.45 mbd or 41.40 million barrels during the review quarter. The
average price of Nigeria’s reference crude, the Bonny Light (370
API), was US$46.44 per barrel in the review quarter.
Provisional data showed that foreign exchange inflow and outflow
through the CBN amounted to US$5.89 billion and US$6.09 billion,
respectively, resulting in a net outflow of US$0.20 billion. Foreign
exchange sales by the CBN to the authorized dealers amounted to
US$4.31 billion. The average exchange rate of the naira vis-à-vis the
US dollar at the inter-bank was N209.13/US$.
Global growth remained modest and uneven. Risks to the global
outlook remained tilted to the downside, due to ongoing
adjustments in the global economy, general slowdown in emerging
market economies, China’s rebalancing, lower commodity prices
and gradual exit by the US from extraordinarily accommodative
monetary policy.
Other major international economic developments and meetings of
importance to the domestic economy during the review period
included: The 2016 Spring Meetings of the Board of Governors of the
World Bank Group (WBG), the International Monetary Fund (IMF) and
the Inter-Governmental Group of Twenty-Four (G-24) on International
Monetary Affairs and Developments held from April 11 – 18, 2016 in
Washington D. C., USA. Also, the 2016 continental seminar of the
Association of African Central Banks (AACB) was held from May 9 -
11 2016 in Cairo, Egypt, on the theme "Financial stability: New
Challenges for Central Banks. Finally, the 51st Annual Meetings of the
African Development Bank (AfDB) and the 42nd Meetings of the
Board of Governors of the African Development Fund (ADF) were
held from May 23 – 27 2016 in Lusaka, Zambia.


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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
aggregates accelerated at the end of the second quarter of 2016.
Developments in banks’ deposit and lending rates were mixed in the
review period. The value of money market assets outstanding
increased, due largely, to the rise in FGN Bonds and treasury bills
outstanding. Developments on the Nigerian Stock Exchange (NSE)
were mixed.
Provisional data indicated that growth in the key monetary
aggregates accelerated at the end of the second quarter of
2016. On quarter-on-quarter basis, broad money supply (M2),
at N21,684.97 billion, grew by 5.9 per cent, compared with the
growth of 2.2 per cent at the end of the preceding quarter,
but in contrast to the decline of 1.7 per cent at the end of the
corresponding period of 2015. The development reflected the
28.0 per cent, 7.3 per cent and 25.7 per cent increase in net
foreign assets, domestic credit (net) and other assets (net) of
the banking system, respectively. Over the level at endDecember 2015, broad money supply (M2) grew by 8.3 per
cent, compared with the growth of 2.2 per cent at the end of
the preceding quarter. The development reflected the 25.7
and 12.5 per cent growth in foreign assets (net) and domestic
credit (net) of the banking system.
Narrow money supply (M1), grew by 0.9 per cent to N9,125.9
billion, compared with the growth of 5.5 per cent, at the end
of the preceding quarter. This, however, indicated a decline
of 6.2 per cent, relative to the level at the end of the
corresponding period of 2015. The development was
attributed, wholly, to the 1.9 per cent growth in demand
deposits of banks. Over the level at end-December 2015,
narrow money supply (M1) grew by 6.5 per cent, compared
with the growth of 5.5 per cent at the end of the preceding
quarter.
Quasi money rose by 9.9 per cent to N12,559.03 billion at the
end of the second quarter, in contrast to the 0.3 per cent
decline
at
the
end
of
the
preceding
quarter.
The
development was due to the decline in time and savings
deposits of banks. Over end-December 2015, quasi money
grew by 9.6 per cent, in contrast to the decline of 0.3 per cent
key monetary
aggregate grew
during Q2 of 2016.


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Economic Report Second Quarter

at the end of the preceding quarter (Fig. 1, Table 1).
Figure 1: Growth Rate of Narrow Money (M1) and Broad Money (M2)1

At N24,318.14 billion, aggregate domestic credit (net) to the
economy, on quarter-on-quarter basis, grew by 7.3 per cent,
compared with the growth of 4.9 per cent and 3.8 per cent at
the end of the preceding quarter and the corresponding
quarter of 2015, respectively. The development, relative to the
preceding quarter was attributed to the 13.5 per cent growth
in claims on the private sector. Over the level at endDecember 2015, net domestic credit rose by 12.5 per cent,
compared with the growth of 4.9 per cent at the end of the
preceding quarter. The development reflected the growth in
claims on the private sector.
Banking system’s credit (net) to the Federal Government fell
by 23.5 per cent to N2,893.2 billion, in contrast to the growth of
30.7 and 26.5 per cent at the end of the preceding quarter
and the corresponding quarter of 2015, respectively. The
development was due to the fall in banks’ holding of
government securities. Relative to the level at end-December
2015, net claims on Federal Government rose marginally by

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

-15
-10
-5

-10
-5

Q1-14
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Quarterly (%)
Cumulative (%)
QM1 (RHS)
QM2 (RHS)
CM1 (LHS)
CM2 (LHS)
Banking system’s
credit to the Federal
Government fell by
23.5 per cent at the
end of the second
quarter of 2016.


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Economic Report Second Quarter

N0.96 million (0.00003 per cent) at the end of the review
period, compared with the growth of 30.7 per cent and 118.5
per cent at the end of the preceding quarter and the
corresponding period of 2015, respectively.
At N21,424.95 billion, banking system’s credit to the private
sector, quarter-on-quarter, grew by 13.5 per cent, compared
with the growth of 0.9 per cent and 1.3 per cent at end-June
2016 and the end of the corresponding period of 2015,
respectively. The development was due to the growth in
claims on the core private sector. Over the level at endDecember 2015, banking system’s credit to the private sector
grew by 14.5 per cent, compared with the growth of 0.9 per
cent and 4.3 per cent recorded at the end of the preceding
quarter and the corresponding period of 2015, respectively.
Figure 2: Growth Rate of Aggregate Domestic Credit to the Economy2

Relative to the level at the end of the preceding quarter,
foreign assets (net) of the banking system, rose by 2.8 per cent
to N7,105.7 billion at end-June 2016, in contrast to the decline
of 1.8 per cent at the end of the preceding quarter. The
development was attributed, largely, to the increase in foreign
asset holdings of the banks, following the adoption of a
flexible exchange rate regime. Over the level at endDecember 2015, foreign assets (net) rose by 25.7 per cent at

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).
-50

-50

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


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Economic Report Second Quarter

end-June 2016, in contrast to the decline of 1.8 and 14.4 per
cent at the end of the preceding quarter and the
corresponding period of 2015, respectively.
Table 1: Growth in Monetary and Credit Aggregates (Per cent) Over
Preceding Quarter
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Domestic Credit (Net)

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Foreign Assets (Net)

Other Assets (Net)

Broad Money Supply (M2)

Quasi-Money

Narrow Money Supply (M1)

Memorandum Items:
Reserve Money (RM)


2.2
Currency-in-circulation (CIC) and Deposits at
the CBN
At N1,684.7 billion, currency-in-circulation declined by 7.0 per
cent in the review quarter, compared with the decline of 2.5
per cent at the end of the preceding quarter. The
development was due, largely, to the decline in vault cash.

Total deposits at the CBN amounted to N10,502.2 billion,
indicating an increase of 8.1 per cent relative to the level at
the end of the preceding quarter. The development reflected
the significant increase in Federal Government deposits. Of
the total deposits at CBN, the shares of the Federal
Government, Banks and ‘’Others’’ were N5,020.9 (47.8 per
cent), N3,687.3 billion billion (35.1per cent) and N1,794.0 billion
(17.1 per cent), respectively.
Reserve money (RM) fell by 6.4 per cent to N5,372.00 billion at
the end of the second quarter, reflecting the decline in both
DMB’s reserves with the CBN and currency in circulation.
2.3
Money Market Developments
The global and domestic economic developments such as
the sharp fall in oil prices, slow-down in global growth,
geopolitical tensions and the normalization of Monetary Policy
by the United States’ Federal Reserve necessitated the
The financial market
was relatively liquid
during the review
period .
Reserve money (RM)
fell at the end of the
first quarter of 2016.


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Economic Report Second Quarter

adoption of a new flexible foreign exchange policy in Nigeria,
towards the end of the second quarter of 2016. The
operationalisation of this policy involved the appointment of
foreign exchange primary Dealers (FXPD) to deal directly with
the Central Bank of Nigeria and the introduction of the overthe-counter (OTC) Naira-settled futures and long-tenured
foreign exchange forwards of 6 to 12 months. Hitherto, foreign
exchange was allocated based on the prioritization of the
most critical need for foreign exchange as it was becoming
difficult to continuously meet demand while speculative
activities persisted at the parallel market.
The commencement of the new foreign exchange policy on
June 20, 2016 influenced the direction of the financial market
thereafter. At the onset, foreign exchange illiquidity hindered
the smooth running of the foreign exchange inter-bank market
and this led the Bank to float a special foreign exchange
auction. The settlement of these transactions drained liquidity
in the money market. Consequently, inter-bank money market
rates spiked and the trend in standing facilities reversed as
there was more patronage at the Standing Lending Facilities
(SLF) than the Standing Deposit Facility (SDF).
Provisional data indicated that total value of money market
assets outstanding at the end of the second quarter of 2016
stood at N10,460.66 billion, showing an increase of 6.7 per
cent, compared with the level in the first quarter of 2016. The
development reflected the 8.09 per cent and 2.73 per cent
growth in FGN bonds and treasury bills, respectively.
2.3.1
Interest Rate Developments
Available data indicated mixed developments in banks’
deposit and lending rates in the second quarter of 2016. With
the exception of the 7–day and 1 month maturities deposit
rates, which fell from 2.83 per cent and 6.93 per cent to 2.75
per cent, and 6.49 per cent at the end of the second quarter
of 2016, all other deposit rates of various maturities rose above
the levels in the preceding quarter. At 5.41 per cent, the
average term deposit rate rose by 0.02 percentage point
above the level in the preceding quarter. The average prime
lending rates fell by 0.13 percentage point to 16.56 per cent,
while maximum lending rates rose by 0.03 percentage point to
26.85 per cent. Consequently, the spread between the
The spread between
the weighted –
average term
deposit and
maximum lending
rates widened at
the end of the first
quarter of 2016.


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Economic Report Second Quarter

weighted average term deposit and maximum lending rates
widened by 0.01 percentage point to 21.43 percentage
points, at the end of the second quarter of 2016. Similarly, the
margin between the average savings deposit and the
maximum lending rates widened by 0.12 percentage point to
24.10 percentage points. With headline inflation at 16.5 per
cent at end-June 2016, all lending rates were positive in real
terms, while deposit rates were negative in real terms.
At the inter-bank funds segment, the weighted average interbank call rate, which stood at 3.01 per cent at the end of the
preceding quarter, rose by 12.55 percentage points to 15.56
per cent, in the second quarter of 2016, reflecting the liquidity
condition in the banking system. The Nigeria inter-bank offered
rate (NIBOR) for the 30-day tenor, rose from 8.02 per cent in
the preceding quarter to 10.04 per cent in the second quarter
of 2016. However, the weighted average rate at the OpenBuy-Back (OBB) segment, rose by 7.66 percentage points to
10.58 per cent (Fig. 3, Table 2).
Figure 3: Selected DMBs Interest Rates (Average)


Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Percent per Annum
Percent per Annum
Prime
Interbank
Maximum
Average Term Deposits (RHS)
Interbank call
rate rose in Q1
2016.


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Economic Report Second Quarter

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

Prime Lending

Interbank

Maximum Lending


2.3.2
Commercial Paper (CP)
Commercial Paper (CP) outstanding held by banks, rose to
N0.53 billion in the second quarter of 2016, compared with
N0.45 billion in the preceding quarter. The development
reflected increased investment in CPs by the commercial
banks, during the review quarter. As a ratio of total assets
outstanding, CPs constituted 0.01 per cent, same as in the
preceding quarter.
2.3.3
Bankers’ Acceptances (BAs)
During the review period, BAs outstanding rose by 141.75 per
cent to N29.76 billion, compared with N12.31billion at the end
of the preceding quarter. The development was attributed to
the increase in investment in BAs by the banks, during the
quarter. Consequently, BAs accounted for 0.28 per cent of
the total value of money market assets outstanding, at the
end of the second quarter of 2016, compared with 0.13 per
cent, at the end of the preceding quarter.

2.3.4 Open Market Operations
The Bank conducted twenty (20) and one (1) special auctions
with tenors ranging from 202 to 364 day tenors from April –June
2016. Total sales was N727.47 billion, while total subscription
was N1,616.80 billion. The bid rates ranged from 8.30 per cent
to 13.50 per cent, while the stop rates ranged from 8.80 per
cent to 13.50 per cent. The specifics of the special auction
were an allotment of N205.94 billion at 13.50 per cent for a
tenor to maturity of 363 days. Repayment of matured CBN bills
was N710.16 billion, bringing the net injection via OMO during
second quarter 2016 to N176.49 billion.
2.3.5
Primary Market
NTBs of 91-182-and 364-day tenors, amounting to N1,111.72
billion, N1,868.02 billion and N1,100.72 billion were offered,
subscribed to and alloted, respectively, in the second quarter
Investment in CP by
banks rose in the
second quarter of
2016.
DMBs’ holdings of
BAs increased
during Q2 of 2016.


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Economic Report Second Quarter

of 2016. The bid rates ranged from 5.00 per cent to 13.00 per
cent, 6.01 per cent to 9.99 per cent and 8.00 per cent to 21.95
per cent, respectively, while the stop rates were from 6.10 -
9.99 per cent, 8.69 per cent - 12.30 per cent and 11.05 per
cent - 14.99 per cent, respectively. In the preceding quarter, a
total of N1,328.56 billion, N3,062.01 billion and N1,328.56 billion,
was offered, subscribed to and alloted, respectively, for the
three tenors.
2.3.6
Bonds Market
Tranches of the 5-, 10- and 20-year FGN Bonds were reopened
during the review period. The term to maturity of the bonds
ranged from 3 years and 8 months to 19 years and 11 months.
Total amount offered, subscribed to and allotted were N320.0
billion, N538.20 billion and N264.50 billion, respectively. In
addition, N70.18 billion of the 10-year was allotted on noncompetitive basis during the review period. The marginal rates
ranged from 12.00 per cent to14.20 per cent for the 5-year
bond, 12.60 per cent to 14.40 per cent for the 10-year bond
and 13.08 per cent to 14.98 per cent for the 20-year tenor
bond. No bond matured during the review period, thereby
resulting in a total withdrawal of N264.50 billion. In the
preceding quarter, tranches of the 5-year and 10-year bond
were re-opened and a new tranche of 20 –year bond offered
for sale. The term to maturity of the bonds ranged from 3 years
and 11 months to 20 years.
Total amount offered, subscribed to and allotted were
N270.00 billion, N645.64 billion and N265.00 billion, respectively.
In addition, N10.84 billion of the 5-year bond was allotted on
non-competitive basis in January 2016, while N5.00 billion and
N20.00 billion of the 5-year and 10-year bonds were allotted
on non-competitive basis, respectively. The marginal rates
ranged from 11.33 per cent to 12.24 per cent for the 5-year,
from 12.09 per cent to 12.50 per cent for the 10-year and was
12.04 per cent for the 20-year maturity bond. There was no
maturity in the period.
2.3.7
CBN Standing Facilities
Developments at the CBN standing facilities window in the
review quarter indicated higher patronage at the Standing
Deposit Facility (SDF) window, during the first two months of
the review quarter. The trend, however, reversed with the
Subscription for FGN
Bonds of various
maturities were
reopened during the
second quarter of
2016.


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Economic Report Second Quarter

settlement of a large volume of foreign exchange purchased
at the special auction conducted on June 20, 2016.
Total request for Standing Lending Facility (inclusive of Intraday lending facilities converted to overnight repo) during the
review period amounted to N4,066.94 billion, with N1.46 billion
in interest earned, compared with SLF of N560.80 billion and
interest earned of N0.28 billion in the preceding quarter. This
amounted to N3, 506.14 billion and N1.18 billion increase in SLF
and interest earned, respectively, from the levels in the first
quarter of 2016.
The Total deposit at the SDF window during the review period
was N6,012.98 billion with a daily average of N100.22 billion,
compared with N6, 614.16 billion in the first quarter of 2016. The
cost incurred on SDF in the review quarter stood at N1.74
billion, compared with N1.08 billion, in the preceding quarter.
2.4
Deposit Money Banks’ Activities
Available data indicated that the total assets and liabilities of
the commercial banks stood at N31,231.4 billion at the end of
the preceding quarter of 2016, representing an increase of 9.6
per cent over the level at the end of the the preceding
quarter. The funds were sourced, mainly, from time, savings
and
foreign
currency
deposits,
foreign
liabilities
and
unclassified liabilities. The funds were used, mainly, to increase
claims on private sector, acquire foreign and unclassified
assets.
At N20,406.4 billion, banks’ credit to the domestic economy,
rose by 11.2 per cent, compared with 0.9 per cent at the end
of the preceding quarter. The development was attributed to
the significant increase in claims on the private sector, during
the review quater.
Central Bank’s credit to the commercial banks rose by 34.2
per cent to N1,041.73 billion, at the end of the review quarter.
Total specified liquid assets of the banks stood at N6,536.9
billion, representing 34.9 per cent of their total current
liabilities. At that level, the liquidity ratio fell by 5.0 percentage
points below the level at the end of the preceding quarter but
was 4.9 percentage points above the stipulated minimum
ratio of 30.0 per cent. The loans-to-deposit ratio, at 74.9 per
Liquidity ratio in Q2
was
above
the
stipulated
minimum,
while
the

Loan-todeposit ratio was
below
the
prescribed
maximum.


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Economic Report Second Quarter

cent, was 7.0 percentage points, above the level at the end
of the preceding quarter, but 5.1 percentage point below the
prescribed maximum of 80.0 per cent.
2.5
Capital Market Developments
2.5.1
Secondary Market
Available data indicated that developments on the Nigerian
Stock Exchange (NSE) were generally mixed during the
second quarter of 2016. Total volume of traded securities
declined by 22.6 per cent to 27.0 billion shares, while the value
increased by 9.8 per cent to N163.4 billion in 251,646 deals, in
the review quarter, compared with 34.9 billion shares worth
N148.9 billion in 202,644 deals, recorded in the first quarter of
2016. The Financial Services Industry led the activity chart
(measured by volume) with 51.8 billion shares, worth N105.5
billion in 154,827 deals, compared with 29.0 billion shares worth
N88.9 billion in 128,269 deals, in the preceding quarter. The
banking sub-sector was the most active (measured by
volume) with 17.8 billion shares worth N90.8 billion in 103,416
deals.
Figure 4: Volume and Value of Traded Securities

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


Value (N Billion)


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


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Economic Report Second Quarter

2.5.2
New Issues Market/Supplementary Listings
There were three (3) supplementary listings in the review quarter (table
4)
Table:4 New and Supplementary Listing on the Nigerian Stock Exchange
S/N Company
Additional Shares (Units)
Reasons
Listing

Transnational Corporation of Nigeria
1,936,049,872
Bonus Issue
supplementary

Vita Foam Plc
59,570,053 ordinary shares
merger with vono Prod Plc
supplementary

Fortis Microfinance Bank Plc
656,666,668 units
Special Placing
supplementary

2.5.3
Market Capitalization
Aggregate market capitalization for all listed securities
(Equities and Bonds) stood at N17.28 trillion, indicating a rise of
8.8 per cent, above the level at the end of the first quarter of
2016. Similarly, market capitalization for the listed equities
increased by 16.8 per cent above the level in the preceding
quarter to close at N10.17 trillion at the end of the review
quarter. Listed equities accounted for 58.9 per cent of the
aggregate market capitalization, compared with 54.9 per
cent at the end of the preceding quarter.
2.5.4 NSE All-Share Index
The All-Share Index, which opened at 25,306.722 at the
beginning of the period, closed at 29,597.79, representing an
increase of 16.9 per cent above the level at the end of
previous quarter. In the review quarter, with the exception of
the NSE-Oil and Gas index which fell by 8.1 per cent to 324.00
at end-June2016, all other sectoral indices rose above the
levels in the preceding quarter. The NSE Banking, NSE
Insurance, NSE Consumer goods, NSE Lotus Islamic, NSE
Industrial, NSE AseM, NSE Pension and NSE Premium indices
rose by 38.7 per cent, 10.3 per cent, 19.6 per cent, 10.5 per
cent, 9.5 per cent, 0.7 per cent, 27.1 per cent and 23.2 per
cent to close at 298.81, 140.04, 736.28, 1958.86, 2146.80,
1213.60, 882.30 and 1862.79, respectively.


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 5: Market Capitalization and All-Share Index


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

Al-Share Index (Equities)
42,482.48

41,210.10

34,657.15

31,744.82

33,456.86

31,217.77

26,871.24

27,385.69

29,597.79


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


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

Economic Report Second Quarter

3.0
Fiscal Operations
3.1
Federation Account Operations
Provisional data indicated that federally-collected revenue
during the second quarter of 2016 was N1,159.05 billion. This
was 51.3 per cent and 8.6 per cent lower than the quarterly
budget estimate and the receipts in the preceding quarter,
respectively. The decline in federally-collected revenue
(gross) relative to the budget estimate was attributed to the
shortfall in receipts from both oil and non-oil revenue, during
the review quarter (Fig. 6, Table 6).
Figure 6: Components of Gross Federally Collected Revenue

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

Oil Revenue

Non-Oil Revenue


At N537.19 billion or 46.3 per cent of the total revenue, gross oil
receipt was lower than the provisional quarterly budget and
the receipts in the preceding quarter by 39.2 per cent and
19.4 per cent, respectively. The decline in oil revenue relative
to the budget estimate was attributed to the persistent fall in
receipts from crude oil/gas export, due to persistent low price
of crude oil in the international market and the series of shutins and shut-downs at some NNPC terminals owing to pipeline

Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Oil Revenue Gross
Non-Oil Revenue
N Billion
Gross federally -
collected revenue
fell by 8.6 per cent
below the level in
the first quarter of
2016.


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

Economic Report Second Quarter

vandalism in the Niger Delta region, during the review quarter
(Fig. 7, Table 7).

Figure 7: Gross Oil Revenue and Its Components

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


At N621.86 billion or 53.7 per cent of total revenue, gross nonoil receipts was above the receipts in the preceding quarter
by 3.2 per cent. It was, however, below the provisional budget
estimate by 58.4 per cent. The decline in non-oil revenue
relative to the provisional budget estimate was due, largely, to
the shortfall in receipts from all of its components except
Customs Special Levies (Non-Federation Account) during the
review quarter (Fig. 8, Table 8).
-


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

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

Value-Added Tax (VAT)

Companies Income Tax & Other Taxes

Customs & Excise Duties

Others/1

1/ Include FGN Independent Revenue, Education Tax, NITDF & Customs Federation/Non-Federation
Account Levies (Port, Sugar, ETLS, Steel, CISS & Cement Levies)
Of the gross federally-collected revenue, a net sum of N665.67
billion was transferred to the Federation Account for
distribution among the three tiers of government and the
13.0% Derivation Fund. The sums of N100.92 billion, N186.83
billion and N48.09 billion were transferred to the Federal
Government Independent Revenue, VAT Pool Account and
Others, repectively. The Federal Government received
N323.16 billion, while the state and local governments
received N163.91 billion and N126.37 billion, respectively. The
balance of N52.23 billion was allocated to the 13.0%
Derivation Fund for distribution among the oil-producing
states. The Federal Government also received N28.02 billion
from the VAT Pool Account, while the state and local
governments received N93.41 billion and N65.39 billion,
respectively.
-

1,000
1,200
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
N billion
Others
Customs & Excise Duties
Companies Income Tax & Other Taxes
Value-Added Tax (VAT)
The
sum
of
N665.67
billion
out of the gross
federally
collected revenue
was
distributed
among the three
tiers
of
government and
13.0% Derivation
Fund
for
oil
producing states.


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

Economic Report Second Quarter

The sum of N7.86 billion was equally distributed as Exchange
Gain among the three tiers of government and the 13%
Derivation Fund as follows: Federal Government (N3.68 billion),
State Governments (N1.87 billion), Local Governments (N1.44
billion) and 13% Derivation Fund (N0.88 billion).
In addition, the sum of N18.99 billion was received by the
Federal Government being installmental refund of NNPC’s
indebtedness to the Federal Government in the first quarter of
2016.
The total statutory and VAT revenue allocation to the three
tiers of government in the second quarter of 2016 amounted
to N879.35 billion, compared with the provisional quarterly
budget estimate of N1,485.70 billion and N1,074.31 billion
received in the first quarter of 2016.
3.2
The Fiscal Operations of the Three Tiers of
Government

3.2.1
The Federal Government

Federal Government retained revenue for the second quarter
of 2016 was estimated at N677.88 billion. This was above the
receipts in the preceding quarter by 18.9 per cent, but lower
than the quarterly budget estimate by 33.0 per cent. Of the
total revenue, Federation Account accounted for 47.7 per
cent, while “Other Oil Revenue”, Federal Government
Independent Revenue, VAT and, NNPC Refund and
Exchange Gain accounted for 30.0 per cent, 14.9 per cent,
4.1 per cent and 3.3 per cent, respectively (Fig. 9, Table 9).


At N677.88 billion, the
estimated
Federal
government
retained
revenue
was
higher
than the receipts in the
preceding quarter by
18.9 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

Figure:9 Federal Government Retained Revenue


Table 9: Federal Government Fiscal Operations (N billion)

Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Retained Revenue

Expenditure

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


At N1,768.85 billion, provisional data indicated that Federal
Government expenditure for the second quarter of 2016 was
above the provisional quarterly budget estimate and the level
at the end of the preceding quarter by 12.8 and 58.1 per
cent,
respectively.
The
development
relative
to
the
proportionate quarterly budget estimate was attributed,
mainly, to the rise in both recurrent and capital expenditure.
A breakdown of the total expenditure showed that the
recurrent component accounted for 72.6 per cent, while
capital and statutory transfers constituted for 19.8 per cent
and 7.6 per cent, repectively (Fig. 5). A further breakdown of
the
recurrent
expenditure
showed
that
the
non-debt
component represented 73.4 per cent, while debt service
payments accounted for the balance of 26.6 per cent.
The fiscal operations of the Federal Government, thus,
resulted in an estimated deficit of N1,090.96 billion, indicating
Federation
Account (47.77%)
VAT Pool
Account (4.1%)
Others - including NNPC
Refund and Exchange Gain
(33.3%)
FGN Independent
Revenue (14.9%)
Fiscal operations
of the FG resulted
in an estimated
deficit
of
N1,090.96 billion
in Q2 2016.


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

Economic Report Second Quarter

an increase of 96.4 per cent above the provisional quarterly
budget deficit of N555.49 billion.
Figure9: Federal Government Expenditure


3.2.2
Statutory Allocations to State Governments

Total
allocation
to
state
governments
including,
the
Federation Account, 13.0% Derivation Fund and VAT, during
the review quarter, amounted to N312.30 billion. This was 40.0
and 17.9 per cent, lower than both the provisional budget
estimate and the level at the end of the preceding quarter,
respectively. Further breakdown showed that receipts from
the Federation Account was N218.89 billion (70.1 per cent),
while VAT contributed N93.41 billion (29.9 per cent). The share
of Federation Account was 23.4 per cent lower than the
preceding quarter’s level. However, receipts from the VAT
Pool Account fell by 1.0 per cent below the level in the
preceding quarter.
3.2.3
Statutory Allocations to Local Government Councils

Provisional
data
indicated
that
allocations
to
local
governments from the Federation and VAT Pool Accounts in
the second quarter of 2016 stood at N193.20 billion. This was
44.1and 15.7 per cent below the budget estimate and the
level in the preceding quarter, respectively. Of the total
amount, allocation from the Federation Account was N127.81
billion (66.2 per cent), while VAT Pool Account accounted for
the balance of N65.39 billion (33.8 per cent).

Recurrent
Capital
Transfers
Capital
(19.8%)
Transfers
(7.6%)
Recurrent (72.6%)


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
Activities in the agrcultural sector increased significantly due to well
distributed rainfall in most parts of the country. Farmers in the South
engaged in harvesting of maize and yam, while farmers in the North
engaged in planting and off-season harvesting. In the livestock subsector, farmers engaged in the breeding of poultry and migration of
cattle from the North to the South in search of green pastures. Crude
oil production was estimated at 1.54 million barrels per day (mbd) or
141.68 million barrels, for the quarter. The end-period inflation rate for
the second quarter of 2016, on year-on-year basis, was 16.5 per
cent, compared with 12.8 per cent at the end of the preceding
quarter. The inflation rate on a 12-month moving average basis was
11.4 per cent, compared with 9.8 per cent at the end of the
preceding quarter.
4.1
Agricultural Sector
Available data indicated that agricultural activities increased
significantly during the second quarter of 2016 due to well
distributed rainfall in most parts of the country. Major
agricultural activities in the southern states were harvesting of
maize and yam, while farmers in the Northern States engaged,
mainly, in planting and off-season harvesting. In the livestock
sub-sector, farmers engaged in the breeding of poultry and
migration of cattle from the North to the South in search of
green pastures. Also, the continued resettlement and reintegration
of
hitherto
displaced
persons
arising
from
insurgency has improved the prospects for increased
agricultural activities in the North-Eastern part of the country.
4.2 Agricultural Credit Guarantee Scheme
A total of N1,993.5 million was guaranteed to 12,405 farmers
under the Agricultural Credit Guarantee Scheme (ACGS) in
the second quarter of 2016. The amount represented a 21.6
per cent increase above the level in the preceding quarter,
but indicated a 25.7 per cent decline below the level in the
corresponding period of 2015. Sub-sectoral analysis showed
that food crops got the largest share of N1,369.5 million (68.5
per cent) guaranteed to 9,607 beneficiaries, livestock got
N350.6
million
(17.6
per
cent)
guaranteed
to
1,149
beneficiaries, fisheries had N89.5 million (4.5 per cent)
guaranteed to 385 beneficiaries, while cash crop received


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

Economic Report Second Quarter

N83.9 million (4.2 per cent) guaranteed to 538 beneficiaries.
The mixed Crop sub-sector received N68.7 million (3.5 per
cent) guaranteed to 414 beneficiaries, while ‘Others’ received
a total of N31.1 million (1.6 per cent) guaranteed to 312
beneficiaries.
Analysis by state showed that 31 states and the Federal
Capital Territory benefited from the Scheme in the review
period, with the highest and lowest sums of N518.0 million (26.0
per cent) and N0.7 million (0.05 per cent) guaranteed to Edo
and Taraba states, respectively,
At end-June 2016, total amount released by the CBN under
the Commercial Agriculture Credit Scheme (CACS) from
inception to the participating banks, for disbursement, stood
at N366.4 billion, for 456 projects(Table 10).


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

Access Bank Plc
17.62

Citibank Plc
3.00

Diamond Baqnk Plc
4.70

ECOBANK
6.30

FCMB Plc.
10.10

Fidelity Bank Plc
15.90

First Bank of Nigeria Plc
39.80

GTBank Plc
23.70

Heritage Bank Plc
4.80

Keystone Bank
3.40

Jaiz Bank Plc
1.00

Skye Bank Plc
11.80

Stanbic IBTC Bank
21.26

Sterling Bank Plc
24.10

Union Bank Nigeria PLC
21.90

United Bank for Africa (UBA) Plc
55.80

Unity Bank Plc
24.30

Wema Bank
1.82

Zenith Bank
75.09

TOTAL
366.4

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

Economic Report Second Quarter

4.3
Industrial Production
Available data indicated a decline in Industrial activities
during the second quarter of 2016 relative to the preceding
quarter. At 110.3 (2010=100), the estimated index of
industrial production fell by 0.02 per cent, below the
levels in the preceding quarter and the corresponding
period of 2015, respectively. The development was
attributed to a marginal decline in activities in all
subsectors during the period.
The index of manufacturing production in the second quarter
of 2016 at 188.9 (2010=100), showed a marginal decline of 0.01
and 0.06 per cent relative to the levels in the preceding
quarter and the corresponding period of 2015, respectively.
Capacity utilisation was estimated at 50.7 per cent, indicating
a 2.0 percentage points decline, compared with the level in
the preceding quarter. The development was occasioned by
the poor power supply due to continued vandalism of gas
pipelines, exchange rate challenges and cash squeeze, all of
which together impacted on business confidence and
hindered activities in the sector (Fig.11).
Figure11: Manufacturing Capacity Utilization Rate


Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Percent
Industrial activities
fell in the review
quarter due to
reduced activities in
all sub-sectors.
Industrial capacity
utilization
was
estimated to have
declined
by
2.0
percentage points
during the review


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 75.0 (2010=100), the estimated index of mining production
in the second quarter of 2016, indicated 0.04 per cent and
0.12 per cent decrease relative to the levels attained in the
preceding quarter and the corresponding period of 2015,
respectively. The development during the review quarter was
due to a significant fall in crude oil and gas production.
At 3,156 MW/h, estimated average electricity generation in
the second quarter of 2016 fell by 0.19 per cent, compared
with the level attained in the preceding quarter. The
development was attributed to the fall in power generation in
the various power plants due to vandalism.
Average estimated electricity consumption, at 2,989 MW/h,
fell by 0.19 per cent, relative to the level attained in the
preceding quarter. The fall in electricity consumption was
attributed to a decline in power generation and transmission
losses (Fig. 12, Table 11).
Figure 102: Index of Industrial Production (2010=100) 3

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


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


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

Economic Report Second Quarter

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

Manufacturing

Mining


Capacity Utilization (%)

Petroleum Sector
Nigeria’s crude oil production, including condensates and
natural gas liquids, was estimated at an average of 1.54
million barrels per day (mbd) or 141.68 million barrels (mb) for
the second quarter of 2016. This represented a decline of 0.37
mbd or 15.4 per cent, relative to 1.82 mbd or 165.62 million
barrels produced in the first quarter of 2016.
Crude oil export stood at 1.09 mbd or 100.28 mb. This
represented a decline of 20.4 per cent, compared with 1.37
mbd or 124.67 mb, recorded in the preceding quarter. Supply
disruptions owing to continued attacks on oil installations by
vandals accounted for the decline in crude oil production.
Deliveries to the refineries for domestic consumption remained
at 0.45 mbd or 41.40 million barrels during the review quarter.
At an estimated average of US$46.44 per barrel, the price of
Nigeria’s reference crude, the Bonny Light (37o API), rose by
35.0 per cent, compared with the level in the preceding
quarter. The average prices of other competing crudes,
namely the the UK Brent at US$45.29/b, WTI at US$45.18/b and
Forcados at US$46.05/b exhibited similar trends as the Bonny
Light.
The average price of OPEC basket of eleven selected crude
streams, at US$42.38 per barrel, indicated an increase of 40.5
per cent, compared with the average of US$30.16/b recorded
in the preceding quarter. It, however, showed a decline of
28.5 per cent, compared with the average of US$59.31/b
recorded in the corresponding quarter of 2015 (Fig. 13, Table
Crude oil and
natural gas
production
decreased in the
second quarter of
2016.
Crude oil export
decreased in Q2
2016.
Average crude oil
prices, including
Nigeria’s Bony
Light (37o API) rose
in the international
crude oil market in
Q2 2016.


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

Economic Report Second Quarter

12).
Figure113: Trends in Crude Oil Prices

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

OPEC Basket


4.5
Consumer Prices4
The all-items composite Consumer Price Index (CPI), at the
end of the second quarter of 2016, was 201.7 (November
2009=100), representing an increase of 6.2 per cent and 16.5
per cent, compared with the levels in the preceding quarter
and the corresponding quarter of 2015, respectively. The
development was driven, largely, by the increases in the
prices of food and non-alcoholic beverages; housing,
water, electricity, gas and other fuel; clothing and
footwear; transport; education; furnishing, household
equipment and maintenance; and health.

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

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


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 urban all-items CPI at the end of the second quarter of
2016 was 203.36 (November 2009=100), indicating an increase
of 7.1and 18.1per cent, above the levels in the preceding
quarter and the corresponding period of 2015, respectively.
Similarly, the rural all-items CPI, at 200.52 (November
2009=100), represented increase of 5.6 and 15.1 per cent
above the levels in the preceding quarter and the
corresponding period of 2015, respectively (Fig. 14, Table 13).
The composite food index (with a weight of 50.7 per cent) was
205.39 per cent, representing an increase of 5.4 per cent,
compared with the 194.87 per cent at the end of the
preceding quarter. The development was attributed to the
increase in the prices of farm produce (vegetables, yam,
potatoes, and other tubers, rice, millet, and fruits) and
processed food.
Figure124: Consumer Price Index

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

Urban

Rural


147.5

152.5

157.5

162.5

167.5

172.5

177.5

182.5

187.5

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


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

Economic Report Second Quarter

The inflation rate at the end of the review quarter, on a yearon-year basis, was 16.5 per cent, compared with 12.8 and 9.2
per cent in the preceding quarter and the corresponding
period of 2015, respectively. On a twelve-month moving
average basis, the inflation rate was 11.4 per cent, indicating
a 1.6 percentage points increase, above the level recorded
in the preceding quarter (Fig. 15, Table 14).
Figure 15: Inflation Rate


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

Year-on-Year


Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Percent
12-Month Average
Year-on-Year
The headline
inflation (y-o-y)
stood at 16.5 per
cent in Q2 2016.


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 showed that foreign exchange inflow and outflow
through the CBN in the second quarter of 2016, rose by 49.3 per cent
and 35.7 per cent, respectively, above the levels in the preceding
quarter. Total non-oil export receipts declined by 43.2 per cent,
relative to the level in the preceding quarter. The average
exchange rate at the inter-bank segment was N209.13/US$,
compared with N197.00/US$ at the end of the preceding quarter. At
US$27.22 billion, the gross external reserves fell by 1.2 per cent,
compared with the level at the end of the preceding quarter.
5.1
Foreign Exchange Flows
Provisional data showed that foreign exchange inflow and
ouflow through the CBN in the second quarter of 2016 were
US$5.89 billion and US$6.09 billion, respectively. This resulted in
a net outflow of US$0.20 billion, compared with the net outflow
of US$0.54 billion in the preceding quarter. Relative to the level
at the end of the preceding quarter, inflow increased by 49.3
per cent, but was a decline of 15.6 per cent, compared with
the level at the end of the corresponding period of 2015. The
development, relative to the preceding quarter was due to
the increase in both oil and non-oil receipts. Similarly, outflow
rose by 35.7 per cent above the level in the preceding
quarter, but was 25.7 per cent lower than the level at the end
of the corresponding period of 2015. The development
relative to the preceding quarter was driven mainly, by interbank sales, swaps and 3rd party MDA transfer (Fig.16, Table 15).
Figure 16: Foreign Exchange Flows Through the CBN


Foreign exchange
inflow and outflow
through the CBN rose
by 49.3 and 35.7 per
cent, respectively,
and resulted in a net
outflow of US$0.20
billion in Q2 of 2016.
-10,000
-5,000


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


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

Economic Report Second Quarter

Table 15: Foreign Exchange Flows Through the CBN (US$ million)
Q1-14
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q1-16
Q2-16
Inflow
12,676.51

13,094.23

10,641.86

8,307.23

6,976.02

11,111.00

7,135.41

3,942.89

5,887.88

Outflow
12,806.25

11,804.98

14,527.35

12,875.77

8,194.56

9,523.32

7,757.49

4,487.05

6,087.87

Netflow
(129.74)

1,289.25

(3,885.49)

(4,568.54)

(1,218.54)

1,587.68

(622.08)

(544.16)

(199.99)


Provisonal data on aggregate foreign exchange inflow into
the economy indicated that total inflow was US$15.33 billion.
This represented an increase of 3.7 per cent above the level
at the end of the preceding quarter but, showed a decline of
35.3 per cent relative to the level at the end of the
corresponding period of 2015. The development was driven
by increase in oil and non-oil receipts. Oil sector receipts,
which accounted for 20.5 per cent of the total, stood at
US$3.15 billion, compared with US$2.48 billion and US$3.65
billion, recorded in the first quarter of 2016 and the
corresponding period of 2015, respectively.
Non-oil public sector inflow, at US$2.74 billion (17.9 per cent of
the total), rose by 87.7 per cent, above the level at the end of
the preceding quarter. It, however, indicated a decline of
17.5 per cent from the level at the end of the corresponding
period of 2015. Autonomous inflow, which accounted for 61.6
per cent of the total, fell by 13.0 per cent compared with the
level in the preceding quarter of 2016.
At US$6.60 billion, aggregate foreign exchange outflow from
the economy rose by 29.4 per cent, above the level in the
preceding quarter, but showed a decline of 19.5 per cent,
from the level at the end of the corresponding period of 2015.
The development, relative to the first quarter was attributed to
the increase in outflow through the CBN. Thus, foreign
exchange flows through the economy resulted in a net inflow
of US$8.73 billion in the review quarter, compared with US$9.69
billion and US$15.51 billion in the first quarter of 2016 and the
corresponding period of 2015, respectively.
5.2
Non-Oil Export Earnings by Exporters
Provisional data showed that total non-oil export earnings, at
US$576.97 million, fell by 43.2 per cent, below the level in the
preceding
quarter.
The
development,
relative
to
the
Autonomous inflow
into the economy fell
by 13.0 per cent in
Q2 2016 .
Total non-oil export
earnings by
exporters fell
during the second
quarter of 2016.


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Economic Report Second Quarter

preceding quarter, was attributed, mainly, to the significant
decline in receipts from manufactured and food products as
well as minerals export. A breakdown by sectors showed that
proceeds from the export of agricultural, minerals, industrial,
manufactured products, food products and transport sectors
stood at US$196.87 million, US$185.51 million, US$84.34 million,
US$79.44
million,
US$30.68
million
and
US$0.12
million
respectively.
The percentage shares of agricultural, minerals, industrial,
manufactured products, food products and transport sectors
in the total non-oil export proceeds were 34.1 per cent, 32.2
per cent, 14.6 per cent, 13.8 per cent, 5.3 per cent and 0.02
per cent, respectively.
5.3
Sectoral Utilisation of Foreign Exchange

The invisible sector accounted for the bulk (34.1per cent) of
total foreign exchange disbursed in the second quarter of
2016, followed by the industrial sub-sector (22.5 per cent). The
contributions of other sectors in a descending order included:
minerals and oil sub-sector (23.3 per cent), manufactured
products (11.3 per cent), food products (6.3 per cent),
transport sector (1.7 per cent) and agricultural products (0.8
per cent) (Fig.17).
Figure17: Sectoral Utilisation of Foreign Exchange


Percent of Total
Q4-15
Q1-16
Q2-16
.
The invisible sector
accounted for the
bulk of the total
foreign exchange
disbursed during
Q2 2016.


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Economic Report Second Quarter

5.4
Foreign Exchange Market Developments5
A total of US$4.31 billion was sold by the CBN to authorized
dealers during the second quarter of 2016. This reflected an
increase of 22.7 per cent above the level in the preceding
quarter, but a decline of 41.5 per cent relative to the level in
the corresponding period of 2015. The development, relative
to the preceding quarter, was attributed to the increased
intervention by the CBN at the forex market and swap
transactions. Of the aggregate, inter-bank and swaps sales
were US$3.11 billion and US$1.20 billion, respectively (Fig. 18,
Table 16).
Figure 18: Supply of Foreign Exchange


Table 16: Demand for and Supply of Foreign Exchange (US$ billion)
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Forex Sales at rDAS/Interbank

Supply of Swaps
nil

Supply of Forex to BDC

Total Forex Supply(BDC and rDAS)


The average exchange rate at the inter-bank segment was
N209.13/US$, compared with N197.00/US$ in the first quarter of
2016 and indicated a depreciation of 6.2 per cent relative to
the rate in the preceding quarter. At the BDC segment, the

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


Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
US$ billion
Forex Sales at rDAS/Interbank
Supply of Swaps
Supply of Forex to BDC
Total Forex Supply
Supply for foreign
exchange by
authorized dealers
rose during Q2 2016.
The average naira
exchange rate vis-àvis the US dollar was
N209.13/US$ at the
interbank segment in
Q2 2016.


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Economic Report Second Quarter

average exchange rate was N351.82/US$ at end-June 2016,
resulting in a premium of 51.8 per cent relative to the interbank rate(Fig. 19, Table 17).
Figure 19: Average Exchange Rate Movements

Table 17: Exchange Rate Movements and Exchange Rate Premium
Average Exchange Rate (N/US$)
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
rDAS
157.29
157.29
162.33
169.68 N/A
N/A
N/A
N/A
N/A
BDC

Interbank

Premium (%)
rDAS/BDC
6.9
7.4
9.8
23.5 N/A
N/A
N/A
N/A
N/A
rDAS/Interbank
3.2
3.2
6.1
12.6 N/A
N/A
N/A
N/A
N/A
BDC/Interbank


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


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Economic Report Second Quarter

Figure 20: Exchange Rate Premium


5.5
Gross Official External Reserves
Gross external reserves at the end of the second quarter of
2016 stood at US$26.51 billion, showing a decline of 3.0 per
cent and 6.5 per cent, compared with the levels in the
preceding quarter and the corresponding period of 2015,
respectively. The development, relative to the preceding
quarter, was due to increased sales of foreign exchange at
the interbank market and notional changes in the value of
third currencies. A breakdown of the official external reserves
showed that CBN reserves stood at US$19.44 billion (73.3%),
Federation reserves, US$2.45 billion (9.3%), and the Federal
Government reserves, US$4.61 billion (17.4%), (Fig. 21, Table
18).

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


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Economic Report Second Quarter

Figure 21: Gross Official External Reserves


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

Table 18: Gross Official External Reserves (US$ million)
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
External Reserves
37,330.0

38,278.6

34,241.5

29,357.2

28,335.2

29,880.2

28,284.8

27,336.4

26,505.4


6.0 Global Economic Conditions
6.1 Global Output
Global growth remained modest and uneven. Economic
activities continued to expand at a solid pace in advanced
economies,
while
developments
in
emerging
market
economies remained weak and more diverse. Increased
uncertainties in Chinese economy and persistent oil price
decline led to renewed downward pressures on euro-area
sovereign bond yields. Risks to the global outlook remained
tilted to the downside due to ongoing adjustments in the
global economy, general slowdown in emerging market
economies, China’s rebalancing, lower commodity prices and
gradual exit by the US from extraordinarily accommodative


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Economic Report Second Quarter

monetary conditions. If these key challenges are not
successfully managed, global growth could be derailed.
6.2 Global Inflation
The sharp decline in oil prices in 2015 continued to have a
huge impact on global inflation. Consumer price inflation has
been revised downwards across almost all advanced
economies and the IMF projects that inflation will remain
below central bank targets in 2016. In emerging market
economies, the downward pressure from lower oil prices was
offset by varying degrees of the pass-through of nominal
exchange rate depreciations to domestic prices, especially in
countries with strong depreciations, such as Brazil, Colombia,
Russia, and Kazakhstan. Overall, global inflation is projected to
remain subdued in the short-term but rise from the second half
of 2016.
In the sub-Saharan Africa region, inflation increased from 11.6
per cent in April 2016 to 12.6 per cent in May 2016, based on
preliminary estimates. Electricity and water scarcity across the
region, coupled with depreciating currencies, has kept
inflationary pressures elevated.
6.3 Global Commodity Demand and Prices
World crude oil demand was estimated at 93.25 mbd in the
second quarter of 2016, representing a decline of 0.2 per cent
compared with the 93.15 mbd recorded in the preceding
quarter. World crude oil supply in the review quarter was
estimated at 94.34 mbd, representing a decline of 0.6 per
cent from the level in the preceding quarter.
The price of OPEC Reference Basket (ORB) averaged US$42.38
per barrel in the second quarter of 2016, representing an
increase of 40.5 per cent, compared with the level in the
preceding quarter. The development was attributed to the
decline in production in Canada, continuous decline in crude
oil rig counts in the US, supply constraints in Nigeria due to
pipeline sabotage and increased global demand.
6.4
International Financial Markets
Developments in the international stock markets were mixed
during the review period. In Europe, the FTSE 100 and MICEX ,
indices increased by 5.3 and 1.1per cent, respectively, while


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Economic Report Second Quarter

the CAC 40 and DAX declined by 3.4 and 2.9 per cent,
respectively. In Asia, the India’s BSE Sensex index increased by
6.5 per cent, while Japan’s Nikkei 225 and China’s Shanghai
Stock Exchange-A indices fell by 7.1 and 2.5 per cent,
respectively. In North America, the Canadian S&P/TSX
Composite, United States S&P 500 and Mexican Bolsa indices
increased by 4.2, 1.9 and 0.2 per cent, respectively.
In Africa, the Nigerian NSE All-Share index increased by 17.0
per cent, while the Kenyan Nairobi NSE 20, Egyptian EGX CASE
30, Ghanaian GSE ASI and South African JSE All-Share indices
fell by 8.6, 7.7, 6.5 and 0.1 per cent, respectively.
6.5 Other International Economic Developments
and Meetings
Other major international economic developments and
meetings of importance to the domestic economy during the
review period included:
The 2016 Spring Meetings of the Board of Governors of the
World Bank Group (WBG), the International Monetary Fund
(IMF) and the Inter-Governmental Group of Twenty-Four (G-24)
on International Monetary Affairs and Developments held in
Washington D. C., USA from April 11 – 18, 2016. The Ministers of
the Inter-Governmental Group of 24, the International
Monetary
and
Finance
Committee
(IMFC)
and
the
Development Committee also held their respective meetings.
The central message at the meetings was that the recovery of
the global economy remained modest, with greater downside
risks and need to manage policy space to achieve higher,
more balanced and inclusive growth. The IMFC noted that the
IMF had a key role to play in supporting a stronger policy
response by the membership especiall with regard to policy
advice and surveillance. The G-24 Ministers welcomed the
entry into force of the 2010 Quota and Governance Reforms
of the IMF that have made progress in shifting the distribution
of quota shares to EMDCs, and noted that there was still a
long way to go in this respect. The Development Committee
observed that fragility and conflict had displaced millions of
people, significantly impacting both origin and host countries.
The 2016 continental seminar of the Association of African
Central Banks (AACB) was held in Cairo, Egypt, from May 9 -


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Economic Report Second Quarter

11 2016 with the theme "Financial stability: New Challenges for
Central Banks. Key recommendations included:

The need for central banks and other regulatory
authorities to strengthen prudential oversights and
regulations within the financial system in line with
emerging developments;

Member central banks should harmonise regulatory and
supervisory norms as well as accounting standards
through convergence to internationally accepted
standards and practices; and

Clear specification of the authorities in charge of the
financial stability function.
Finally, the 51st Annual Meetings of the African Development
Bank (AfDB) and the 42nd Meetings of the Board of Governors
of the African Development Fund (ADF) were held from May
23 – 27, 2016 in Lusaka, Zambia, with the theme: “Energy and
Climate Change”. After deliberatiuons, the Governors
endorsed the High 5 priorities and expressed satisfaction
with the progress made towards operationalizing them.


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Economic Report Second Quarter

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APPENDIX TABLES


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Economic Report Second Quarter

Table A1: Money and Credit Aggregates


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Economic Report Second Quarter

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

Claims on Federal Government (Net)

Central Bank (Net)

Banks

Claims on Private Sector

Central Bank

Banks

Claims on Other Private Sector

Central Bank

Banks

Claims on State and Local Government

Central Bank

DMBs

Claims on Non-financial Public Enterprises

Central Bank

DMBs

Foreign Assets (Net)

Central Bank

DMBs and Non Interest Banks

Other Assets (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities (M2)

Memorandum Items:
Reserve Money (RM)

Currency in Circulation (CIC)

Banks' Deposit with CBN

N billion


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Economic Report Second Quarter

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

Claims on Federal Government (Net)

Claims on Private Sector

Claims on Other Private Sector

Claims on State and Local Government

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

Other Assets (Net)

Total Monetary Assets (M2)

Quasi-Money 1/

Money Supply (M1)

Currency Outside Banks

Demand Deposits 2/
1.02
-2.98
-10.66

6.8
1.94
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.
Table A3: Federal Government Fiscal Operations (N billion)


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Economic Report Second Quarter

Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Retained Revenue

Federation Account

VAT Pool Account

FGN Independent Revenue

Excess Crude

Others/SURE-P

Expenditure

Recurrent

Capital

Transfers

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


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