CENTRAL BANK OF NIGERIA


REPORT FOR THE FIRST HALF OF 2002


AUGUST 15, 2002

EDITORIAL COMMITTEE


Editor-in-Chief
Dr. O. J. Nnanna


Managing Editor
F. O. Odoko


Editor
E. D. Balogun


Associate Editors

E. U. Ukeje
S. N. Ibeabuchi
S. C. Rapu
N. C. Oputa
C. I. Enendu
M. U. Yakub
C. I. Effiok (Mrs) (Secretary)

TABLE OF CONTENTS


.0
INTRODUCTION

PART ONE: ACTIVITIES OF THE CENTRAL BANK

2.0
A Review of CBN’s Mandate and Monetary Policy Stance

2.1
CBN’s Mandate

2.2
Monetary and Financial Policy Stance

2.3
Interest Rate Policy

2.4
Financial Sector Surveillance

2.5
Foreign Exchange Policies

2.6
Developmental Functions

3.0
OPERATIONS OF THE CENTRAL BANK OF NIGERIA

3.1
Liquidity Management

3.2
Financial Sector Surveillance

3.3
Foreign Exchange Management

3.4
Debt Conversion Programmed (DCP)

3.5
Development Finance Operations

3.5.1 Agricultural Credit Guarantee Scheme Funds

3.5.2 The Small and Medium Industries Equity

Investment Scheme (SMIEIS)
3.6
CBN Assets and Liabilities

3.7
Services to Third Parties

PART TWO: ECONOMIC REPORT

4.0
A REVIEW OF OTHER MACROECONOMIC AND SECTORAL

POLICIES

4.1
Fiscal Policy Measures

5.0
DEVELOPMENTS IN THE FINANCIAL SECTOR

5.1
Monetary and Credit Developments

5.1.1 Money Supply

5.1.2 Banking System Credit

5.1.3 Money Market Developments

5.1.4 Inter-bank Funds Market

5.1.5 Interest Rates

5.1.6 Financial Savings

5.1.7 Capital Market Developments

5.1.8 Deposit Money Banks

5.1.9 Discount Houses

5.2 Fiscal Operations and Developments

5.2.1 Federation Account Operations

5.2.2 Federal Government Finances

5.2.3 Statutory Revenue Allocation to State

Government and the Federal Capital Territory

5.2.4 Statutory Allocations to Local Government

5.2.5 Public Debt

5.3 Real Sector Developments

5.3.1 Agricultural Production and Prices

5.3.2 Industrial Production

5.3.3 Consumer Prices

5.3.4 Labour Market

5.3.5 Socio-Economic Developments

5.4 External Sector Developments

5.4.1 Balance of Payments

5.4.2 External Assets

5.4.3 Developments in the IFEM

5.4.4 Sector Utilization of Foreign Exchange

5.5 International Economic and Monetary Developments

5.5.1 Developments in the World Economy

5.5.2 International Monetary Cooperation

5.5.3 International Currency Markets

5.5.4 Developments in the International Commodity

Markets
5.5.5 Bilateral Relations

6.0 ECONOMIC OUTLOOK FOR THE REST OF FISCAL 2002

FIGURES


1.
Structure of Treasury Bill Holdings

2.
Sectoral Breakdown of ACGSF Loans by Value

3.
Money Supply in Nigeria

4.
Banking System’s Credit to the Economy

5.
Share of Government and Private Sector in

Banking System’s Credit to the Economy
6.
Selected Commercial Banks’ Interest Rates

7.
Federal Government Fiscal Operations

8.
Public Debt Outstanding

9.
Index of Agricultural Production

10.
Index of Industrial Production

11.
Consumer Price Indices and Inflation Rate

12.
Balance of Payments

13.
Exports and Imports

14.
Movements in Exchange Rate

15.
Sectoral Utilization of Foreign Exchange

TABLES

Table 1.
Open Market Operations

Table 2.
Issues and Subscription of Treasury Bills and

Certificates
Table 3.
Monetary and Credit Developments

Table 4.
Value of Money Market Instruments

Table 5.
Selected Interest Rates

Table 6.
Federation Account Operations

Table 7.
Fiscal Operations of the Federal Government

Table 8.
Selected Real Sector Indicators

Table 9.
Selected External Sector Indicators
(N)

Table 10.
Selected External Sector Indicators
($)

CENTRAL BANK OF NIGERIA
REPORT FOR THE FIRST HALF OF 2002

1.0
INTRODUCTION

This report reviews the activities of
the Central Bank of Nigeria (CBN) and
analyses
the
developments
in
the
economy during the first half of 2002.
The report is presented in two main parts.
Part 1 focuses on the activities of the
Central Bank of Nigeria during the period.
In particular, this part reviews the
mandate, developmental objectives and
policy stance of the Bank as well as its
reactions
to
emerging
economic
problems. Subsequently, it assesses the
outcome of the Bank’s operations during
the period. Part 2 focuses on the
developments in the economy. In this
regard, It reviews and appraises major
macroeconomic and sectoral policies,
highlighting the achievements, problems
and challenges and concludes with a
prognosis of the economic outlook for the
rest of the year.


PART ONE

ACTIVITIES OF THE CENTRAL
BANK OF NIGERIA

2.0
A Review Of CBN’s Mandate
And Monetary Policy Stance

In accordance with the statutory
mandate, the Central Bank of Nigeria
pursued its core function of ensuring
price stability via actions aimed at
stemming excess liquidity and achieving
monetary stability as well as fostering
stable exchange rate. It was also very
proactive in the surveillance of the
financial system, as well as facilitating
access of small and medium scale
enterprises to funds from the financial
markets.

2.1
CBN’s Mandate

The core mandate of the CBN as spelt
out in the Central Bank of Nigeria (CBN)
Act (1991) as amended includes:

• issuance of legal tender currency
notes and coins in Nigeria;
•
maintenance of external reserves
and safeguard of the international
value of the legal tender currency;
•
promotion
and
maintenance
of
monetary stability and a sound and
efficient financial system in Nigeria;
•
acting
as
banker
and
financial
adviser to the Federal Government;
and
•
acting as lender of last resort to
banks.

2.2
Monetary and Financial Policy
Stance

In line with the mandate and in
order to achieve the macroeconomic
targets, the CBN adopted a medium-term
perspective monetary policy framework,
covering 2002 – 2003. The medium-term
framework was adopted to minimize the
problem
of
time
inconsistency
and
over/under-reaction due to temporary
shocks.

Monetary policy in 2002 was
aimed primarily at ensuring price stability.
In order to achieve this objective, various
policy measures were designed to keep
growth in monetary aggregates at levels
consistent with GDP and inflation targets.
Consequently, quantitative targets for
monetary aggregates were set as shown
in table 1a.
The
following
monetary
policy
instruments were to be employed to
achieve the specified targets:

• Open Market Operations (OMO),
conducted in Nigerian Treasury
Bills
(NTBs),
which
was
complemented with:
o Cash
Reserve
Requirement
(CRR), which was fixed at 12.5
per
cent
of
total
deposit
liabilities and;
o Liquidity Ratio (LR), which was
fixed at 40.0 per cent.

2.3
Interest rate policy

The thrust of interest rate policy in
2002 was the sustenance of a marketbased
interest
rate
regime.
Consequently, the discount window was
kept open with Minimum Rediscount Rate
(MRR) set at 20.5 per cent per annum.

2.4
Financial Sector Surveillance

The Bank’s policy stance on
surveillance was to maintain financial
sector stability by:
• ensuring sound management,
• setting, maintaining and enforcing
compliance with prudential guidelines,
and
• forestalling abuse of standards in
banks and other financial institutions.

2.5
Foreign Exchange Policies

Foreign exchange policies in 2002
were geared towards exchange rate
stability and achievement of balance of
payments viability. In addition to the
existing policy measures, other new
measures enunciated in 2002 included:

•
The two-way quote system at the
IFEM;
•
The Inter-bank Foreign Exchange
Market (IFEM), to operate freely
under
the
relevant
laws
and
regulations;
•
Foreign exchange purchased from
CBN at IFEM, to be used for eligible
transactions and was not transferable
in the Inter-bank Foreign Exchange
Market;
• Holders
of
ordinary
domiciliary
account to continue having unfettered
access to funds in their accounts,
while utilisation of funds in the non-oil
export domiciliary accounts to be
subject to eligible transactions;
• All oil and oil service companies to
continue
selling
their
foreign
exchange brought into the country to
meet their local expenses to any bank
of their choice, including the CBN;
• Current transactions involving the use
of
bills
for
collection
remained
permissible
provided
relevant
documents
were
passed
through
authorised dealers. Transactions
executed on private sector initiative,
were
to
carry
no
government
guarantee or obligations;

(i)
Growth in Broad Money (M2)
19.6
15.3

(ii) Growth in Narrow money (M1)
4.2
12.4
13.8
(iii) Growth in Total Bank Credit to the Economy
109.3
57.9
25.7
(iv) Growth in Banking system Credit to Government
27.6
96.6
-150.3
(v) Growth in Banking system Credit to Private Sector
59.4
34.9
32.3
(vi) Inflation Rate

9.3

(vii) GDP

Table 1a:
Monetary Policy Targets (in per cent)
Policy Target

• The maximum amount which bureaux
de change can sell was retained at
US $5,000.00 per transaction;
• Funding of Business Travel Allowance
(BTA) and Personal Travel Allowance
(PTA) remained eligible in IFEM,
subject to the maximum ceiling of US
$2,500.00 per quarter for BTA and
US$2,000.00 per six months (twice a
year) for PTA for beneficiaries above
12 years old. For travels to countries
in the ECOWAS sub-region, BTA and
PTA was to be issued in ECOWAS
Travellers’ Cheques;
• Bureaux de change operators, to
source
their
foreign
exchange
requirements (in Travellers Cheques)
from the IFEM; and
• The
maximum
life
span
of
an
approved Form ‘M’ for importation of
machinery,
plant
and
equipment
retained at 540 days.

2.6
Developmental functions


The policy objective of the Bank is to
promote
non-inflationary
growth,
by
enhancing bank credit access to farmers
and small and medium scale enterprises
via:
• Agricultural Credit Guarantee Scheme
Fund (ACGSF);
• Supervision of the utilization of credit
facilities under the SME II;
• The implementation of the Small and
Medium Industries Equity Investment
Scheme (SMIEIS); and
• The introduction of Rediscounting and
Refinancing
Facility
(RRF)
at
concessionary interest rate.

3.0
OPERATIONS OF THE
CENTRAL BANK OF NIGERIA

3.1
Liquidity Management

OMO
remained
the
dominant
instrument of monetary management,
complemented by reserve requirements
and discount window operations.
•
Transactions in OMO indicated
remarkable improvement over the levels
in the preceding half-year and the
corresponding period of 2001. The
development was attributable largely, to
the attractiveness of the yield on the
intervention securities. The market
witnessed
significant
patronage
in
February and May. The rise in demand in
February followed largely, the improved
liquidity position of the banks while the
development in May was reinforced by
the diversion of funds to OMO auctions
from the primary market as a result of the

1 s t H a l f 1 9 9 9
0.2
80.9

1 4 . 8
1 s t H a l f 2 0 0 0
42.9
4 5 . 2
11.9
1 s t H a l f 2 0 0 1
2 2
5 5 . 5
2 2 . 5
1 s t H a l f 2 0 0 2
C B N
C B s
M B s
N B P u b
F i g u r e 1 : S t r u c t u r e o f T r e a s u r y B i l l H o l d i n g s ( % o f T o t a l )

unexpected downward review of the
issue rate. Consequently, aggregate bids
and sales stood at N305.1 billion and
N291.4 billion in the review period,
compared with N266.5 billion and N258.4
billion in the preceding half-year and
N136.8 billion and N128.5 billion in the
corresponding period of 2001.
•
In the primary market for NTBs, a
total of N1,169.1 billion was issued to
replace maturing bills of the same
tenor
during
the
period.
Total
subscription and sales amounted to
N643.3 billion a piece compared with
N467.2 billion and N433.9 billion in
the preceding half year. The surge
in the banking system’s liquidity
coupled with the attractiveness of the
treasury bill rate, accounted for the
significant increase in subscription by
banks and non-bank public in the
primary market. However, the total
treasury bills outstanding remained
the same at end-December 2001 level
amounting to N584.5 billion. CBN’s
holding of the treasury instrument at
end-June 2002 constituted 22.0 per
cent of total outstanding, compared
with 55.7 and 42.8 per cent at endDecember
and
end-June
2001,
respectively.
•
There was no new issue of CBN
Certificates in the review period, while
matured Certificates amounting to
N80.7
billion
were
repaid.
The
matured investment consisted of 180day and 360-day tranches amounting
to N59.0 billion and N21.7 billion,
respectively. Consequently, only one
issue of the 180-day maturity valued
at N4.0 billion remained outstanding
as at the end of the period under
review.

3.2
Financial Sector Surveillance

In the continued effort to sanitise the
financial system, the Central Bank of
Nigeria (CBN) in February 2002, revoked
the operating licence of Savannah Bank
PLC1. With this action, the number of
deposit
money
banks
in
operation
declined from 90 at end-December, 2001
to 89 at end-June, 2002. Consequently,
the branch network of the banks declined
from 2,994 in December 2001 to 2,984 at
the end of the first half of 2002.

The
number
of
outstanding
applications for new bank licences rose
from 24 as at end-December 2001 to 27
by end-June 2002. This included 3
approvals -in-principle (AIPs) that had
been granted and 24 others, which were
at
various
stages
of
processing.
However, no banking licence was issued
during the first half of 2002.

Consequent
to
the
need
to
strengthen the operations of the existing
banks, the minimum capital requirement
of banks, which was fixed at N500
million, was reviewed to N1.0 billion with
the deadline for compliance fixed for 1st
January 2003. The minimum requirement
for new banks, however, remained at
N2.0 billion. As at end-June 2002, the
web-enabled Credit Risk Management
System
(CRMS)
database
had
an
outstanding credit balance of N566.7
billion for 20,669 borrowers of N1.0
million and above, compared with N433.4
billion for 19,608 borrowers in the
corresponding period of 2001.

The CBN continued to address the
problem of distress in the banking system
in a more pragmatic manner. The
contingency plan for banks’ distress
resolution, which was prepared by the
CBN in line with international best
practices,
was
to
be
adopted
for
implementation by the operators from
July, 2002. Moreover, in pursuance of the
role of the CBN as the lender of last
resort, the CBN introduced a private
sector funded ‘lifeboat’ arrangement that

1 The revocation of the banking license is presently a
subject of court litigation. In the interim, the bank has
discontinued its operations

allowed banks in temporary liquidity
problem to access the facility for liquidity
support. This effort was aimed at
promoting a sound and effective banking
system.

During the first half of the year, an
average of 10 banks failed to meet the
capital adequacy requirement of 8.0 per
cent. Consequently, the banks were
closely monitored and directed to recapitalise. At end-March 2002, the total
credit portfolio of the banks in Nigeria
amounted to N743.6 billion, out of which
14.6 per cent was non-performing. Thirtyeight banks constituting 42 per cent of
the total banks in the system were found
to be net-takers of funds in the inter-bank
market. Also, as at end-June 2002, 10
banks had their accounts with the CBN
overdrawn resulting in an aggregate
overdrawn position of N6.1 billion

The surveillance of the other
financial
institutions
was
intensified
during the first half of 2002. Efforts were
made by the CBN to sanitise the
community banking sub-sector with the
granting of final operating licences to 282
community banks (CBs) during the period
under
review.
The
re-capitalisation
exercise for the bureaux de change
continued as efforts were made to verify
their existence and status with a view to
revalidating their licences. At end-June
2002, a total of 267 CBs were reported to
be in operation. Out of this number, only
13 had met the minimum paid-up capital
requirement of N10.0 million, while 67
were given 6 months with effect from
June 2002 to comply. The remaining 187
CBs whose addresses could not be
located, were given 4 weeks from 12th
June, 2002 to contact the CBN or have
their operating licences revoked.

3.3
Foreign Exchange

Management
The
management
of
foreign
exchange by the CBN has continued to
be
through
the
Inter-bank
Foreign
Exchange Market (IFEM). The Bank
sustained the daily intervention in the
market during the first half of the year, in
spite of the huge demand pressures and
dwindling inflows. The CBN conducted a
total of 121 IFEM intervention sessions
that involved 3,780 deals during which all
demands by the authorised dealers were
fully met. In order to encourage inward
transfers and increase the supply base in
the foreign exchange market, authorised
dealers were required to ensure full
compliance
with
the
provision
on
international
inward
money
transfers
where beneficiaries had a right to collect
their money in the currency of remittance.
Also, to minimise capital flight, guidelines
for remittance on judgement debt were
revised during the review period. Other
measures included the commencement
of direct sale of Travellers’ Cheques to
end-users by Travelex in Nigeria under a
pilot project; and the conditional approval
of foreign bank guarantee as collateral for
naira denominated loans.

3.4
Debt Conversion Programme
(DCP)


The level of activities in the debt
conversion
programme
continued
to
decline
as
four
applications
were
received compared with six in the
corresponding period of the preceding
year. However, the value of applications
received
amounted
to
US$1,450.73
million, representing an increase of
US$702.03 million or 93.8 per cent over
the level in the same period of 2001. Out
of the total applications received, two
valued
at
US$68.30
million
were
approved in principle compared with two
valued at US$672.19 million in the first
half of 2001.


At end-June 2002, external debt
valued at US$3.59 million was redeemed
under the auction system compared with
US$15.6 million in the same period of

2001. The total value of debts redeemed
since
inception
amounted
to
US$1,429.94 million. Other benefits
received included discounts (US$0.28
million
or
N32.04
million)
and
transactions commission (N9.48 million).


Total disbursements of proceeds
to
beneficiaries
were
N0.4
billion
compared to N1.3 billion in the first half of
the preceding year, while the cumulative
amount disbursed was N0.4 billion.
Sectoral breakdown of disbursements
during the period showed that Hotel and
Tourism accounted for N369.9 million or
100 per cent of the total.

3.5 Development Finance
Operations

3.5.1 Agricultural Credit Guarantee
Scheme Funds


The
paid
up
capital
of
the
Agricultural Credit Guarantee Scheme
Fund (ACGSF) remained at N2.3 billion
as no new resources were injected into
the Fund. The balance of N0.8 billion
required to bring the Fund to the new
share capital of N3.0 billion is yet to be
paid by the Federal Government. During
the period, earnings from investment in
government securities, mainly treasury
bills and CBN certificates, boosted the
resources of the Fund to N3.1 billion.
However, there was a slow down in the
activities of the ACGS as the volume and
value of loans guaranteed during the
period declined. The volume and value
of loans stood at 1,579 and N66.5 million,
respectively, representing a decline of
46.4 and 37.0 per cent, respectively,
below the levels in June 2001. This
development was attributed largely to the
risk aversion of bank operators.

Figure 2: Sectoral Breakdown of ACGSF Loans by value, Jan-June, 2002
FoodCrops
77%
Livestock
11%
Fishery
1%
Others
11%

A sectoral break down of the loans
guaranteed during the period by number
showed that the food crop sub-sector
accounted for 81.7 per cent while the
livestock, fishery and others accounted
for
5.4,
2.0
and
10.9
per
cent,
respectively. Figure 2 shows the
distribution
of
the
value
of
loans
guaranteed by subsector. Analysis of
loans guaranteed by size showed that
medium-size loan of between N20,001
and N100,000 accounted for 1,211 or
76.7 per cent and valued N47.5 million.
This shift could be attributed to the high
cost of production arising from upward
movement in price levels, which rendered
smaller
values
inadequate
for
the
operations of small-scale farmers. Smallscale farmers borrowing N20,000 and
below accounted for 306 loans or 19.4
per cent valued N13.3 million.

A total of 9,552 loans valued
N290.9 million were fully repaid in the
first half of 2002. This represented
increases of 1.6 and 5.6 per cent in
volume and value, respectively, when
compared with a corresponding period of
2001. A total of 66 claims valued N2.7
million were settled showing a decline of
58.2 per cent in volume but an increase
of 129.9 per cent in value when
compared with the levels in the first half
of 2001. During the period under review,
42 loans valued N21.5 million for which
lending banks had filed claims were
recovered,
indicating
the
positive
response of defaulters to the loan
recovery drive of the managing agent.

3.5.2 The Small and Medium Industries
Equity Investment Scheme (SMIEIS)

The Small and Medium Industries
Equity Investment Scheme (SMIEIS),
which was launched in 2001 made
substantial, progress during the first half
of 2002. As at end-June 2002, 75 banks
had set aside the sum of N7.1 billion for
equity investment in viable ventures
under the scheme. Of this amount,
eleven banks had invested the sum of
N0.6 billion or 8.0 per cent. The modest
performance
was
attributed
to
the
cautious approach of the investing banks
and bureaucratic delays.

3.6 CBN Assets and Liabilities


Available data indicated that the
total assets/liabilities of the Central Bank
declined by N42.3 billion or 2.0 per cent
below its end-December 2001 level to
N2,033.1
billion,
in
contrast
to
an
increase of N374.0 billion or 20.9 per
cent in the first half of 2001. The decline
reflected largely, the N127.8 billion or
10.8 per cent decrease in the Bank’s
foreign assets, following unfavourable
developments in the international oil
market. Conversely, the domestic assets
of the Bank rose by N85.5 billion or 9.6
per cent as a result of the substantial rise
in other assets.

At N979.2 billion, the Bank’s domestic
assets, comprising mainly investment in
government securities increased by 9.6
per cent, compared with the 43.0 per cent
increase recorded in the corresponding
half-year of 2001. The Bank’s holding of
treasury securities declined by 31.0 per
cent from its level in December 2001 to
N509.9 billion, while rediscounts and
advances declined significantly by 79.4
per cent to N1.5 billion during the period.
Central
Bank’s
Ways
and
Means
Advances to the Federal Government
stood at N42.3 billion at end-June 2002.
Other assets of the Bank increased
substantially by 219.9 per cent to N461.4
billion. Total deposit liabilities of the CBN
declined by N305.5 billion or 27.0 per
cent to N826.2 billion, while the Bank’s
currency liabilities declined by N49.1
billion or 12.2 per cent to N354.4 billion.
The Bank’s general reserves, however,
increased marginally from N34,527.0
billion to N34,527.4 billion, while the paid-

up capital remained unchanged at endDecember, 2001 level of N3.0 billion.

3.7 Services to Third Parties

The CBN disbursed about N104.0
million
to
twelve

(12)
Nigerian
Universities during the period in review.
This was the outstanding balance of a
total of N245.0 million approved by the
Bank as grants for capacity building in
these institutions. This was to assist in
the execution of their capital projects
such as the construction of science
laboratories,
computer
facilities
and
classrooms etc.

PART TWO

ECONOMIC REPORT

4.0
A REVIEW OF OTHER
MACROECONOMIC AND
SECTORAL POLICIES

Macroeconomic policies in 2002
were designed to ensure price stability
and reverse the upward trend in inflation
rate to a single digit. Furthermore, the
policies were to foster an enabling
environment for private-sector-led growth
in order to boost long-term economic
growth
and
reduce
poverty.
The
monetary policy strategies for achieving
these objectives were spelt out in the
CBN Monetary Policy Circular No. 36 as
well as the Federal Government’s Budget
statement for fiscal 2002.

4.1
Fiscal Policy Measures

The focus of fiscal policy in 2002
was to increase growth in output and
reduce poverty and unemployment. To
this end, government reviewed the tariff
regime in favour of machineries, spare
parts and raw materials. Furthermore,
government made efforts to provide fiscal
incentives to foreign investors. Overall,
the fiscal measures included:
• An aggregate Federal Government
budgetary outlay of approximately
N1,064.8 billion, made up of capital
expenditure (46.3 per cent) and
Recurrent Expenditure ( 53.7 per
cent).
• Retained revenue was projected at
N634.0 billion.
• An overall deficit was estimated at
N443.6 billion or 7.7 per cent of GDP.
• The various tax concessions in favour
of the manufacturing sector include:
-
Duty reduction on raw materials
import, except iron rods;
-
Retention of zero duty on machinery
and spare parts;
-
The requirements for manufacture-inbond scheme were relaxed;
• Incentives for domestic agricultural
production included:
-
Ban on bulk importation of vegetable
oil;
-
VAT exemption on basic foods.

5.0
DEVELOPMENTS IN THE
FINANCIAL SECTOR

5.1
Monetary and Credit
Developments

5.1.1 Money Supply

In the first half of the year, the
growth in monetary aggregates exceeded
programmed targets for fiscal 2002.
Available
data
indicated
that
broad
money supply (M2) increased by 14.1 per
cent to N1,502.1 billion. On annualised
basis, M2, growth rate would exceed the
permissible growth target of 15.3 per cent
for the whole year. Similarly, narrow
money supply (M1) rose by 6.8 per cent
to N872.1 billion, compared with the
target of 12.4 per cent for fiscal 2002.
The levels were, however, lower than the
28.0 and 26.1 per cent growth recorded
in the corresponding period of 2001. The
rise in M2 reflected increases in M1 and
quasi-money. The main factors which
influenced the rise in M1 were the

Figure 4: Banking Systems' Credit to the Economy (Per cent Growth
Rate During the First Half of the Year)

Per cent
Aggr. Cr.

Govt. Cr.

Prvt. Cr.


Figure 3: Money Supply in Nigeria (Per cent Growth Rate during
the First Half of the Year)

Per Cent
M1
M2
M1

M2


increases of 28.5 and 2.2 per cent in
aggregate bank credit (net) to the
domestic economy and other assets (net)
of the banking system, respectively. The
decline of 7.7 per cent in foreign assets
and the rise in quasi money, however,
exerted some moderating influence on M1
growth (Table 3).

5.1.2 Banking System Credit

Aggregate
banking
system’s
credit to the domestic economy rose by
28.5 per cent to N1,066.0 billion. If
annualised, the growth rate would be
within the 57.9 per cent target for the
entire 2002. The growth in aggregate
credit was traceable largely to the rise in
credit to the government. Net claims on
the government sector rose substantially
and exceeded the target of 96.6 per cent
by a wide margin and far above the
increase of 4.2 per cent recorded in the
corresponding period of 2001. The
claims by the CBN and the deposit
money banks were jointly responsible for
the rise in credit to government. CBN’s
net claims on the sector increased by
47.9 per cent, reflecting largely, the rise
in the Bank’s direct advances to the
Federal Government.

Figure 5: Share of Government and Private Sector in Banking System's
Credit to the Economy

Per Cent
% Govt Cr.
%Prvt Cr.
%Prvt Cr.

% Govt Cr.


Credit
to
the
private
sector
increased by 9.9 per cent to N939.4
billion at the end of the review period,
compared with 34.9 per cent target
growth rate for fiscal 2002 and the
increase of 29.6 per cent observed in the
corresponding period of 2001. Credit to
state and local governments fell by 54.3
per cent, while claims on non-financial
public
enterprises
rose
significantly
during the period, in contrast to the 7.5
per cent decline a year earlier. Credit to
‘other’ private sector (non-governmental
establishments) recorded an increase of
11.9 per cent, vis -à-vis the 26.2 per cent
increase in the first half of 2001.

5.1.3
Money Market


Developments

Activities in the money market during the
first half of 2002 were influenced largely
by the state of banking system’s liquidity
and the developments in the foreign
exchange market. The level of money
market instruments outstanding at endJune 2002 rose marginally by N3.0 billion
or 0.5 per cent to N657.0 billion,
compared with the N7.3 billion or 1.4 per
cent increase in the first half of 2001. The
increase was driven by the transactions
in Bankers Acceptances (BAs), while
dealings in Commercial Papers (CPs)
and Eligible Development Stocks (EDS)
recorded declines during the review
period.
However,
NTBs
remained
unchanged at the end-December 2001
level of N584.5 billion as no new issues
were made during the period. NTBs
constituted the dominant instrument in
the market, accounting for 89.0 per cent
of the total value of money market assets
outstanding in the review period.

5.1.4 Inter-bank Funds Market

The
Inter-bank
Funds
Market
recorded a remarkable reduction in the
volume of transactions in the first half of
2002. The development was attributable
to the liquidity surfeit in the banking
system and the suspension of some
banks from the foreign exchange market

Figure 6: Selected Commercial Banks' Interest Rates (Per Cent, Half Year)

Per Cent
Inter-Bank

Savings

Prime

Max


following intensified surveillance of the
market by the monetary authorities.

At N417.2 billion, the total value of
transactions in the market declined by 5.1
per cent from the end-December 2001
level, in contrast to the 41.0 per cent
increase in the corresponding period of
2001. Transactions in overnight call
money, which constituted the dominant
maturity (61.1 per cent), rose marginally
by 0.2 per cent to N254.9 billion from
N254.5 billion in the preceding half-year.
Similarly, the inter-bank call rate, which
averaged 24.6 per cent in December
2001, rose to 25.1 per cent in June 2002.


5.1.5 Interest Rates

Reported
bank
deposit
and
lending rates showed modest declines
during the review period. The average
savings deposit rate which stood at 5.0
per cent in December 2001, declined to
3.7 per cent in June 2002, while the
average rate on time deposits of 3-month
maturity that was 17.9 per cent in the
preceding six months declined to 17.0
per cent by end June, 2002, compared
with the 16.5 per cent level observed in
the
corresponding
period
of
2001.
Similarly, the average prime lending rate
declined from 26.0 per cent in December
2001 to 25.3 per cent in June, while the
maximum lending rate moderated to 30.6
per cent from 31.2 per cent at endDecember, 2001. The spread between
banks’ weighted average deposit and
maximum lending rates stood at 13.8
percentage points in June, while the
margin between their average savings
deposit and maximum lending rates was
26.9 percentage points. With inflation
rate estimated at 16.4 per cent in June,
the average rates on 3-month, 6- month
and 12-month deposits were generally
positive in real terms.

The CBN’s Minimum Rediscount
Rate (MRR) remained unchanged at endDecember 2001 level of 20.5 per cent,
while the NTB issue rate in the primary
market was adjusted downward from

22.50 to 20.72 per cent in the second
quarter. The average inter-bank call rate,
however, rose from 24.6 per cent in
December 2001, to 25.1 per cent at-endJune 2002 (Table 5).

5.1.6 Financial Savings

Aggregate financial savings at end of
June, 2002 amounted to N646.9 billion,
indicating an increase of 25.6 percent
over the level in December, 2001.
Aggregate savings to GDP ratio rose
marginally to 10.5 in June, 2002 from
10.0 per cent at end December, 2001.
Deposit money banks (DMBs) continued
their dominance as the major depository
institutions in the economy. The DMBs
accounted for 97.2 per cent of total
institutional
savings
in
June
2002,
compared
with
95.2
per
cent
in
December, 2001. Other institutions that
contributed to the level of financial
savings
included
community
banks,
pension
funds
and
“others”,
which
accounted for the balance of 2.8 per cent.

5.1.7
Capital Market
Developments

Transactions in the secondary market
reflected improved performance during
the first half of 2002 as the major market
indicators showed upward trends. The
volume of traded securities rose by 20.2
per cent to 2,721.0 million shares,
compared with 2,263.2 million shares
recorded in June 2001. The value of
shares traded also increased by 2.6 per
cent from N22.8 billion in June 2001 to
N23.1 billion in June, 2002. Transactions
in
equities
dominated
the
market,
accounting for 99.9 per cent. The balance
of 2.6 million stocks valued at N0.2 billion
was accounted for by government stocks.
An
analysis
of
the
transactions
showed that the banking sub-sector had
a bullish run over other sub-sectors
during the first half of 2002, followed by
the petroleum products marketing subsector. Market capitalization which stood
at N644.9 billion in December, 2001 rose
by 7.0 per cent to N690.0 billion at endJune, 2002. This development reflected
the continued positive movements in
equity prices as well as improved
confidence in the market. The CBN’s all
sector equity price index increased during
the period under review. The index was
12,618.8 at end June, 2002 indicating an
increase of 22.0 per cent over the level in
December, 2001.

The new issues market was active as
two
state
governments
and
five
companies, including 3 banks, sought
funds from the market during the period
under review. The breakdown showed
that Yobe and Ekiti state governments
raised N2.5 billion each through the
market, while Fidelity Bank Plc, Tourist
Company of Nigeria, First Atlantic Bank
Plc, Chartered Bank Plc and Presco Co.
Plc raised N503.8 million, N2.6 billion,
N2.3 billion, N124.2 million and N798.2
million, respectively. Four of the issues
were offers for subscription, while the fifth
was by rights issue.

5.1.8 Deposit Money Banks

Available data indicated that total
assets/liabilities of deposit money banks
(DMBs) at end-June, 2002 amounted to
N2,397.7 billion representing an increase
of N230.4 billion or 10.6 percent over the
level in December, 2001. The system
remained oligopolistic, with ten banks
accounting for 51.3 per cent of total
assets; 52.2 per cent of total deposits;
46.0 per cent of loans and advances; and
34.1 per cent of capital and reserves.
Total funds available to the banks during
the first half of 2002 amounted to N360.8
billion. The funds were sourced mainly
from
increases
in
deposit
liabilities
(N165.1 billion), accretion to capital
accounts (N88.8 billion), draw-down on

reserves (N36.8 billion), as well as the
increase in central government deposits
(N30.4 billion), among other sources. The
funds were used mainly to expand claims
on the central government (N96.3 billion),
and the private sector (N111.4 billion);
reduce other liabilities (N78.0 billion) and
acquire foreign assets (N35.4 billion),
among others.

At N1,149.9 billion, aggregate credit
of DMBs rose by N151.6 billion or 15.2
per cent over the level at end-December
2001. The banks’ credit to the private
sector increased by 10.1 per cent during
the half-year, compared with the increase
of 29.8 per cent in the corresponding
period a year earlier, while claims on the
Government rose sharply by 42.9 per
cent, reflecting the increase in the banks’
treasury bill holding.

Aggregate liquid ity ratio of the banks
was 48.9 per cent, compared with the
minimum ratio of 40.0 per cent stipulated
for fiscal 2002. Average loan/deposit
ratio of banks at end-June, 2002 stood at
73.4 per cent, compared with 54.1 per
cent in the corresponding period of 2001.

5.1.9 Discount Houses

The
performance
of
discount
houses in June 2002 reflected an
improvement relative to the first and
second halves of 2001. At N52.6 billion,
asset/liabilities
of
discount
houses
increased by N20.2 billion or 62.6 per
cent over the level at end-December,
2001. Funds available to the discount
houses in the period under review
amounted to N31.6 billion, compared with
N13.1 billion in the comparable period of
2001. The funds were sourced mainly
from money at call from banks (N25.3
billion), recall of claims from others (N3.0
billion) and reduction in cash balances
(N2.0 billion). These funds were utilised
to
increase
investments
in
Federal
government securities (N20.6 billion),
increase claims on banks (N4.6 billion)
and reduce other liabilities (N1.9 billion).
The discount houses met the statutory
requirement with respect to investments
in treasury securities as they invested
85.0 per cent, compared with 60.0 per
cent stipulated for fiscal 2002.

5.2
Fiscal Operations and
Developments

5.2.1 Federation Account
Operations


Total federally-collected revenue
in the first half of 2002 amounted to
N865.2 billion, which was 23.5 per cent
lower than the level in the corresponding
period of 2001 but 19.0 per cent over the
proportionate
budget
estimate.
The
higher revenue relative to the budget
projections was attributable to receipts
from oil sources. The higher price of
crude oil per barrel relative to the budget
target impacted positively on oil revenue.
Total oil receipts fell by 36.0 percent
below the corresponding period of 2001
but increased by 29.7 per cent over the
budget target. Non-oil revenue recorded
an increase of 41.9 per cent over the
corresponding half of 2001, but fell
slightly below the budget target by 0.4
per cent. The sum of N620.7 billion or
71.7 per cent of the total federally
collected revenue was credited to the
Federation Account as against 58.6 per
cent in the first half of 2001.

5.2.2 Federal Government Finances

The retained revenue of the
Federal Government for the period was
N284.9 billion, indicating decreases of
14.9 and 10.1 percent below the amount
in the corresponding period of 2001 and
the proportionate budget estimate. The
aggregate expenditure of the Federal
Government, at N404.4 billion showed
declines of 24.9 and 17.2 per cent

Figure 7: Federal Government Fiscal Operations (N'Billion,
First Half of the Year)

Billion Naira
Ret. R ev.
Tot. Exp.
Recur Bal.
Overall Bal.
Ret. Rev.

Tot. Exp.

Recur Bal.

Overall Bal.


compared with the proportionate budget
estimate for the first half of 2002 and the
corresponding
period
of
2001,
respectively.
The
relatively
low
expenditure resulted largely from delayed
disbursement of capital expenditure.
Recurrent expenditure, which accounted
for 81.3 per cent of total, exceeded the
budget estimate by 13.7 per cent.
Consequently, the fiscal operations of the
Federal Government during the first half
of year 2002 resulted in an estimated
overall deficit of N119.5 billion as against
the proportionate budget target of N221.8
billion
and
N153.4
billion
in
the
corresponding period of 2001. The deficit
was financed with borrowings from the
banking
system,
excess
crude
oil
proceeds and other funds, including past
savings.

5.2.3 Statutory Revenue Allocation to
State
Governments
and
the
Federal Capital Territory
Statutory revenue allocations to state
governments and the Federal Capital
Territory (FCT), Abuja amounted to
N209.4 billion during the first half of 2002,
up by 6.8 per cent when compared with
the sum of N195.9 billion allocated to this
tier
of
government
during
the
corresponding period of 2001. Total
revenue
allocation
to
the
states
comprised
N147.6
billion
from
the
Federation Account, N25.3 billion from
value-added pool account, N8.5 billion
from excess crude oil proceeds and
N28.0 billion to the oil producing states in
respect of the 13 per cent derivation
principle.

5.2.4
Statutory allocations to
Local Governments

Total statutory allocation inclusive
of VAT to local government councils, in
the review period stood at N139.6 billion,
showing an increase of 11.8 per cent
over the level in the corresponding period
of 2001. Total statutory allocation
comprised of N121.9 billion of Federation
Account
and
N17.7
billion
VAT
allocations. These allocations were
generally higher than the corresponding
period of the preceding year by N12.0
billion or 10.9 per cent of Federation

Figure 8: Public Debt Outstanding

Billion Naira

Billion D
Int.(=N=)

Ext.(=N=)

Ext.($)


Account Allocation; and N2.7 billion or
18.4 per cent of VAT allocation.
5.2.5 Public Debt

Domestic debt outstanding at the end
of June 2002 stood at N1,017.0 billion,
indicating an increase of N118.6 billion or
10.0 per cent over the level at end-June,
2001.
However,
the
domestic
debt
outstanding remained at end-December
2001 stock level of N1,017.0 billion. The
Federal Government redeemed N280.0
million development stocks during the
review period. Available data on external
debt outstanding showed that the debt
stock at end-June, 2002 stood at
US$28,400.0 million, while external debt
service payments for the first half of the
year amounted to US$461.3 million
compared with US$1,383.0 million in the
corresponding period of 2001. Of the total
debt service payments, 51.0, 6.5, 13.8,
and 17.6 per cent accrued to multilateral
institutions, the Paris Club of creditors,
the promissory notes holders, London
Club
and
other
bilateral
creditors,
respectively.

5.3
REAL SECTOR
DEVELOPMENTS

The performance of the Real
Sector improved in the first half of 2002.
Provisional
data
indicated
that
agricultural production grew by 4.1 per
cent,
while
manufacturing
capacity
utilisation rate, at 36.2 per cent, was
higher than the 35.5 per cent recorded in
the first half of 2001. Electricity
consumption
recorded
a
marginal
increase, while the price of crude oil
firmed
up.

There
were
also
improvements in the delivery of social
services, particularly in the health and
education
sub-sectors.

Similarly,
inflationary pressures moderated while
crude oil production slumped.

5.3.1 Agricultural
Production
and
Prices

Output in the agricultural sector
expanded further in the first half of 2002.
At 235.4 (1984 =100), the index of
agricultural production increased by 4.1
per cent, compared with the 3.9 and 3.3
per cent recorded in the first halves of

and
2000,
respectively.
The

Figure 9: Index of Agricultural Production (1984 = 100)

Number
Crops

Livestock

Fishing

Forestry

Aggregate


improved performance was accounted for
by growth in the output of all the subsectors. For instance, crop, fishery and
livestock production rose by 4.0, 2.8 and
2.2 per cent, respectively.

The increase in the prices of Nigeria’s
major agricultural export commodities, at
the
London
Commodities
Market
observed from the first half of 2001,
continued during the period under review.
The all commodities price index, in dollar
terms,
stood
at
82.9
(1985=100),
representing an increase of 47.8 per cent
over the level in the first half of 2001. Of
the six commodities monitored, four
recorded price increases, while the prices
of the remaining two were below their
2001 levels. For instance, the prices of
palm oil, cocoa, copra and soya bean
rose by 54.4, 49.4, 31.8 and 1.3 per cent,
respectively. The improvement in prices
was attributed mainly to reduced supply
and
slight
increases
in
demand.
However, cotton and coffee recorded
price declines of 23.2 and 5.3 per cent,
respec tively, reflecting the weak demand
for
coffee.
The
increasing
use
of
synthetic cotton and excess supply
combined to dampen the price of cotton.

In Naira terms, the all-commodities
index rose by 39.7 per cent to 7915.6
(1985=100). The price increases for the
monitored commodities ranged from
15.6 per cent for soya bean to 45.0 per
cent for palm oil, except coffee and
cotton. Nevertheless, the domestic price
of all the commodities recorded price
increases. The price of palm kernel,
cotton, Soya bean, cocoa and coffee rose
by 54.2, 44.3, 2.9, 2.0 and 0.3 per cent,
respectively.

The domestic retail prices of all the
selected food items rose significantly
when compared with their levels in the
first half of 2001. The increase ranged
from 0.5 per cent for yam flour to 33.8 per
cent for beans. The prices of other
commodities, such as garri, millet, guinea
corn, maize and local rice rose by 9.8,
18.0, 19.3, 19.4 and 21.9 per cent,
respectively. The price of palm oil also
increased by 13.5 percent, owing largely
to rising demand. The price increases

Figure 10: Index of Industrial Production (1984 = 100)

Number
Mining

Manf.

All Sect.

Elect.


were attributed largely to increased
transportation
and
production
costs,
arising from high cost of inputs such as
fuel, fertilizers and farm machineries.
Other reasons included the poor state of
rural roads that impeded the smooth
transportation of farm produce from the
rural to urban centres. Also, increased
demand for cassava by industrial starch
producers, livestock feed manufacturers
and
pharmaceutical
companies
contributed to the upward movement in
its price.


5.3.2 Industrial Production

The tempo of industrial activities
rose marginally during the first half of
2002. At 143.9 (1985 = 100), the
provisional index of industrial production
increased by 0.5 per cent over the level
in the corresponding period of 2001, but
declined by 0.3 per cent below the level
in the preceding half year. The increase
in
output
over
the
level
in
the
corresponding
period
of

was
accounted for by the 1.8 and 4.6 per cent
increase in electricity consumption and
manufacturing production, respectively.
Mining output, however, fell by 6.8 per
cent. Similarly, the decline in industrial
production in relation to the second half
of 2001 was accounted for by the slow
down in the three sub-sectors: electricity
consumption
(0.9%),
mining
output
(6.5%) and manufacturing production
(0.3%). At 36.2 per cent, the estimated
aggregate
manufacturing
capacity
utilization rate rose by 0.7 percentage
points over its level in the first half of
2001, but decreased by 0.1 percentage
points below the level in the second half
of the preceding year.

Higher manufacturing output was
constrained largely, by some lingering
problems which included high cost of
production, occasioned by high interest
rates,
depreciating
exchange
rate,
multiple levies and taxes imposed by
state and local governments; and low
effective demand for local manufactures,
induced partly by the influx of cheaper
finished
products
into
the
country.
Other constraints were insecurity of lives
and
properties,
as
well
as
poor
infrastructural
facilities,
which
discouraged investments and production.

Mining output declined relative to
the levels in the first and second halves
of
2001,
owing
to
contraction
in
petroleum
production.
Crude
oil
production,
including
condensates,
estimated at 342.09 million barrels, fell by
9.6 and 12.9 per cent below its level in
the first and second halves of 2001.
Average daily production stood at 1.89
million barrels, compared with 2.30
million barrels per day (mbd) in the
corresponding period of 2001. The
decline in crude oil production was
attributed to Nigeria’s compliance with
OPEC quota, which was lowered in order
to shore up prices. At 260.64 million
barrels, aggregate crude oil exports
decreased by 25.0 per cent below the
level in the first half of 2001, while a total
of 81.45 million barrels was supplied for
local refining.

Crude oil prices in the international
market were unstable in the first half of
2002, owing largely to OPEC members’
non-compliance with production quotas,
renewed tension in the Middle -East,
release of strategic reserves by the US
and
Russia’s
resumption
of
full
production.

In
spite
of
these
developments, OPEC’s efforts paid off as
crude prices firmed up during the half
year. For example, the average spot
price of Nigeria’s reference crude, the
Bonny
Light
(37o
API),
rose
from
US$22.36 in the second half of 2001 to
US $24.41 per barrel, representing an
increase of 9.2 per cent. It was, however,
8.1 per cent lower than the US $26.57
recorded in the corresponding period of
2001. The average prices of Forcados,
UK Brent, West Texas International (WTI)
and
Arab
Light
were
US$23.81,
US$24.07, US$25.41 and US$27.77
respectively, during the review period.


The production of natural gas was
estimated at 28,471.40 million cubic
metres (MMm3), which represented an
increase of 10.7 per cent over the level in
the first half of 2001. The rise in gas
output was attributable to increased
exploitation of non-associated gas for use
in the Nigeria Liquefied Natural Gas
(NLNG)
project.
Gas
flared,
which
represented 48.2 per cent of the output,
totalled 13,711.90 MMm 3 as against
12,253.40 MMm 3 in the corresponding
period of 2001.


At 14,759.50 MMm 3, the volume
utilized rose by 9.6 per cent over the level
in the same period of 2001. Gas sold to
industries increased by 12.3 per cent to
7,533.8 MMm 3. Conversely, gas used
as fuel by oil firms fell by 3.5 per cent to
1,091.30 MMm 3, while the volume of reinjected gas fell by 4.5 per cent to
4,407.0 MMm 3.


The
total
consumption
of
petroleum products amounted to 5.182
million tonnes during the period under
review. This represented an increase of
8.8 per cent over the level in the first half
of 2001. The increase in consumption
was attributed to improvements in the
supply
of
the
products
through
importation by the NNPC and higher
supply from the refineries, following
successful turn around maintenance of
the facilities. Consumption rose despite
increases in the prices of some major
petroleum products at the beginning of
the year. Except for the liquefied
petroleum gas (LPG), automotive gas oil
and
bitumen/asphalt
for
which
consumption decreased by 25.6, 7.8 and
21.3 per cent to 0.01, 1.06 and 0.24
million
tonnes,
respectively,
the
consumption
of
all
other
products
increased.

Solid minerals production fell in
the first half of 2002. Estimated at 1.01
million tonnes, it declined by 2.6 and 6.2
per cent below the levels in the
corresponding half of 2001 and the
preceding half year. The decline in output
relative to the corresponding period of

2001, was accounted for by declines of
3.3 and 2.7 per cent in coal and
limestone
production,
respectively,
occasioned largely by inadequate funding
(working capital), as well as obsolete
machinery and equipment. The output
of cassiterite, columbite and marble,
however, rose by 3.0, 0.7 and 2.9 per
cent, respectively.


Electricity consumption improved
in the first half of 2002. At 4,432.6 million
KWh,
the
estimated
electricity
consumption rose by 1.0 per cent over its
level in the corresponding first half of
2001. The increase was accounted for by
increases of 3.2 and 1.4 per cent in the
commercial /street lighting and industrial
components. Residential consumption,
which accounted for 51.4 per cent of
total, however, declined by 0.3 per cent.
Commercial/street lighting and industrial
components represented 26.7 and 21.9
per cent of total, respectively, in the
review period. The improvement was
attributable largely to the impact of the
on-going
rehabilitation
of
electricity
infrastructure nation-wide, as well as the
additional electricity generated by the
Lagos and Rivers states’ independent
power plants.

5.3.3 Consumer Prices


The inflationary pressures, which
began in the second half of 2001,
moderated in the first half of 2002. Data
from the Federal Office of Statistics
(FOS) indicated that the composite
consumer price index (CPI) for June was
4,784.7 (1984=100), representing an
inflation rate of 16.4 per cent compared
with the 16.6 per cent level a year ago
(Table 7, Figure 11). The analysis of the
components of the CPI showed that the
increase
was
attributed
to
four
components in the basket: food, drinks,
accommodation,
and
transportation
expenses, the prices of which rose by
10.3, 20.5, 44.7, and 2.0 per cent,
respectively. The upward trend was,
however, moderated by decreases in the
prices of five other commodities, which
ranged from 0.7 per cent for other
Figure 11: Consumer Price Indices and Inflation Rate

Numbers

Per Cent
Composite

Food

Urban

Rural

Inflation


services to 6.8 per cent for education and
cultural
services.
Although,
the
inflationary
pressures
trended
downwards,
the
double-digit
figure
persisted, owing to both demand and
supply factors. On the demand side was
the liquidity surfeit in the banking system,
arising from the expansionary fiscal
stance of the government. On the other
hand, the supply factors included the
depreciation of the naira exchange rate
and high interest rates, as well as
infrastructural
inadequacies,
which
resulted
in
high
cost
of
domestic
production.

5.3.4 Labour Market

Current
labour
statistics
were
not
available from the Federal Office of
Statistics (FOS). Provisional estimates
indicate
that
the
composite
unemployment rate for June 2002 was
4.1 per cent, compared with 3.8 per cent
for June 2001. The urban unemployment
rate was projected at 6.1 per cent, 0.3
percentage point above the 5.9 per cent
of
June
2001.
Similarly,
the
rural
unemployment rate, which was 3.1 per
cent in June 2001, was projected to 3.4
per cent during the review period. These
estimates
should,
however,
be
interpreted with caution, as anecdotal
evidence seem to suggest that the
unemployment rate could be much higher
than
the
reported
estimates.
The
increasing rate of unemployment has
been traced to inability of the private
sector to generate employment to its full
potential,
owing
to
poor
growth
performance, arising from frequent power
outages
and
other
infrastructural
deficiency.

5.3.5 Socio-Economic Developments

There were improvements in the
delivery of social services during the first
half of 2002, particularly in the health and
education sub-sectors. In the health subsector, immunization against polio and
other child killer diseases was intensified,
while a total of N457.0 million was given
as grants to some of the Federal
University
Teaching
Hospitals
and
Federal Medical Centres for special
projects,
including
buildings
and
upgrading of facilities. In addition, the
Nigerian Agency for Food and Drug
Administration (NAFDAC) intensified its
efforts to checkmate the importation and
production of fake and sub-standard
pharmaceutical products. International
agencies
and
non-governmental
agencies (NGOs) also contributed to the
improvement in health care delivery in
the country. For example, the Canadian
International
Development
Agency
(CIDA) donated $20.0 million to Schools
of Health Technology in Bauchi and
Cross River States, while Japan gave a
grant of $2.85 million for the procurement
of Oral Polio Vaccines (OPV) and cold
chain equipments in the efforts to
eradicate polio.

In the education sub-sector, efforts
were intensified on the rehabilitation of
primary and secondary schools under the
Universal
Basic
Education
(UBE)
scheme. The scheme received a boost
during the period, as the World Bank
gave a grant of $100.0 million as a
contribution to its implementation in 16
states
of
the
federation.
Similarly,
the
United
States
Environmental
Protection
Agency
(USEPA) donated equipments worth
$20.0 million to the Department of
Environmental
Management
and
Technology
of
the
University
of
Agriculture, Abeokuta, for monitoring
environmental pollution. Further more,
the
Niger
Delta
Development
Commission (NDDC) supplied science
equipment and chemicals worth N80.0
million to secondary schools in Ondo
State, mainly to schools in the oil
producing riverine areas.


Billion Naira
Figure 12: Balance of Payments
Cur. Acct

Cap. Acct

Overall Bal.


5.4
External Sector Developments

5.4.1 Balance of Payments

Nigeria’s
external
sector
was
under severe pressure during the first
half of 2002, resulting in a huge overall
balance of payments deficit. From a
surplus of N51.1 billion (US$0.5 billion) in
the first half of 2001, the overall position
deteriorated to deficits of N22.0 billion
(US$0.2
billion)
and
N394.9
billion
(US$3.4 billion) in the second half of

and
the
first
half
of
2002,
respectively.
This
development
was
accounted for by the deterioration in both
the current, and the capital and financial
accounts.

The financing of the overall deficit
was through the draw-down in external
reserves and a further deferment of a
portion of the scheduled debt service
totaling N189.1 billion (US$1.64 billion),
which fell due during the period. As a
result of the draw-down, the nation’s
stock of external reserves declined by
17.0 per cent from end-December 2001
level of US$10.45 billion to US$8.67
billion at end June 2002. This contrasts
with the increase of 6.6 per cent or
US$0.7 billion at end-June, 2001. The
level of external reserves could support
8.2 months of current foreign exchange
disbursements as against 8.4 months in
the first half of 2001.

In contrast with the trend observed
in the two halves of 2001, the current
account recorded a deficit of N82.5 billion
(US$0.7
billion),
from
surpluses
of
N150.5 billion (US$1.35 billion) and
N117.6
billion
(US$1.1
billion),
respectively. This reflected the sharp
decline in merchandise trade (goods)
balance, occasioned by the drastic
reduction in earnings from crude oil
exports, and the drop in the current
transfers (net). The combined effect of
these two accounts and the huge deficit
in the services and income accounts
impacted, adversely on the current
account position.

Figure 13: Exports and Imports

Billion Naira

Exp.

Imp.

Trd. Bal.


Total
receipts
from
exports
declined from N1,218.5 billion (US$10.9
billion) in the first half of 2001 to N749.7
billion (US$6.5 billion) in the period of
review. The oil sector export fell by 39.2
per cent to N734.9 billion (US$6.4 billion),
while that of the non-oil sector increased
from N9.3 billion (US$0.08 billion) in the
first half of 2001 to N14.8 billion
(US$0.13 billion). Import bills however,
shrank from N668.3 billion (US$6.0
billion) in the first half year of 2001 to
N448.9 billion (US$3.9 billion), with oil
and non-oil components declining by 17.6
and 36.0 per cent, respectively, in the
first half of 2002. Similarly, the trade
surplus decreased by 45.3 per cent to
N300.8 billion (US$2.6 billion), reflecting
mainly the dwindling receipts from the
export sector.

The
combined
deficit
in
the
services and income accounts was
attributable to huge out-payments in
respect of oil sector operations, travels
and high interest payments on scheduled
debt service. At N463.8 billion, the deficit
in services and income accounts for the
reporting period was, however, lower
than the N516.0 billion (US$4.6 billion)
recorded in the first half of 2001. Also,
the net surplus in the current transfers
account fell from N116.4 billion (US$1.0
billion) in the first half of 2001 to N80.5
billion (US$0.7 billion), reflecting a lower
level of home remittances by Nigerians
resident abroad.

The capital and financial account
weakened relative to its position in the
first half of 2001, arising from other
sector’s
short-term
liabilities,
and
scheduled debt due amounting to US$
1.03 billion in the first half of 2002.
Consequently, deficits recorded in the
capital and financial account worsened
from N92.0 billion (US$0.8 billion) and
N138.3 billion (US$1.2 billion) in the first
and second halves of 2001, respectively,
to N303.1 billion (US$2.6 billion).

Figure 14: Movements in Exchange

Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Naira Per US Dollar
AFE
Bureau de
Parallel
5.4.2 External Assets

Nigeria’s total external assets was
N1,347.9
billion
(US$11.2
billion)
compared with N1,469.5 billion ($12.9
billion) and N1,399.6 billion (US$12.5
billion) at end-December and end-June
2001, respectively. This represented
declines of 8.7 and 3.7 percentage points
below the respective levels in the
comparable periods of 2001. The decline
was attributed to the depreciation of the
exchange rate and a drop in Central
Bank of Nigeria’s (CBN) holdings. CBN
holdings
fell
from
N1,181.6
billion
(US$10.4 billion) and N1,101.6 billion
(US$9.8 billion) at end-December and
end-June 2001, respectively, to N1,041.9
billion (US$8.7 billion). Net assets of the
banking sector amounted to N0.31 billion
during the period under review in contrast
to N0.28 and N0.29 billion at endDecember and the corresponding period
of 2001, respectively.

5.4.3 Developments in the IFEM

At
the
IFEM,
total
foreign
exchange sold amounted to US$4,139.9
million, as against US$4,760.1 million in
the corresponding period of 2001. The
CBN purchases from the market remained
low at US$26.11 million, compared with
US$41.5 million in the corresponding
period of 2001. The average IFEM
exchange rate of the naira was N115.97
per US$1.00, compared with N110.50 per
US$1.00 in the first half of 2001,
indicating a depreciation of 4.1 per cent.
At the bureaux de change and parallel
segments of the market, the naira
depreciated by 5.53 and 5.32 per cent, to
N137.29 and N136.92, per US$1.00
respectively from their levels in the
corresponding period of 2001. This was
attributed to high liquidity surfeit arising
from the fiscal operations of government.
The spread between the IFEM and
parallel market rates widened marginally,
from 17.8 per cent in the first half of 2001
to 18.1 per cent in the review period.

5.4.4 Sectoral Utilization of
Foreign Exchange

Analysis of sectoral utilization of foreign
exchange in the economy during the first
half of 2002 revealed that imports,
invisibles and debt service payments
accounted for 63.4, 29.0 and 7.6 per

cent, respectively, compared with 74.1,
16.1 and 9.8 per cent in the preceding
half and 76.6, 17.9 and 5.5 per cent in
the corresponding period of 2001. Of the
total imports, the shares of private and
public sectors were 60.9 and 2.5 per
cent,
respectively.

A
further
disaggregation of private sector imports
revealed that at 32.7 per cent, the
industrial sector took the lion share,
made up of raw material and machinery,
spare parts and CKD at 19.6 and 13.1
per cent, respectively. Finished goods
accounted for 23.2 per cent, transport 3.6
per cent and personal effects, 29.0 per
cent.

5.5
INTERNATIONAL ECONOMIC
AND MONETARY

DEVELOPMENTS

5.5.1
Developments in the
World Economy

The growth in world output was
estimated at 2.8 per cent in the
review period, as against 3.2 per cent
recorded during the first half of 2001.
This reflected the sluggish recovery
in the United States of America
(USA) and weak performance of the
European and Asian economies. The
global recession continued to impact
adversely on African economies, as
reflected in the declining commodity
prices and low demand of their
traditional
exports.
The
rate
of
inflation in some major economies
trended upwards, arising from the
high cost of energy.

5.5.2
International Monetary
Cooperation


The Spring Meetings of the two
Bretton
Wood
institutions
-
International Monetary Fund (IMF)
and
the
World
Bank
held
in
Washington
D.C.,
April,

deliberated on the following issues:
support for low-income countries,
general review of quotas and special
drawing rights (SDR) allocation, IMF
conditionality,
and
anti-money
laundering and the financing of
terrorism. Also discussed, were
poverty reduction strategies, debt
management
and
sustainability,
conflict and post conflict countries’
issues,
HIV/AIDS
and
other
communicable diseases, trade and
integration of Africa in the World
5 5
28.2
16.8
1 s t H a l f 1 9 9 9
69.7
16.4
13.9
1 s t H a l f 2 0 0 0
76.6
17.9
5.5
1 s t H a l f 2 0 0 1
63.4
2 9
7.6
1 s t H a l f 2 0 0 2
I m p o r t s
I n v i s i b l e s
Ext. Debts Serv.

economy and the role of the private
sector in development. The Meeting
recognized efforts by low-income
countries
to
strengthen
their
development frameworks and foster
greater country ownership of poverty
reduction programmes. In addition,
they were urged to continue to
undertake
necessary
reforms,
implement sound policies, strengthen
institutions
and
practice
good
governance.
Developed
countries
were encouraged to provide more
and
consistent
development
assistance,
encourage
private
investments in developing countries
and allow greater market access for
products from developing countries.
Similarly, there was strong support
for the New Partnership for Africa’s
Development (NEPAD), as a means
of strengthening growth prospects
and reducing poverty in Africa.
The Inter-Governmental Group of
24 on International Monetary Affairs
and Development (G-24) met during
the spring meetings of the IMF/ World
Bank, with the Ministers stressing the
need for increased representation of
the developing countries in the
decision making process of the
Bretton Woods institutions. They
advocated for the streamlining of
conditionality associated with the use
of Fund resources.
The 7th and 8th Meetings of the
Convergence Council of Ministers
and Central Bank Governors of the
West African Monetary Zone (WAMZ)
were held in Freetown, Sierra Leone
and in Accra, Ghana, respectively
during
the
review
period.
The
Meetings deliberated extensively on
the time frame to fully actualise the
WAMZ project, which included: the
eventual establishment of a West
African Central Bank; full pooling of
external reserves and liabilities to
support the common currency of the
WAMZ; and the need for member
countries to take steps to accede to
the IMF General Data Dissemination
Standard
(GDDS)
to
ensure
statistical data and methodology
harmonization. Also, the West African
Monetary Institute (WAMI) is to
conclude two studies on central bank
financing
of
government
budget
deficit, and exchange rate parity
among
the
member
countries’
currencies, for discussion at the next
meeting.

5.5.3
International Currency
Markets

Developments in the international
foreign
exchange
markets
were
influenced by the combined effects of
the slow recovery in the US economy
and the second quarter down turn in
the US equity market which resulted
in declining confidence in corporate
earnings, as well as rising inflation in
some
industrialised
countries.
Consequently,
the
US
dollar
depreciated on the average, against
the pound sterling and the Swiss
franc by 0.2 and 4.2 per cent,
respectively. The dollar initially
appreciated against the Yen by 7.3
per
cent
owing
mainly
to
the
instability in the Japanese financial
system, but depreciated significantly
in the second quarter as the US
economy weakened. In Nigeria, the
naira on the average, depreciated
against the US dollar by 4.1, 4.6 and
4.7 per cent relative to the rates in
the corresponding period of 2001, at
the
inter-bank
foreign
exchange
market (IFEM), bureaux de change
and parallel markets, respectively.

5.5.4 Developments in the
International Commodity
Markets
The meetings of the International
Coffee
Organisation
(ICO),
in
February and March, 2002 noted that

estimated coffee production fell by
3.0 per cent in 2002 owing largely to
low level of stocks, supply and
unfavourable
weather
in
some
producing countries such as Brazil,
Indonesia and Vietnam. However, the
average
ICO
composite
price
increased by 2.2 per cent from
US$0.5000 per pound in 2001 to
US$0.5109 per pound in April, 2002.
Twenty-two exporting countries and
eleven
importing
members
were
noted to have completed necessary
procedures for the ratification of the
International Coffee Agreement (ICA)

which
entered
into
force
provisionally on the 1st October,
2001. Nigeria’s voting rights in the
ICO remained suspended owing to
non-payment of an outstanding debt
of £5,580.00 to the Organization.


The
International
Cocoa
Organisation (ICCO) meetings in
January, March and June 2002
discussed administrative issues and
the entry into force of the 6th
International Cocoa Agreement 2001.
Six
members,
including
Nigeria,
deposited
their
instruments
of
acceptance and ratification of the 6th
International
Cocoa
Agreement
(ICCA). A favourable development
during the period was the high price
of cocoa in both London and New
York markets, selling at £1,000.0 and
US$1,350.0 per tonne respectively.
This was attributed to the decline in
the world stock associated with
shortfalls in production by a major
producer - Cote d’Ivoire.


The Organization of Petroleum
Exporting Countries (OPEC) held two
Ministerial Conferences in March and
June 2002, during which member
countries agreed to sustain output
level of 21.7 mbd agreed to in
November 2001 until the third quarter
of 2002. Consequently, Nigeria’s
quota was reduced to 1.787 mbd in
January 2002, from 1.911 mbd in
September 2001.

5.5.5
Bilateral Relations

Nigeria
held
bilateral
joint
commission meetings with China,
Botswana, Niger, Namibia and South
Africa. The meetings reviewed the
implementation of existing bilateral
agreements, negotiated and signed
new cooperative pacts in the areas of
science and technology, culture,
education, trade and investment with
these countries.

6.0
ECONOMIC OUTLOOK FOR THE
REST OF FISCAL 2002

The
analysis
of
economic
development during the first half of 2002
indicated that the performance was
mixed. Domestic output was driven by
marginal
growth
in
agricultural
and
industrial
production,
while
inflation
moderated. The fiscal operations of the
Federal Government resulted in a large
deficit, which contributed to excess
liquidity with its attendant problem for
monetary management. Consequently,
the growth of key monetary aggregates
exceeded the targets set for the period.
The unemployment situation remained
worrisome with adverse implication on
security of lives and property. However,
improvements were recorded in the
delivery
of
socio-economic
services
during the period. The pressure on the
foreign exchange market continued with
further
depreciation
of
the
naira
exchange rate and the high rate of
depletion of the nation’s external reserve.

The fiscal out-turn for the rest of
the year would depend on the revenue
performance, as well as the early
resolution of the stalemate between the
executive and the legislatu re on the

budget in order to determine the actual
expenditure profile. Barring any new
developments that could increase the
export quota of Nigeria’s crude oil,
revenue from petroleum is not expected
to
increase
beyond
the
budgeted
estimates.

Non-oil
receipts
could
however improve, given the impressive
performance of VAT in the first half. The
total expenditure is expected to rise
rapidly as soon as the release of capital
vote
is
executed.

However,
the
continued commitment of the government
to accountability and fiscal transparency
and
due
process
in
project
implementation could have a moderating
effect on fiscal expansion.

The task of fostering monetary
stability may remain an ardous task given
the high level of liquidity in the banking
system.

The
situation
may
be
aggravated
if
the
government
commences the full implementation of
2002 budget in the second half. The
temptation for fiscal quick-fix as a result
of political grandstanding could rapidly
increase the level of liquidity in the
system. This underscores the need for
fiscal and monetary restraint in the
remaining months of the year.


The growth in domestic output is
expected to improve further in the second
half of the year owing to improvement in
input supply and improved distribution of
rainfall nation-wide. Also, the recent
policy of encouraging the export of
cassava
may
induce
increase
in
production of the commodity, which is a
major staple.

Despite the improved prospects
for good agricultural output during the
remainder
of
the
year,
inflationary
pressures may however, resume during
the rest of the year, if the current
expansionary
trends
in
fiscal
and
monetary policy out-turns persist. This
could
be
accentuated
by
imported
inflation if further depreciation of the
exchange rate persists.

The economic outlook for the rest
of 2002 indicate that the performance of
the domestic economy would further
improve
provided
there
is
full
commitment
to
the
continued
implementation of sound fiscal and
monetary policy measures.

T
A
B
L
E

:
O
P
E
N
M
A
R
K
E
T
O
P
E
R
A
T
I
O
N
S
Y e a r / M o n t h
T o t a l B i d s
A m o u n t
A v e r a g e
A v e r a g e

S o l d
T e n o r ( D a y s )
Y i e l d
1 9 9 7
J a n u a r y

F e b r u a r y

M a r c h

A p r i l

M
a
y

J u n e

T
O
T
A
L
1 2 0 7 2 0
8 1 7 9 5

1 9 9 7
J u l y

A u g u s t

S
e
p
t
e
m
b
e
r

O c t o b e r

N
o
v
e
m
b
e
r

D
e
c
e
m
b
e
r

T
O
T
A
L
3 1 1 1 7
2 9 7 3 8

1 9 9 8
J a n u a r y

F e b r u a r y

M a r c h

A p r i l

M
a
y

J u n e

T
O
T
A
L
2 7 7 0 7
2 7 3 4 7
1 9 9 8
J u l y

A u g u s t

S
e
p
t
e
m
b
e
r

O c t o b e r

N
o
v
e
m
b
e
r

D
e
c
e
m
b
e
r

T
O
T
A
L
3 2 1 3 1
2 9 2 9 6

1 9 9 9
J a n u a r y

F e b r u a r y

M a r c h

A p r i l

M
a
y

J u n e

T
O
T
A
L
1 0 4 0 4 2
9 5 4 6 1
1 9 9 9
J u l y

A u g u s t

S
e
p
t
e
m
b
e
r

O c t o b e r

N
o
v
e
m
b
e
r

D
e
c
e
m
b
e
r

T
O
T
A
L
7 7 7 3 3

2 0 0 0
J a n u a r y

F e b r u a r y

M a r c h

A p r i l

M
a
y

J u n e

T
O
T
A
L
3 0 4 4 1 3
1 6 5 4 2 1
2 0 0 0
J u l y

A u g u s t

S
e
p
t
e
m
b
e
r

O c t o b e r

N
o
v
e
m
b
e
r

D
e
c
e
m
b
e
r

T
O
T
A
L
1 7 8 1 8 4
1 5 2 6 7 9
2 0 0 1
J a n u a r y

F e b r u a r y

M a r c h

A p r i l

M
a
y

J u n e

T
O
T
A
L
1 3 6 8 0 3
1 2 8 5 4 5
2 0 0 1
J u l y

A u g u s t

S
e
p
t
e
m
b
e
r

O c t o b e r

N
o
v
e
m
b
e
r

D
e
c
e
m
b
e
r

T
O
T
A
L
2 6 6 4 9 9
2 5 8 3 9 9
2 0 0 2
J a n u a r y

F e b r u a r y

M a r c h

A p r i l

M
a
y

J u n e
4 4 3 2 0
4 1 5 6 0
4 2
T
O
T
A
L
3 0 5 0 9 0
2 9 1 3 8 0

TABLE 2
ISSUES AND SUBSRIPTION OF TREASURY BILLS AND CERTIFICATES
MONTHLY AVERAGES
(=N= million)

2001 1/
2001 2/
2002 2/
1st Half
2nd Half
1st Half
2nd Half
1st Half
2nd Half
1st Half
2nd Half
1st Half
2nd Half
1st Half
2nd Half
1st Half
Treasury Bills (Issues)

Subscriber:


Central Bank

Commercial Bank

Merchant Bank

Non-Bank Public

Treasury Certificates (Issues)

Subscriber:


0.0
Central Bank

Commercial Bank

Merchant Bank

Non-Bank Public


1/ Data represent banks' subscription in line with universal banking which commenced in January 2001.
2/Provisional


TABLE 3
MONETARY AND CREDIT DEVELOPMENTS
DEC 1996
JUNE1997
DEC 1997 1/JUNE1998
DEC 1998
JUNE1999
DEC 1999
JUNE 2000
DEC 2000JUNE2001
DEC 2001
JUNE 2002
1.Domestic Credit (net)

(a) Claims on Federal Government (net)

By Central Bank

By Commercial Banks

By Merchant Banks


(b) Claims on Private Sector

By Central Bank

By Commercial Banks

By Merchant Banks

(i) Claims on State and Local Governments

By Central Bank

By Commercial Banks

By Merchant Banks

(ii) Claims on Non-Financial Public Enterprises

By Central Bank

By Commercial Banks

By Merchant Banks

(iii) Claims on Other Private Sector

By Central Bank

By Commercial Banks

By Merchant Banks

(2) Foreign Assets (net)

By Central Bank

By Commercial Banks

By Merchant Banks

(3) Other Assets (net)

Total Monetary Assets

Quasi-Money 1/

Money Supply

Currency Outside Banks

Demand Deposits 2/

Total Monetary Liabilities


GROWTH RATE OVER THE PRECEDING DECEMBER (In Percentages)
Credit to the Domestic Economy (net)

Credit to the Private Sector

Claims on Federal Government (net)

By Central Bank

Claims on State and Local Governments

Claims on Non-Financial Public Enterprises

Claims on Other Private Sector

Foreign Assets (net)

Quasi-Money

Money Supply (M1)

Broad Money (M2)

Other Assets (net)

NOTES :
1/. Quasi-Money consists of Time, Savings and Foreign Currency Deposits of Commercial and Merchant Banks excluding Takings from Discount Houses.
2/. Demand Deposits consist of state, local and parastatals deposits at the CBN; state local and private sector deposits as well as demand deposits of
non-financial public enterprises at Commercial and Merchant banks.

TABLE 4
VALUE OF MONEY MARKET INSTRUMENTS
Instrument
Dec
JUNE
Dec
JUNE
Dec
JUNE
Dec
JUNE
Dec
JUNE
Dec
JUNE
Dec
JUNE

Treasury Bills

Treasury Certificates

Eligible Development Stocks

Certificates of Deposits

Commercial Papers

Bankers' Acceptances

Total

Percentage Change Over Preceding December
Treasury Bills


Treasury Certificates


Eligible Development Stocks


Certificates of Deposits


Commercial Papers


Bankers' Acceptances


Total


TABLE 5

SELECTED INTEREST RATES

(Per cent at End of Period)


June
June
June
June
Dec
June
Dec
June
Dec
June
Dec
June
Dec June
DecJun 2/
Dec
Jun

Minimum Rediscount Rate

Treasury Bills Issue Rate

Commercial Banks 1/
Savings Deposit Rate

Time Deposit Rate (3 months)

Prime Lending Rate

Maximum Lending Rate


Merchant Banks 1/

Time Deposit Rate (3 months)

Prime Lending Rate

Maximum Lending Rate

Inter-bank Rate (End-Period)


1/ Weighted Averages
2/ With the introduction of universal banking in January 2001, data for 2001 represent industry averages for each tenor.

TABLE 6
FEDERATION ACCOUNT OPERATIONS
(N MILLION)
Proportionate
Budget Estimates

2001 1/
2002 2/
2002 2/
1st Half
1st Half
1st Half
1st Half
1st Half
1st Half
Federally Collectable Revenue (Gross)
389,880.8 350,733.7
745,829.6 1,131,662.6 727,040.4
865,171.0
Oil Revenue (Gross)3/

Exports

PPT , Royalties,rent, etc

Upstreams Gas Sales

Domestic Crude Oil Sales

Open Acreage Allocation Fee

Other Oil Revenue

Less:
First Charges 4/

Transfer to PSTF

Oil Revenue (Net)

Non- Oil Revenue

Companies Income Tax.

Customs & Excise Duties.

Privatisation Proceeds

Value-Added Tax(VAT)

Tax on Petroleum Products

Independent Revenue of Fed. Govt.

Education Tax
n.a
n.a

Others

Federally - collected revenue(Net)

Federation Account Allocation:

Transfer to AFEM Surplus Account

Transfer to Stabilization Account

Transfer to Federation Reserve Account

Transfer to Federal Govt. Ind. Revnue

Transfer to VAT Pool Account

Deductions for 13% Derivation

National Judicial Council

Transfer to Others 5/

Amount Distributed

Federal Government

State Government

Local Government

Special Funds

Federal Capital Territory

Ecology

Statutory Stabilization

Residual Account

Overall Balance

Financing

Draw-Down from Federation Reserves

0.0
0.0
15,000.0
Draw-Down from Excess Crude/PPT Account

20,509.0
0.0
0.0
Other Funds

Memorandum Items:
First Charges:

JVC Cash calls

NNPC Priority Projects

External Debt Service/NJC /6

Excess Crude Proceeds & Others

1/ Revised
2/ Provisional

3/ Consists of export and domestic oil revenue
4/ As contained in memorandum items
5/ Includes Education Tax, Customs levies, and privatisation proceeds
6/ Provisional debt service payments Jan.- March 2002 (i.e before Supreme Court Judgement)
Sources: Federal Ministry of Finance.

TABLE 7
FISCAL OPERATIONS OF THE FEDERAL GOVERNMENT
(=N='Million)
PROPORTINATE
BUDGET
ESTIMATE

2001 1/
2002 2/
2002 2/
1st HALF
1st HALF
1st HALF
1st HALF 1ST HALF 1ST HALF
1ST HALF
Federal Government Retained Revenue

Statutory Revenue Allocation

Independent Revenue

Share of Value-Added Tax

Share of AFEM Surplus

External Debt Service Funds 3/

PSTF

Privatisation Proceeds

Others 4/

Total Expenditure

Recurrent Expenditure 5/

Interest Payments

Foreign

Domestic

Other(Non-Debt)

Capital Expenditure & Net Lending 6/

Capital Repayments

Foreign

Domestic

Other(Non-Debt)

Net Lending to States/Others

Transfer to PSTF

Transfer to NDDC
2,500.0
6,324.7
6,294.8
Others 7/

Balance Of Revenue And Expenditure
Recurrent Balance(Surplus(+)/Deficit(-))

Overall Balance(Deficit(-)/Surplus(+)/8

Financing:

Foreign(Net)

Domestic(Net)

Banking System

Non Bank Public

Excess Crude oil proceeds
174,400.0
27,080.0
36,273.4
Share of Reserve Account/Looted Funds
24,240.0
26,080.0
36,325.2
Other Funds 9/


Memoradum Items:
Primary Balance

Government Obligations

(i) External Debt Outstanding

(ii) Internal Debt Outstanding


1/ Revised

2/ Povisional
3/ From 2001 external debt service and other first line charges are treated in Federation Account
4/ Includes Fed. Govt. share of Reserved A/c, FIRS Reserves, etc
5/ Includes extra-budgetary expenditure.
6/ Includes net of deductions for loans on lent to State,local governments and Federal parastatals/companies.
7/ Includes subventions and grants to States & Local Councils, and local contractors, deferred customs duties
8/The difference between the Year 2002 figure and the Federal Ministry of Finance figure is explained by the following items:-
Fed. Govt. Share of Excess Crude, Reserved Account, Receipts from looted funds & Other funds which are financing items but treated
as current revenue by Federal Ministry of Finance.
9/ Indicates Balance brought forward from the previous Year.
Source: Federal Ministry of Finance.

TABLE 8
SELECTED REAL SECTOR INDICATORS
(Per cent, except otherwise indicated)

2001/1
2001/1
2002/2
Ist Half
Ist Half
Ist Half
2nd Half
Ist Half
2nd Half
1st Half
Agricultural Production Index
(1984=100)

Crops

Staples

Other Crops

Livestock

Fishery

Forestry

Indices of Average World Prices
(c.i.f) in US$ of Nigeria's Major
All Commodities (1985-100)

Cocoa

Coffee

Cotton

Palm Oil

Copra

Soyabean

Industrial Production Index

(1985=100)
Manufacturing Index

Mining Index

Electricity

Manufacturing Capacity Utilisation Rate

Consumer Price Index (1998=100)
Composite

Food

Urban (All Items)

Rural (All Items)

Inflation Rate

GROWTH RATE OVER THE PRECEDING PERIOD(%)
Agricultural Production Index
(1984=100)

Crops

Staples

Other Crops

Livestock

Fishery

Forestry

Indices of Average World Prices
(c.i.f) in US$ of Nigeria's Major
All Commodities (1985-100)

Cocoa

Coffee

Cotton

Palm Oil

Copra

Soyabean

Industrial Production Index

(1985=100)
Manufacturing Index

Mining Index

Electricity

Manufacturing Capacity Utilisation Rate

Consumer Price Index (1998=100)
Composite

Food

Urban (All Items)

Rural (All Items)

1/ Revised
2/ Provisional

TABLE 9
SELECTED EXTERNAL SECTOR INDICATORS
(=N=Million, except otherwise indicated)
1ST.HALF 1/
1ST.HALF1ST.HALF 1/ 2ND.HALF 2/
1ST.HALF 2/
ITEMS

1. BALANCE OF PAYMENTS
A. CURRENT ACCOUNT

Goods

Exports (FOB )

Oil Sector

Non-Oil Sector

Imports (FOB )

Oil Sector

Non-Oil Sector

Balance on Services & Income

Current Transfers (net)

B. CAPITAL AND FINANCIAL ACCOUNT

C. ERRORS AND OMISSIONS

D. OVERALL BALANCE

E. FINANCING

a. Exceptional Financing

i. Promissory notes

ii. Deferred / Reschedulled Debt Service

iii. Others

b. Reserves 3/

2.EXTERNAL ASSETS (End of period)

3.EXTERNAL DEBT STOCK

4.EXCHANGE RATE ( N/$ ) - Averages
Inter-banks(Official) 4/

Parallel Market

Bureaux de Change

1 / REVISED
2 / PROVISIONAL
3 / MINUS (-) SIGN INDICATES INCREASE IN RESERVE
PLUS (+) SIGN INDICATES DECREASE IN RESERVE
4/ THE CONVERSION EXCHANGE RATES IN 1998 WERE DERIVED FROM THE WEIGHTED AVERAGE OF OFFICIAL AND AFEM RATES
TABLE 10
SELECTED EXTERNAL SECTOR INDICATORS
(US$Million, except otherwise indicated)
1ST.HALF 1/ 1ST.HALF
1ST.HALF 1/ 2ND.HALF 2/1ST.HALF 2/
ITEMS

1. BALANCE OF PAYMENTS
A. CURRENT ACCOUNT
-4315
444.8

-2254.1
3205.6
1351.1

-713.8
Goods

Exports (FOB )

Oil Sector

Non-Oil Sector

Imports (FOB )

Oil Sector

Non-Oil Sector

Balance on Services & Income

Current Transfers (net)

B. CAPITAL AND FINANCIAL ACCOUNT

C. ERRORS AND OMISSIONS

D. OVERALL BALANCE

E. FINANCING


a. Exceptional Financing
2391.8
1887.3

1075.2
1049.3
128.2

1635.4
i. Promissory notes

ii. Deferred / Reschedulled Debt Service
2391.8
1887.3

1075.2
1049.3
128.2

1635.4
iii. Others

b. Reserves 3/

2.EXTERNAL ASSETS (End of period)
8703.1


3.EXTERNAL DEBT STOCK

4.EXCHANGE RATE 4/

1 / REVISED
2 / PROVISIONAL
3 / MINUS (-) SIGN INDICATES INCREASE IN RESERVE
PLUS (+) SIGN INDICATES DECREASE IN RESERVE
4/ THE CONVERSION EXCHANGE RATES IN 1998 WERE DERIVED FROM THE WEIGHTED AVERAGE OF OFFICIAL AND AFEM RATES