Economic growth; inflation; foreign exchange.  These are three of the Central Bank of Nigeria’s key responsibilities, yet prioritising one at the expense of the others can prove costly.  Yet how – with what tools – does the CBN manage them? We provide answers below. FX Last week, the exchange rate in the Investors and Exporters …

Q1 2021 GDP was reported on Sunday evening and showed the growth rate at 0.51% year-on-year (y/y). This was better than the 0.11% y/y growth of Q4 but Q1 2021’s non-oil growth was actually slower than Q4 (+0.79% y/y against +1.69% y/y).  Although the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) …

For the past 18 months investors in 1-year risk-free Nigerian Treasury Bills (T-bills) have been denied a return anywhere near the rate of inflation. Yet this has begun to change and, we believe, conditions are set to improve still further. After the radical interest rate policies of 2020, we see a return to something close …

Tomorrow we publish our report on the Mutual Fund (Collective Investment Scheme) industry. The total assets under management (AUM) of Nigeria’s Mutual Funds grew by 50% last year to N1.6 trillion. Yet we have found that it is difficult, not to say impossible, to get comparable performance data for the unit prices (UP) of Fixed …

Last week the Central Bank of Nigeria removed the directors of First Bank of Nigeria, but reinstated its managing director, in a move that grabbed headlines. It raises the issue of corporate governance and of governance overall in Nigeria.  What is the cost of poor governance and what are the benefits of good governance?  We …

It was in April last year when oil prices hit multi-year lows, the price of Brent crude dipping down to US$19.33/bbl late in the month and West Texas Light hitting negative US$37.63/bbl for a day as stocks rose and storage capacity became scarce. Then the United States convened a meeting of oil producers, the Organization …

Last week the fixed income markets received two important indicators as to the likely direction of market interest rates.  One was the fact that a few members of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee voted to raise the Monetary Policy Rate, even though a majority voted to keep it at 11.50%.  The …

The Monetary Policy Committee (MPC) of the CBN meets today and tomorrow to decide upon its Monetary Policy Rate (MPR). We estimate that it will keep the MPR on hold at 11.50%, but amplify its commentary on inflation, singling it out as the next economic threat to be dealt with. This would leave the way …

Inflation continues to rise, with February inflation reported at 17.33% year-on-year after 16.47% y/y in January, and food inflation at 21.79% y/y. Policymakers believe that structural issues are the core problem, but we sense that they include market interest rates in the mix when it comes to considering all the drivers of inflation. This could …

Nigerian markets are famous for not correlating with global markets, but recently it has been wise to pay attention to global bond markets.  The rise of the US government 10-year bond yield has attracted a lot of attention over the past few weeks and led to nervousness in certain equity markets.  The wisdom of taking …