Economy

FSDH Urges MPC to Ease Monetary Policy to Stimulate Growth

Published

8 years ago

31/03/2018

By Modupe Gbadeyanka

As the Central Bank of Nigeria (CBN) prepares to hold its first Monetary Policy Committee (MPC) meeting of 2018 next week, one of the leading investment firms in the country, FSDH Research, has advised the committee to consider cutting its rates so as to “boost credit creation and stimulate economic growth.”

In a report released on Thursday, analysts at FSDH said they would expect the MPC to consider a drop in either the Monetary Policy Rate (MPR), which is currently at 14 percent, or the Cash Reserve Ration (CRR), presently at 22.50 percent.

The investment company noted that although the GDP growth rate in Nigeria improved further in Q4 2017 at 1.92 percent from 1.40 percent in Q3 2017, the recovery was still very fragile, emphasising that additional monetary policies were required to stimulate a broad-based growth.

“FSDH Research’s analysis of the growth pattern in 2017 shows that two sectors; agriculture and, mining and quarrying were the major drivers of growth. They were the two sectors out of the six largest sectors of the Nigerian economy that recorded growth in 2017. Other leading sectors which are trade, information and communication, manufacturing, and real estate all contracted. Thus, the need for monetary policy easing,” it said.

FSDH Research said looking at the developments in the international market; the economic outlook in the major advanced countries is strong in the short-term to medium-term, necessitating monetary policy normalisation.

It said the outlook of the GDP growth rate remains strong, the unemployment rate is low in most regions and should remain low in the short-term, while inflation rate is trending up.

The Federal Open Market Committee (FOMC) of the United States (U.S) Federal Reserve (The Fed) increased the Federal Funds Rate (Fed Rate) at its March 2018 meeting. The Fed increased the Fed Rate to 1.50 percent – 1.75 percent from 1.25 percent -1.50 percent.

“FSDH Research expects that the FOMC will increase the Fed Rate to 2.25 percent – 2.50 percent by year end. The increase in the interest rate should lead to increase in the yields on the fixed income securities in the advanced markets, with the attendant possible increase in capital flights from the emerging markets,” the report said.

According to FSDH, the increase in the crude oil price and favourable crude oil production in Nigeria have increased capital inflows and also led to favourable trade balance. Consequently, the country’s external reserves (30-Day Moving Average) increased substantially in the last five months, growing to $46.04 billion as at March 26, 2018.

It said this provides additional short-term stability for the value of Naira.

However, FSDH Research recognised the vulnerabilities of the Nigerian economy to the adverse movements in the crude oil prices. Thus the need to stimulate other non-oil sectors to reduce these vulnerabilities, it said.

Continuing, FSDH Research noted that the current strategies of the Debt Management Office (DMO) to reduce the interest expense on the debt of the Federal Government of Nigeria (FGN) were working.

It pointed out that the latest debt figures show that the interest expense on the local debt has dropped in the last few months.

The investment firm also observed a relative increase in the revenue accrued to the FGN from the Federation Account Allocation Committee (FAAC). These two factors have led to a drop in the ratio of the interest expense to the FGN FAAC revenue which stood at 20% in December 2017. Thus the yields on the fixed income securities in the market have dropped substantially in the last six months, it said.

Although FSDH Research said it believes the yields on the NTBs may drop further, it is of the view that the yields on the FGN Bonds may move up gradually from the current level as the FGN starts to borrow to fund the 2018 budget.

It said despite the drop in the yields on fixed income securities in Q4 2017, Nigeria recorded the highest Foreign Portfolio Investments (FPIs) inflows in 2017 during the last quarter.

This, it explained, implies improving confidence on the short-term outlook of the Nigeria economy.

FSDH Research also noted that the growth in money supply as at December 2017 was lower than the CBN’s target for the year.

The broad money (M2) grew by 2.62 percent, lower than the target of 10.29 percent, while the net domestic credit contracted by 2.95 percent as against the target of 17.93 percent. The net credit to the private sector grew marginally by 1.40 percent, lower than the target of 14.88 percent.

It pointed out that the need to curb high inflation rate and maintain stability in the foreign exchange market were the main reasons for the contractionary monetary policy.

FSDH Research said it believes the inflation rate may drop to single digit mid-year, while the exchange rate should remain stable in the short-term.

“Therefore, there is a need for monetary policy easing to boost credit creation and stimulate economic growth,” it averred.

Concluding, FSDH Research said looking at the short-term outlook of the Nigerian economy, it believes the MPC should begin monetary policy easing to signal the end of its monetary policy tightening cycle.

The CBN will hold its first MPC meeting on Tuesday, April 3 and Wednesday, April 4, 2018.

At its last meeting in November 2017, the committee maintained the MPR at 14 percent, with the asymmetric corridor at +200 and -500 basis points around the MPR; and the CRR and Liquidity Ratio (LR) left at 22.50 percent and 30 percent respectively.

Economy

Oil Market Rises 2% on Fresh Iran-US Confrontation

Published

19 seconds ago

04/02/2026

Adedapo Adesanya

By Adedapo Adesanya

The oil market was up by nearly 2 per cent on Tuesday after the United States shot down an Iranian drone approaching an aircraft carrier and armed boats in the Strait of Hormuz, stoking concerns talks aimed at de-escalating US-Iran tensions could be disrupted.

This action caused the Brent futures to rise by $1.03 or 1.6 per cent to $67.33 per barrel, as the US West Texas Intermediate (WTI) futures jumped by $1.07 or 1.7 per cent to $63.21 a barrel.

Both crude benchmarks dropped more than 4 per cent on Monday after President Donald Trump said Iran was seriously talking with America.

However, the US military shot down an Iranian drone that “aggressively” approached the Abraham Lincoln aircraft carrier in the Arabian Sea on Tuesday.

In the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, Iranian gunboats approached a US-flagged oil tanker in what US and British maritime security sources describe as a failed attempt to interfere with the vessel’s transit.

Members of the Organisation of the Petroleum Exporting Countries (OPEC) including Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia. The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, remains Iran’s most obvious pressure point.

Despite the latest development, the UAE urged Iran and the US on Tuesday to use the resumption of nuclear talks this week to resolve a standoff that has led to mutual threats of air strikes. Iran, meanwhile, is demanding that talks be held in Oman not Turkey.

In Ukraine, President Volodymyr Zelenskiy accused Russia on Tuesday of exploiting a US-backed energy truce to stockpile munitions, and using them to attack Ukraine a day before peace talks. This boosted worries that Russia’s oil would remain sanctioned for longer.

On Monday, President Trump announced a trade deal with India, one of the world’s biggest economies and oil importers, on Monday to cut tariffs to 18 per cent from 50 per cent in exchange for the country halting Russian oil purchases and lowering trade barriers.

The American Petroleum Institute (API) estimated that crude oil inventories in the US decreased by 11.1 million barrels in the week ending January 30. Crude oil inventories decreased by 247,000 barrels in the week prior.

Official data from the US Energy Information Administration (EIA) will be published later on Wednesday.

Economy

AFC Commits Support to Transformative Reforms in Nigeria’s Power Sector

Published

6 hours ago

04/02/2026

Adedapo Adesanya

By Adedapo Adesanya

The Africa Finance Corporation (AFC), the continent’s leading infrastructure solutions provider, has reiterated its commitment to playing a pivotal role to support transformative reforms in Nigeria’s power sector.

This is as it act as co-Financial Adviser to the Nigerian government on the successful issuance of the recent N501 billion inaugural tranche under the Presidential Power Sector Financial Reforms Programme (PPSFRP), as part of the N4 trillion Power Sector Bond Programme, aimed at resolving over a decade of legacy debt obligations in Nigeria’s electricity supply industry and restoring financial stability across the sector.

AFC provided comprehensive financial advisory services to the federal government, including the design of the Programme’s negotiation strategy framework, support in negotiating and executing Settlement Agreements with Power Generation Companies (GenCos), and structuring the bond issuance. Working in partnership with CardinalStone Partners as co-Financial Advisers, AFC deployed its deep sector expertise and strong local market knowledge to deliver the landmark transaction.

The programme was overseen by the Presidential Power Sector Debt Reduction Committee (PPSDRC), with technical leadership from the Office of the Special Adviser to the President on Energy, and implemented through NBET Finance Company Plc, a special purpose vehicle of Nigerian Bulk Electricity Trading Plc (NBET). Proceeds from the issuance will be used to settle verified, overdue receivables owed to GenCos for electricity supplied between February 2015 and March 2025, injecting liquidity into the power sector and extinguishing long-standing claims.

Commenting on AFC’s involvement, Mr Banji Fehintola, Executive Board Member and Head, Financial Services at Africa Finance Corporation, said: “The successful issuance of the inaugural tranche under the Power Sector Bond Programme underscores AFC’s commitment to supporting transformative reforms in Nigeria’s power sector. By resolving long-standing liquidity challenges and restoring confidence among investors and operators, this transaction lays the foundation for sustainable growth and improved electricity supply across the country.”

When fully implemented, the programme is expected to impact approximately 5,398MW of electricity generation capacity by Nigerian GenCos and finalise settlement for 290,644.84GWh of electricity billed since 2015. It will also strengthen companies serving about 12 million active registered customers, creating a solid platform for new investments in capacity enhancement and expansion.

Economy

NASD Reiterates Commitment to Strategic Direction, Strong Governance

Published

12 hours ago

03/02/2026

Adedapo Adesanya

By Adedapo Adesanya

NASD Plc, which operates Nigeria’s Over-the-Counter (OTC) securities exchange, has reaffirmed its commitment to reinforcing its long-term strategic direction and governance framework.

The exchange recently convened its major shareholders, board members, and executive management at a high-level stakeholder retreat in Lagos.

NASD said, “The retreat held in Lagos brought together key institutional stakeholders for in-depth discussions on NASD’s evolving role within Nigeria’s capital market ecosystem.

“The engagement provided a structured platform for shareholders and management to align on strategic priorities necessary to deepen institutional strength, enhance market relevance, and support sustainable growth.”

The company noted that deliberations focused on the importance of strong shareholder collaboration, disciplined strategy execution, and equitable governance practices to further strengthen investor confidence and long-term value creation.

The statement added that participants exchanged views on navigating market complexity, adapting to regulatory and economic changes, and ensuring that the Exchange continues to operate in line with global best practices while addressing the specific needs of Nigeria’s over-the-counter market.

NASD emphasised that the retreat highlighted the critical role of close alignment among shareholders, the Board, and executive leadership in shaping the Exchange’s next phase of development. By encouraging open dialogue and shared strategic intent, the engagement reaffirmed NASD’s commitment to transparency, institutional resilience, and leadership within the capital market.

The session concluded with a group engagement reflecting the depth of experience, governance oversight, and collective responsibility guiding NASD’s strategic outlook as it continues to enhance its contribution to Nigeria’s financial market architecture.

NASD posted a standout performance in 2025, with its market diversification strategy delivering a surge in listings, deeper market activity, and a sharp expansion in market value across its alternative trading platforms.

Last year, the market capitalisation on the exchange more than doubled to N2.12 trillion, representing a 106 per cent increase from N1.03 trillion in 2024. The number of admitted securities also rose marginally to 47, up from 45 in the prior year, reflecting a 4 per cent growth.

The NASD Securities Index (NSI) rose by 18 per cent to 3,543.74 points, compared with 3,002.68 points in 2024. Similarly, the NASD Pension Index advanced by 21 per cent to 1,032.88 points, up from 954.33 points.

Trading volumes surged significantly during the year. Total volume traded climbed to 14.03 billion units, marking a 377 per cent increase from 2.98 billion units in 2024. However, this sharp rise in volume contrasted with a decline in transaction value, which fell by 43 per cent to N59.29 billion, down from N103.96 billion in 2024.

The total number of deals executed on the platform dropped to 6,456, representing a 26 per cent decline from 8,724 deals recorded the previous year, indicating fewer but larger or more strategic transactions.

The exchange also recorded notable listings in 2025, with Infrastructure Credit Guarantee Company PLC (InfraCredit), Paintcom Investment Nigeria PLC (Paintcom), and MRS PLC admitted to trading.