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

Nigeria Needs More Taxpayers, Not Higher Taxes—Oyedele

Published

2 hours ago

26/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, yesterday clarified that the federal government is not increasing taxes but making efforts to raise the tax net.

Mr Oyedele made this remark on Thursday while receiving a delegation from the Chartered Institute of Taxation of Nigeria (CITN) at his office in Abuja.

He hailed the institute for introducing a National Tax Awareness Day and for supporting the current tax reforms of the federal government.

The minister charged the institute to double its effort in public enlightenment, stressing that many Nigerians still view taxation as a means for the government to take money from citizens.

He reiterated that the priority of the government is not to increase tax rates but to broaden the tax base by ensuring that all eligible taxpayers meet their obligations.

“We are still not getting enough revenue from taxes.

“It is not about increasing taxes but making sure that those who are supposed to pay taxes. We want to promote fairness in tax administration,” he said.

Nigeria is challenged by the inability to generate adequate revenue from taxation despite ongoing reforms, stressing that a significant number of eligible taxpayers have yet to fulfil their civic obligations.

He said the challenge facing the country was not necessarily about raising tax rates but ensuring that individuals and businesses that ought to pay taxes do so in a fair and transparent system.

The minister also commended the institute for supporting the federal government’s tax reform agenda and promoting public understanding of taxation, but urged it to intensify its advocacy efforts, noting that many Nigerians still harbour misconceptions about taxation.

According to him, many citizens continue to view taxation merely as a tool for the government to take money from the people rather than as a critical instrument for national development.

“We are still not getting enough revenue from taxes. It is not about increasing taxes, but making sure that those who are supposed to pay taxes. We want to promote fairness in tax administration,” he added.

Mr Oyedele stressed that if Nigeria succeeds in building an efficient and equitable tax system, the impact on infrastructure, public services and economic development would be transformative, challenging the institute to introduce annual awards for the country’s most tax-compliant individuals and organisations as a means of encouraging voluntary compliance and recognising responsible taxpayers.

Economy

Akara, Kulikuli, Roasted Corn Business Not Capital Intensive—Remi Tinubu

Published

4 hours ago

26/06/2026

Aduragbemi Omiyale

By Modupe Gbadeyanka

Nigeria’s First Lady, Mrs Oluremi Tinubu, has given Nigerians business advice that may not involve a lot of money to start.

Speaking with newsmen recently, the wife of President Bola Tinubu said businesses like akara (fried bean cake), kulikuli (a crunchy snack from roasted peanuts or groundnuts) and roasted corn can be set up without breaking the bank.

She disclosed that to support her husband’s Renewed Hope agenda, she has provided funding packages to traders and others to the tune of N3.5 billion.

“To start akara business doesn’t take a lot of money. To start roasting corn and kuli-kuli doesn’t take much. We didn’t give them a loan; we gave it to them as a grant,” she stated.

She further said, “We’ve encouraged Nigerians as best as we could, what is within our hands, I have given, and I keep giving. Those are the things we’ve done.”

“I remember giving for TB (tuberculosis) when I heard of many TB cases; I gave N2 billion, to breast cancer, I gave N1 billion, and to [tackle] malnutrition, I gave N500 million.

“These are the things we’ve been doing to assist the government. So, we’ve had impact in agriculture, social investment, education (as scholarship and ICT training) and others. We are still open to doing more,” she disclosed.

Economy

NASD Exchange Extends Winning Streak by 1.70%

Published

6 hours ago

26/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange rallied by 1.70 per cent on Thursday, June 25, after three price gainers overpowered the two price losers recorded at the close of business.

Consequently, the market capitalisation of the trading platform increased by N43.79 billion to N2.618 trillion from N2.574 trillion, and the NASD Security Index (NSI) improved by 72.96 points to close at 4,362.32 points, in contrast to Wednesday’s 4,289.36 points.

Yesterday, the price advancers were led by Nipco Plc, which chalked up N31.79 to close at N349.76 per unit versus the preceding day’s N317.97 per unit. Okitipupa Plc gained N18.00 to end at N298.00 per share versus the previous session’s N280.00 per share, and Central Securities Clearing System (CSCS) Plc went up by N7.11 to N86.79 per unit from N79.68 per unit.

On the flip side, Nitrox Industrial Gases Plc crumbled by 32 Kobo to close at N21.09 per share compared with the N21.41 per share it closed at midweek, and Food Concepts Plc depreciated by 25 Kobo to N2.51 per unit from N2.76 per unit.

During the session, the value of securities traded by investors went down by 86.7 per cent to N10.9 million from the preceding session’s N82.9 million, and the volume of securities dropped 84.9 per cent to 10.9 million units from the previous 82.9 million, while the number of deals grew by 84.2 per cent to 35 deals from 19 deals.

At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 68.4 million units exchanged for N4.7 billion.

GNI Plc was also the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.