Economy
MPC May Delay Hike in Rates Until January 2019—FSDH
By Dipo Olowookere
Ahead of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), which kicks off tomorrow, analysts at Lagos-based FSDH Research have said the apex bank may not tamper with the monetary policy rate (MPR) until its January 2019 meeting.
Though the company noted that rising demand for foreign exchange leading to a consistent decline in the foreign reserves, and rising inflation rate were major justifications for an increase in policy rates, it maintained that the CBN may continue to use the conduct of Open Market Operations (OMO) to manage the temporary liquidity in the financial system that may affect price stability.
Business Post recalls that at its meeting in September 2018, the MPC maintained the MPR at 14 percent, with the asymmetric corridor at +200 and -500 basis points around the MPR; the Cash Reserve Ratio (CRR) at 22.50 percent and the Liquidity Ratio (LR) at 30 percent.
According to FSDH, a review of the global economy shows that global growth remains fairly strong, but trade restrictions may reduce global growth. This is according to the International Monetary Fund (IMF), which projects a global growth rate of 3.7 percent for 2018 and 2019.
The growth rate forecast is slightly lower than the growth rate projections the IMF released in July 2018. Although FSDH Research notes that despite the recent drop in the price of crude oil on the international market, the moderately strong global growth should sustain global crude oil prices around $70/b in the short-term.
FSDH Research says it expects the Federal Open Market Committee (FOMC) of the US Federal Reserve to raise the Federal Funds Rate (Fed Rate) by 0.25 percent when the committee meets in December 2018.
The October 2018 US unemployment rate at 3.7 percent (lower than the target of 6.5 percent), inflation rate of 2.5 percent (higher than the target of 2 percent) and the growth of 3.5 percent in the economy all support arguments for an interest rate increase.
The investment firm said an increase in the Fed Rate may further place additional demand pressure on foreign exchange in Nigeria and possibly increase capital flight from emerging markets. Thus, a rate cut in Nigeria is not appropriate under these situations.
It said the short-term forecast for the Nigerian economy shows that economic growth remains fragile. The IMF forecasts growth rates of 1.9 percent and 2.3 percent in 2018 and 2019 respectively. These growth rates are lower than the Nigerian population growth rate. Thus, the economy needs policy stimulus to record a growth rate that is inclusive. Nevertheless, monetary policy easing in the form of an interest rate cut may not stimulate growth. Appropriate fiscal measures and incentives that will improve the ease of doing business in Nigeria will lay strong foundation for sustainable growth.
The Purchasing Managers’ Index (PMI) survey published by the CBN for the month of October 2018 expanded at a faster rate. FSDH Research attributes the expansion in the PMI to the increased economic activities that are usually associated with the last quarter of the year.
FSDH Research said it observed a consistent drawdown in the external reserves in order to maintain foreign exchange rate stability in Nigeria.
The CBN increased the supply of foreign exchange at the Investors’ and Exporters’ Foreign Exchange Window and increased the yield at the OMO to dowse demand pressure at the foreign exchange market.
Consequently, the drawdowns from the external reserves continued until November 2018. CBN remained the largest supplier of foreign exchange at the I & E window in the last three months.
FSDH Research noted that an attractive Nigerian Treasury Bill (NTB) yield around the current level of 16 percent may help to attract foreign portfolio investment and reduce capital flight.
Nevertheless, there is a need for deliberate fiscal measures and engagements that will promote non-oil exports that attract foreign investment into Nigeria and will guarantee foreign exchange stability.
The inflation rate increased to 11.28 percent in September 2018, the second increase since January 2017, principally due to the increase in the Food Index.
FSDH Research says it expects inflation rate to increase marginally to 11.34 percent in October and to end the year 2018 at 11.7 percent.
It said an increase in food prices, electioneering spending, and a possible increase in the minimum wage, are potential factors that will influence the direction of the inflation rate in the next three months.
Despite the expected rise in the inflation rate, it will be difficult for a hike in the interest rate to stem the rising inflation rate, as the cause of the rising inflation rate is not within the scope of monetary policy.
According to FSDH, the MPC may deal with the possible negative impact of an increase in the minimum wage at its January 2019 meeting. Thus a hold decision may be appropriate.
Data from the CBN shows that the key monetary aggregates in the country are below the target the CBN sets for the country. This development supports an argument for an expansionary policy to boost credit creation.
However, the current structural rigidities in the economy do not support strong credit growth. Therefore, unconventional policies are required to boost credit creation and business expansion to stimulate growth.
Measures that remove the risks inherent in the economy will encourage credit expansion and this will support sustainable growth.
By Modupe Gbadeyanka
The Nigerian maritime sector may soon witness the inflow of $600 million in investment from APM Terminals.
On the sidelines of the ongoing Africa CEO Forum in Kigali, Rwanda, the Regional President of APM Terminals for Africa-Europe, Mr Igor van den Essen, informed President Bola Tinubu that his company was interested in deepening its investment in Nigeria.
According to a statement issued by the Special Adviser to the President of Information and Strategy, Mr Bayo Onanuga, the investment would be deployed in Apapa port modernisation, logistics infrastructure, and long-term private-sector investment in Nigeria’s maritime sector.
President Tinubu welcomed the investments, emphasising that Nigeria is repositioning itself for greater competitiveness through ongoing economic reforms and infrastructure modernisation.
He said the country is determined to move beyond structural bottlenecks and outdated systems, stressing the need for advanced technology, faster cargo processing, and improved operational efficiency across the nation’s ports.
He emphasised that Nigeria possesses the market scale, talent base, and economic potential to support globally competitive maritime and logistics infrastructure investments and called on other investors to take advantage of Nigeria’s reform outcomes.
Earlier, Mr Igor van den Essen lauded President Tinubu’s reform agenda and policy direction, which had strengthened investor confidence and created renewed momentum for long-term infrastructure investments.
He described Nigeria as a strategic stronghold within its African operations, referencing over 20 years of collaboration and substantial existing investments in the country’s port ecosystem.
He reaffirmed his company’s commitment to expanding investments in Nigeria and disclosed plans to support the development of world-class terminal infrastructure and technology-driven port operations.
He also commended Mr Tinubu for establishing the National Single Window (NSW), which has streamlined trade procedures, improved Customs coordination, and reduced delays in cargo clearance.
By Adedapo Adesanya
Dangote Petroleum Refinery has filed a new lawsuit against the federal government over the fuel import licences issued to marketers and the Nigerian National Petroleum Company (NNPC) Limited.
Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued licences to six marketers for the importation of 720,000 metric tonnes of Premium Motor Spirit, known as petrol.
The marketers are NIPCO, AA Rano, Matrix, Shafa, Pinnacle, and Bono. The development comes amid claims by the NMDPRA that the Dangote Petroleum Refinery now supplies over 90 per cent of Nigeria’s daily petrol consumption.
Dangote said in the filing that the licences issued undermine its operations and contravene the law, which it argues allows imports only when domestic supply falls short.
Named in the suit against the country is the Attorney General and Minister of Justice, Mr Lateef Fagbemi. The federal government can only be sued via his office.
The case signals renewed tensions almost a year after Dangote withdrew an earlier lawsuit challenging similar licences. That case sought to nullify import permits issued to the NNPC and several traders.
The new filing asks the Federal High Court in Lagos to set aside import permits issued or renewed by the NMDPRA, arguing they breach an earlier order to maintain the status quo.
Dangote ended the earlier lawsuit in July 2025 without explanation, leaving unresolved questions over competition and supply in one of Africa’s largest fuel markets.
Nigeria has long relied on petrol imports due to underperforming state refineries. However, Dangote’s 650,000 barrels per day capacity refinery was touted to end that dependence.
Despite the presence of the facility, imports have continued to cover supply gaps as the refinery ramps up output.
The NMDPRA did not issue a single import licence in the first quarter of 2026 because the Dangote refinery had the capacity to meet Nigeria’s petrol demand.
Business Post gathered that only upon intervention by President Bola Tinubu were the licenses granted for the second quarter by the NMDPRA.
By Adedapo Adesanya
The Nigeria Bureau of Statistics (NBS) has revealed that Nigeria’s headline inflation rate in April 2026 rose to 15.69 per cent, beating analysts’ expectations of 15.95 per cent, as the fallout from the Iran war continued to affect the global economy.
The statistical office on Friday showed the headline inflation rate for April on a month-on-month basis was 2.13 per cent, while the food inflation rate in the review month was 16.06 per cent on a year-on-year basis.
The rise in prices comes as an energy price shock stemming from the continued conflict in the Middle East, which stoked food prices and affected relative exchange rate stability.
According to the NBS, “this can be attributed to the rate of change in the average prices of the following products: Millet whole grain, yam flour, ginger (Fresh), beef, garri, tam tuber, pepper (Fresh), cray fish, cassava tuber, Beans, Irish Potatoes, tomatoes (fresh), wheat grain (Sold loose), soya beans, guinea corn, plantain, carrots (Fresh) etc.”
“The average annual rate of food inflation for the twelve months ending April 2026, relative to the previous twelve-month average, was 17.55%, which was 17.05% points lower than the average annual rate of change recorded in April 2025 (34.60%),” the NBS said.
Analysts at Coronation Research had earlier projected that the inflation rate in Nigeria would be at 15.95 per cent on a year-on-year basis in April 2026. It added that the expected inflation rate signals a return toward the underlying disinflation trajectory and could be a pivotal data point in shaping Monetary Policy Committee (MPC) deliberations at the next policy meeting.
It also expects food inflation to further ease, as food and non-alcoholic beverages remain the dominant contributor to headline CPI, accounting for about 40 per cent of the Consumer Price Index (CPI) basket.
The MPC of the Central Bank of Nigeria (CBN) will meet this month, the first since the Iran War started in late February, to review core monetary policies and possibly make adjustments.
The committee reduced the Monetary Policy Rate (MPR) by 50 basis points from 27.0 per cent to 26.5 per cent at its 304th Monetary Policy Committee (MPC) meeting in February.
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