Regulatory Alerts2025-12-09
NDIC Quarterly Vol 39 No 3&4 2024 – Review of Macroeconomic Developments in the Fourth Quarter of 2024
Nigeria's economy expanded by 3.84% in Q4 2024, led by the non-oil and service sectors, amidst a rise in total public debt to N144.67 trillion and continued inflationary pressures. To address these conditions and stabilize the financial landscape, the Monetary Policy Committee increased the Monetary Policy Rate to 27.50% and maintained Cash Reserve Ratios for banks. Furthermore, new CBN circulars were issued to facilitate the voluntary disclosure and repatriation of foreign currencies, while also removing the Standing Deposit Facility from direct MPC oversight, remunerating it at MPR minus 100 basis points.
Review of Macroeconomic Developments in the Fourth Quarter, 2024
2.0 Macroeconomic Conditions
2.1 Global Economic Conditions
The global economic growth remained stable in the fourth quarter of 2024. It was however marked with divergences in growth rates across many economic groups and countries, arising from a mix of upside and downside risks. Upside risks, such as robust demand and expected benefits from new policy strides, boost growth in the US, providing the global economy with the stability leverage required to withstand the impact of downside risks elsewhere. These risks include, but are not limited to, lower than expected growth in China and India, subdued growth in the Euro Area on the back of lagging economic performance in Germany, and growth disruption in Japan, among others.
The International Monetary Fund (IMF) in its January 2025 World Economic Outlook (WEO) update estimated that the global economy grew in the fourth quarter of 2024, as depicted in Figure 2.1, at an annual rate of 3.2 per cent, same as in the third and previous quarters of the year. While the growth was buttressed by growth declines in Advanced Economies (AEs)30 and Emerging and Developing Asia (EDA) from annual rates of 1.8 per cent and 5.3 per cent in the third quarter of 2024 to 1.7 and 4.2 per cent in the fourth quarter 2024, respectively, it benefited from stronger economic performance in Latin America and Caribbean (LAC) and the Sub-Saharan Africa (SSA) where growth rose from annual rates of 2.1 per cent and 3.8 per cent in the third quarter of 2024 to 2.4 per cent and 3.8 per cent in the fourth quarter 2024, respectively. Growth in Emerging Market and Developing Economies (EMDEs), however, remained unchanged over the period.
Annual economic growth in AEs derived from the growth performance of its constituent countries. Growth decline in this economic group was largely contributed to, as shown in Figure 2.2, by Germany's negative growth of -0.2 per cent in the fourth quarter, down from nil growth in the third quarter, as well as growth decline in the UK to 0.9 per cent from 1.1 per cent over the period. The poor economic performance in Europe was so significant that stable economic performance in the US and Canada, where the growth rates remained at 2.8 per cent and 1.3 per cent in the last two quarters of 2024 could not support the AE's economic growth from sliding downward in the fourth quarter of 2024.
The EMDEs and SSA 2025 growth prospects remained unchanged as at the end of the fourth quarter of 2024 (as reported in IMF WEO Jan update), as projected 2025 growth rates for these economic groups remained at 4.2 per cent, same as forecasted in the third quarter of 2024 in IMF October WEO. The growth prospect for the Euro Area is however downcast, as growth projection was revised downward to 1.0 per cent from 1.2 per cent evaluated in October 2024 WEO.
The AEs' positive economic outlook derive, as shown in Figure 2.6, from brighter growth prospects in US and UK whose 2025 economic growth rates were revised upward in the fourth quarter of 2024 (reported in IMF Jan 2025 WEO) to 2.7 per cent and 1.6 per cent from 2.2 per cent and 1.5 per cent, respectively, in the third quarter of 2024 (as reported in IMF October 2024 WEO). However, economic outlooks for Canada and Germany are pessimistic, as shown in Figure 2.6 with declines in expected economic growth for 2025.
The stable prospect for EMDEs is supported by improved outlook in China, with potential to counteract weaker performance prospects elsewhere, as the other large economy, India, has a lackluster prospect. Similarly, SSA's stable outlook, evaluated in the fourth quarter of 2024, draws largely from stable outlook in its large economies, namely Nigeria and South Africa, where growth in 2025 is expected to remain at 3.2 per cent and 1.5 per cent, respectively, as projected in the third quarter of 2024.
2.4 Domestic Economic Conditions
2.4.1 Real GDP
The Nigerian economy grew by 3.84 per cent, quarter-on-quarter (q-o-q), in the fourth quarter of 2024, to N22.61 trillion (in constant prices), from N21.77 trillion quarterly output in the fourth quarter of 2023. The growth rate is higher than the 3.46 per cent recorded in each of the fourth quarter of 2023 and the third quarter of 2024.
Table 2.1: GDP Growth Rates and Related Indicators in Nigeria
| Real GDP and Sectoral Components | 2023 Q1 | 2023 Q2 | 2023 Q3 | 2023 Q4 | 2023 Annual | 2024 Q1 | 2024 Q2 | 2024 Q3 | 2024 Q4 |
|---|---|---|---|---|---|---|---|---|---|
| Real Gross Domestic Product, Real GDP, (N' Trillion) | |||||||||
| Real GDP (constant price) | 17.7 | 17.72 | 19.4 | 21.7 | 76.68 | 18.2 | 18.2 | 20.1 | 22.6 |
| Growth Rates (Percentage) | |||||||||
| Real GDP (Economic growth) | 2.31 | 2.51 | 2.54 | 3.46 | 2.74 | 2.98 | 3.19 | 3.46 | 3.84 |
| Non-oil Sector | 2.77 | 3.58 | 2.75 | 3.07 | 3.04 | 2.80 | 2.80 | 3.37 | 3.96 |
| Oil Sector | (4.21) | (13.4) | (0.85) | 12.1 | (2.22) | 5.70 | 10.1 | 5.17 | 1.48 |
| Agricultural sector | (0.90) | 1.50 | 1.30 | 2.10 | 1.13 | 0.18 | 1.41 | 1.14 | 1.76 |
| Industrial Sector | 0.31 | (1.94) | 0.46 | 3.86 | 0.72 | 2.19 | 3.53 | 2.18 | 2 |
| Service Sector | 4.35 | 4.42 | 3.99 | 3.98 | 4.18 | 4.32 | 3.79 | 5.19 | 5.37 |
| Sectoral Contribution (Percentage) | |||||||||
| Non-oil Sector | 93.7 | 94.66 | 94.5 | 95.3 | 94.60 | 93.6 | 94.3 | 94.4 | 95.4 |
| Oil Sector | 6.21 | 5.34 | 5.48 | 4.70 | 5.40 | 6.38 | 5.70 | 5.57 | 4.60 |
| Total (Oil and Non-oil) | 100.00 | 100.0 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 |
| Agriculture | 21.6 | 23.01 | 29.3 | 26.1 | 25.18 | 21.0 | 22.6 | 28.6 | 25.5 |
| Industry | 21.0 | 18.56 | 18.0 | 17.3 | 18.65 | 20.8 | 18.6 | 17.7 | 17.0 |
| Service | 57.2 | 58.42 | 52.7 | 56.5 | 56.18 | 58.0 | 58.7 | 53.5 | 57.3 |
| Total (Agric, Industry, and Service) | 100.00 | 100.0 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 |
The oil sector grew by 1.48 per cent in the quarter under review, as its contribution to GDP decreased to 4.60 per cent in the fourth quarter of 2024, from 4.70 per cent recorded in the fourth quarter of 2023. However, the contribution of non-oil sector increased slightly to 95.40 per cent in the fourth quarter of 2024 from 95.30 per cent in the fourth quarter of 2023, on the back of growth of 3.96 per cent recorded in the fourth quarter.
The service sector grew by 5.37 per cent and contributed 57.38 per cent to the real GDP, thereby having the largest impact on economic growth in the fourth quarter of 2024. While the Agricultural and the Industrial sectors achieved growth of 1.76 per cent and 2.0 per cent, respectively, they contributed 25.59 per cent and 17.03 per cent to real GDP in the fourth quarter of 2024.
2.4.2 Consumer Price and Price Indices
Inflation pressure in Nigeria persisted in the fourth quarter of 2024, as indicated in Figure 2.7. Headline inflation rose from 28.92 per cent at the end of the fourth quarter of 2023 to 39.8 per cent at the end of the fourth quarter of 2024, which indicates a significant inflationary trend over the year. Headline inflation rose from 32.70 per cent at the end of September 2024 to 33.88 per cent, 34.60 per cent, and 34.80 per cent in October, November and December 2024, respectively.
Food inflation rate rose from 37.77 per cent at the end of the third quarter in September 2024 to 39.16 per cent in October, 39.93 per cent in November and slightly fell to 39.84 per cent at the end of the fourth quarter in December 2024. Core inflation consistently increased, rising from 27.43 per cent at the end of September to 28.37 per cent in October, 28.75 per cent in November and 29.28 per cent at the end of December 2024.
2.4.3 Exchange Rate Movement
As shown in Figure 2.8, the Naira appreciated against the US dollar in the fourth quarter of 2024 compared to its value at the end of the third quarter of 2024. The exchange rate appreciated from N1601.03/$1 at the end of third quarter in September to N1535.32/$1 at the end of the fourth quarter in December 2024. The Naira depreciated from N1601.03/$1 in September to N1669.97/$1 in October, but slightly appreciated to N1663.40/$1 and then N1535.32/$1 in November and December, respectively.
Similarly, the Naira appreciated against the Pound Sterling and Euro, as the exchange rate dropped to N1924.83/£ and N1594.89/€ at the end of fourth quarter of 2024 from N2142.98/£ and N1789.15/€ at the end of the third quarter of 2024.
2.4.4 External Reserves
External reserves increased, as shown in Figure 2.9, from US$38.35 billion at the end of September 2024, to US$39.78 billion, US$40.23 billion and US$40.87 billion in October, November and December 2024, respectively.
During the same period, the price of crude oil rose by 2.1 per cent to $75.48 pb at the end of the fourth quarter of 2024 from US$73.95 pb at the end of the third quarter of 2024.
2.5 Nigeria Public Debt Stock
Nigeria's total public debt rose from N142.31 trillion in the third quarter of 2024 to N144.67 trillion at the end of the fourth quarter of 2024, representing a 1.65 per cent increase over the period. The debt comprises domestic and external debts which stood at N74.37 trillion and N70.28 trillion, accounting for 51.41 per cent and 48.59 per cent, respectively, of the total public debt at end of the fourth quarter of 2024.
Table 2.2 Nigeria Public Debt
| Debts | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|---|---|---|---|---|---|---|---|---|
| Public Debts (N' trillion) | ||||||||
| Total External Debt | 19.64 | 33.25 | 31.98 | 38.22 | 56.02 | 63.07 | 68.88 | 70.28 |
| Total Domestic Debts | 30.21 | 54.13 | 55.93 | 59.12 | 65.65 | 71.22 | 73.43 | 74.37 |
| Total Public Debt | 49.85 | 87.38 | 87.91 | 97.34 | 121.67 | 134.29 | 142.31 | 144.67 |
| Public Debt Growth Rate (%) | 7.78 | 75.29 | 0.61 | 10.73 | 24.99 | 10.38 | 5.97 | 1.65 |
| Public Debts ($' billion) | ||||||||
| Total External Debt | 47.36 | 80.17 | 77.11 | 92.16 | 42.11 | 42.90 | 43.02 | 45.78 |
| Total Domestic Debts | 72.84 | 130.52 | 134.86 | 142.55 | 49.35 | 48.45 | 45.87 | 48.44 |
| Total Public Debt | 120.2 | 210.7 | 211.97 | 234.71 | 91.46 | 91.35 | 88.89 | 94.22 |
| Public Debts (External/Internal as Proportion of Total (%)) | ||||||||
| Total External Debt | 39.40 | 38.05 | 36.38 | 39.26 | 46.05 | 46.96 | 48.40 | 48.59 |
| Total Domestic Debts | 60.60 | 61.95 | 63.62 | 60.74 | 53.95 | 53.04 | 51.60 | 51.41 |
| Total Public Debt | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Debt Service
| Actual External Debt Services ($ 'million) | 801.36 | 368.26 | 1390.71 | 943.17 | 1120.01 | 1120.39 | 1338.26 | 1078.09 |
| Actual External Debt Services (N' billion) | 368.91 | 283.7 | 1069.12 | 848.28 | 1489.94 | 1647.19 | 2142.61 | 1655.22 |
| Actual Domestic Debt Service (N' billion) | 874.13 | 565.88 | 1792.47 | 2000.6 | 989.24 | 2852.75 | 1433.32 | 1583.81 |
| Total Debt Services paid (N' billion) | 1243.04 | 849.58 | 2861.59 | 2848.88 | 2479.18 | 4499.94 | 3575.93 | 3239.03 |
| US$/Naira Rate | 460.35 | 770.38 | 768.76 | 899.39 | 1330.3 | 1470.19 | 1601.03 | 1535.32 |
2.6 Financial Sector Developments
2.6.1 Money Market Developments
Figure 2.10 shows the deposit and lending rates in Nigeria. The savings deposit rose from 6.79 per cent in September to 7.56 per cent in October and declined to 6.56 per cent November before rising to 7.51 per cent in December, 2024. Interest rates on time deposit slightly decreased from 13.78 per cent in September to 13.57 per cent in October, then rose to 14.22 per cent in November and later declined to 13.33 per cent in December, 2024.
Prime lending rate increased from 16.75 per cent in September to 17.36 per cent in October and further rose to 18.39 per cent and 18.56 per cent in November and December 2024, respectively. Max lending rate slightly increased from 30.21 per cent in September to 30.28 per cent in October and further rose to 31.06 per cent in November and then later declined to 29.71 per cent in December 2024.
Figure 2.11 compares the money market rates from the third quarter to the fourth quarter of 2024. The interbank call rate, which had been at 27.92 per cent in September, slightly decreased to 27.83 per cent in October before rising to 28.88 per cent in November, then later declined to 28.71 per cent in December 2024. MPR, which stood at 27.25 per cent in September, maintained 27.25 per cent in October, then slightly increased and remained at 27.50 per cent in November and December 2024, respectively. Treasury bill rose from 16.91 per cent in September to 17.00 per cent in October and further rose and remained at 18.00 per cent in November and December 2024, respectively. The prescribed Cash Reserve Ratio (CRR), which had been at 45.00 per cent since March 2024, rose and remained at 50.00 per cent throughout the fourth quarter, 2024. However, the Liquidity ratio remained unchanged at 30.00 per cent since January 2024.
As depicted in Figure 2.12, Narrow Money (M1), which stood at N35.56 trillion in September, declined to N34.78 trillion in October, then increased to N36.27 trillion in November 2024. Money Supply (M2), which was N108.95 trillion in September 2024, declined to N107.99 trillion in October and later rose to N108.95 trillion in November 2024. Broad Money Supply (M3), which stood at N108.95 trillion in September, slightly decreased to N108.00 trillion in October before slightly increasing to N108.97 trillion in November 2024.
2.7 Capital Market Development
2.7.1 All-Share Index
The Nigerian Exchange Limited All-Share Index (NGX ASI) exhibited notable fluctuations throughout the fourth quarter of 2024. As shown in Figure 2.13, the index decreased from 98,558.79 at the end of the third quarter, September 30, 2024, to 97,651.23 and 97,506.87 in October and November, respectively, then later rose to 102,926.40 in December 2024.
2.7.2 Domestic and Foreign Portfolio Investments
As shown in Table 2.3, the total portfolio investment rose by 1.97 per cent from N493.1 billion in September 2024 to N502.73 billion in October 2024, but fell by 12.02 per cent in November 2024 to N442.34 billion, and later increased by 52.29 per cent to N673.66 billion in December 2024.
Table 2.3: Domestic & Foreign Portfolio Transactions in Equity Trading (Q3 – Q4, 2024)
| Year | Month | Total N' Billion | Total Growth (%) | Domestic N' Billion | Domestic % of Total | Domestic Growth (%) | Foreign N' Billion | Foreign % of Total | Foreign Growth (%) |
|---|---|---|---|---|---|---|---|---|---|
| December | 673.66 | 52.29 | 606.91 | 90.09 | -0.72 | 66.75 | 9.91 | 63.04 | |
| November | 442.34 | -12.01 | 401.4 | 90.74 | 0.2 | 40.94 | 9.26 | -13.74 | |
| 2024 | October | 502.73 | 1.97 | 455.27 | 90.56 | -1.14 | 47.46 | 9.44 | 14.61 |
| September | 493.01 | 29.90 | 451.60 | 91.60 | 7.95 | 41.41 | 8.40 | -27.95 | |
| August | 379.52 | -22.80 | 322.05 | 84.86 | -3.90 | 57.47 | 15.14 | -0.09 | |
| July | 491.61 | 38.66 | 434.09 | 88.30 | 14.94 | 57.52 | 11.70 | -30.02 |
2.8 CBN Monetary Policy and Circulars
2.8.1 Monetary Policy Development
In the fourth quarter of 2024, the CBN's Monetary Policy Committee (MPC) convened a meeting on 25-26 November.
At this meeting, the Committee: i. Acknowledged and commended the Federal Government's efforts in improving security, particularly in the North-East, which is expected to enhance food production. The Committee also expressed optimism that the full deregulation of the downstream petroleum sub-sector would help eliminate scarcity and stabilize prices in the short to medium term; ii. Voiced concerns over ongoing exchange rate pressures, driven by sustained high demand in the foreign exchange market; iii. Expressed satisfaction with the resilience and stability of the banking system, which has remained strong despite significant internal and external challenges. Key financial soundness indicators, including the Capital Adequacy Ratio (CAR), Non-Performing Loan ratio (NPL), and Liquidity Ratio (LR), continued to perform well; iv. Highlighted progress in the external sector, as evidenced by the growing current account surplus, increased remittances, and capital inflows, which have positively influenced external reserves.
The Committee recommended that: i. Emphasized the importance of strengthening collaboration between monetary and fiscal authorities to achieve the shared objectives of price stability and sustainable economic growth; ii. Encouraged the Bank to explore strategies for enhancing market liquidity while maintaining vigilant oversight of the banking system to ensure adherence to regulatory thresholds and preserve the industry's overall health; iii. Recognized the Bank's efforts in promoting financial inclusion as a means to improve the transmission of monetary policy and enhance its effectiveness; iv. Prioritized the selection of optimal policies to address rising price trends, stabilize the exchange rate, and effectively anchor inflation expectations.
The MPC, in its statutory meetings held in the Fourth quarter of 2024, voted to: i. raise the Monetary Policy Rate (MPR) by 25 basis points to 27.50% in November, 2025; ii. retain the asymmetric corridor around the MPR at +500/-100 basis points; iii. retain the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 50.00 per cent and Merchant Banks at 16 per cent in November; and retain the Liquidity Ratio at 30.00 per cent.
2.8.2 CBN Circulars & Guidelines
The CBN issued various circulars and guidelines on the operations of insured deposit-taking financial institutions for the period under review. Highlights of some of the circulars are presented below:
i. FPR/DIR/PUB/CIR/002/013 Circular to all Commercial, Merchant, and Non-Interest banks on Implementation of the Foreign currency disclosure, Deposit, Repatriation, and Investment scheme, 2024 The circular, issued on November 5, 2024, to all banks and other financial institutions following the Presidential Executive Order No. 15 was to facilitate voluntary disclosure, deposit, and repatriation of internationally tradable foreign currencies held onshore and offshore by Nigerian citizens, resident within or outside Nigeria. The Central Bank of Nigeria issued a guideline on the Foreign Currency Disclosure, Deposit, Repatriation and Investment Scheme 2024 to the Commercial, Merchant, and Non-Interest Banks on the modalities of their participation.
ii. FMD/DIR/PUB/CIR/001/022 Superseded Circular – Operationalization of the Standing Deposit Facility (SDF) Asymmetric Corridor Post 298th meeting of the Monetary Policy Committee (MPC) This circular, dated November 29, 2024, was issued in response to the 298th Monetary Policy Committee meeting, which retained the asymmetric corridor at +500/-100bps from +100/-300bps. As a result, the committee removed the Standing Deposit Facility (SDF) of 19% on deposits above N3 billion. In view of that, the SDF will be remunerated on a single tier basis which is currently Monetary Policy Rate (MPR) minus 100 basis points.